Exhibit 1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and among
VESTA INSURANCE GROUP, INC.,
VESTA FIRE INSURANCE CORPORATION,
NEW AFFIRMATIVE LLC,
X.X. XXXXXXX I LP
(SOLELY WITH RESPECT TO SECTIONS 1.1(b),
4.3, 5.2, 5.5, 5.8 and ARTICLE VIII
(other than 8.1 and 8.2))
and
DELAWARE STREET CAPITAL MASTER FUND, L.P.
(SOLELY WITH RESPECT TO SECTIONS 1.1(b),
4.3, 5.2, 5.5, 5.8 and ARTICLE VIII
(other than 8.1 and 8.2))
dated as of
June 14, 2005
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Table of Contents
Page
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ARTICLE I PURCHASE AND SALE OF THE SHARES............................................................1
Section 1.1 Purchase and Sale of the Shares..................................................1
Section 1.2 Closing..........................................................................2
Section 1.3 Closing Deliveries...............................................................2
ARTICLE II PURCHASE PRICE............................................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS............................................3
Section 3.1 Organization.....................................................................4
Section 3.2 Ownership of Shares..............................................................4
Section 3.3 Authorization; Validity of Agreements............................................4
Section 3.4 No Violations; Consents and Approvals............................................5
Section 3.5 Agreements With the Company......................................................6
Section 3.6 Litigation.......................................................................7
Section 3.7 Disclosure.......................................................................7
Section 3.8 Brokers..........................................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...........................................7
Section 4.1 Organization.....................................................................7
Section 4.2 Authorization; Validity of Agreement.............................................8
Section 4.3 No Violations; Consents and Approvals............................................8
Section 4.4 Financing........................................................................9
Section 4.5 Accredited Investor..............................................................9
Section 4.6 Brokers..........................................................................9
Section 4.7 Information.....................................................................10
ARTICLE V COVENANTS.................................................................................10
Section 5.1 Certain Agreements with Respect to the Company..................................10
Section 5.2 Consents and Approvals; Performance; Reasonable Best Efforts....................11
Section 5.3 Acquisition Proposals...........................................................14
Section 5.4 Agreements with the Company.....................................................14
Section 5.5 Acquisition of Other Shares Prior to Closing....................................15
Section 5.6 Release of Liens................................................................15
Section 5.7 Notification of Certain Matters.................................................16
Section 5.8 Press Releases and Public Announcements.........................................16
Section 5.9 Further Assurances..............................................................16
Section 5.10 Confidentiality.................................................................16
ARTICLE VI CONDITIONS...............................................................................17
Section 6.1 Conditions to Each Party's Obligation...........................................17
Section 6.2 Conditions to the Obligation of the Sellers.....................................18
Section 6.3 Conditions to Obligation of the Purchaser.......................................19
Section 6.4 Frustration of Closing Conditions...............................................21
ARTICLE VII TERMINATION.............................................................................21
Section 7.1 Termination.....................................................................21
Section 7.2 Effect of Termination...........................................................22
ARTICLE VIII MISCELLANEOUS..........................................................................23
Section 8.1 Survival........................................................................23
Section 8.2 Indemnification.................................................................23
Section 8.3 Amendment; Waiver...............................................................24
Section 8.4 Fees and Expenses...............................................................24
Section 8.5 Notices.........................................................................24
Section 8.6 Interpretation; Seller Obligations..............................................27
Section 8.7 Headings........................................................................27
Section 8.8 Counterparts....................................................................28
Section 8.9 Entire Agreement................................................................28
Section 8.10 No Third Party Beneficiaries....................................................28
Section 8.11 Severability....................................................................28
Section 8.12 Specific Performance............................................................28
Section 8.13 Governing Law...................................................................28
Section 8.14 Submission to Jurisdiction......................................................28
Section 8.15 Waiver of Jury Trial............................................................29
Section 8.16 Assignment......................................................................29
TABLE OF DEFINED TERMS
Term Page
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Acquisition Proposal........................................................14
Action.......................................................................7
affiliate...................................................................27
Agreement....................................................................1
beneficial ownership........................................................27
Business Day.................................................................2
Closing......................................................................2
Closing Date.................................................................2
Closing Date Gross Amount...................................................20
Closing Date Net Amount.....................................................20
Common Stock.................................................................1
Company......................................................................1
Company Contracts............................................................6
Confidential Information....................................................17
Contract.....................................................................6
Department...................................................................6
Deposit Amount..............................................................20
Determination Date...........................................................2
DSC..........................................................................1
DSC Percentage...............................................................2
Form A Filing................................................................8
Governmental Approvals......................................................12
Governmental Entity..........................................................5
HSR Act......................................................................9
JCF..........................................................................1
JCF Percentage...............................................................1
JCF Stake....................................................................2
knowledge...................................................................27
Laws........................................................................12
Liens........................................................................4
Material Negative Condition.................................................12
Other Shares................................................................15
Outside Date................................................................22
Per Share Purchase Price.....................................................3
Person.......................................................................4
Purchaser....................................................................1
Registration Rights Agreement...............................................15
Reinsurance Contracts........................................................6
Release of Liens............................................................15
Representatives.............................................................14
Seller.......................................................................1
Seller Disclosure Schedule...................................................4
Sellers......................................................................1
Shares.......................................................................1
Subsidiary...................................................................7
VFIC.........................................................................1
VIG..........................................................................1
VIG Credit Agreement........................................................15
VIG Liens...................................................................15
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 14, 2005 (this
"Agreement"), by and among Vesta Insurance Group, Inc., a Delaware corporation
("VIG"), Vesta Fire Insurance Corporation, an Illinois insurance company
("VFIC", and together with VIG, collectively the "Sellers" and each
individually, a "Seller"), and New Affirmative LLC, a Delaware limited
liability company (the "Purchaser"), and in each case solely for the purposes
of Sections 1.1(b), 4.3, 5.2, 5.5, 5.8 and Article VIII (other than 8.1 and 8.2)
hereof, X.X. Xxxxxxx I LP, a Delaware limited partnership ("JCF"), and Delaware
Street Capital Master Fund, L.P., a Cayman Islands exempted limited partnership
("DSC") (it being understood that the obligations of JCF and DSC,
respectively, under Sections 1.1(b), 4.3, 5.2, 5.5, 5.8 and the applicable
Sections of Article VIII shall be as to itself only several and not joint and
several).
WHEREAS, the Sellers collectively own in the aggregate 5,218,228
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of Affirmative Insurance Holdings, Inc., a Delaware corporation (the
"Company");
WHEREAS, the Sellers desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, the Shares, on the terms and
subject to the conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows.
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 Purchase and Sale of the Shares.
(a) At the Closing (as defined in Section 1.2) and upon the terms
and subject to the conditions set forth in this Agreement, the Sellers shall
sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser
shall accept and purchase from the Sellers, the Shares, free and clear of all
Liens (as defined in Section 3.2).
(b) In connection with the obligations of the Purchaser, (a) JCF
agrees to severally, but not jointly, at the Closing guarantee the full and
punctual payment of the JCF Percentage (as defined herein) of the aggregate
Per Share Purchase Price by the Purchaser and (b) DSC agrees to severally, but
not jointly, at the Closing guarantee the full and punctual payment of the DSC
Percentage (as defined herein) of the aggregate Per Share Purchase Price by
the Purchaser. For the purposes of this Agreement, the "JCF Percentage" shall
be equal to the amount (expressed as a percentage) of (i)(A)(I) the sum of (x)
the number of shares of common stock of Affirmative owned by DSC two (2) days
prior to the Closing Date (such date, the "Determination Date"), (y) the
number of shares, if any, of common stock of Affirmative owned by JCF and its
affiliates on the Determination Date (the "JCF Stake") and (z) 5,218,228
shares of common stock of Affirmative divided by (II) two (2) minus (B) the
JCF Stake divided by (ii) 5,218,228. For the purposes of this Agreement, the
"DSC Percentage" shall be equal to one hundred percent (100%) minus the JCF
Percentage.
Section 1.2 Closing. The closing of the purchase and sale of the
Shares and the other transactions contemplated hereby (the "Closing") will
take place at 10:00 a.m., New York time, on the date that is two (2) Business
Days (as defined below) after satisfaction or waiver of all of the conditions
set forth in Article VI hereof (other than those conditions which by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions) (the "Closing Date"), at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
unless another date or place is agreed to in writing by the parties hereto.
For purposes of this Agreement, "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banks in New York, New York are
authorized or required by Law to be closed for regular banking business.
Section 1.3 Closing Deliveries.
(a) Deliveries by the Sellers. At the Closing, the Sellers shall
deliver to the Purchaser:
(i) stock certificates representing the Shares, duly endorsed
in favor of the Purchaser or accompanied by a separate stock power duly
and validly executed by the applicable Seller and otherwise sufficient to
vest in the Purchaser good and valid title to the Shares (with all
necessary transfer tax and all other revenue stamps attached thereto),
free and clear of all Liens;
(ii) an executed receipt for the aggregate Per Share Purchase
Price (as defined in Article II);
(iii) an executed certificate signed by an executive officer of
each of the Sellers delivered pursuant to Section 6.3(d);
(iv) an executed instrument of assignment and transfer with
respect to the Sellers' rights under the Registration Rights Agreement
with respect to the Shares pursuant to Section 5.4(c);
(v) the certificates referred to in Section 6.3(h) and (i) duly
executed by an executive officer of each of the Sellers (which shall have
been delivered five (5) days prior to the Closing Date pursuant to
Section 6.3(h) and (i), respectively);
(vi) a statement of each of the Sellers in form and substance
reasonably satisfactory to the Purchaser that satisfies the Purchaser's
obligations under Treasury Regulation ss. 1.1445-2(b) or (c), as
applicable; and
(vii) such other documents, agreements, instruments, writings
and certificates as the Purchaser may reasonably request to effect the
transactions contemplated hereby, in form and substance reasonably
satisfactory to the Purchaser.
(b) Deliveries by the Purchaser. At the Closing, the Purchaser shall
deliver to the Sellers:
(i) the aggregate Per Share Purchase Price for the Shares, by
delivery by wire transfer of immediately available funds to an account
designated by the Sellers not later than two (2) Business Days prior to
the Closing Date;
(ii) an executed certificate signed by an executive officer of
the Purchaser delivered pursuant to Section 6.2(c); and
(iii) such other documents, agreements, instruments, writings
and certificates as the Sellers may reasonably request to effect the
transactions contemplated hereby, in form and substance reasonably
satisfactory to the Sellers.
ARTICLE II
PURCHASE PRICE
The purchase price per share for the Shares shall be equal to $15.00
(the "Per Share Purchase Price"). The Per Share Purchase Price shall be
adjusted to reflect appropriately the effect of any forward or reverse stock
split, stock dividend (including any dividend or distribution of securities
exercisable or exchangeable for or convertible into Common Stock), cash or "in
kind" dividend (other than regular cash dividends in amounts which are not in
excess of the amounts previously paid by the Company), stock issuance or sale,
reorganization, recapitalization, reclassification, combination, exchange of
shares or other similar change with respect to the Common Stock occurring or
with a record date on or after the date hereof and on or prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLERS
Simultaneously with the execution and delivery of this Agreement,
the Sellers shall deliver to the Purchaser a disclosure schedule with numbered
sections corresponding to the relevant sections in this Agreement (the "Seller
Disclosure Schedule"). VIG and VFIC severally but not jointly represent and
warrant to the Purchaser as follows:
Section 3.1 Organization. VIG is a corporation duly organized,
validly existing and in good standing under the Laws (as defined in Section
5.2) of the State of Delaware. VFIC is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Illinois.
Section 3.2 Ownership of Shares. Except for VIG Liens with respect
to the Shares held by VIG (as defined in Section 5.6), which shall be released
at or prior to the Closing, the Sellers, as of the date hereof and at all
times up to the Closing shall, own and have good and valid title to the Shares
free and clear of all liens, claims, charges, encumbrances, security
interests, mortgages, pledges, options, assessments, licenses, buy/sell
agreements, preferential arrangements or other restrictions of any kind or
nature whatsoever, including any restriction or covenant with respect to, or
condition governing, the use, voting, transfer, receipt of income or other
exercise of any attributes of, or material benefits associated with, ownership
(collectively, "Liens"). At the Closing, the Sellers shall deliver to the
Purchaser good and valid title to the Shares free and clear of all Liens. VIG
owns directly 1,045,600 shares of Common Stock and VFIC owns directly
4,172,628 shares of Common Stock. The Shares represent all equity interests
owned, directly or indirectly, by the Sellers or their affiliates in the
Company or any of its Subsidiaries (as defined in Section 3.5(a)). Except for
VIG with respect to the VIG Liens, which shall be released at or prior to the
Closing, none of the Sellers is a party to any agreement creating rights with
respect to the Shares in any individual, partnership, joint venture, trust,
corporation, unincorporated entity or Governmental Entity (as defined in
Section 3.4(b)) ("Person") and each of the Sellers has the full power and
legal right to sell, assign, transfer and deliver the Shares. There are no
existing warrants, options, stock purchase agreements, redemption agreements,
restrictions of any nature, voting trust agreements, proxies, calls or rights
to subscribe of any character relating to the Shares owned by any of the
Sellers. None of the Sellers has received any notice of any adverse claim to
the ownership of any of the Shares and has no knowledge of any facts that
would reasonably be likely to give rise to any adverse claim to the ownership
of the Shares.
Section 3.3 Authorization; Validity of Agreements. Each of the
Sellers has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Sellers and,
assuming due authorization, execution and delivery of this Agreement by each
of the other parties hereto, is a valid and binding obligation of each of the
Sellers enforceable against such Sellers in accordance with its terms.
Section 3.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this
Agreement by the Sellers nor the consummation by the Sellers of the
transactions contemplated hereby will (i) violate any provision of the
certificate of incorporation or bylaws of either of the Sellers, (ii) except
as set forth in Section 3.4(a) of the Seller Disclosure Schedule, result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any loan or credit agreement, note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract, agreement
or other instrument or obligation to which the Sellers or to the knowledge of
the Sellers, the Company or any of its Subsidiaries, is a party or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Sellers or the Shares or any of the Sellers' properties or
assets, except in the case of the preceding clauses (ii) and (iii), for those
conflicts, breaches, violations, defaults or accelerations that would not,
individually or in the aggregate (x) have, or be reasonably likely to have a
material adverse effect on the ability of the Sellers to (1) perform their
obligations under this Agreement or (2) consummate the transactions
contemplated hereby or (y) reasonably be likely to (1) adversely affect the
attributes of, or material benefits associated with, ownership of the Shares
by the Purchaser (including dividend and voting rights) at and following the
Closing or (2) result in the Purchaser incurring a material liability. No
representation is being made with regard to any conflicts, breaches,
violations, defaults or accelerations which occur by reason of the regulatory
or legal status of the Purchaser, JCF or DSC or facts specifically pertaining
to any of them.
(b) Except as disclosed in Section 3.4(b) of the Seller Disclosure
Schedule, no filing or registration with, notification to, or authorization,
consent, approval or waiver of, any Governmental Entity (as defined below) is
required in connection with the execution, delivery and performance of this
Agreement by the Sellers or the consummation by the Sellers of the
transactions contemplated hereby. For the purposes of this Agreement,
"Governmental Entity" shall mean any (A) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature, (B) governmental or quasi-governmental entity of
any nature, including any governmental division, subdivision, department,
agency, bureau, branch, office, commission, council, board, instrumentality,
officer, official, representative, organization, taxing authority or unit and
any court or other tribunal (foreign, federal, state or local), (C) Person, or
body exercising, or entitled to exercise, any executive, legislative,
judicial, administrative, regulatory, police, military or taxing authority or
power of any nature, including the Department (as defined below), or (D)
arbitrator or arbitration panel or similar person or body. For the purposes of
this Agreement, "Department" shall mean the Illinois Department of Financial
and Professional Regulation - Division of Insurance. No representation is
being made with regard to any filing or registration, notification,
authorization, consent, approval or waiver which is required by reason of the
regulatory or legal status of the Purchaser, JCF or DSC or facts specifically
pertaining to any of them.
Section 3.5 Agreements With the Company. Section 3.5 of the Seller
Disclosure Schedule sets forth a complete, accurate and current list of all
material contracts, commitments, arrangements, licenses, obligations,
indentures, deeds of trust or other instruments or agreements (each, a
"Contract") between the Sellers or any of their affiliates (other than the
Company and its Subsidiaries), on the one hand, and the Company or any of its
Subsidiaries (as defined below), on the other hand (collectively the "Company
Contracts"), including any Contract pursuant to which the Sellers provide
reinsurance to the Company or any of its Subsidiaries (or vice versa), any
related arrangement pursuant to which the Sellers have collateralized (to the
Company or its Subsidiaries or to any third party) their obligations under
such Contracts or any Contract pursuant to which the Seller has authorized the
Company or any of its Subsidiaries to underwrite insurance on its behalf (or
vice versa) (collectively, the "Reinsurance Contracts"). The Sellers have
previously delivered to the Purchaser the Sellers' forecasted Case and IBNR
reserves for the Reinsurance Contracts as of each quarter end in 2005. Each
Company Contract is a valid and binding obligation of the Sellers or their
affiliates and, to the knowledge of the Sellers, is a valid and binding
obligation of the Company or its Subsidiaries, as applicable, and is in full
force and effect and enforceable by the applicable Seller or its affiliates,
on the one hand, and the Company or its Subsidiaries, on the other hand, in
accordance with its terms. Each of the Sellers or their applicable affiliates
has performed, and to the knowledge of the Sellers, each of the Company and
its Subsidiaries has performed, all material obligations required to be
performed by it under each Company Contract, and there has been no breach or
default or claim of default by it or, to its knowledge, by the Company or any
of its Subsidiaries, under any provision thereof and no event has occurred
which, with or without notice, the passage of time or both, would constitute a
breach or default by it, or, to its knowledge, the Company or any of its
Subsidiaries as applicable, under any provision thereof or that would permit
modification, acceleration or termination of any Company Contract by any of
the Sellers or their affiliates, on the one hand, or the Company or any of its
Subsidiaries, on the other hand, or any other party thereto. Except as set
forth in Section 3.5 of the Seller Disclosure Schedule, the enforceability
after the Closing by the Company or its Subsidiaries of the Company Contracts
shall not be adversely affected by the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
and no notice to, or consent, approval or waiver is required from any Person.
From and after the Closing, the Registration Rights Agreement shall be
enforceable against the Company by the Purchaser and no notice to, or consent
or approval of any Person is required in order to effect the assignments of
the Registration Rights Agreement pursuant to this Agreement. Complete,
accurate and current copies of each of the Company Contracts (including any
amendments and/or supplements thereto) set forth in Section 3.5 of the Seller
Disclosure Schedule have been delivered to the Purchaser by the Sellers.
Neither Seller has knowledge of any facts or circumstances that would
reasonably be likely to be the basis for any material Action (as defined in
Section 3.6) by the Sellers, or any of their Subsidiaries, on the one hand,
against the Company or any of its Subsidiaries, on the other hand, relating to
or under any Company Contract. As used in this Agreement, the term
"Subsidiary" shall mean, with respect to any Person, any corporation or other
entity of which 50% or more of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such entity
is directly or indirectly owned by such Person.
Section 3.6 Litigation. There is no suit, action, arbitration,
proceeding or investigation (each, an "Action") which is pending or, to the
knowledge of the Sellers, threatened, against either of the Sellers or their
respective Subsidiaries or any of their respective assets, properties or
businesses which would, individually or in the aggregate have, or be
reasonably likely to have a material adverse effect on the ability of the
Sellers to (a) perform their obligations under this Agreement or (b)
consummate the transactions contemplated hereby.
Section 3.7 Disclosure. No statement in this Agreement, any
schedule attached hereto or certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
Section 3.8 Brokers. Other than Sagent Advisors, the fees and
expenses of which shall be paid solely by the Sellers, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
Section 4.1 Organization. The Purchaser, and solely for the
purposes of Section 4.3, JCF and DSC (each as to itself only several and not
joint and several) is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
Section 4.2 Authorization; Validity of Agreement. The Purchaser has
the requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized, and no other
proceedings on the part of the Purchaser are necessary to authorize the
execution and delivery of this Agreement by the Purchaser and the consummation
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Purchaser and, assuming due authorization, execution and
delivery of this Agreement by the Sellers, is a valid and binding obligation
of the Purchaser enforceable against it in accordance with its terms.
Section 4.3 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this Agreement
by the Purchaser, JFC or DSC nor the consummation by the Purchaser, JFC or DSC
of the transactions contemplated, JCF or DSC hereby will (i) violate any
provision of the limited liability company agreement or limited partnership
agreement, as the case may be, of the Purchaser, JCF or DSC, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, license, lease, contract, agreement or other instrument or
obligation to which the Purchaser, JCF or DSC or any of its respective
Subsidiaries is a party or by which any of them or any of their assets may be
bound or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Purchaser, JCF or DSC, any of its respective
Subsidiaries or any of its respective properties or assets, except in the case
of the preceding clauses (ii) and (iii), for those conflicts, breaches,
violations, defaults or accelerations that would not, individually or in the
aggregate, have, or be reasonably likely to have a material adverse effect on
the ability of the Purchaser, JCF or DSC to (x) perform its obligations under
this Agreement or (y) consummate the transactions contemplated hereby. No
representation is being made with regard to any conflicts, breaches,
violations, defaults or accelerations which occur by reason of the regulatory
or legal status of the Sellers or the Company or facts specifically pertaining
to any of them.
(b) Except for (i) the filing with, and the written approval of the
Department in respect of, the Form A, Statement Regarding the Acquisition of,
Control of a Domestic Insurer with respect to the transactions contemplated
hereby (the "Form A Filing"), (ii) the filing of a Statement on Schedule 13D
with the Securities and Exchange Commission and any securities exchange on
which the Company's securities are listed, (iii) the filing of a Form 3 with
the SEC and any other filings with the SEC as may be necessary or appropriate
and (iv) the required filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no filing or registration
with, notification to, or authorization, consent, approval or waiver of, any
Governmental Entity is required in connection with the execution and delivery
of this Agreement by the Purchaser, JCF or DSC or the consummation by the
Purchaser, JCF or DSC of the transactions contemplated hereby, except for such
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have, or be reasonably likely to have a
material adverse effect on the ability of the Purchaser, JCF or DSC to (x)
perform its respective obligations under this Agreement or (y) consummate the
transactions contemplated hereby. No representation is being made with regard
to any filing or registration, notification, authorization, consent, approval
or waiver which is required by reason of the regulatory or legal status of the
Sellers or the Company or facts specifically pertaining to any of them.
Section 4.4 Financing. Subject to the satisfaction, or waiver by
the Purchaser, of the conditions set forth in Section 6.1 and Section 6.3, the
Purchaser will have at the Closing sufficient funds available to pay the
Purchase Price and to satisfy and perform its obligations hereunder.
Section 4.5 Accredited Investor
(a) The Purchaser is acquiring the Shares to be acquired by it
hereunder for its own account, solely for the purpose of investment and not
with a view toward, or for sale in connection with, any distribution thereof,
in violation of the federal securities Laws or any applicable foreign or state
securities Law.
(b) The Purchaser is an "accredited investor" as defined in Rule
501(a) promulgated under the Securities Act of 1933, as amended.
(c) The Purchaser understands that the acquisition of the Shares to
be acquired by it pursuant to the terms of this agreement involves substantial
risk. The Purchaser and its officers have experience as an investor in
securities and equity interests of companies such as the ones being
transferred pursuant to this Agreement and the Purchaser acknowledges that it
can bear the economic risk of its investment (which may be for an indefinite
period) and has such knowledge and experience in financial or business matters
that the Purchaser is capable of evaluating the merits and risks of its
investment in the Shares to be acquired by it pursuant to the transactions
contemplated hereby.
Section 4.6 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or
on behalf of the Purchaser.
Section 4.7 Information. Purchaser, JCF and DSC have sufficient
experience in business, financial and investment matters to be able to
evaluate the risks involved in the acquisition of the Shares and to make an
informed investment decision with respect to such acquisition, and further
acknowledge that the Sellers make no representation specifically regarding the
value of the Shares.
ARTICLE V
COVENANTS
Section 5.1 Certain Agreements with Respect to the Company.
(a) During the period from the date hereof to the Closing Date,
except (x) as expressly permitted by this Agreement or (y) with the express
written consent of the Purchaser, the Sellers shall not, and shall cause each
of their Subsidiaries not to:
(i) acquire or hold any equity interest in the Company other
than the Shares;
(ii) transfer (which term shall include, without limitation,
any sale, gift, pledge or other disposition), or consent to any transfer
of (or enter into any contract, option or other agreement or
understanding with respect to any transfer of), any or all of the Shares,
or any interest therein;
(iii) grant any proxy, power-of-attorney or other authorization
in or with respect to the Shares or enter into any agreement relating to
the Shares;
(iv) incur or suffer to be incurred any Lien on any of the
Shares (other than the VIG Liens, which shall be released at Closing);
(v) make any loan, advance or capital contributions to, or
investments in, the Company or its Subsidiaries;
(vi) cause, or seek to cause, the Company and its Subsidiaries
to declare, pay or make any regular or special cash dividends or other
cash distributions with respect to the Shares or any other capital stock
of the Company;
(vii) agree or take any action, including by voting or giving a
consent, to amend the certificate of incorporation or the bylaws of the
Company;
(viii) amend or terminate, waive any benefit under or exercise
any registration right under, or agree to amend, terminate, waive any
benefit under or exercise any registration right under, the Registration
Rights Agreement;
(ix) take any other action that would in any way restrict,
limit or interfere with the performance of its obligations pursuant to
this Agreement; or
(x) agree or commit (including by voting the Shares) to do any
of the foregoing.
(b) The Sellers shall use their reasonable best efforts to cause the
transactions contemplated hereby to be consummated as promptly as practicable
and to permit the Purchaser to realize the attributes of, and material
benefits associated with, ownership of the Shares, including dividend and
voting rights; without limiting the generality of the foregoing, prior to the
Closing, the Sellers shall not propose or consent to, and shall vote the
Shares against, any action that is intended, or could reasonably be expected,
to materially impede or delay, postpone or adversely affect the consummation
of the transactions contemplated hereby or could otherwise adversely affect
the attributes of, or material benefits associated with, ownership of the
Shares by the Purchaser (including dividend and voting rights) at and
following the Closing.
Section 5.2 Consents and Approvals; Performance; Reasonable Best
Efforts.
(a) The parties shall, and shall use their reasonable best efforts
to cause their affiliates (other than in the case of the Sellers with respect
to the Company and its Subsidiaries) to, cooperate with each other and shall
use their reasonable best efforts to (i) promptly prepare and to file all
necessary documentation, and to effect all applications, notices, petitions
and filings, with each Governmental Entity and each third party (other than a
Governmental Entity) that are necessary or advisable to consummate the
transactions contemplated hereby, including the purchase and sale of the
Shares and (ii) obtain as promptly as practicable (A) all Governmental
Approvals (as defined below), and (B) any permit, consent, approval, waiver or
authorization of such third parties that are necessary or advisable to
consummate the transactions contemplated hereby, including the purchase and
sale of the Shares. Notwithstanding the other provisions of this Agreement,
none of the Purchaser, DSC or JCF shall be obligated to take or refrain from
taking, or to agree to take or refrain from taking, any action or to suffer to
exist any restriction, limitation, condition or requirement that would,
individually or in the aggregate with all other such actions, restrictions,
limitations, conditions or requirements related thereto, reasonably be
expected to result in (i) a material negative effect on the business or the
condition (financial or otherwise), results of operations, operations, assets,
properties or liabilities of (A) the Purchaser or any of its respective
affiliates, as the case may be, or (B) the Company and its Subsidiaries, taken
as a whole, including with respect to the Company and its Subsidiaries, any
limitation or restriction on the declaration or payment of dividends,
including with respect to the Shares; provided, that notwithstanding the
foregoing, in no event shall the Purchaser or any of its affiliates be
required to take any action (or refrain from taking any action) with respect
to, or agree to the imposition of any limitation or restriction on, any of
JCF's or DSC's other investments, (ii) a material negative effect on the
benefits, taken as a whole, which the Purchaser, DSC or JCF or any of their
respective affiliates, as the case may be, reasonably expected to derive from
the consummation of the transactions contemplated hereby, including the
purchase and sale of the Shares, (iii) a limitation on the ability of the
Purchaser to vote (or act by written consent with respect to) all or a portion
of the Shares or (iv) any requirement that any of the Purchaser, DSC or JCF or
any of their respective affiliates make (or become obligated to make whether
through notice, lapse of time or otherwise) any capital contribution to, or
investment in, the Company or any of its Subsidiaries (clauses (i), (ii),
(iii) and (iv) shall each be referred to as a "Material Negative Condition").
The parties and their respective directors and officers shall use their
reasonable best efforts to (x) file as promptly as practicable, but in no
event later than twenty (20) days after the date of this Agreement, all
required applications and documents in connection with obtaining the
Governmental Approvals (including as set forth in Section 5.2(c)) and shall
act reasonably and promptly thereafter in responding to additional requests
and comments in connection therewith and (y) obtain as promptly as practicable
all other consents, authorizations, approvals and waivers, including, if
applicable, after the Closing. "Governmental Approvals" shall mean all
permits, licenses, certificates, franchises, concessions, approvals, consents,
ratifications, permissions, clearances, confirmations, endorsements, waivers,
certifications, filings, franchises, notices, variances, rights, designations,
ratings, registrations, qualifications, authorizations or orders that are or
have been issued, granted, given or otherwise made available by or under the
authority of any Governmental Entity or pursuant to any Law. "Laws" shall mean
applicable laws (including common law), statutes, codes, rules, regulations,
orders, ordinances, judgments or decrees or other pronouncements having the
effect of law in the United States or any foreign country or any state,
county, city or other subdivision of any Governmental Entity.
(b) Each of the parties shall (i) subject to Laws relating to
exchange of information, consult with each of the other parties on all of the
information relating to such party and any of their respective affiliates that
appears in any filing made with, or written materials submitted to, any
Governmental Entity or any other third party in connection with the
transactions contemplated hereby, (ii) consult with each of the other parties
with respect to the obtaining of any Governmental Approvals and any permit,
consent, approval, waiver or authorization of a third party necessary or
advisable to consummate the transactions contemplated hereby and (iii) keep
each of the other parties apprised of the status of obtaining any Governmental
Approvals and any permit, consent, approval, waiver or authorization of a
third party necessary or advisable to consummate the transactions contemplated
hereby. The party responsible for any such action shall promptly deliver to
the other party evidence of the filing or making of all applications, filings,
registrations, notifications, permits, consents, approvals, waivers and
authorizations relating thereto, and any supplement, amendment or item of
additional information in connection therewith, except for documents filed or
submitted on a confidential basis with a Governmental Entity.
(c) Without limiting the generality of the foregoing, as soon as
practicable after the date hereof, (i) but in no event later than twenty (20)
days following the date hereof, the Purchaser and, to the extent applicable,
JCF and DSC shall submit a Form A Filing to the Department, (ii) the Sellers
and their affiliates shall make all filings contemplated by Section 3.4(b) of
the Seller Disclosure Schedule and (iii) the Purchaser and, to the extent
applicable, JCF and DSC shall make the required filings under the HSR Act with
the Federal Trade Commission and the Department of Justice. The parties shall
promptly make any and all other filings and submissions of information with the
Department and other Governmental Entities that are reasonably requested by the
Department and other Governmental Entities in order to obtain the Governmental
Approvals required by the Department and other Governmental Entities to
consummate the transactions contemplated hereby. The Sellers agree to furnish
the Purchaser with such necessary information and reasonable assistance as may
be reasonably requested in connection with the preparation by the Purchaser of
the Form A Filing and other filings or submissions (including, if requested by
the Purchaser, by participating in telephonic or in-person meetings with the
Department or any other Governmental Entity).
(d) Each of the parties shall, upon request, furnish each other with
all information concerning themselves and their affiliates, and such other
matters as may be reasonably necessary in connection with any statement,
filing, notice or application made by or on behalf of the Purchaser, the
Sellers, the Company, DSC or JCF or any of their respective affiliates to any
Governmental Entity in connection with the transactions contemplated hereby,
including the purchase and sale of the Shares, except to the extent that such
information would be, or relates to information that would be, filed under a
bona fide claim of confidentiality.
(e) Each of the parties shall (i) promptly advise each other party
upon receiving any communication from any Governmental Entity or third party
whose permit, consent, approval, waiver or authorization is required for
consummation of the transactions contemplated hereby, including the purchase
and sale of the Shares that causes such party to reasonably believe that there
is a reasonable likelihood that any requisite permit, consent, approval,
waiver or authorization of a Governmental Entity or third party will not be
obtained or that the receipt of any such permit, consent, approval, waiver or
authorization will be materially delayed and (ii) supply each other party with
copies of all correspondence between such party or any of its representatives
and Governmental Entities with respect to Governmental Approvals within two
(2) Business Days of sending or receipt.
(f) Each of the parties shall perform all acts to be performed by it
pursuant to this Agreement and shall refrain from taking or omitting to take
any action that would violate or cause to remain unfilled its covenants,
obligations or agreements or breach its representations and warranties
hereunder or render them inaccurate in any material respect as of the date of
this Agreement or the Closing Date or that in any way would prevent or
materially adversely affect the consummation of the transactions contemplated
hereby. Subject to the limitations contained elsewhere in this Section 5.2,
each of the parties shall use its reasonable best efforts to satisfy or cause
to be satisfied all of the conditions to the obligations of the other parties
set forth in Sections 6.2 and 6.3, respectively, and shall do all such further
acts and things, as such either party may reasonably request for the purpose
of carrying out the intent of this Agreement and transactions contemplated
hereby.
Section 5.3 Acquisition Proposals. The Sellers shall not, and shall
cause their Subsidiaries and each of their respective directors, officers,
employees, agents, consultants, advisors or other representatives, including
legal counsel and accountants (collectively, "Representatives") not to,
directly or indirectly, (x) solicit, initiate, knowingly encourage or
knowingly facilitate (including by way of furnishing information) any
inquiries or the making or submission of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal (as defined below),
(y) participate or engage in discussions or negotiations with, or disclose any
non public information or data relating to the Shares, the Company or its
Subsidiaries or any of the Company Contracts to any Person that has made an
Acquisition Proposal or to any Person in contemplation of an Acquisition
Proposal, or (z) accept an Acquisition Proposal or enter into any agreement or
agreement in principle providing for or relating to an Acquisition Proposal or
enter into any agreement or agreement in principle requiring the Sellers to,
or which contemplates that the Sellers shall, abandon, terminate or fail to
consummate the transactions contemplated hereby. Concurrently with execution
of this Agreement, the Sellers shall, and shall cause their respective
Representatives to, immediately cease any existing discussions or
negotiations, if any, with any Persons conducted heretofore with respect to
any Acquisition Proposal and request the return or destruction of any
confidential information concerning the Company and it Subsidiaries that has
been provided to any such Person in connection therewith. The Sellers shall
notify the Purchaser (and provide all details reasonably requested by the
Purchaser) promptly, but in any event within seventy-two (72), if the Sellers
or any of their affiliates receives any Acquisition Proposal. For the purposes
of this Agreement, "Acquisition Proposal" shall mean any inquiry, proposal or
offer from any Person (other than the Purchaser or any of its affiliates)
concerning any sale, transfer, lease, assignment, pledge, hypothecation or
other disposition of any or all of the Shares or any other capital stock or
other equity interests of the Company, including any single or multi-step
transaction or series of related transactions.
Section 5.4 Agreements with the Company.
(a) The Sellers shall not, without the prior written consent of the
Purchaser, extend, modify, terminate or renew (or take any action to cause the
Company to extend, modify, terminate or renew) any Company Contract (including
any Reinsurance Contract, except as expressly set forth in clause (b) below),
or enter (or agree to enter) into any Contract which would have been a Company
Contract had such Contract been in existence on the date hereof.
(b) The Sellers shall maintain and renew each Reinsurance Contract
for a period of one (1) year following the Closing on the terms currently in
force, unless such Reinsurance Contract is earlier terminated by the Company
in accordance with the terms of such Reinsurance Contract following the
Closing; provided, that the arrangements under each such Reinsurance Contract
shall continue in all material respects in a manner consistent with past
practice and any unilateral action by the Sellers shall not be considered in
determining whether arrangements under such Reinsurance Contract continue in
all material respects in a manner consistent with past practice.
(c) At the Closing, the Sellers shall assign and transfer to the
Purchaser all rights of the Sellers under the Registration Rights Agreement,
dated May 27, 2004 between the Sellers, on the one hand, and the Company, on
the other hand (the "Registration Rights Agreement").
Section 5.5 Acquisition of Other Shares Prior to Closing. If prior
to Closing, the Purchaser, JCF or DSC enter into an agreement to acquire, or
commence a tender offer to acquire (which is in fact consummated), all of the
Common Stock of the Company not held by the Sellers (the "Other Shares") then,
in the event that such acquisition is subsequently consummated (whether before
or after the Closing), the Purchaser shall pay to the Sellers, at the time of
the consummation of the purchase of the Other Shares, an amount equal to (i)
one half of the excess of the per share price paid for the Other Shares over
the Per Share Purchase Price, multiplied by (ii) the number of Shares.
Section 5.6 Release of Liens. At or prior to the Closing, in
connection with the foregoing and with respect to any Liens of any kind on any
of the Shares pursuant to the VIG Credit Agreement (as defined below) (the
"VIG Liens"), the Sellers shall take all necessary action to negotiate and
enter into appropriate agreements with First Commercial Bank to obtain the
release of all such Liens in connection with VIG's credit agreement (the "VIG
Credit Agreement"), dated September 30, 2004 with First Commercial Bank
(collectively, the "Release of Liens") and shall deliver to the Purchaser
evidence in form and substance reasonably satisfactory to the Purchaser of the
Release of Liens. To the extent applicable, such evidence shall include the
delivery of Uniform Commercial Code financing UCC-3 collateral change
statements, discharges or other appropriate termination statements, recordings
and other actions that the Purchaser deems necessary or advisable. For the
avoidance of doubt, the Sellers' obligations pursuant to this Section 5.6
shall include, if necessary, the payment at or prior to the Closing by Sellers
in full of any and all outstanding indebtedness and other amounts due under
the VIG Credit Agreement.
Section 5.7 Notification of Certain Matters. From the date hereof
through the Closing, the Sellers shall give prompt written notice to the
Purchaser and the Purchaser shall give prompt written notice to the Sellers of
(a) the occurrence, or failure to occur, of any event which occurrence or
failure would be reasonably likely to cause any of the Sellers' or the
Purchaser's respective representations or warranties contained in this
Agreement to be untrue or inaccurate in any material respect and (b) any
material failure of the Sellers or the Purchaser to comply with or satisfy any
of their or its respective covenants, conditions or agreements to be complied
with or satisfied by them under this Agreement; provided, however, that such
disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement, or to satisfy any condition.
Section 5.8 Press Releases and Public Announcements. No party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior
written approval of the other party; provided, however, that any party may
make any disclosure it believes in good faith is required by applicable Law
(including, without limitation, the Form A Filing with the Department and any
requirement to file a Form 8-K or Statement on Schedule 13D with the
Securities and Exchange Commission and any securities exchange on which the
Company's securities are listed) or any listing or trading agreement
concerning its publicly-traded securities. In the case of any such public
disclosure (other than the filing of the Form A Filing with the Department and
a Form 8-K or Statement on Schedule 13D with the Securities and Exchange
Commission and any securities exchange on which the Company's securities are
listed), the disclosing party shall, prior to making such disclosure, use its
reasonable best efforts to advise the other party as promptly as practicable,
allow the other party reasonable time to comment on such disclosure and
consider the views of the other party in respect of such disclosure, all
unless impracticable.
Section 5.9 Further Assurances. At any time and from time to time
after the Closing Date, the parties hereto shall (a) furnish upon reasonable
request to each other such further assurances, information, documents,
instruments of transfer or assignment, files and books and records, (b)
promptly execute, acknowledge, and deliver any such further assurances,
documents, instruments of transfer or assignment, files and books and records
and (c) do all such further acts and things, as such other party may
reasonably request for the purpose of carrying out the intent of this
Agreement and transactions contemplated hereby.
Section 5.10 Confidentiality.
(a) Each of the parties hereto shall hold and shall cause their
respective affiliates to hold, and shall each cause their respective past,
present and future Representatives to hold, in confidence and not disclose or
release without the prior written consent of the party to which such
Confidential Information (as defined below) belongs, any and all Confidential
Information of the other parties; provided, that any party may disclose, or
may permit disclosure of, Confidential Information (i) to its Representatives
who have a need to know such information and are informed of their obligation
to hold such information confidential to the same extent as is applicable to
the parties hereto and in respect of whose failure to comply with such
obligations such disclosing party will be responsible or (ii) if a party
hereto, its affiliates or its Representatives are compelled to disclose any
such Confidential Information by judicial or administrative process or, in its
reasonable judgment, by other requirements of Law (including without
limitation the Form A Filing with the Department and any requirement to file a
Form 8-K or Statement on Schedule 13D with the Securities and Exchange
Commission and any securities exchange on which the Company's securities are
listed). Notwithstanding the foregoing, in the event that any demand or
request for disclosure of Confidential Information is made pursuant to clause
(ii) above (except for the matters set forth in the parenthetical contained in
clause (ii) above), the applicable parties, as the case may be, shall promptly
notify the other relevant parties of the existence of such request or demand
and shall provide such other parties a reasonable opportunity to seek an
appropriate protective order or other remedy, which both parties will
cooperate in obtaining (each at their own expense). For the purposes of this
Agreement, "Confidential Information" shall mean all proprietary technical,
economic, environmental, operational, financial and/or other business
information or material of one party which, prior to the Closing Date, has
been disclosed by any such party in written, oral (including by recording),
electronic or visual form to, or otherwise has come into the possession of,
any other party (except, in each case, to the extent that such information can
be shown to have been (1) in the public domain through no fault of any other
such party or its affiliates, (2) lawfully acquired from other sources by any
other such party or its affiliates to which it was furnished or (3) developed
by or for any other such party without reference to the Confidential
Information; provided, however, in the case of subclause (2) that such sources
did not provide such information in breach of any confidentiality or other
legal obligations of which the receiving party had knowledge).
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation. The respective
obligation of each party to effect the transactions contemplated hereby shall
be subject to the satisfaction or, to the extent permitted by applicable Law,
waiver at or prior to the Closing of each of the following conditions:
(a) no statute, rule, order, decree or regulation shall have been
enacted or promulgated by any Governmental Entity of competent jurisdiction
which prohibits the transactions contemplated hereby or makes such
transactions illegal;
(b) all Governmental Approvals which are necessary for the
consummation of the transactions contemplated hereby shall have been filed,
have occurred or have been obtained and all such Governmental Approvals shall
be in full force and effect (other than the expiration of the applicable
waiting period under the HSR Act that is addressed in Section 6.1(c));
(c) the waiting period (and any extension thereof) applicable to the
transactions contemplated hereby under the HSR Act or any other applicable
competition, merger control, antitrust or similar Law shall have been
terminated or shall have expired; and
(d) there shall be no order, writ, judgment, injunction, decree,
stipulation, determination, or award entered and in effect precluding,
restraining, enjoining or prohibiting consummation of the transactions
contemplated hereby and there shall not be pending any suit, action,
proceeding or investigation by a Governmental Entity seeking to restrain,
enjoin or prohibit the transactions contemplated hereby.
Section 6.2 Conditions to the Obligation of the Sellers. The
obligation of the Sellers to effect the transactions contemplated hereby is
further subject to the satisfaction or, to the extent permitted by applicable
Law, waiver at or prior to the Closing of the following conditions:
(a) the representations and warranties of the Purchaser contained
herein shall be true and correct as of the date hereof and as of the Closing
Date as though made on the Closing Date (without regard to materiality
qualifiers contained therein), except (i) to the extent such representations
and warranties expressly speak as of an earlier date, in which case as of such
earlier date and (ii) for those failures to be true and correct that would
not, individually or in the aggregate, have, or be reasonably likely to (x)
have a material adverse effect on the ability of the Purchaser to (1) perform
their obligations under this Agreement or (2) consummate the transactions
contemplated hereby or (y) result in the Sellers incurring a material
liability;
(b) the Purchaser, JCF and DSC shall have performed in all material
respects each of its respective agreements and covenants contained in or
contemplated by this Agreement that are required to be performed by it at or
prior to the Closing pursuant to the terms hereof; and
(c) each of the Sellers shall have received a certificate signed by
an executive officer of the Purchaser, dated the Closing Date, to the effect
that, to such executive officer's knowledge, the conditions set forth in
Sections 6.2(a) and 6.2(b) hereof have been satisfied.
Section 6.3 Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to effect the transactions contemplated hereby is
further subject to the satisfaction or, to the extent permitted by applicable
Law, waiver at or prior to the Closing of the following conditions:
(a) the representations and warranties of the Sellers contained
herein shall be true and correct as of the date hereof and as of the Closing
Date as though made on the Closing Date (without regard to materiality
qualifiers contained therein), except (i) to the extent such representations
and warranties expressly speak as of an earlier date, in which case as of such
earlier date and (ii) for those failures to be true and correct that would
not, individually or in the aggregate have, or be reasonably likely to (A)
have a material adverse effect on (x) the ability of the Sellers to (1)
perform its obligations under this Agreement or (2) consummate the
transactions contemplated hereby or (y) the attributes of, or material
benefits associated with, ownership of the Shares by the Purchaser (including
dividend and voting rights) at and following the Closing or (B) result in the
Purchaser incurring a material liability;
(b) the Sellers shall have performed in all material respects each
of its agreements and covenants contained in or contemplated by this Agreement
that are required to be performed by it at or prior to the Closing pursuant to
the terms hereof;
(c) neither the Sellers nor the Company nor any of their respective
affiliates shall have taken any action which (i) has the effect of prohibiting
the Purchaser from acquiring all of the Shares or (ii) could reasonably be
likely to adversely affect any attributes of, or material benefits associated
with, the Purchaser's ownership of the Shares (including dividend and voting
rights); provided, however, that in the event of the occurrence of any action
with respect to any matter described in clause (ii) above, this condition
shall be deemed to have been automatically waived by the Purchaser for the
limited purposes of such action if the Purchaser has not terminated this
Agreement under Section 7.1(f) on or before the date that is ten (10) Business
Days from the date that the Purchaser received written notice from the Sellers
of such action;
(d) the Purchaser shall have received a separate certificate signed
by an executive officer each of the Sellers, dated the Closing Date, to the
effect that the conditions set forth in Sections 6.3(a), 6.3(b), 6.3(c),
6.3(e), 6.3(g), 6.3(h), 6.3(i) and 6.3(j) hereof have been satisfied;
(e) the Sellers shall deliver evidence in form and substance
reasonably satisfactory to the Purchaser that the Release of Liens has
occurred including, without limitation, the delivery of Uniform Commercial
Code financing UCC-3 collateral change statements, discharges or other
appropriate termination statements, recordings and other actions that the
Purchaser deems necessary or advisable;
(f) no Governmental Approval that is necessary for the consummation
of the transactions contemplated hereby shall contain a Material Negative
Condition; provided, however, that, without limiting the Purchaser's rights
under this condition with respect to any of clauses 5.2(a)(i), (iii) and (iv),
the Purchaser's right to invoke the condition as it solely relates to any
action, limitation, condition or restriction of the type described in Section
5.2(a)(ii) shall expire on the next Business Day following the date that is
one-hundred twenty (120) days following the date of this Agreement;
(g) the capital and surplus of VFIC set forth in its latest
quarterly statement on file with or submitted to the Department as of the
business day immediately preceding the Closing Date shall not be less than
$90,000,000;
(h) the gross amounts owed as of the most recent quarter-end prior to
the Closing Date for which such data is available (which in any event shall be
for the most recent quarter then ended if the Closing Date occurs on or after
forty-five (45) days following the end of the most recent quarter then ended)
by the Sellers and their affiliates to the Company and its affiliates pursuant
to the Reinsurance Contracts (the "Closing Date Gross Amount") shall at the
Closing in no event exceed the amounts stated in the information previously
provided by the Sellers to the Purchaser; provided, that five (5) Business Days
prior to the Closing Date the Sellers shall deliver to the Purchaser a
statement of the such Closing Date Gross Amount and, to the extent such Closing
Date Gross Amount exceeds the amounts stated in the information previously
provided by the Sellers to the Purchaser, the Sellers shall have ten (10)
Business Days to cure such excess amounts;
(i) at the Closing Date:
(A) the amount equal to (x) the Closing Date Gross Amount less (y) the amounts
on deposit in the security fund (the "Deposit Amount") as of the Closing Date
securing the obligations of the Seller to the Company under the Reinsurance
Agreements pursuant to the Security Fund Agreement, dated September 3, 2004
(or any successor thereto) (such resulting amount, the "Closing Date Net
Amount"),
shall be not more than
(B) the amount equal to 2/3 multiplied by (x) the gross amounts stated in
the information previously provided by the Sellers to the Purchaser as of
December 31, 2004 less (y) the Deposit Amount as of December 31, 2004;
provided that five (5) Business Days prior to the Closing Date the Sellers
shall deliver to the Purchaser a statement of the Closing Date Net Amount and
to the extent the Closing Date Net Amount exceeds the Closing Date Target Net
Amount, the Sellers shall have ten (10) Business Days to cure such excess
amounts;
(j) (x) neither VFIC nor any of its business, operations, assets or
contractual arrangements is subject (whether through notice, lapse of time or
otherwise) to (i) a plan of supervision or monitorship or (ii) an order of
rehabilitation, receivership or liquidation, in each case, by the Department
or other Governmental Entity and (y) neither of the Sellers nor any of their
respective subsidiaries has commenced or have filed a petition with respect
to, or is reasonably expected to commence or file a petition to, in each case,
whether voluntary or involuntary, any liquidation, receivership,
rehabilitation, bankruptcy, winding-up, dissolution or similar proceeding
under applicable law; and
(k) the Sellers shall have delivered, or have caused to be
delivered, to the Purchaser, as applicable, all of the items set forth in
Section 1.3(a).
Section 6.4 Frustration of Closing Conditions. None of the parties
may rely on the failure of any condition set forth in this Article VI to be
satisfied if such failure was caused by the failure of such party to act in
good faith or to use its reasonable best efforts to cause the Closing to
occur.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing occurs:
(a) by the mutual written consent of each of the Purchaser and the
Sellers;
(b) by either the Sellers or the Purchaser, if any Governmental
Entity shall have issued a statute, order, decree or regulation or taken any
other action (which statute, order, decree, regulation or other action the
parties hereto shall use their reasonable commercial efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby or making the transactions contemplated
hereby illegal and such statute, order, decree, regulation or other action
shall have become final and non-appealable;
(c) by written notice of the Purchaser, if the Sellers breach or
fail to perform in any material respect any of their representations,
warranties or covenants contained in this Agreement, which breach or failure
to perform (i) would or would reasonably be expected to give rise to the
failure of a condition set forth in Section 6.1 or 6.3, and (ii) cannot be or
has not been cured within thirty (30) days after the giving of written notice
to the Sellers of such breach;
(d) by written notice of the Sellers, if the Purchaser breaches or
fails to perform in any material respect any of its representations,
warranties or covenants contained in this Agreement, which breach or failure
to perform (i) would or would reasonably be expected to give rise to the
failure of a condition set forth in Section 6.1 or 6.2, and (ii) cannot be or
has not been cured within thirty (30) days after the giving of written notice
to the Purchaser of such breach;
(e) by written notice of either the Sellers or the Purchaser if the
Closing shall not have occurred on or prior to December 12, 2005 (the "Outside
Date"); provided, further, that the right to terminate this Agreement under
this Section 7.1(e) shall not be available to a party hereto, if such party
hereto has failed to perform in all material respects its obligations under
this Agreement and such failure has been the cause of, or results in, the
failure of the Closing to occur on or before the Outside Date;
(f) by the Purchaser if the Sellers or the Company, or any of their
respective affiliates have taken any action, which action could reasonably be
likely to adversely affect any attributes of, or material benefits associated
with the Purchaser's ownership of the Shares; provided, that the Purchaser's
ability to exercise its termination rights pursuant to this Section 7.1(f) due
to any such specific action shall expire (for the limited purpose of such
action) if the Purchaser has not exercised its termination right hereunder on
or prior to the date that is ten (10) Business Days from the date the
Purchaser received written notice from the Sellers of the occurrence of such
action; or
(g) by written notice of the Purchaser, in the event that the
Department notifies the Purchaser, at any time that on or prior to the date
that is one-hundred twenty (120) days following the date of this Agreement, in
writing (specifically detailing any action, limitation, condition or
restriction) that as a requirement of approving the Form A Filing it will
impose or require a Material Negative Condition of the type described in
Section 5.2(a)(ii) in the approval order with respect to the Form A Filing;
provided, that the Purchaser's ability to exercise its termination rights
pursuant to this Section 7.1(g) due to any such action, limitation, condition
or restriction shall expire on the date that is the next Business Day
following the date that is one hundred twenty (120) days following the date of
this Agreement; provided, further, that nothing in this Section 7.1(g) shall
in any way limit the Purchaser's rights under the conditions set forth in
Section 6.3(f) with respect to any of clauses 5.2(a)(i), (iii) and (iv)
whether prior to or after such date.
Section 7.2 Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.1 hereof, written notice thereof shall
forthwith be given to the other party specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall forthwith become
null and void, and there shall be no liability on the part of the Purchaser or
the Sellers, except that such termination shall not limit a party's liability
with respect to any breach or violation of any representation, warranty,
covenant, agreement or obligation occurring prior to the time of such
termination; provided, that the agreements contained in Section 5.8, Section
5.10, this Article VII and Article VIII hereof shall survive the termination
of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Survival.
(a) All of the representations and warranties contained in this
Agreement or on any schedule hereto shall survive the Closing until the first
anniversary after the Closing; provided, that the representations and
warranties contained in Section 3.2 (Ownership of Shares), Section 3.3
(Authorization; Validity of Agreements) and Section 3.8 (Brokers) shall
survive the Closing indefinitely.
(b) All of the covenants, agreements, undertakings and obligations
of the parties contained in this Agreement shall survive until fully performed
or fulfilled in accordance with their terms (unless earlier terminated as
provided in Section 7.2), unless non-compliance with such covenants,
agreements, undertakings or obligations is waived in writing by the party
entitled to such performance.
(c) It is understood by each of the parties hereto that, following
the Closing, neither JCF nor DSC shall have any liability (whether for
indemnification or otherwise) to the Sellers or to any of their affiliates by
reason of, or under, this Agreement or the transactions contemplated hereby.
Section 8.2 Indemnification.
(a) VIG agrees to indemnify and hold harmless Purchaser and each of
its respective directors, officers, employees, members, affiliates and agents
from and against any and all costs, expenses (including reasonable attorneys'
fees and expenses), judgments, fines, penalties, claims, losses, damages and
assessments arising out of or in connection with a breach or non-fulfillment
by either VIG or VFIC of any of their representations, warranties, covenants,
obligations, or agreements under this Agreement or any certificate of VIG or
VFIC, in each case delivered to the Purchaser pursuant to Section 6.3(d). VFIC
agrees to indemnify and hold harmless Purchaser and each of its respective
directors, officers, employees, affiliates and agents from and against any and
all costs, expenses (including reasonable attorneys' fees and expenses),
judgments, fines, penalties, claims, losses, damages and assessments arising
out of or in connection with a breach or non-fulfillment by VFIC of any of its
representations, warranties, covenants, obligations or agreements under this
Agreement or any certificate of VFIC delivered to the Purchaser pursuant to
Section 6.3(d).
(b) The Purchaser agrees to indemnify and hold harmless the Sellers
and each of their respective directors, officers, employees, affiliates and
agents from and against any and all costs, expenses (including reasonable
attorneys' fees and expenses), judgments, fines, penalties, claims, losses,
damages and assessments arising out of or in connection with a breach or
non-fullfilment by the Purchaser of any of its representations, warranties,
covenants, obligations or agreements under this Agreement or any certificate
of the Purchaser delivered to the Sellers pursuant to Section 6.2(c).
Section 8.3 Amendment; Waiver.
(a) This Agreement may not be amended or modified by the parties
except by an instrument in writing signed on behalf of each of the parties
hereto.
(b) At any time prior to the Closing, the parties may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document,
certificate or writing delivered pursuant hereto or (iii) waive compliance
with any of the agreements, covenants or conditions of the other parties
hereto contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 8.4 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses. In the
event of the termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from
a breach of this Agreement by any other party.
Section 8.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
by a standard overnight carrier or when delivered by hand or (c) the
expiration of five (5) Business Days after the day when mailed in the United
States by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(i) if to the Sellers:
Vesta Insurance Group, Inc.
X.X. Xxx 00000
0000 Xxxxx Xxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. XxXxxxxxxx, Esq.
with a copy to:
Xxxxx & Xxxxxxx LLP
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Xx., Esq.
(ii) if to the Purchaser, to:
New Affirmative LLC
c/o X.X. Xxxxxxx I LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxxxx
DSC AFFM, LLC
000 X. Xxxxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx
with a copy to:
DSC AFFM, LLC
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx
and with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
(iii) if to JCF:
X.X. Xxxxxxx I LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
(iv) if to DSC:
Delaware Street Capital Master Fund, L.P.
x/x XXX Xxxxxxxx, X.X.
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx
with a copy to:
Delaware Street Capital Master Fund, L.P.
c/o DSC Advisors, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx
and a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
Section 8.6 Interpretation; Seller Obligations.
(a) For purposes of this Agreement, words in the singular shall be
held to include the plural and vice versa, and words of one gender shall be
held to include the other gender as the context requires. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The terms "hereof,"
"herein" and "hereto" shall be interpreted to refer to this Agreement in its
entirety and to all of the Schedules and not to any particular provision,
unless otherwise stated. The term "affiliate" when used in this Agreement
shall have the meaning ascribed to it in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended. The term "knowledge" when used with respect
to the Sellers shall mean the actual knowledge, without any requirement of due
inquiry, of Xxxxxx X. Xxxxx III, Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx, Xxxx X.
XxXxxxxxxx, Xxx Xxxxxxxx, and Xxxxx Xxxxxxxxx. The phrase "beneficial
ownership" and words of similar import when used in this Agreement shall have
the meaning ascribed to it in Rule 13d-3 under the Securities Exchange Act of
1934, as amended.
(b) VIG shall be jointly and severally liable for its and VFIC's
obligations under this Agreement. VFIC shall be liable for its obligations
under this Agreement. In the event that any party receives any notice or
waiver from either of the Sellers, such notice or waiver shall be deemed to be
binding on each of the Sellers.
Section 8.7 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated.
Section 8.8 Counterparts. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original but all of
which shall be considered one and the same agreement.
Section 8.9 Entire Agreement. This Agreement, the Seller Disclosure
Schedule, the Confidentiality Agreement, dated as of June 3, 2005, by and
among the Sellers, Delaware Street Capital, LLC and JCF, any schedules and any
other writing signed by the parties in connection herewith constitute the
entire agreement, and supersede all prior agreements and understandings
(written and oral), among the parties with respect to the subject matter
hereof.
Section 8.10 No Third Party Beneficiaries. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto and
their respective successors and permitted assigns, and it is not the intention
of the parties to confer third-party beneficiary rights, and this Agreement
does not confer any such rights, upon any other Person other than any Person
entitled to indemnity under Section 8.2.
Section 8.11 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.12 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or equity.
Section 8.13 Governing Law. This Agreement, and any disputes arising
hereunder or controversies related hereto, shall be governed by and construed
in accordance with the internal Laws, and not the Laws governing conflicts of
Laws, of the State of Delaware; provided, that the submission and approval of
the Form A Filing shall be governed by the Illinois Insurance Code.
Section 8.14 Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably submit in any action, suit or proceeding arising out of
this Agreement or any of the transactions contemplated hereby to the exclusive
jurisdiction of the state and federal courts located in Xxxx County, Illinois,
for any action or proceeding arising under or relating to this Agreement. The
parties hereto waive any and all objections to the laying of venue of any such
litigation in such jurisdiction and agree not to plead or claim in any such
litigation that such litigation has been brought in an inconvenient forum.
Section 8.15 Waiver of Jury Trial. Each party acknowledges and
agrees that any controversy which may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of or relating to this Agreement, or the transactions contemplated hereby.
Each party certifies and acknowledges that (a) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the
foregoing waiver, (b) each such party understands and has considered the
implications of this waiver, (c) each such party makes this waiver voluntarily
and (d) each such party has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section
8.15.
Section 8.16 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either of the
parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other party; provided, that the Purchaser shall have
the right without obtaining the consent of the Sellers (a) to assign its
rights and obligations under this Agreement to any affiliate of the Purchaser
or (b) collaterally assign (or grant a security interest in), in whole or in
part, this Agreement; provided, further, that nothing herein shall relieve the
Purchaser, JCF or DSC of their respective obligations hereunder unless a
novation in writing is provided by the Sellers. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and assigns, and
the provisions of this Agreement are not intended to confer upon any Person
other than the parties hereto and their respective successors and assigns any
rights or remedies hereunder.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
NEW AFFIRMATIVE LLC
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Authorized Person
By: /s/ Xxxxxxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Authorized Person
VESTA INSURANCE GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx, III
-----------------------------------
Name: Xxxxxx X. Xxxxx, III
Title: President and Chief
Executive Officer
VESTA FIRE INSURANCE CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
X.X. XXXXXXX I LP
By: JCF Associates I LLC,
its General Partner
By: /s/ Xxxxxxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: Principal
DELAWARE STREET CAPITAL
MASTER FUND, L.P.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title:
(Signature Page to Stock Purchase Agreement)
