SECURITIES PURCHASE AGREEMENT
This
SECURITIES
PURCHASE AGREEMENT
is
entered into as of October 31, 2008
(this
“Agreement”), by and between MAIDEN HOLDINGS NORTH AMERICA, LTD., a Delaware
corporation (the “Buyer”), MAIDEN HOLDINGS, LTD., a company organized under the
laws of Bermuda (“Holdings”) (solely for the purposes of the covenant regarding
the Rights Offering of Holdings in Section 7.7 of this Agreement) and
GMACI
HOLDINGS LLC,
a
Delaware limited liability company (the “Seller”).
WHEREAS,
the Seller is the holder of all of the outstanding ownership interests of GMAC
Re LLC, a Delaware limited liability company (the “Company”);
WHEREAS,
the Company acquired certain assets and hired former employees of its Affiliate,
GMAC Re Corp., and GMAC Re Corp. was engaged in a business similar to the
Company; and
WHEREAS,
this Agreement contemplates a transaction in which the Buyer will purchase
from
the Seller, and the Seller will sell to the Buyer, all of the outstanding
ownership interests of the Company for the consideration and on the terms and
conditions set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as
follows.
ARTICLE
I
DEFINITIONS
Section
1.1 General
Provisions.
For all
purposes of this Agreement:
(a) The
terms
defined in this Article I have the meanings ascribed to them in this Article
I
and include the plural as well as the singular.
(b) All
accounting terms used herein have the meanings ascribed to them under GAAP,
except to the extent otherwise provided herein.
(c) All
references herein to designated “Articles,” “Sections” and other subdivisions
and to “Exhibits” and “Disclosure Schedules” are to the designated Articles,
Sections and other subdivisions of the body of this Agreement and to the
exhibits and other schedules to this Agreement.
(d) Pronouns
of either gender or neuter shall include, as appropriate, the other pronoun
forms.
(e) The
words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.
(f) On
or
prior to the date hereof, the Seller, on the one hand, and the Buyer, on the
other, have delivered to each other schedules (respectively, its “Disclosure
Schedule”) setting forth, among other things, items the disclosure of which is
necessary or appropriate either (i) in response to an express informational
requirement contained in a provision hereof or (ii) as an exception to one
or
more representations, warranties or covenants contained in a section of this
Agreement. The inclusion of an item on a Disclosure Schedule in response to
a
disclosure obligation or as an exception to a representation, warranty or
covenant shall not be deemed an admission by the disclosing party that such
item
represents a material exception or fact, event or circumstance or that such
item
would, or would be reasonably likely to, result in a Material Adverse Effect
on
the disclosing party.
Section
1.2 Definitions.
As used
in this Agreement, the following capitalized terms shall have the meanings
set
forth below:
“AAA”
has
the meaning set forth in Section 10.8(e) hereof.
“AAA
Rules” has the meaning set forth in Section 10.8(e) hereof.
“Action”
means any action, cause of action (whether at law or in equity), arbitration,
claim or complaint by any Person alleging potential liability, wrongdoing or
misdeed of another Person, or any administrative or other similar proceeding,
criminal prosecution or investigation by any Governmental Entity alleging
potential liability, wrongdoing or misdeed of another Person.
“Actuarial
Materials” has the meaning set forth in Section 5.7(b).
“Administration
Agreement” means that certain Administration Agreement of even date herewith by
and among Motors, Integon, Integon Preferred, Integon National, MIC P&C, the
Company, the Buyer and Maiden.
“Affiliate”
(and, with a correlative meaning, “Affiliated”) means, with respect to any
Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person. As used in this definition, “control” (including, with
correlative meanings, “controlled by” and “under common control with”) shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities
or
partnership or other ownership interests, by contract, as trustee or executor,
or otherwise). For the avoidance of doubt, (i) GMAC Direct shall be considered
an affiliate of the Seller for all periods prior to the closing of the
transactions contemplated under the GMAC Direct SPA, and (ii) Integon shall
be
considered an affiliate of the Seller for all periods prior to the closing
of
the transactions contemplated under the Integon SPA.
“Agreement”
has the meaning set forth in the preface above.
“Allocation
Statement” has the meaning set forth in Section 2.7 hereof.
“Applicable
Law” means any domestic federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
pronouncement, bulletin, judgment, decree, policy, administrative or judicial
doctrine, guideline or other requirement or principle of common law applicable
to the Buyer, the Seller or the Company or any of their respective businesses,
properties or assets, as the case may be.
-
2
-
“Apportioned
Obligations” has the meaning set forth in Section 8.3(b) hereof.
“Arbitrable
Agreement” means any Transaction Document.
“Arbitrable
Agreement Party” or “Arbitrable Agreement Parties” means any signatory, or all
signatories, respectively, to any Arbitrable Agreement.
“Arbitration
Joinder Party” shall have the meaning set forth in Section 10.8(b)
hereof.
“XXXXX
Rules” has the meaning set forth in Section 10.8(e) hereof.
“Assets
of the Company” means all of the assets owned of record and beneficially by the
Company at any given time as reflected on the books and records of the Company
and determined in accordance with GAAP.
“Backstop
Commitment” has the meaning set forth in Section 6.7 hereof.
“Backstop
Investors” has the meaning set forth in Section 6.7 hereof.
“Business
Day” means any day other than a Saturday, Sunday or a day on which banks in New
York City are authorized by law or executive order to be closed.
“Buyer”
has the meaning set forth in the preface above.
“Buyer
Restricted Companies” has the meaning set forth in Section 7.13(a)(i) hereof.
“Buyer
Parent SEC Documents” means all reports, schedules, forms and registration,
proxy and other statements filed by the Holdings with the Securities Exchange
Commission.
“Buyer
Parties” has the meaning set forth in Section 10.8(c) hereof.
“Carved-Out
Business of GMAC” has the meaning set forth in Section 7.10 hereof.
“Cash”
means all of the Company’s cash and cash equivalents in U.S.
Dollars.
“Cash
Payment” has the meaning set forth in Section 2.3 hereof.
“Company
Closing Liabilities” means the liabilities of the Company as of the Closing
Date, as determined in accordance with GAAP and reflected on the Final Closing
Balance Sheet.
“Company
Closing Tangible Assets” means the Cash and prepaid assets of the Company as of
the Closing Date, as determined in accordance with GAAP and reflected on the
Final Closing Balance Sheet.
-
3
-
“Closing”
has the meaning set forth in Section 3.1 hereof.
“Closing
Date” has the meaning set forth in Section 3.1 hereof.
“COBRA”
means the provisions for continuation of health coverage enacted by
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, as
set forth in Section 4980B of the Code and Sections 601-608 of ERISA, and any
amendments thereto and successor provisions thereof, including any regulations
promulgated under the applicable provisions of the Code and ERISA.
“COBRA
Beneficiaries” has the meaning set forth in Section 7.12(b) hereof.
“Code”
means the Internal Revenue Code of 1986, as amended, and any successor
thereto.
“Company”
has the meaning set forth in the preface above.
“Company
Employees” means the employees of the Company on the Closing Date (including
employees on short-term disability or leave of absence).
“Company
Policies” has the meaning set forth in Section 5.6 hereof.
“Competing
Business” means (a) the reinsurance, as a reinsurer or retrocessionaire, of
commercial property and casualty risks, including, without limitation, accident
and health and workers’ compensation risks, of insurance companies (other than
reinsurance of risks of Affiliates or former Affiliates of GMAC LLC (or their
successors-in-interest) that shall not constitute SRS Business or Reinsurance
Business under the terms of the Fronting Agreement) or (b) the writing on a
surplus lines or non-admitted basis of excess commercial property business,
in
either case in the United States, but
excluding, with respect to clauses (a) and (b), any insurance or reinsurance
products with the predominate customers being automobile manufacturers,
distributors or dealers or insurance or reinsurance of personal lines
risks.
“Contemplated
Transactions” means the transactions contemplated in this Agreement and in the
other Transaction Documents.
“Damages”
means all costs, damages, disbursements or expenses (including, but not limited
to interest and reasonable legal, accounting and other professional fees and
expenses incurred in the investigation, collection, prosecution and defense
of
claims and amounts paid in settlement) that are actually imposed or otherwise
actually incurred or suffered by the indemnified person, but shall not include
incidental, consequential, exemplary, punitive or other special damages (unless
such damages have been awarded to a third party and as to which an indemnifying
party is determined to be liable).
“Dealer
Inventory Business” has the meaning set forth in Section 7.13(a)(i)
hereof.
“Disclosure
Schedule” has the meaning set forth in Section 1.1(f) hereof.
-
4
-
“Employee
Plan” means any written retirement plan, pension plan, profit sharing plan,
stock ownership plan, deferred compensation agreement or arrangement, vacation
pay, sickness, disability or death benefit plan, employee stock option or stock
purchase plan, bonus or incentive plans or programs, Section 125 cafeteria
plan,
health care reimbursement, dependent care reimbursement, severance pay plan,
program, policy, practice or agreement, or arrangement, and each other employee
benefit plan, program, policy, practice, agreement or arrangement, including,
without limitation, each “employee benefit plan” within the meaning of Section
3(3) of ERISA.
“Environmental
Law” means any and all local, state and federal laws, regulations, codes,
decrees, orders, judgments, principles of common law and binding judicial or
administrative interpretations thereof pertaining to: (a) the protection of
the
environment (including air quality, surface water, groundwater, soils,
subsurface strata, drinking water, natural resources and biota) or human health
and safety; or (b) the presence, use, processing, generation, management,
storage, treatment, recycling, disposal, discharge, release, threatened release,
investigation or remediation of hazardous materials, including,
without limitation, the Federal Resource Conservation and Recovery Act, the
Federal Comprehensive Environmental Response, Compensation and Liability Act,
the Federal Clean Water Act, the Federal Clean Air Act, and the Federal
Occupational Safety and Health Act and their implementing regulations as well
as
state analogues, each as may be amended from time to time.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and
any
rules and regulations thereunder.
“ERISA
Affiliate” has the meaning set forth in Section 7.12(d) hereof.
“Final
Closing Balance Sheet” has the meaning set forth in Section 2.4(b)
hereof.
“Financial
Statements” has the meaning set forth in Section 5.7(a)
hereof.
“Fronted
Insurance Contracts” has the meaning ascribed to it in the Fronting
Agreement.
“Fronting
Agreement” means that certain Fronting Agreement of even date herewith by and
among Buyer, Motors, Integon, MIC P&C, Integon National and Integon
Preferred.
“FRR
Agreement” means that certain Fronting and Renewal Rights Agreement between
Motors and Integon, to be dated as of the date of the closing of the sale of
Integon pursuant to the Integon SPA.
“GAAP”
means United States generally accepted accounting principles and practices
as in
effect from time to time and applied consistently throughout the periods
involved applying the respective historical accounting principles, policies,
practices and methods of the Company, and upon which the Financial Statements
were prepared.
“General
Assignment Agreements” means the General Assignment Agreements between the Buyer
and each of the Insurer Parties (or their applicable Affiliates, including,
but
not limited to GMAC Re Corp.) of even date herewith with respect to the
properties, assets, contracts, agreements, licenses or instruments listed on
Section 5.5(d) of the Seller’s Disclosure Schedule.
-
5
-
“GMAC
Direct” means GMAC Direct Insurance Company, a Missouri domiciled property and
casualty insurance company.
“GMAC
Direct SPA” means that certain Securities Purchase Agreement of even date
herewith between the Buyer and Motors with respect to the acquisition of GMAC
Direct by the Buyer.
“Governmental
Entity” means any foreign, domestic, federal, territorial, state or local U.S.
or non-U.S. governmental authority, quasi-governmental authority,
instrumentality, court or government, self-regulatory organization, commission,
tribunal or organization or any political or other subdivision, department,
branch or representative of any of the foregoing.
“Holdings”
has the meaning set forth in the preface above.
“In-Force
Contract” has the meaning ascribed to it in the Fronting Agreement.
“Insurance
Contracts” has the meaning ascribed to it in the Fronting
Agreement.
“Insurer
SPAs” means the GMAC Direct SPA and the Integon SPA.
“Insurer
Affiliates” has the meaning ascribed to it in the Fronting
Agreement.
“Insurer
Parties” means Integon, Integon Preferred, MIC P&C and Motors.
“Integon”
means Integon Specialty Insurance Company, a North Carolina domiciled property
and casualty insurance company.
“Integon
National” means Integon National Insurance Company, a North Carolina domiciled
property and casualty insurance company.
“Integon
Preferred” means Integon Preferred Insurance Company, a North Carolina domiciled
property and casualty insurance company.
“Integon
Reinsurance Agreement” means the Quota Share Reinsurance Agreement by and
between Integon and Motors contemplated in the Integon SPA.
“Integon
SPA” means that certain Securities Purchase Agreement of even date herewith
between the Buyer and GMAC Insurance Management Corp. with respect to the
acquisition of Integon by the Buyer.
“Intellectual
Property Right” has the meaning set forth in Section 5.11(a)
hereof.
“Interests”
has the meaning set forth in Section 4.6 hereof.
“IRS”
means the U.S. Internal Revenue Service.
-
6
-
“Knowledge
of Buyer” or “Buyer’s Knowledge” means actual knowledge of Xxx Xxxxx or Xxxxxxx
Xxxx after reasonable inquiry.
“Knowledge
of Seller” or “Seller’s Knowledge” means actual knowledge of Xxxx Xxxx or
Xxxxx Xxxxxx after reasonable inquiry.
“Leases”
has the meaning set forth in Section 5.5(b) hereof.
“Liabilities”
means any and all debts, losses, liabilities, offsets, claims, damages, fines,
commitments, obligations, payments and accounts payable (including, without
limitation, those arising out of any award, demand, assessment, settlement,
judgment or compromise relating to any Action), and accruals for out-of-pocket
costs and expenses (including, without limitation, reasonable attorneys’ fees
and expenses incurred in investigating, preparing or defending any Action)
of
any kind or nature whatsoever, whether absolute, accrued, contingent or other,
and whether known or unknown.
“Liabilities
of the Company” means the total Liabilities of the Company at any given time as
reflected on the books and records of the Company and determined in accordance
with GAAP.
“Lien”
means any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (statutory or otherwise), preference,
priority, charge or other encumbrance, adverse claim (whether pending or, to
the
knowledge of the Person against whom the adverse claim is being asserted,
threatened) or restriction of any kind affecting title or resulting in an
encumbrance against property, real or personal, tangible or intangible, or
a
security interest of any kind, including, without limitation, any easement,
servitude, encroachment, conditional sale or other title retention agreement,
any right of first refusal on real property, and any filing of or agreement
to
give any financing statement under the Uniform Commercial Code (or equivalent
statute) of any jurisdiction (other than a financing statement which is filed
or
given solely to protect the interest of a lessor).
“Maiden”
means Maiden Insurance Company, Ltd., an insurance company organized under
the
laws of Bermuda.
“Material
Adverse Effect” means (a) with respect to the Company, any change, effect, event
or occurrence resulting in a material adverse effect on (i) the business,
financial condition or results of operations of the Company, taken as a whole
or
(ii) the ability of the Company or, following the Closing, its Insurer
Affiliates to renew, write new insurance policies or enter into new reinsurance
contracts with respect to the Insurance Contracts or Fronted Insurance
Contracts, other than in the case of (i) or (ii) any change, effect, event
or
occurrence relating to (A) the effects of changes affecting the economy and
securities markets generally; (B) the effects of changes affecting the
insurance, reinsurance and financial services industries generally, including
the general competitive forces in the insurance and reinsurance markets and
changes to Applicable Laws, or accounting or reserving principles, practices
or
conventions; (C) the announcement of the Contemplated Transactions and
(D) any changes resulting from actions or omissions of a party hereto taken
with the prior written consent of the other parties with respect to this
Agreement or the other Transaction Documents or the Contemplated Transactions;
(b) with respect to the Seller, any change, effect, event or occurrence
resulting in a material adverse effect on (i) the business, financial condition
or results of operations of the Seller, taken as a whole, or (ii) the ability
of
the Seller to consummate the transactions contemplated hereby on a timely basis
and perform its obligations hereunder; and (c) with respect to the Buyer, any
change, effect, event or occurrence resulting in a material adverse effect
on
(i) the business, financial condition or results of operations of the Buyer,
taken as a whole or (ii) the ability of the Buyer to consummate the transactions
contemplated hereby on a timely basis and perform its obligations
hereunder.
-
7
-
“Material
Contracts” has the meaning set forth in Section 5.12 hereof.
“Maximum
Indemnification Amount” has the meaning set forth in Section 9.3(a)
hereof.
“MIC
P&C” means MIC Property and Casualty Insurance Company, a Michigan domiciled
property and casualty insurance company.
“Motors”
means Motors Insurance Corporation, a Michigan domiciled property and casualty
insurance company.
“Names”
has the meaning set forth in Section 7.2 hereof.
“Ordinary
Course of Business” means the ordinary course of business of a Person consistent
with past customs and practice. As applied to the Company, “Ordinary Course of
Business” means the ordinary course of business of the Company and GMAC Re
Corp., consistent with past customs and practices of the Company and GMAC Re
Corp.
“Other
Taxes” has the meaning set forth in Section 8.5 hereof.
“Outside
Accountants” has the meaning set forth in Section 2.4(c)(ii)
hereof.
“Permitted
Liens” means all imperfections of title or Liens (a) that are reflected or
reserved against or disclosed on the books of the Company, (b) that arise
out of Taxes or general or special assessments not in default and payable
without penalty or interest or the validity of which is being contested in
good
faith by appropriate proceedings, (c) of carriers, warehousemen, mechanics,
materialmen and other similar Persons or otherwise imposed by law incurred
in
the Ordinary Course of Business for sums not yet delinquent or being contested
in good faith, or (d) that relate to deposits made in the Ordinary Course of
Business in connection with workers’ compensation, unemployment insurance and
other types of social security.
“Person”
means an individual, corporation, partnership, association, joint stock company,
limited liability company, Governmental Entity, trust, joint venture, labor
union, estate, unincorporated organization, private agency or other entity.
“Post-Closing
Tax Period” means any Tax period (or portion thereof) ending after the Closing
Date.
-
8
-
“Pre-Closing
Tax Period” means any Tax period (or portion thereof) ending on or before the
Closing Date.
“Preliminary
Closing Balance Sheet” has the meaning set forth in Section 2.4(a)
hereof.
“Preliminary
Purchase Price Calculation” has the meaning set forth in Section 2.4(a)
hereof.
“Purchase
Price” has the meaning set forth in Section 2.2 hereof.
“Regulation
S-X” means Securities Exchange Commission Regulation S-X.
“Reinsurance
Agreement” means that Portfolio Transfer and Quota Share Reinsurance Agreement
of even date herewith by and between Maiden and Motors.
“Reinsurance
Business” has the meaning ascribed to it in the Fronting Agreement.
“Related
Person” has the meaning set forth in Section 7.13(a)(iii) hereof.
“Release
and Indemnification Agreement” means that certain Release and Indemnification
Agreement of even date herewith by and among Motors, the Seller, the Company
and
the Buyer.
“Representative”
means, with respect to any Person, such Person’s officers, directors, employees,
Affiliates, agents and representatives (including any investment banker,
financial advisor, accountant, actuary, appraiser, analyst, consultant, legal
counsel, agent, representative or expert retained by or acting on behalf of
such
Person or its subsidiaries).
“Rights
Offering” has the meaning set forth in Section 6.7 hereof.
“Risk
Period” has the meaning set forth in Section 7.12(c) hereof.
“Securities
Act” has the meaning set forth in Section 6.6 hereof.
“Seller”
has the meaning set forth in the preface above.
“Seller
Confidential Information” has the meaning set forth in Section 7.13(a) hereof.
“Seller
Parties” has the meaning set forth in Section 10.8(c) hereof.
“Seller
Plans” has the meaning set forth in Section 5.19 hereof.
“SRS
Business” has the meaning ascribed to it in the Fronting Agreement.
“Subsidiary”
of any Person means any corporation, partnership, joint venture or other entity
in which such Person (a) owns, directly or indirectly, 50% or more of the
outstanding voting securities or equity interests, or (b) has the right to
designate a majority of its board of directors or similar governing body or
to
direct the management of such corporation, limited liability company,
partnership, joint venture or other entity.
-
9
-
“Taxes”
means (a) all taxes (whether U.S. federal, state or local or foreign) based
upon
or measured by income and any other tax whatsoever, including, without
limitation, gross receipts, profits, sales, use, occupation, value added, ad
valorem, transfer, franchise, withholding, payroll, employment, excise, premium
or property taxes, together with any interest, penalties or additions to tax
imposed with respect thereto, (b) any obligations under any agreements or
arrangements with respect to any Taxes described in clause (a), and (c) any
transferee or secondary liability or joint or several liability in respect
of
any amounts described in clause (a) imposed by law or as a result of being
a
member of any affiliated, consolidated, combined, unitary or similar
group.
“Taxing
Authority” means any federal, state, local or foreign governmental authority,
quasi-governmental authority, instrumentality or political or other subdivision,
department or branch of any of the foregoing, with the legal authority to
impose, assess or collect Taxes.
“Tax
Return” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any amendment thereof, schedule
or attachment thereto, required to be filed with any Taxing
Authority.
“Threshold”
has the meaning set forth in Section 9.3(a) hereof.
“Trademark
License Agreement” means that certain GMAC Re LLC Trademark License Agreement of
even date herewith between General Motors Corporation and the
Company.
“Transaction
Documents” means this Agreement, the Fronting Agreement, the Reinsurance
Agreement, the Transition Services Agreement, the Insurer SPAs, the
Administration Agreement, the Integon Reinsurance Agreement, the Release and
Indemnification Agreement, the Trust Agreement, the Trademark License Agreement,
and the other agreements, instruments or other documents contemplated hereby
and
thereby.
“Transition
Services Agreement” means that certain Transition Services Agreement of even
date herewith by and between Motors and the Company.
“Trust
Agreement” means that certain Trust Agreement of even date herewith by and among
Maiden, Motors and JPMorgan Chase Bank, N.A.
“Unresolved
Changes” has the meaning set forth in Section 2.4(c)(ii) hereof.
“WARN”
has the meaning set forth in Section 5.18(k) hereof.
ARTICLE
II
PURCHASE
AND SALE OF INTERESTS
Section
2.1 Purchase
and Sale of Interests.
Upon
the terms and subject to the conditions of this Agreement, the Buyer shall
purchase, acquire and accept from the Seller, and the Seller shall sell, convey,
transfer, assign and deliver to the Buyer, the Interests, free and clear of
all
Liens, for the consideration specified herein.
-
10
-
Section
2.2 Purchase
Price.
(a) The
total
purchase price (as adjusted as provided herein, the “Purchase Price”) payable at
Closing to the Seller by the Buyer for all of the Interests shall be One Hundred
Million Dollars ($100,000,000.00).
(b) In
accordance with Sections 2.4 and 2.5, the Purchase Price shall be
adjusted “dollar for dollar” in an amount equal to the Company Closing
Tangible Assets less the Company Closing Liabilities less One Million
Dollars ($1,000,000.00). Such amount, if a positive
number, shall increase the Purchase Price and, if a
negative number, shall reduce the Purchase Price.
Section
2.3 Cash
Payment at Closing.
At the
Closing, the Buyer shall pay to the Seller an aggregate amount (the “Cash
Payment”) equal to One Hundred Million Dollars ($100,000,000.00).
Section
2.4 Final
Closing Balance Sheet.
(a) Not
later
than sixty (60) days after the Closing Date, the Buyer shall cause the balance
sheet of the Company to be prepared as of the Closing Date in accordance with
GAAP and using the same accounting methods, policies, practices and procedures
used in the preparation of the balance sheets included in the Financial
Statements, and shall deliver such balance sheet to the Seller (the “Preliminary
Closing Balance Sheet”), which balance sheet shall include the Buyer’s
calculation (the “Preliminary Purchase Price Calculation”) of the Company
Closing Tangible Assets of the Company as of the Closing Date, the
adjustments to the Purchase Price, if any, pursuant to Section 2.2(b) and the
Purchase Price giving effect to such adjustments.
(b) If,
within thirty (30) days following its receipt of the Preliminary Closing Balance
Sheet and the Preliminary Purchase Price Calculation, the Seller does not
dispute the Preliminary Closing Balance Sheet or the Preliminary Purchase Price
Calculation, the Preliminary Closing Balance Sheet shall be deemed to be the
balance sheet of the Company as of the Closing Date (the “Final Closing Balance
Sheet”) and the Purchase Price set forth in the Preliminary Purchase Price
Calculation shall be final.
(c) In
the
event the Seller has any dispute with regard to the Preliminary Closing Balance
Sheet or the Preliminary Purchase Price Calculation, such dispute shall be
resolved in the following manner. The Seller shall notify the Buyer in writing
of such dispute within thirty (30) days after the Seller’s receipt of the
Preliminary Closing Balance Sheet, which notice shall specify in reasonable
detail the nature of the dispute.
|
(i)
|
During
the thirty (30) day period following the Buyer’s receipt of such notice,
the Buyer and the Seller shall attempt to resolve such dispute and
to
determine the final calculation of Purchase
Price.
|
-
11
-
| (ii) |
If,
at the end of the thirty (30) day period specified in subsection
(c)(i)
above, the Buyer and the Seller shall have failed to reach a written
agreement with respect to all or a portion of such dispute (those
items
that remain in dispute at the end of such period are the “Unresolved
Changes”), the matter shall be referred to an accounting firm jointly
selected by the Seller’s accountants and the Buyer’s accountants (the
“Outside Accountants”) for review and resolution of any and all matters
(but only such matters) which remain in dispute. The Buyer and the
Seller
shall instruct their respective accountants to select the Outside
Accountants in good faith within ten (10) days. If either the Buyer’s or
the Seller’s accountants shall not be willing to select the Outside
Accountants within such ten (10) day period, the other accountant
shall
select the Outside Accountants. If the Buyer’s or the Seller’s accountants
cannot agree upon the Outside Accountants within such ten (10) day
period,
within an additional five (5) days, they shall each designate an
Outside
Accountant who has not performed work in the last two years for either
the
Seller or the Buyer and the Outside Accountants shall be selected
by lot
from those two accounting firms. If only one of the Seller’s and the
Buyer’s accountants shall so designate a name of an accounting firm for
selection by lot, such accounting firm so designated shall be the
Outside
Accountants.
|
|
(iii)
|
Each
party hereto agrees to execute, if requested by the Outside Accountants,
a
reasonable engagement letter. All fees and expenses relating to the
work,
if any, to be performed by the Outside Accountants shall be borne
pro rata
by
the Seller and the Buyer in inverse proportion to the allocation
of the
dollar amount of the Unresolved Changes, in the aggregate, between
the
Buyer and the Seller made by the Outside Accountants such that the
party
with whom the Outside Accountants agree more closely pays a lesser
proportion of the fees and expenses. The Outside Accountants shall
act as
an arbitrator to determine, based solely on the provisions of this
Agreement and the presentations by the Seller and the Buyer, or
Representatives thereof, and not by independent review, only the
resolution of the Unresolved Changes. The Outside Accountants’ resolution
of the Unresolved Changes, which for each of the Unresolved Changes
shall
be within the range of values of the amount claimed by either party
as to
any of the Unresolved Changes, shall be made within thirty (30) days
of
the submission of the Unresolved Changes to the Outside Accountants,
shall
be set forth in a written statement delivered to the Seller and the
Buyer
and shall be deemed to be mutually agreed upon by the Buyer and the
Seller
for all purposes of this Agreement. Any changes to the Preliminary
Closing
Balance Sheet resulting from such resolution of the Unresolved Changes
shall be made, and such Preliminary Closing Balance Sheet, as so
changed
shall be the Final Closing Balance Sheet and the calculation of Purchase
Price therefrom shall be final and binding for all purposes
hereunder.
|
-
12
-
(d) At
all
times prior to the final determination of the Final Closing Balance Sheet and
the Purchase Price, the Buyer shall, and shall cause the Company to cooperate
fully with the Seller and the Seller’s authorized Representatives, including
providing, on a timely basis, all information necessary or useful in reviewing
the Preliminary Closing Balance Sheet, and require Company Employees who become
employees of the Buyer to assist the Seller and the Seller’s authorized
representatives in the review of the Preliminary Closing Balance
Sheet.
Section
2.5 Adjustment
to Purchase Price.
If,
pursuant to the Final Closing Balance Sheet, the Cash Payment is greater than
the Purchase Price, the Seller shall pay to the Buyer, as an adjustment to
the
Purchase Price, in a manner and with interest as provided in Section 2.6, the
amount of such excess. If, pursuant to the Final Closing Balance Sheet, the
Cash
Payment is less than the Purchase Price, the Buyer shall pay to the Seller,
as
an adjustment to the Purchase Price, in a manner and with interest as provided
in Section 2.6, the amount of such difference.
Section
2.6 Payment
and Interest.
(a) Any
payments pursuant to Section 2.5 and Section 2.6(b) shall be made within
five (5) Business Days after the Purchase Price, as applicable, has been finally
determined, by wire transfer to the Buyer of immediately available funds by
Seller to a designated account of the Buyer.
(b) The
amount of any payment pursuant to Section 2.5 shall bear interest from and
including the Closing Date but excluding the date of payment at a rate per
annum
equal for each day during such period at the prime rate of interest announced
publicly by Citibank N.A. in New York, New York from time to time as its prime
rate.
Section
2.7 Purchase
Price Allocation.
The
Buyer and the Seller agree that the purchase of the Interests shall be treated
as an asset purchase for federal income Tax purposes and for Tax purposes of
any
other jurisdiction when Applicable Law so provides. Not later than sixty (60)
days following the Closing Date, the Buyer shall prepare or cause to be prepared
and shall provide to the Seller a statement (the “Allocation Statement”)
allocating among the Assets
of the
Company the
Purchase Price
(including, without limitation, all Liabilities of the Company assumed by Buyer
hereunder) for the Assets of the Company as set forth in this Agreement. Such
statement shall be prepared in accordance with the provisions of Section 1060
of
the Code
and
Treasury Regulations thereunder.
Within
ten (10) days after the receipt of such Allocation Statement, the Seller will
propose to the Buyer in writing any reasonable changes to such Allocation
Statement together with reasonable documentation supporting such changes (and
in
the event that no such changes are proposed in writing to the Buyer within
such
time period, the Seller will be deemed to have agreed to, and accepted, the
Allocation Statement). The Buyer and the Seller will attempt in good faith
to
resolve any differences with respect to the Allocation Statement, in accordance
with requirements of Section 1060 of the Code, within fifteen (15) days after
the Buyer’s receipt of a timely written notice of objection from the Seller. If
the Buyer and the Seller are unable to resolve such differences within such
time
period, the Outside Accountants will be selected in the manner provided in
Section 2.4(c)(ii) hereof and any remaining disputed matters will be submitted
to the Outside Accountants for resolution, in accordance with the requirements
of Section 1060 of the Code. Promptly, but not later than fifteen (15) days
after such matters are submitted to it for resolution hereunder, the Outside
Accountants will determine those matters in dispute and will render a written
report as to the disputed matters and the resulting allocation of the Purchase
Price (together with any Liabilities of the Company assumed by the Buyer),
which
report shall be conclusive and binding upon the parties. The fees and expenses
of the Outside Accountants in respect of such report shall be paid one-half
by
the Buyer and one-half by the Seller. The Buyer and the Seller shall each file
or cause to be filed IRS Form 8594 for its taxable year that includes the
Closing Date in a manner consistent with the allocation set forth on the
Allocation Statement as so finalized, and (except as set forth below relating
to
a revised Allocation Statement) shall not take any position on any Tax Return
or
in the course of any Tax audit, review, or litigation inconsistent with the
allocation provided in the Allocation Statement. In the event that any
adjustment is required to be made to the Allocation Statement as a result of
the
payment of any additional purchase price for the Assets of the Company or
otherwise, the Buyer shall prepare or cause to be prepared, and shall provide
to
the Seller, a revised Allocation Statement reflecting such adjustment. Such
revised Allocation Statement shall be subject to review and resolution of timely
raised disputes in the same manner as the initial Allocation Statement. Each
of
the Buyer and the Seller shall file or cause to be filed a revised IRS Form
8594
reflecting such adjustment as so finalized for its taxable year that includes
the event or events giving rise to such adjustment, and (except as required
by
future revised Allocation Statements) shall not take any position on any Tax
Return or in the course of any Tax audit, review, or litigation inconsistent
with the allocation provided in the revised Allocation Statement.
-
13
-
ARTICLE
III
THE
CLOSING
Section
3.1 Time
and Place of Closing.
The
closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place upon the execution and delivery of this Agreement or at such other
date as the parties shall mutually agree (the “Closing Date”) at the offices of
Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000. All the Contemplated Transactions (other than the Integon
Reinsurance Agreement, the FRR Agreement and the closings of the acquisitions
of
Integon and GMAC Direct contemplated by the Insurer SPAs) shall be deemed to
be
consummated as of 12:01 a.m. Eastern Time on the Closing Date, including the
transactions contemplated by the Fronting Agreement and the Reinsurance
Agreement and all actions taken at Closing shall be deemed to have occurred
simultaneously and shall be deemed effective as of the dates and times specified
in this Agreement unless another date or time is specified in another
Transaction Document with respect to a particular aspect of the Contemplated
Transactions.
Section
3.2 Deliveries
at Closing.
(a) At
the
Closing, the Seller shall deliver to the Buyer:
|
(i)
|
Assignment
of the Membership Interests to the Buyer in the form of Schedule
3.2(a)(i)
attached hereto and any certificates evidencing the
Interests;
|
-
14
-
|
(ii)
|
All
of the Company’s books and records, including, without limitation, all
minute books and other limited liability Company records, employment
records, financial and accounting records and other files of the
Company
not located in the Company’s offices on
Closing;
|
|
(iii)
|
Company
officer certificate in a form and substance reasonably satisfactory
to the
Buyer attaching copies of resolutions duly adopted by the member
of the
Seller authorizing the execution and performance of this Agreement
and the
other documents contemplated hereby and the transactions contemplated
hereby;
|
|
(iv)
|
A
certificate complying with the Code and the Treasury Regulations,
in form
and substance reasonably satisfactory to the Buyer and executed under
penalties of perjury, certifying that the Seller is not a “foreign person”
as defined in Section 1445 of the
Code;
|
|
(v)
|
Certificates
of good standing of the Company and the Seller certified by the Delaware
Secretary of State;
|
|
(vi)
|
The
written consents of the parties identified on Section 5.3 of the
Seller’s
Disclosure Schedule;
|
|
(vii)
|
The
General Assignment Agreements of the parties identified on Section
5.5(d)
of the Seller’s Disclosure
Schedule;
|
|
(viii)
|
The
GMAC Direct SPA, duly executed by
Motors;
|
|
(ix)
|
The
Integon SPA, duly executed by GMAC Insurance Management
Corp.;
|
|
(x)
|
The
Reinsurance Agreement, duly executed by
Motors;
|
|
(xi)
|
The
Fronting Agreement, duly executed by Integon, Integon Preferred,
Integon
National, MIC P&C and Motors;
|
|
(xii)
|
The
Administration Agreement duly executed by Integon, Integon Preferred,
Integon National, MIC P&C and
Motors;
|
|
(xiii)
|
The
Trust Agreement, duly executed by
Motors;
|
|
(xiv)
|
The
Trademark Services Agreement, duly executed by General Motors Corporation
and GMAC LLC;
|
|
(xv)
|
The
Transition Services Agreement, duly executed by
Motors;
|
|
(xvi)
|
The
Release and Indemnification Agreement duly executed by the Seller
and
Motors; and
|
-
15
-
|
(xvii)
|
Evidence
that all agreements between the Company and any Affiliate, other
than
Affiliate agreements contemplated under this Agreement, have been
terminated.
|
|
(b)
|
At
the Closing, the Buyer shall deliver to the
Seller:
|
| (i) |
The
Purchase Price by wire transfer of immediately available funds to
such account
as has been designated by the Seller to the
Buyer;
|
|
(ii)
|
An
original executed Certificate of Amendment of the Company’s Certificate of
Formation to be filed with the Delaware Secretary of State to change
the
Company’s name as required by Section 7.2;
|
|
(iii)
|
The
GMAC Direct SPA, duly executed by the
Buyer;
|
|
(iv)
|
The
Integon SPA, duly executed by the
Buyer;
|
|
(v)
|
The
Reinsurance Agreement, duly executed by Maiden;
|
|
(vi)
|
The
Fronting Agreement, duly executed by the Buyer;
|
|
(vii)
|
The
Administration Agreement duly executed by the Company, the Buyer
and
Maiden;
|
|
(viii)
|
The
Trust Agreement, duly executed by Maiden and JPMorgan Chase Bank,
N.A.;
|
|
(ix)
|
The
Trademark License Agreement, duly executed by the
Company;
|
|
(x)
|
The
Transition Services Agreement, duly executed by the Company;
and
|
|
(xi)
|
The
Release and Indemnification Agreement duly executed by the Buyer
and the
Company.
|
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES REGARDING THE SELLER
The
Seller hereby represents and warrants, as of the date hereof and as of the
Closing Date, to the Buyer as follows:
Section
4.1 Organization.
The
Seller is a limited liability company duly organized, validly existing and
in
good standing under the laws of Delaware.
-
16
-
Section
4.2 Authorization
of Transaction.
The
Seller has the necessary limited liability company power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party, to perform its obligations hereunder and thereunder and to
consummate the Contemplated Transactions. The execution and delivery of this
Agreement and the other Transaction Documents to which the Seller is a party,
the performance by the Seller of its obligations hereunder and thereunder and
the consummation of the Contemplated Transactions have been duly and validly
authorized by all necessary limited liability company action on the part of
the
Seller. No other limited liability company action or proceeding on the part
of
the Seller is necessary to authorize this Agreement or the Transaction
Documents, or other documents and instruments to be executed and delivered
by
the Seller to consummate the Contemplated Transactions. This Agreement and
each
of the other Transaction Documents and instruments to be executed and delivered
by the Seller to consummate the Contemplated Transactions will constitute valid
and binding agreements of the Seller, enforceable against it in accordance
with
their respective terms, subject to the effect of receivership, conservatorship
and subject to the effect of bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to or affecting the
enforcement of creditors’ rights generally and subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity).
Section
4.3 Noncontravention.
The
execution and the delivery of this Agreement, the Transaction Documents to
which
the Seller is a party and the consummation of the Contemplated Transactions
will
not directly or indirectly (with or without notice, lapse of time or both)
(a)
violate any injunction, judgment, order, decree, ruling or other restriction
of
any Governmental Entity to which the Seller is subject, (b) violate any
provision of the certificate of formation or limited liability company operating
agreement of the Seller or (c) conflict with, result in a breach of, constitute
a default under, or result in the acceleration of, create in any party the
right
to accelerate, terminate, modify or cancel, or require any notice or consent
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Seller is a party or by which it is bound, except where any such
violation, conflict, breach, default, acceleration, termination, modification,
cancellation or failure to give notice or obtain consent would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Seller.
Section
4.4 Consents.
Except
as set forth in Section 4.4 of the Seller’s Disclosure Schedule, in connection
with the consummation of the sale of the Interests by the Seller to the Buyer,
no registrations, filings, applications, notices, consents, approvals, orders,
qualifications or waivers are required to be made, filed, given or obtained
by
the Seller, to or from any Governmental Entity, except for those that the
failure to make, file, give or obtain would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Seller or
the
Company.
Section
4.5 Brokers’
Fees.
Neither
the Seller nor the Company has any liability or obligation to pay any fees
or
commissions to any broker, finder, or agent with respect to the Contemplated
Transactions for which the Buyer, or the Company, could become liable or
obligated.
Section
4.6 The
Interests.
The
Seller holds of record directly and owns beneficially 100% of the outstanding
ownership interests in the Company (the “Interests”), free and clear of all
Liens. Upon the delivery of and payment for the Interests as provided for in
this Agreement, the Buyer will acquire good and valid title to the Interests,
free and clear of any Liens. The Seller is not a party to any option, warrant,
purchase right, or other contract or commitment (other than this Agreement)
that
could require the Seller to sell, transfer, or otherwise dispose of any portion
of the Interests. The Seller is not a party to any voting trust, proxy, or
other
agreement or understanding with respect to the voting of any of the
Interests.
-
17
-
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES REGARDING THE COMPANY
The
Seller hereby represents and warrants, as of the date hereof and as of the
Closing Date, to the Buyer as follows:
Section
5.1 Organization,
Qualification, and Corporate Power.
The
Company is duly organized, validly existing, and in good standing under the
laws
of Delaware. The Company is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such authorization, qualification or good
standing would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The Company has the
necessary limited liability company power and authority to carry on the
businesses in which it is currently engaged and to own and use the properties
currently owned and used by it in the conduct of its respective businesses.
Section
5.2 Capitalization
and Subsidiaries.
(a) Section 5.2(a)
of the Seller’s Disclosure Schedule lists the Company’s date of formation, the
number and type of its outstanding ownership interests, and the current
ownership of such ownership interests and each of the states where it is
qualified to do business as of the date of this Agreement.
(b) There
are
no options, warrants, convertible securities, or other rights, agreements,
arrangements or commitments of any character relating to the ownership interests
in the Company or obligating the Seller or the Company to issue or sell any
interest in the Company.
(c) The
Company does not own or have any agreement to acquire, directly or indirectly,
any equity or beneficial interest in any Person.
(d) Except
as
set forth in Section 5.2(d) of the Seller’s Disclosure Schedule, the Company
does not have any Subsidiaries.
Section
5.3 Noncontravention
with respect to the Company.
Except
as set forth in Section 5.3 of the Seller’s Disclosure Schedule, neither the
execution and the delivery of this Agreement, nor the consummation of the
Contemplated Transactions, will directly or indirectly (with or without notice,
lapse of time or both) (a) violate any injunction, judgment, order, decree,
ruling, or other restriction of any Governmental Entity to which the Company
is
subject or any provision of the organizational documents of the Company or
(b) conflict with, result in a breach of, constitute a default under, or
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or terminate, cancel, or require any notice under any material
agreement, contract, lease, license, instrument, or other arrangement to which
the Company or GMAC Re Corp. is a party or by which either of them is bound,
or
(c) result in the imposition of any Lien against any of the Assets of the
Company or GMAC Re Corp. (other than a Permitted Lien), except where any such
violation, conflict, breach, default, acceleration, termination, modification,
cancellation or failure to give notice or obtain consent would not reasonably
be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company.
-
18
-
Section
5.4 Consents.
Except
as set forth in Section 5.4 of the Seller’s Disclosure Schedule, in connection
with the consummation of the sale of the Interests by the Seller to the Buyer,
no registrations, filings, applications, notices, consents, approvals, orders,
qualifications or waivers are required to be made, filed, given or obtained
by
the Company or GMAC Re Corp., to or from any Governmental Entity, except for
those that the failure to make, file, give or obtain would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on
the Company.
Section
5.5 Title
and Related Matters.
(a) With
the
exception of properties disposed of in the Ordinary Course of Business since
June 30, 2008 or otherwise transferred in accordance with the terms of this
Agreement, the Company has good title to, or holds by valid and existing lease
or license, free and clear of all Liens other than Permitted Liens, each item
of
real and personal property reflected on the Financial Statements and to each
item of real and personal property acquired by the Company since June 30, 2008.
The Company, and GMAC Re Corp., do not own and have never owned any real
property.
(b) Section
5.5(b) of Seller’s Disclosure Schedule sets forth a list of all leases
(including subleases) of real property to which the Company is a party (the
“Leases”). The Company holds a valid leasehold estate, free and clear of all
Liens, except Permitted Liens, to each Lease to which it is a party. The Leases
are in full force and effect in all material respects and, as of the date
hereof, the Company has not received a written notice of default or termination
with respect to any of the Leases. Except as set forth in Section 5.5(b) of
the
Seller’s Disclosure Schedule, there has not occurred any event nor has the
Seller received any written notice of any default or event that with notice
or
lapse of time, or both, would constitute a material breach by the Company of,
or
material default by the Company in, the performance of any covenant, agreement
or condition contained in any Lease, and to the Seller’s Knowledge, no lessor
under a Lease is in material breach or default in the performance of any
covenant, agreement or condition contained in such Lease. The Company has paid
all rents and other charges to the extent due under the Leases. Premises owned
by the Seller or one of its Affiliates that the Company may not occupy
post-Closing are identified on Section 5.5(b) of Seller’s Disclosure
Schedule.
(c) With
respect to material leased personal property used by the Company in its
business, the Company is not in default in any material respect under the terms
of any such lease.
-
19
-
(d) Section
5.5(d) of the Seller’s Disclosure Schedule lists all material properties,
assets, contracts, agreements, licenses or instruments used by the Company
in
the conduct of its business that are owned or leased by an Affiliate of the
Company, including, but not limited to GMAC Re Corp., or to which an Affiliate
of the Company, including, but not limited to GMAC Re Corp., is a named party.
Except as set forth on Section 5.5(d) of the Seller’s Disclosure Schedule, the
Assets of the Company, including the Leases and personal property leased by
the
Company as set forth on Section 5.5(b) of the Seller’s Disclosure Schedule,
constitute the material properties, rights and assets necessary and sufficient
for the continued conduct of the businesses of the Company after the Closing
in
the same manner as currently being conducted.
Section
5.6 Insurance.
As of
the date hereof, the Company is covered by (a) valid and effective insurance
policies issued in favor of the Seller, an Affiliate of the Seller and/or the
Company or (b) self insured plans that, in the judgment of the Seller, are
customary for a company of similar size in the industry and locale in which
the
Company operates. Section 5.6 of the Seller’s Disclosure Schedule sets forth a
complete and accurate list of all insurance policies covering the business
and
operations of the Company issued in favor of an Affiliate of the Seller, the
Seller and/or the Company (the “Company Policies”), specifying the type of
coverage, the amount of coverage, the insurer, the policyholder, each
loss-sharing arrangement, and all self insured plans covering the business
and
operations of the Company. Neither the Seller, the Company nor any Affiliate
of
the Seller (a) is in material default with respect to the Company Policies,
(b)
has received any written notice of a cancellation with respect to any of the
Company Policies or (c) has been refused any insurance coverage sought or
applied for with respect to the Company or its business. All premiums due and
payable on any of the Company Policies or renewals thereof have been paid or
will be paid timely through the Closing Date.
Section
5.7 Financial
Statements.
(a) Set
forth
in Section 5.7(a) of the Seller’s Disclosure Schedule are true and complete
copies of the unaudited balance sheet of the Company as of June 30, 2008 and
the
related unaudited statement of income for the year 2008 through June 30, 2008
(collectively, the “Financial Statements”). The Financial Statements present
fairly in all material respects the financial position and results of operations
of the Company for the period or as of the date set forth therein, in each
case,
and the Financial Statements were prepared in accordance with GAAP.
(b) Section
5.7(b) of the Seller’s Disclosure Schedule sets forth with respect to the
business written by each Insurer Party the combined premiums written, expenses,
claims made and paid, loss ratios and combined ratios for the 2005 through
2007
calendar years and for the six months ending June 30, 2008.
Such
loss
and combined ratios were determined based on statutory accounting principles
consistently applied throughout the applicable periods and actuarial methods
and
assumptions made in good faith based upon information available at the time.
The
information provided to the Buyer and its Representatives with respect to such
loss and combined ratios (the “Actuarial Materials”) was, to the Knowledge of
the Seller complete and accurate in all material respects. To the Knowledge
of
the Seller, there has been no material adverse change in such loss and combined
ratios of the Insurer Parties for the calendar years ending December 31, 2005
through 2007 or the six months ending June 30, 2008, since the date of the
Actuarial Materials through the Closing Date.
-
20
-
Section
5.8 Absence
of Undisclosed Liabilities.
Except
as set forth on Section 5.8 of the Seller’s Disclosure Schedule or otherwise
incurred in the Ordinary Course of Business since June 30, 2008, to the Seller’s
Knowledge, the
Company does not have any Liabilities that, individually or in the aggregate,
have or would be reasonably expected to have a Material Adverse Effect on the
Company, that have not been disclosed in the Financial Statements or in the
Seller’s Disclosure Schedule.
Section
5.9 Events
Subsequent to June 30, 2008.
(a) Since
June 30, 2008, there has not occurred a Material Adverse Effect on the Company
nor has there been any sale, assignment or transfer of any of the material
Assets of the Company other than sales, assignments or transfers of assets
in
the Ordinary Course of Business. Except with respect to activities undertaken
in
connection with the transactions contemplated by this Agreement, since June
30,
2008, the Company has carried on its business in all material respects in the
Ordinary Course of Business. Since June 30, 2008, the Company has not suffered
any material loss, damage, destruction or other casualty to any of the material
Assets of the Company that were not replaced or covered by
insurance.
(b) Without
limiting the foregoing, except as set forth on Section 5.9(b) of the Seller’s
Disclosure Schedule, none of the Company, the Seller or any Person acting on
behalf of the Company or the Seller has taken any of the following actions
since
June 30, 2008:
|
(i)
|
sold
(or granted any warrants, options or other rights to purchase) any
of the
Interests, or otherwise issued any other interests in the
Company;
|
|
(ii)
|
acquired
any assets or property of the Company for a cost in excess of One
Hundred
Thousand Dollars ($100,000), individually or in the
aggregate;
|
|
(iii)
|
created,
incurred or assumed any indebtedness relating to or affecting the
Company
other than accounts payable incurred in the Ordinary Course of
Business;
|
|
(iv)
|
made
any loans, advances or capital contributions to or investments in
any
Person relating to or affecting the
Company;
|
|
(v)
|
materially
changed billing, payment or credit practices of the Company with
any
insurer, reinsurer, producer, agent, broker or intermediary or changed
the
timing of rendering invoices;
|
|
(vi)
|
entered
into any material Lease or contract, or terminated, modified or changed
in
any material respect any contract, to which the Company is a party
or by
which it is bound other than in the Ordinary Course of
Business;
|
|
(vii)
|
entered
into any employment, independent contractor, severance, termination
or
other compensation agreement with any employee or consultant of the
Company other than in the Ordinary Course of
Business;
|
-
21
-
|
(viii)
|
increased
the rate or terms of compensation of, or entered into any new, or
extended
the term of any existing, bonus or incentive agreement or arrangement
with, any employee or consultant of the Company other than in the
Ordinary
Course of Business;
|
|
(ix)
|
adopted
any new Employee Plan of the Company or amendment to increase the
compensation or benefits payable under any of the Employee Plans
of the
Company;
|
|
(x)
|
induced
any employee or consultant of the Company to leave his or her employment
or terminate his or her engagement in order to accept employment
or an
engagement with the Seller or any of its Affiliates, or acted to
otherwise
adversely affect the relations of the Company with any employee or
consultant to the detriment of the
Company;
|
|
(xi)
|
entered
into any material transaction, agreement, contract or understanding
relating to or affecting the Company with an Affiliate or, except
as
contemplated by the terms of this Agreement or the Transaction Documents,
altered the terms of any material transaction, agreement, contract
or
understanding with any Affiliate;
|
|
(xii)
|
suffered
any material breach or waived any rights of the Company or arising
under
or in connection with any material Assets of the Company other than
in the
Ordinary Course of Business;
|
|
(xiii)
|
entered
into any merger, consolidation, recapitalization or other business
combination or reorganization relating to or affecting the
Company;
|
|
(xiv)
|
changed
any of the Company’s methods of accounting or accounting systems, policies
or practices;
|
|
(xv)
|
without
limiting the foregoing, entered into any material transaction (except
as
expressly contemplated by this Agreement) affecting any of the Assets
of
the Company or the operations, prospects or financial condition of
the
Company other than in the Ordinary Course of Business;
or
|
|
(xvi)
|
entered
into any oral or written agreement, contract, commitment, arrangement
or
understanding with respect to any of the
foregoing.
|
Section
5.10 Legal
Compliance.
(a) Since
January 1, 2003, the Company and GMAC Re Corp. have complied with all Applicable
Laws, except where noncompliance would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company;
-
22
-
(b) Except
as
set forth on Section 5.10 of the Seller’s Disclosure Schedule, since January 1,
2003, neither the Company nor GMAC Re Corp has received any written notice
from
any Governmental Entity, citizens group or other third party of any violation
or
alleged violation by the Company or GMAC Re Corp. of any Applicable Law or
any
material Intellectual Property Right of any Person. Except as set forth on
Section 5.10 of the Seller’s Disclosure Schedule, to the Knowledge of the
Seller, there is no investigation, audit, examination or inquiry relating to
the
Company or GMAC Re Corp or their business in progress or contemplated by any
Governmental Entity.
(c) To
the
Seller’s Knowledge, since January 1, 2003, neither the Company nor GMAC Re Corp.
has engaged in any corrupt business practices or price fixing, bid rigging
or
any other anticompetitive activity of any type.
(d) Since
January 1, 2003, neither the Company, GMAC Re Corp., their managers or officers,
nor to the Seller’s Knowledge, any employees or agents of the Company or GMAC Re
Corp., has (i) directly or indirectly given or agreed to give any illegal gift,
contribution, payment or similar benefit to any supplier, customer, governmental
official or employee or other Person who was, is or may be in a position to
help
or hinder the Company or GMAC Re Corp. (or assist in connection with any actual
or proposed transaction) or made or agreed to make any illegal contribution,
or
reimbursed any illegal political gift or contribution made by any other Person,
to any candidate for federal, state, local or foreign public office (x) which
could reasonably be expected to subject the Company, GMAC Re Corp., the Buyer
or
their business to any damage or penalty in any civil, criminal or governmental
litigation or proceeding or (y) the non-continuation of which has had or could
reasonably be expected to have a Material Adverse Effect on the Company or
(ii)
established or maintained any unrecorded fund or asset or made any false entries
on any books or records for any purpose.
Section
5.11 Intellectual
Property.
(a) Except
as
set forth in Section 5.11(a) of the Seller’s Disclosure Schedule, the Company
owns or possesses, or has valid, enforceable rights or licenses to use, the
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, Internet domain names (including any registrations,
licenses or rights relating to any of the foregoing), computer software, trade
secrets, inventions and know-how that are necessary to carry on its business
as
presently conducted (each, an “Intellectual Property Right”) free and clear of
all Liens (other than Permitted Liens and restrictions provided in an agreement,
license or other arrangement listed in Section 5.11(a) of the Seller’s
Disclosure Schedule), except where the failure to so own or possess, or have
licenses to use any Intellectual Property Right, has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as set forth in Section 5.11(a) of the Seller’s Disclosure Schedule, since
January 1, 2003 neither the Company nor GMAC Re Corp. has received any written
notice of any infringement of the rights of any third party with respect to
any
Intellectual Property Right that, if such infringement is determined to be
unlawful, could reasonably be expected to have a Material Adverse Effect on
the
Company. The Seller has no Knowledge of any infringement by any Person of any
Intellectual Property Right of the Company.
-
23
-
(b) All
Intellectual Property Rights that have been licensed by or on behalf of the
Company are being used substantially in accordance with the applicable license
pursuant to which the Company has the right to use such Intellectual Property
Rights, except where the failure to do so could not reasonably be expected
to
have a Material Adverse Effect on the Company. Section 5.11(b) of the Seller’s
Disclosure Schedule lists each agreement, license or other arrangement to use
relating to any licensed Intellectual Property Right, which if not licensed
or
available for use by the Company, could reasonably be expected to have a
Material Adverse Effect on the Company or under which a one-time or periodic
license fee of more than $50,000 was or shall be payable in the applicable
licensing period.
(c) Section
5.11(c)(i) of the Seller’s Disclosure Schedule contains a complete and accurate
list of (A) registered and applied for patents, trademarks, service marks,
copyrights, or domain names owned or licensed by the Company, in each case
specifying the jurisdiction in which the applicable registration has been
obtained or pending application has been filed, and, where applicable, the
registration or application number therefor and (B) material common law
trademarks and service marks owned by the Company and other Intellectual
Property Rights owned or licensed by the Company. Except as set forth in Section
5.11(c)(ii) of the Seller’s Disclosure Schedule, as of the date hereof, there
are no claims pending or, to the Knowledge of Seller, threatened, challenging
the ownership, validity or enforceability of any Intellectual Property Right
owned by the Company, except, in each case, for such claims that, if adversely
determined, could not reasonably be expected to have a Material Adverse Effect
on the Company.
(d) To
Seller’s Knowledge, since January 1, 2003, neither the Company nor GMAC Re Corp.
has suffered a material security breach with respect to its data or systems
requiring notification to employees in connection with such employees’
confidential information or to customers, except, in each case, for such
security breaches that have not had and could not reasonably be expected to
have
a Material Adverse Effect on the Company.
Except
as
set forth in Section 5.11(d) of the Seller’s Disclosure Schedule, since January
1, 2003, neither the Company nor GMAC Re Corp. has received any written notice
of an infringement of any Intellectual Property Right of any Person that, if
such infringement is determined to be unlawful, could reasonably be expected
to
have a Material Adverse Effect on the Company. To the Knowledge of Seller,
no
use by the Company of any Intellectual Property Right owned by the Company
(A)
infringes any Intellectual Property Right of any Person, except to the extent
that such infringement, if determined to be unlawful, has not had and could
not
reasonably be expected to have a Material Adverse Effect on the Company or
(B)
requires any payment for the use of such Intellectual Property Right of any
Person (except for the payment of licensing or maintenance fees).
Section
5.12 Contracts.
The
Seller has made available true and complete copies of each of the following
types of contracts of the Company (collectively, the “Material
Contracts”):
(a) contracts
and agreements between the Company and the Seller or any Affiliate pursuant
to
which (i) the Seller or an Affiliate provides assets, services or facilities
to
the Company, or (ii) the Company provides assets, services or facilities to
the
Seller or an Affiliate;
(b) contracts
and agreements, with any present or former officer, director, trustee or
employee of the Company (including employment agreements and agreements
evidencing loans or advances to any such Person or any Affiliate of such
Person);
-
24
-
(c) contracts
and agreements containing any provision or covenant limiting the ability of
the
Company to engage in any line of business, the manner in which business is
to be
conducted, to compete with any Person or to do business with any Person or
in
any location or geographic area;
(d) mortgages,
indentures, loan or credit agreements, security agreements and other agreements
and instruments relating to the borrowing of money or the extension of credit
to
or by the Company or the direct or indirect guarantee by the Company of any
obligation of any Person for borrowed money or other financial obligation of
any
Person or any other liability of the Company in respect of indebtedness for
borrowed money or other financial obligations of any Person, in any case in
excess of $100,000;
(e) the
Leases and any other leases, subleases or licenses of real property used in
the
conduct of the business of the Company and all other leases, subleases, licenses
or rental or use contracts providing for annual rental payments in any case
in
excess of $100,000 (whether the Company is lessor, lessee, licensor or
licensee);
(f) agency,
subagency, producer, broker, selling, marketing or similar
agreements;
(g) stock
purchase agreements, asset purchase agreements and other acquisition or
divestiture agreements relating to the acquisition, lease or disposition of
material assets or properties used in conducting the business of the Company
or
any membership interests or other equity interest of the Company, under which
the Company has any executory indemnification or other continuing obligations;
(h) any
contract providing for indemnification or any special purpose vehicle or other
financing entity, including off-balance sheet entities;
(i) any
contract providing for future payments that are conditioned on, or that cause
an
event of default as a result of, a change of control of the Company or any
similar event;
(j) any
agreement to which the Company is a party granting or obtaining any right to
use
or practice any rights under any material Intellectual Property Right (other
than licenses for off-the-shelf commercially available software), all material
information technology service agreements, material service agreements that
involve Intellectual Property Rights and all material outsourcing agreements;
provided, that for purposes hereof any such agreement shall be a Material
Contract if annual fees due thereunder exceed $100,000; and
(k) other
material contracts not listed above.
All
of
the Material Contracts are listed in Section 5.12 of the Seller’s Disclosure
Schedule. Except as has not had and could not reasonably be expected to have
a
Material Adverse Effect on the Company, each Material Contract is the legal,
valid and binding obligation of the Company and, to the Knowledge of the Seller,
of each other party thereto, and is enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar Applicable Laws affecting the enforcement of creditors’ rights
generally, and to general equitable principles (regardless of whether considered
in a proceeding of law or in equity). Except as has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company, neither
the Company nor, to the Knowledge of the Seller, any other party thereto is
in
violation or default of any term of any such Material Contract and, to the
Knowledge of the Seller, no condition or event exists which with the giving
of
notice or the passage of time, or both, would constitute a violation or default
of any Material Contract by the Company or any other party thereto or permit
the
termination, modification, cancellation or acceleration of performance of the
obligations of the Company or any other party to the Material
Contract.
-
25
-
Section
5.13 Litigation.
Section
5.13 of the Seller’s Disclosure Schedule sets forth all Actions pending or, to
the Seller’s Knowledge, threatened against the Company or GMAC Re Corp., none of
which (a) if adversely determined would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
or
(b) enjoins or seeks to enjoin any significant activity of the Company. As
of
the date hereof, there are no judgments or outstanding orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency, or by arbitration) against the Company. There is no actual or, to the
Seller’s Knowledge, threatened Action which presents a claim to restrain,
condition or prohibit the transactions contemplated herein.
Section
5.14 Licenses, Permits, and
Exemptions.
Except
as set forth on Section 5.14 the Seller’s Disclosure Schedule, since January 1,
2003, the Company, GMAC Re Corp. and their employees have held and currently
hold all licenses, registrations or permits (or exemptions therefrom) necessary
to conduct the business and operations of the Company and GMAC Re Corp., the
failure to hold which would reasonably be expected to have, individually or
in
the aggregate, a Material Adverse Effect on the Company. Section 5.14 of
the Seller’s Disclosure Schedule sets forth all licenses, registrations or
permits held by the Company, GMAC Re Corp. and their employees and reflects
all
exemptions from license, registration or permit requirements. Each such license,
registration and permit is in full force and effect. Upon Closing, the Company
and its employees will hold all licenses, registrations and permits necessary
to
conduct the business and operations of the Company, the failure to hold which
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
Section
5.15 Affiliate
Transactions.
Except
as set forth in Section 5.15 of the Seller’s Disclosure Schedule (a) none of the
Seller or any of its Affiliates provides or causes to be provided to the Company
any material assets, services or facilities and (b) the Company does not provide
to the Seller or any of its Affiliates any material assets, services or
facilities. All of the agreements listed in Section 5.15 of the Seller’s
Disclosure Schedule have been terminated.
Section
5.16 Accounts
Receivable.
All
accounts receivable of the Company that are reflected on the Financial
Statements (i) are accurate and complete in all material respects, and (ii)
represent or will represent valid obligations arising from services actually
performed in the Ordinary Course of Business. None of such accounts receivable
are subject to any counterclaim or set-off except for counterclaims or set-offs
for which reserves have been established on the books of the Company or to
the
extent set forth on Section 5.16 of Seller’s Disclosure Schedule.
-
26
-
Section
5.17 Employees.
The
Seller has previously provided the following information in writing to the
Buyer
for each Company Employee:
(i)
job
title;
(ii)
job
band;
(iii)
annual
base salary;
(iv)
incentives
paid in 2007 and 2008;
(v)
date
of
hire;
(vi)
credited
years of service;
(vii)
employment
status (active or leave of absence); and
(viii)
employment
category (full-time or part-time);
which
information is true, complete and accurate in all material respects as of the
date hereof.
Section
5.18 Employee
Relations.
Except
as set forth in Section 5.18 of the Seller’s Disclosure Schedule:
(a) The
Company is in material compliance with all federal, state or other Applicable
Laws, domestic or foreign, respecting employment and employment practices,
terms
and conditions of employment and wages and hours of employment;
(b) No
legal
claim in respect of application for employment, employment or termination of
employment of any Person is pending before any Governmental Entity, or to
Seller’s Knowledge is threatened, against the Company or GMAC Re
Corp.;
(c) The
Seller, the Company and GMAC Re Corp. have not, and are not, engaged in any
unfair labor practice relating to or affecting the Company;
(d) No
unfair
labor practice complaint against the Company or GMAC Re Corp. is pending before
the National Labor Relations Board;
(e) No
labor
strike, dispute, slowdown or stoppage is actually pending or, to Seller’s
Knowledge, threatened against or involving the Company;
(f) Neither
the Seller, the Company nor GMAC Re Corp. is a party to any collective
bargaining agreement relating to or affecting the Company or GMAC Re Corp.
and
no collective bargaining agreement relating to or affecting the Company is
currently being negotiated by any of them;
(g) None
of
the employees of the Company or GMAC Re Corp. is or has been represented by
a
labor union;
(h) No
petition has been filed or Action instituted by any employee or group of
employees of the Company or GMAC Re Corp. with any labor relations board seeking
recognition of a bargaining representative;
-
27
-
(i) To
Seller’s Knowledge, there is no organizational effort currently being made or
threatened by or on behalf of any labor union to organize any employees of
the
Company;
(j) There
are
no other controversies or disputes pending between the Company and employees
of
the Company or GMAC Re Corp., except for such other controversies and disputes
with individual employees arising in the Ordinary Course of Business that have
not had and would not reasonably be expected to have a Material Adverse Effect;
and
(k) The
Seller, the Company and GMAC Re Corp. have taken any and all actions necessary
to comply with the Worker Adjustment and Retraining Notification Act (“WARN”),
with respect to any event or occurrence affecting the Company or GMAC Re Corp.
since the effective date of WARN.
Section
5.19 Employee
Benefit Plans and Programs.
All
Employee Plans in which Company Employees are eligible to participate as of
the
date hereof are maintained and sponsored by an Affiliate of the Seller (“Seller
Plans”). Except as set forth in Section 5.19 of Seller’s Disclosure Schedules,
as of the Closing, the Company shall not have any Liabilities of any kind,
whether known or unknown, fixed or contingent, disputed or undisputed, matured
or unmatured, liquidated or unliquidated, or secured or unsecured, under any
Employee Plan, including the Seller Plans, including, without limitation, any
civil penalty assessed pursuant to Sections 406, 409 or 502 of ERISA or tax
imposed pursuant to Section 4975, 4976 or 4980B of the Code, or any Liability
under Title IV of ERISA.
Section
5.20 Employment
Agreements.
Except
as set forth in Section 5.20 of the Seller’s Disclosure Schedule, neither the
Company nor GMAC Re Corp. is a party to or bound by any employment agreement
or
producer agreement that causes an employee of the Company to be other than
an
“at will” employee.
Section
5.21 Company
Relationships.
Section
5.21 of Seller’s Disclosure Schedule sets forth a correct and complete list of
(a) each insurance company, reinsurance company, agent, producer, intermediary
and broker through which the Company or GMAC Re Corp. placed insurance or
reinsurance during the period January 1, 2008 through the Closing Date and
during the fiscal years ended December 31, 2007 and 2006 setting forth the
name
of each individual or entity and the total gross premiums written by each
individual or entity during the applicable period and (b) each insurance
company, reinsurance company, agent, producer, intermediary or broker that
paid
commissions to the Company in each such period, setting forth the name of each
such company and the amount of the commissions paid to the Company. Except
as
otherwise set forth in Section 5.21 of Seller’s Disclosure Schedule, all
accounts with all companies represented by the Company are current and there
are
no disagreements or unreconciled discrepancies as to the amounts owed by or
to
the Company.
Section
5.22 Renewal
Rights.
Neither
any Affiliate of Seller (other than the Company) nor any Insurer Party has
or
will have any right to offer, quote and/or solicit the renewals of any of the
In-Force Contracts or any Fronted Insurance Contract, including the right to
solicit replacement insurance coverage upon expiration of the In-Force Contracts
or Fronted Insurance Contracts with respect to the SRS Business or renew
reinsurance upon expiration of Insurance Contracts with respect to the
Reinsurance Business and all such rights, as possessed and in existence as
between the Insurer Parties or any Affiliate of the Seller (other than the
Company), on the one hand, and the Company, on the other hand, are held by
the
Company.
-
28
-
Section
5.23 Environmental
Matters.
The
business of the Company and GMAC Re Corp. and the Assets of the Company and
GMAC
Re Corp. have at all times, and do presently, comply in all material respects
with all Environmental Laws. With respect to the Assets of the Company and
GMAC
Re Corp. and the business of the Company and GMAC Re Corp., there are no
judicial, administrative or other Actions pending or, to Seller’s Knowledge,
threatened, alleging a violation of any Environmental Law.
Section
5.24 Disclosure.
To
Seller’s Knowledge, none of the representations and warranties contained in this
Article V, or the Seller’s Disclosure Schedule contains any untrue statement of
a material fact or omits a material fact necessary to make the statements
contained herein or therein, taken as a whole, in light of the circumstances
in
which they were made, not misleading.
Section
5.25 Exclusion
of Implied Representations and Warranties.
EXCEPT
AS EXPRESSLY SET FORTH IN THIS ARTICLE V, THE SELLER EXCLUDES AND DISCLAIMS
ANY
AND ALL IMPLIED REPRESENTATIONS AND WARRANTIES.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES REGARDING THE BUYER
The
Buyer
hereby represents and warrants, as of the date hereof and as of the Closing
Date, to the Seller as follows:
Section
6.1 Organization.
The
Buyer is duly organized, validly existing and in good standing under the laws
of
its jurisdiction of incorporation.
Section
6.2 Authorization
of Transaction.
The
Buyer has the necessary corporate power and authority to execute and deliver
this Agreement and the other documents and instruments to be executed by it
hereunder, to perform its obligations hereunder and to consummate the
Contemplated Transactions. The execution and delivery of this Agreement, the
performance by the Buyer of its obligations hereunder and the consummation
of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Buyer. No other corporate
action or proceeding on the part of the Buyer is necessary to authorize this
Agreement or the other documents and instruments to be executed and delivered
by
the Buyer pursuant hereto or the consummation by the Buyer of the Contemplated
Transactions. When fully executed and delivered, this Agreement and each of
the
other documents and instruments to be executed and delivered by the Buyer
pursuant hereto will constitute valid and binding agreements of the Buyer,
enforceable against it in accordance with their respective terms, subject to
the
effect of applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to or affecting the enforcement
of creditors’ rights generally and subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
-
29
-
Section
6.3 Noncontravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
Contemplated Transactions, will directly or indirectly (with or without notice,
lapse of time or both) (a) violate any injunction, judgment, order, decree,
ruling or other restriction of any Governmental Entity to which the Buyer is
subject or any provision of the charter or bylaws of the Buyer or (b) conflict
with, result in a breach of, constitute a default under, or result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which
it is
bound, except where any such violation, conflict, breach, default, acceleration,
termination, modification, cancellation or failure to give such notices would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Buyer.
Section
6.4 Consents.
Except
as set forth in Section 6.4 of the Buyer Disclosure Schedule, in connection
with
the consummation of the purchase of the Interests by the Buyer from the Seller,
no registrations, filings, applications, notices, consents, approvals, orders,
qualifications or waivers are required to be made, filed, given or obtained
by
the Buyer or any of its Affiliates with, to or from any Person in connection
with the consummation of the Contemplated Transactions except for those that
the
failure to make, file, give or obtain would not have a Material Adverse Effect
on the Buyer.
Section
6.5 A.M.
Best Rating.
Maiden
has an A.M. Best rating of no lower than A- with a stable outlook, after giving
effect to the closing of the transaction contemplated by this Agreement in
accordance with the terms hereof.
Section
6.6 Buyer
Parent SEC Documents.
As of
their respective effective dates (in the case of Buyer Parent SEC Documents
that
are registration statements filed pursuant to the Securities Act of 1933 (as
amended, the “Securities Act”)) and as of their respective filing dates (in the
case of all other Buyer Parent SEC Documents), the Buyer Parent SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934 and the Securities Act, as the case may be, and the rules
and regulations of the Securities Exchange Commission promulgated thereunder,
applicable to such Buyer Parent SEC Documents, and none of the Buyer Parent
SEC
Documents as of such respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section
6.7 Capital
Commitment. Holdings
has a commitment letter dated as of October 31, 2008 (the “Backstop Commitment”)
from two of its stockholders (the “Backstop Investors”), a true and correct
executed copy of which has been provided to the Seller, pursuant to which the
Backstop Investors have agreed to purchase up to Two Hundred Sixty Million
Dollars ($260,000,000.00) of
equity
or debt securities of Holdings, in the event that Holdings shall be unable
to
raise an aggregate of at least Two Hundred Sixty Million Dollars
($260,000,000.00) pursuant to the equity rights offering described in the
Backstop Commitment (the “Rights Offering”) or there is a delay or failure of
the Rights Offering that will lead to a downgrade of Maiden from A- with a
stable outlook by A.M. Best.
-
30
-
Section
6.8 Brokers’
Fees.
The
Buyer has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the Contemplated Transactions for
which
the Seller could become liable or obligated.
Section
6.9 Disclosure.
To
Buyer’s Knowledge, none of the representations and warranties contained in this
Article VI or the Buyer’s Disclosure Schedule contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained herein or therein, taken as a whole, in light of the circumstances
in
which they were made, not misleading.
Section
6.10 Exclusion
of Implied Representations and Warranties.
EXCEPT
AS EXPRESSLY SET FORTH IN THIS ARTICLE VI, THE BUYER EXCLUDES AND DISCLAIMS
ANY
AND ALL IMPLIED REPRESENTATIONS AND WARRANTIES.
ARTICLE
VII
POST-CLOSING
COVENANTS
The
parties agree as follows with respect to the period following the
Closing:
Section
7.1 Notices
and Consents.
Each of
the Seller and the Buyer agrees to use its commercially reasonable efforts
to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Contemplated Transactions and to cooperate with
the
other in connection with the foregoing, including using its commercially
reasonable efforts to effect all necessary registrations and filings, including,
but not limited to submissions of information requested by Governmental
Entities.
Section
7.2 Corporate
Names.
Subject
to the rights granted under the Fronting Agreement, the Buyer acknowledges
that,
from and after the Closing Date, the Seller and its Affiliates shall have the
absolute and exclusive proprietary right to all names, marks, trade names and
trademarks (collectively, the “Names”) incorporating GMAC, by itself or in
combination with any other Name, including, without limitation, the corporate
design logo associated with GMAC LLC, GMAC Insurance or any of the Affiliates
of
GMAC LLC (other than that specifically of the Company to the extent it does
not
incorporate any Name), and that none of the rights thereto or goodwill
represented thereby or pertaining thereto are being transferred hereby or in
connection herewith nor shall the Buyer or any of its Affiliates (including
the
Company) have any right after the Closing to use, in any way, the Names except
solely for transitional purposes as specifically set forth in the Transition
Services Agreement. On the Closing Date, the Buyer will cause the Company to
change its name such that it no longer incorporates any Name.
Section
7.3 General.
Without
limiting the provisions of Sections 9.1(b) and (d) and 9.3, following the
Closing Date, if any further action is necessary to carry out the purposes
of
this Agreement, all of the parties hereto will take and will cause their
Affiliates to take such further action (including the execution and delivery
of
such further instruments and documents) as any other party reasonably may
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under the provisions
of
this Agreement).
-
31
-
Section
7.4 Litigation
Support.
In the
event and for so long as any party actively is contesting or defending against
any Action, claim, or demand in connection with (a) any of the Contemplated
Transactions or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the Company, each
of
the other parties shall cooperate with it and its counsel in the defense or
contest, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the defense or contest, all at the sole cost and expense of the contesting
or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under the provisions of this Agreement).
Section
7.5 Confidentiality.
Each
party hereto will hold, and will use commercially reasonable efforts to cause
its Affiliates, and their respective Representatives to hold, in strict
confidence from any Person (other than any such Affiliates or Representatives),
except with the prior written consent of the other party or unless
(i) compelled to disclose by judicial or administrative process (including
in connection with obtaining the necessary approvals of this Agreement, the
other Transaction Documents, or any of the Contemplated Transactions of
Governmental Entities) or by other requirements of Applicable Law or stock
exchange regulation, or (ii) disclosed in an action or proceeding brought
by a party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any
of
its Affiliates furnished to it by the other party or such other party’s
Representatives in connection with this Agreement, the other Transaction
Documents, or any of the Contemplated Transactions, except to the extent that
such documents or information can be shown to have been (a) previously
known or available to (on a non-confidential basis) the party receiving such
documents or information, (b) in the public domain (either prior to or
after the furnishing of such documents or information hereunder) through no
violation of this provision by the receiving party or (c) later acquired by
the receiving party from another source if the receiving party is not aware
that
such source is under an obligation or duty to the party seeking to keep such
documents and information confidential; provided that following the Closing
the
foregoing restrictions will not apply to the Buyer’s use in the Ordinary Course
of Business of documents and information relating exclusively to the rights
granted under the Fronting Agreement.
-
32
-
Section
7.6 Seller’s
Noncompetition.
(a) The
Seller hereby covenants and agrees with the Buyer that from and after the
Closing Date and through the fifth anniversary of the Closing Date, neither
the
Seller nor any Subsidiary of GMAC LLC shall, directly or indirectly: (a) engage
in the Competing Business; (b) as a partner, member or stockholder (except
as a
holder, for investment purposes only, of not more than five percent (5%) of
the
outstanding stock of any company listed on a national securities exchange,
or
actively traded in a national over-the-counter market), equity holder, or joint
venturer of any other Person, or, directly or beneficially, own, manage,
operate, control, or participate in the ownership, management, operation or
control of, or permit the use of its name by, a Person that is engaged in the
Competing Business if such Person derives an amount greater than ten percent
(10%) of its annual gross premiums from the Competing Business; or (c) solicit
any policyholder of an Insurance Contract or Fronted Insurance Contract (both
as
defined in the Fronting Agreement) issued in connection with the SRS Business
(as defined in the Fronting Agreement) or insurance company that is a party
to
an Insurance Contract or Fronted Insurance Contract entered into in connection
with the Reinsurance Business (as defined in the Fronting Agreement), directly
or through an agent, broker, intermediary or other producer with respect to
any
insurance coverage or cession of insurance risks or liabilities of the type
that
is the subject of the Business (as defined in the Fronting Agreement), except
to
the extent required by Applicable Law, the terms of the Insurance Contracts,
or
as contemplated by this Agreement or any of the Transaction Documents; provided,
however, that the foregoing restrictions in clauses (a), (b) or (c) above shall
not prohibit or apply to: (i) the acquisition after the Closing Date and
subsequent operation by the Seller or any of its Affiliates of any business
or
entity, provided that such acquired business or entity derives an amount that
is
less than of ten percent (10%) of its annual gross premiums from the Competing
Business, measured at the end of the most recent fiscal year prior to the date
of acquisition, or (ii) any joint venture, partnership, agency or other similar
business relationship between the Seller or any of its Affiliates and any other
Person entered into primarily for the purpose of marketing, selling or producing
direct insurance business (but excluding excess commercial property business
written on a surplus lines or non-admitted basis anywhere in the United States)
pursuant to which the Seller or any of its Affiliates reinsure all or a portion
of the direct insurance business produced thereunder as a component of such
joint venture, partnership, agency or other similar business
relationship.
(b) It
is
agreed that any party hereto shall be entitled to an injunction or injunctions
to prevent breaches of this Section and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they
are
entitled hereunder or otherwise.
Section
7.7 Completion
of Rights Offering.
Holdings shall use commercially reasonable efforts, to complete, on or before
March 31, 2009, equity or debt security issuances raising an aggregate of at
least Two Hundred Sixty Million Dollars ($260,000,000.00) in proceeds pursuant
to the Rights Offering and, if such Rights Offering is not completed to the
full
extent of Two Hundred Sixty Million Dollars ($260,000,000.00) by March 31,
2009,
Holdings shall complete on or before March 31, 2009, the sale of equity or
debt
securities of Holdings to the Backstop Investors raising an aggregate of at
least Two Hundred Sixty Million Dollars ($260,000,000.00) in proceeds from
such
sale and/or the Rights Offering and, in either such event, infuse the proceeds
of such sale and/or Rights Offering into Maiden, GMAC Direct and/or Integon
in
such amounts and on such terms as shall be necessary to maintain an A- rating
by
A.M. Best of Maiden, GMAC Direct and Integon.
-
33
-
Section
7.8 Third
Party Consents.
From and
after the Closing Date, the parties shall use and shall cause their
Affiliates to use commercially reasonable efforts to obtain all necessary
consents from third parties identified on Section 5.3 of the Seller’s Disclosure
Schedule as requiring such consent effective as of the Closing Date to effect
the assumption by the Buyer, the Company or an Affiliate of Buyer of
the material contracts or the change of control of the Company. Nothing
contained in this Agreement will be construed as an attempt to agree to assign
any contract, which by Applicable Law or by its terms is non-assignable without
the consent of any other party thereto, unless such consent shall have been
given. If the parties are unable to obtain the required consent of a third
party
of the contracts identified on Section 5.3 of the Seller’s Disclosure
Schedule, the Seller and the Buyer shall cooperate in a commercially
reasonably manner which does not violate Applicable Law or the relevant contract
in order to provide the benefits and burdens of such contract to the Buyer.
Section
7.9 Licensing
of the Company by the Buyer.
Following Closing, the Buyer shall use commercially reasonable efforts to
license the Company as a producer, managing general agent and reinsurance
intermediary in all states where such licenses shall be required for the Company
to transact business related to the Fronted Insurance Contracts.
Section
7.10 Financial
Statements with Respect to the Carved-Out Business of GMAC.
Following the Closing, the Seller will use commercially reasonable efforts
to
cooperate and assist and to cause its employees, Affiliates and outside
accountants, Deloitte, to cooperate and assist the Buyer and its accountants
in
the preparation of (i) audited balance sheets as of December 31, 2007 and
December 31, 2006 and audited statements of income, cash flows and changes
in
stockholder’s equity for the years ended December 31, 2007, 2006 and 2005 for
the Carved-Out Business of GMAC, and (ii) reviewed financial statements as
of
and for the period ended September 30, 2008 and 2007 for the Carved-Out Business
of GMAC, in form and substance materially in compliance with Regulation S-X
with
respect to the timely filing by Holdings of a current report on Form 8-K with
respect to the acquisition of the Carved-Out Business of GMAC. As
used
in this Section 7.10, the term “Carved-Out Business of GMAC” includes the
assets, liabilities and operations of the Company, as well as, the premiums
written and expenses incurred (along with related assets and liabilities)
related to the block of business serviced by the Company, but reflected on
the
financial statements of Motors and Integon, but excluding other business written
by Motors and Integon which is not being acquired by the Buyer or its Affiliates
under this Agreement and the other Transaction Documents. The Buyer and the
Seller shall each bear their internal costs as well as the cost of their
respective outside accountants in complying with the requirements under this
Section 7.10.
Section
7.11 Maintenance
of Post-Closing Business.
(a) The
Buyer
intends to operate the Company as a going concern following the Closing and
shall retain the leadership and business teams of the Company for a period
of at
least three (3) years following the Closing, subject to the performance-based
criteria of the Buyer and the Company established from time to time and the
financial results and prospects of the Company. The Buyer shall maintain the
existing claims infrastructure of the Company in place immediately prior to
the
Closing for a period of at least three (3) years following the Closing, provided
that the Buyer may cause to be made adjustments in the Ordinary Course of
Business to the infrastructure and practices of the Company so long as there
is
no resulting diminution in levels of service and standards or to reflect changes
in the volume of business and prospects of the Company.
-
34
-
(b) For
purposes of determining eligibility and vesting, but not benefit accrual, under
any employee benefits plans for Company Employees after the Closing, the Buyer
shall cause to be granted, to the extent applicable, credit to Company Employees
for years of service with the Company or Affiliates of the Company prior to
the
Closing.
Section
7.12 COBRA
Benefits.
(a) The
Buyer
represents to the Seller that neither the Buyer nor any ERISA Affiliate of
the
Buyer currently maintains a group health plan and that as of the Closing Date,
neither the Company Employees, nor their dependants, shall be eligible to
participate in any group health plan sponsored by the Buyer, the Company or
any
ERISA Affiliate of the Buyer. The Buyer agrees that it, directly or through
an
ERISA Affiliate, shall establish a group health plan covering the Company
Employees on or before December 31, 2008.
(b) As
of the
Closing, (i) the Company shall cease to be an ERISA Affiliate of the Seller
and
shall cease to be a sponsoring employer under all Seller Plans, including the
Seller’s group health plan and (ii) the coverage of the Company Employees under
all Seller Plans, including Seller’s group health plan, shall cease, subject
only to the rights of some Company Employees or their dependants to elect
continuation coverage under federal COBRA. The Seller agrees to cause timely
notice to be provided to all “covered employees” or “qualified beneficiaries”
whose coverage under the Seller’s group health plan terminates as a result of
the Closing of their rights to elect COBRA continuation coverage under Seller’s
group health plan (those Company Employees electing continuation coverage
referred to herein as “COBRA Beneficiaries”).
(c) The
Buyer
shall reimburse the COBRA Beneficiaries for any increase in the contributions
payable for medical, dental and vision coverage by such COBRA Beneficiaries
to
the Seller for providing continuation coverage, including medical, dental and
vision coverage. The Buyer shall also reimburse the Seller in an amount equal
to
fifty percent (50%) of the total cost of the premiums paid by the Seller to
obtain stop-loss insurance covering claims of COBRA Beneficiaries receiving
continuation coverage of Twenty Five Thousand Dollars ($25,000) or more.
(d) For
purposes of this Section 7.12, (i) the terms “continuation coverage,” “covered
employee,” “group health plan,” and “qualified beneficiary” shall have the
meaning ascribed to such terms under Section 4980B of the Code and the
regulations promulgated thereunder and (ii) the term “ERISA Affiliate” shall
mean with respect to the Buyer or the Seller any person or entity that is
considered a single employer with the Buyer or the Seller due to the application
of the controlled group rules of Sections 414(b) or (c) of the
Code.
-
35
-
Section
7.13 Buyer
Covenant Regarding Restricted Businesses.
(a)
The
Seller and its Affiliates have provided access to and shared confidential and
proprietary information about the Dealer Inventory Business and Integon Fronted
Business (as such terms are defined below) with the Company and the Transferred
Employees (the “Seller Confidential Information”) that would otherwise not be
available from and after the Closing Date to the Buyer and its Subsidiaries
and
which the Buyer and its Subsidiaries could use to the competitive disadvantage
of the Seller and its Affiliates after the Closing. Therefore, the Buyer agrees
that, from and after the Closing Date, for the respective durations outlined
below, the Buyer shall comply, and shall cause the Company and the Buyer’s other
Subsidiaries to comply, with the following covenants restricting their ability
to solicit customers of the Seller and its Affiliates for Dealer Inventory
Business and Integon Fronted Business.
|
(i)
|
Dealer
Inventory Business.
From and after the Closing Date and through the third anniversary
of the
Closing Date, neither the Buyer, the Company nor any of their respective
Subsidiaries (together, the “Buyer Restricted Companies”) shall permit,
and the Buyer shall cause its Subsidiaries not to permit, directly
or
indirectly, alone or in association with, on behalf of, in the name
of or
as an agent of, any Buyer Restricted Company or, a Related Person
(A) any employees of the Company, or (B) any employee, agent or
representative of any Buyer Restricted Company (other than the Company),
who shall be assisted, supervised, advised or otherwise aided, directly
or
indirectly, by a Transferred Employee, to solicit, market, offer,
bind,
enter into or issue insurance or reinsurance contracts, policies,
treaties
or slips for or relating to commercial auto physical damage coverages
insuring the inventory of automobile dealers (the “Dealer Inventory
Business”), who, to the Knowledge of the Buyer or, the knowledge of Xxxxx
Xxxxxxx and Xxxx Xxxxxxxxxx were customers of the Seller or its Affiliates
as of the Closing Date or during the twelve-month period prior to
the
Closing Date nor shall any Buyer Restricted Company, directly or
indirectly, alone or in association with, on behalf of, in the name
of or
as an agent of, any Buyer Restricted Company or a Related Person,
use any
Seller Confidential Information to solicit, market, offer, bind,
enter
into or issue such insurance or reinsurance contracts, policies,
treaties
or slips.
|
|
(ii)
|
Business
Fronted by Integon.
Throughout the period commencing on the closing date under the Integon
SPA
and continuing, with respect to any given state within the United
States,
as long as the Fronting Period (as such term is defined in the FRR
Agreement) remains in effect with respect to such state and Integon
is
fronting for Motors or any Affiliate of Motors thereunder, the Buyer
shall
cause the Company and Integon not to permit, directly or indirectly,
alone
or in association with, on behalf or in the name of or as an agent
of, any
Buyer Restricted Company or, a Related Person (A) any of the employees
of
the Company, or (B) any employee, agent or representative of any
Buyer
Restricted Company (other than the Company), who shall be assisted,
supervised, advised or otherwise aided, directly or indirectly, by
a
Transferred Employee, to solicit, market, offer, bind, enter into
or issue
insurance or reinsurance contracts, policies, treaties or slips for
or
relating to, any of line of business constituting In-Force Contracts
or
Fronted Contracts (as such terms are defined in the FRR Agreement),
including, without limitation, any commercial auto physical damage
coverages, commercial vehicle coverage, Dealer Inventory Business
or
standard, nonstandard and preferred private passenger auto and
recreational vehicle coverages that shall be included in such In-Force
Contracts and Fronted Contracts (together, the “Integon Fronted Business”)
in the United States to Persons, who, to the Knowledge of the Buyer
or the
knowledge of Xxxxx Xxxxxxx and Xxxx Xxxxxxxxxx were customers of
the
Seller or its Affiliates as of the Closing Date nor shall any Buyer
Restricted Company, directly or indirectly, alone or in association
with,
on behalf of, in the name of or as an agent of, any Buyer Restricted
Company or a Related Person, use any Seller Confidential Information
to
solicit, market, offer, bind, enter into or issue such insurance
or
reinsurance contracts, policies, treaties or slips.
|
-
36
-
|
(iii)
|
For
purposes of this Section 7.13(a), “Related Person” means any Person of
which any Buyer Restricted Company is a partner, member or stockholder
(except as a holder, for investment purposes only, of not more than
five
percent (5%) of the outstanding stock of any company listed on a
national
securities exchange, or actively traded in a national over-the-counter
market) or equity holder, or which is a joint venturer of such Buyer
Restricted Company, or, which is directly or beneficially, owned,
managed,
operated or controlled by such Buyer Restricted Company, or in which
such
Buyer Restricted Company participates in the ownership, management,
operation or control of, or which the Buyer Restricted Company permits
the
use of its name by such Person.
|
(b)
The
parties hereto acknowledge that the restrictions contained in this Section
7.13
were specifically negotiated to induce the Seller to enter into this Agreement
and are reasonable and necessary to protect the legitimate interests of the
Seller, that the Seller shall not have an adequate remedy at law for any actual
or attempted breach or violation of this Section 7.13 and that the Seller,
in
addition to any other rights or remedies, shall be entitled to specific
performance, injunctive and other equitable relief for any actual or attempted
breach or violation, as well as reasonable attorneys’ fees incurred in
successfully enforcing the covenants in this Section 7.13 against any such
actual or attempted breach or violation. Anything in this Agreement to the
contrary notwithstanding, the rights of the Seller under this Section 7.13
shall
inure to the benefit of any successor or assign of the Seller, including,
without limitation, any Person acquiring, directly or indirectly, all or
substantially all of the assets of the Seller, whether by merger, consolidation,
sale or otherwise.
-
37
-
ARTICLE
VIII
TAXES
Section
8.1 Tax
Representations.
The
Seller represents and warrants that:
(a) The
Seller has timely filed all Tax Returns required to be filed and all Taxes
owed
(whether or not shown or required to be shown on such Tax Returns) have been
paid or remitted, in each case, to the extent such Taxes and Tax Returns related
to the Assets of the Company or the operation of the Company. All such Tax
Returns were true, complete and correct in all respects. No portion of any
Tax
Return that relates to the Assets of the Company or the operation of the Company
has been the subject of any audit, action, suit, proceeding, claim or
examination by any governmental authority, and no such audit, action, suit,
proceeding, claim, deficiency or assessment is pending or, to the Knowledge
of
the Seller, threatened. The Seller is not currently the beneficiary of any
extension of time within which to file any Tax Return, and the Seller has not
waived any statute of limitation with respect to any Tax or agreed to any
extension of time with respect to a Tax assessment, or deficiency. No claim
has
ever been made by a governmental authority in a jurisdiction where the Seller
or
the Company does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There are no Liens for Taxes upon the Assets of the
Company other than for real property Taxes not yet due. The Seller does not
have, and has not had, a permanent establishment in any foreign country, as
defined in any applicable Tax treaty or convention between the United States
and
such foreign country. The Seller does not have any liability for the Taxes
of
any Person (other than the Seller) under Treasury Regulation Section 1.1502-6
(or any corresponding provision of state, local or non-U.S. Tax law), as a
transferee or successor, by contract, or otherwise. No portion of the Purchase
Price is subject to any Tax withholding provision of federal, state, local
or
non-U.S. law.
(b) The
Seller has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, stockholder,
independent contractor, creditor, or other third party. None of the Liabilities
of the Company is an obligation to make a payment that will not be deductible
under Section 280G of the Code. The Assets of the Company do not include any
stock or other ownership interests in any foreign or domestic corporations,
partnerships, joint ventures, limited liability companies, business trusts,
or
other entities.
(c) With
the
exception of any state requiring a separate corporate filing for a single member
limited liability company, the Company has been treated as a disregarded entity
for Tax purposes since the date of its formation and has not filed an election
for Tax purposes to be treated as an association taxable as a
corporation.
(d) The
Seller has timely paid all Taxes, and all interest and penalties due thereon
and
payable by it, for the Pre-Closing Tax Period which will have been required
to
be paid on or prior to the Closing Date, the non-payment of which would result
in a Lien on any Assets of the Company, or would result in the Buyer becoming
liable or responsible therefor.
-
38
-
(e) The
Seller has established, in accordance with GAAP, adequate reserves for the
payment of, and will timely pay, all Taxes which arise from or with respect
to
the Assets of the Company or the operation of the Company which are incurred
in
or attributable to the Pre-Closing Tax Period, the non-payment of which would
result in a Lien on any Assets of the Company, would otherwise adversely affect
the Company or would result in the Buyer becoming liable therefor.
(f) Section
8.1(f) of the Seller’s Disclosure Schedule contains a list of all jurisdictions
(whether foreign or domestic) to which any Tax is properly payable by the Seller
in connection with the Company or the Assets of the Company.
(g) None
of
the Assets of the Company is a “United States real property interest” within the
meaning of Section 897 of the Code.
(h) There
has
not been any change in any method of Tax accounting or any making of a Tax
election or change of an existing election by the Seller with respect to the
Company.
Section
8.2 Tax
Indemnity by the Seller.
The
Seller shall be liable for, and shall indemnify and hold the Buyer and the
Company and any successor entities thereto or Affiliates thereof harmless from
and against the following:
(a) Any
and
all Taxes of the Seller or any Affiliate (other than the Company);
(b) Any
Liability (including Taxes) of the Buyer or the Company in connection with
or
arising from any breach of any representation, agreement, or covenant relating
to Taxes made by the Seller in this Article VIII of this Agreement;
and
(c) Any
and
all Taxes of the Company relating to any period prior to the Closing Date that
have not paid or fully accrued or reserved by the Company as of the Closing
Date.
Section
8.3 Tax
Cooperation; Allocation of Taxes.
(a) The
Buyer
and the Seller agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information and assistance relating
to
the Company as is reasonably necessary for the filing of all Tax Returns, and
making of any election related to Taxes, the preparation for any audit by any
governmental authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax Return. The Seller and the Buyer shall cooperate
with each other in the conduct of any audit or other proceeding related to
Taxes
involving the Company or the Assets of the Company and each shall execute and
deliver such powers of attorney and other documents as are necessary to carry
out the intent of this Section 8.3(a).
-
39
-
(b) All
real
property Taxes, personal property Taxes and similar ad valorem
obligations levied with respect to the Assets of the Company for a taxable
period which includes (but does not end on) the Closing Date (collectively,
the
“Apportioned Obligations”) shall be apportioned between the Seller and the Buyer
as of the Closing Date based on the number of days of such taxable period
included in the Pre-Closing Tax Period and the number of days of such taxable
period included in the Post-Closing Tax Period. The Seller shall be liable
for
the proportionate amount of such Taxes that is attributable to the Pre-Closing
Period. Within ninety (90) days after the Closing, the Seller and the Buyer
shall present a statement to the other setting forth the amount of reimbursement
to which each is entitled under this Section 8.3(b) together with such
supporting evidence as is reasonably necessary to calculate the proration
amount. The proration amount shall be paid by the party owing it to the other
within ten (10) days after delivery of such statement. Thereafter, the Seller
shall notify the Buyer upon receipt of any xxxx for real or personal property
Taxes relating to the Assets of the Company, part or all of which are
attributable to the Post-Closing Tax Period, and shall promptly deliver such
xxxx to the Buyer who shall pay the same to the appropriate governmental
authority, provided that if such xxxx covers the Pre-Closing Tax Period, the
Seller shall also remit prior to the due date of assessment to the Buyer payment
for the proportionate amount of such xxxx that is attributable to the
Pre-Closing Tax Period. If either the Seller or the Buyer shall thereafter
make
a payment for which it is entitled to reimbursement under this Section 8.3(b),
the other party shall make such reimbursement promptly but in no event later
than thirty (30) days after the presentation of a statement setting forth the
amount of reimbursement to which the presenting party is entitled along with
such supporting evidence as is reasonably necessary to calculate the amount
of
reimbursement. Any payment required under this Section 8.3(b) and not made
within ten (10) days of delivery of the statement shall bear interest at the
rate per annum determined, from time to time, under the provisions of Section
6621(a)(2) of the Code for each day until paid.
(c) Prior
to
the Closing Date, the Seller shall provide the Buyer with a clearance
certificate or similar document(s) which may be required by any governmental
authority in order to relieve the Buyer of (i) any obligation to withhold any
portion of the Purchase Price and (ii) any liability for Taxes (determined
without regard to the provisions of this Agreement assigning responsibility
therefor) for which relief is available by reason of the filing of an
appropriate certificate.
(d) The
Buyer
and the Seller shall file all Tax Returns consistent with the Allocation
Statement and shall not make any inconsistent written statements or take any
inconsistent position on any Tax Return, in any refund claim, during the course
of any IRS audit or other Tax audit, for any financial or regulatory purpose,
in
any litigation or investigation or otherwise. Each party shall notify the other
parties if it receives notice that the IRS or other governmental agency proposes
any allocation different than that set forth in the Allocation Statement. No
later than ten (10) days prior to the filing of their respective Form 8594s
relating to the transactions contemplated by this Agreement, each party shall
deliver to the other party a copy of its Form 8594.
Section
8.4 Payments.
Any
payment made pursuant to this Article VIII or Article IX shall be treated by
the
Seller and the Buyer as an adjustment to the Purchase Price and the Seller
and
the Buyer agree not to take any position inconsistent therewith for any
purpose.
Section
8.5 Other Taxes.
The
Seller agrees to assume liability for and to pay all sales, transfer, stamp,
real property transfer and similar Taxes incurred as a result of the sale of
the
Interests (“Other Taxes”).
-
40
-
Section
8.6 Survival
Periods.
The
survival periods with regard to representations set forth in Section 8.1 hereof
shall be to sixty (60) days after the expiration of the applicable statutes
of
limitations (including extensions).
ARTICLE
IX
SURVIVAL,
INDEMNIFICATION
Section
9.1 Survival
of Representations and Warranties, Covenants and Agreements.
(a) The
representations and warranties of the Seller contained in this Agreement shall
survive the Closing hereunder for a period of eighteen (18) months, except
that
(i) the representations and warranties set forth in Sections 4.1
(Organization of Seller), 4.2 (Authorization of Transaction), 4.3(b)
(Noncontravention), 4.5 (Brokers’ Fees), 4.6 (The Interests), 5.1 (Organization,
Qualification and Corporate Power of the Company), and 5.2 (Capitalization
and
Subsidiaries) hereof shall survive indefinitely, (ii) the representations
and warranties set forth in Section 5.19 (Employee Benefit Plans and Programs)
shall survive until sixty (60) days after the applicable statutes of limitations
(including extensions), and (iii) the representations and warranties set
forth in Section 8.1 (Tax Representations) shall survive as provided for in
Section 8.6.
(b) Any
covenants or agreements of the Seller to be performed after the Closing, shall
survive for one (1) year after the date on which such post-Closing covenant
or
agreement was required to have been performed.
(c) The
representations and warranties of the Buyer contained in this Agreement shall
survive the Closing hereunder for a period of eighteen (18) months, except
that
the representations and warranties set forth in Sections 6.1 (Organization),
6.2
(Authorization of Transaction), 6.3(a) (Noncontravention) and 6.8 (Brokers’
Fees), shall survive indefinitely.
(d) Any
covenants or agreements to be performed by the Buyer after the Closing Date,
shall survive for one (1) year after the date on which such post-Closing
covenant or agreement was required to have been performed.
Section
9.2 Indemnification.
(a) Subject
to the provisions of this Agreement, the Seller agrees to indemnify and hold
the
Buyer and its Affiliates (including the Company following the Closing Date),
predecessors, successors and assigns (and their respective officers, directors,
employees and agents) harmless from and against and in respect of all Damages
resulting from or relating to:
|
(i)
|
A
breach by the Seller or any of its Affiliates of any surviving
representation or warranty made by the Seller or any such Affiliate
in
this Agreement;
|
-
41
-
|
(ii)
|
Failure
of the Company or GMAC Re Corp. to hold all licenses, registrations
or
permits (or exemptions therefrom) necessary to conduct the business
and
operations of the Company prior to the Closing Date;
|
|
(iii)
|
Any
fine or penalty, including interest thereon, assessed by any Governmental
Entity for failure of the Company, from and after the Closing, to
hold all
licenses, registrations or permits (or exemptions therefrom) necessary
to
conduct the business and operations of the Company as conducted
immediately prior to the Closing, provided the Company is compliance
with
the requirements of Section 2.5(d)(iii) of the Fronting
Agreement;
|
|
(iv)
|
A
breach by the Seller or any of its Affiliates of any covenant or
agreement
of the Seller or any such Affiliate in this Agreement and to be performed
post-Closing;
|
|
(v)
|
Any
Liability of the Company under or attributable to any Seller Plan
except,
so long as Company Closing Tangible Assets less One Million ($1,000,000)
equals or exceeds the aggregate of the accruals or reserves described
in
this Subsection (v) or (vi) of the Section 9.2(a), any Liability
incurred
in the Ordinary Course of Business previously paid or fully accrued
or
reserved by the Company as of the Closing Date and reflected in the
Final
Closing Balance Sheet; provided, however, that, for the avoidance
of
doubt, any Liability incurred by the Company after the Closing Date
under
any retention bonus or restrictive stock unit plans established prior
to
the Closing with respect to Company Employees shall be the responsibility
of the Seller, if and to the extent any such Liabilities become due;
|
|
(vi)
|
So
long as Company Closing Tangible Assets less One Million ($1,000,000)
equals or exceeds the aggregate of the accruals or reserves described
in
this Subsection (v) or (vi) of the Section 9.2(a), any Liability
of the
Company not paid or fully accrued or reserved by the Company on the
Final
Closing Balance Sheet attributable to GMAC LLC or any of its Subsidiaries,
except pursuant to any of the Transaction Documents;
|
|
(vii)
|
Following
the termination of any contract or agreement relating to a prepaid
asset
included in Company Closing Tangible Assets prior to the end of the
period to which such prepaid asset relates other
than caused solely by the Buyer’s or the Company's act or omission to act
after the Closing, the failure of the Company to receive a refund of
the portion of such prepaid asset allocable to the remainder of such
period; and
|
|
(viii)
|
Any
matter described on Schedule
9.2(a).
|
(b) Subject
to the provisions of this Agreement, the Buyer agrees to indemnify and hold
the
Seller and its Affiliates, predecessors, successors and assigns (and their
respective officers, directors, employees and agents) harmless from and against
and in respect of all Damages, resulting from or relating to:
-
42
-
|
(i)
|
A
breach by the Buyer or any of its Affiliates of any surviving
representation or warranty made by the Buyer or any such Affiliate
in this
Agreement;
|
| (ii) |
A
breach by the Buyer or any of its Affiliates of any covenant or
agreement
of the Buyer or any such Affiliate in this Agreement and to be
performed
post-Closing; and
|
|
(iii)
|
The
conduct by the Buyer or any of its Affiliates of the business of
the
Company from and after the Closing, but only to the extent that (x)
the Seller or one of its Affiliates shall be not obligated to indemnify
the Buyer or such Affiliate with respect to Damages resulting from
or
relating to such conduct of the Buyer or such Affiliate, or (ii)
the
Seller or any of its Affiliates shall have released the Buyer and
such
Affiliate from liability with respect to such conduct, under one
of the
other Transaction Documents.
|
(c) The
Seller’s and the Buyer’s respective indemnification obligations with respect to
Taxes are governed exclusively by Article VIII; provided,
however,
that
the procedures outlined in Section 9.3(d) shall be followed with respect to
claims made pursuant to Article VIII.
(d) For
purposes of calculating the amount of Damages incurred arising out of or
relating to any breach of a representation or warranty by the Seller (but not
for purposes of determining if a breach shall have occurred), the references
to
knowledge Material Adverse Effect or other materiality qualifications shall
be
disregarded.
Section
9.3. Limitations.
(a) Anything
contained in this Agreement to the contrary notwithstanding, (i) the Buyer
(on
behalf of itself and any of its Affiliates including the Company post-Closing)
shall not make any claim for indemnification pursuant to Section 9.2(a)(i)
until the aggregate amount of all such claims and claims for indemnification
pursuant to Section 9.2(a)(i) exceeds One Million Dollars ($1,000,000) (the
“Threshold”) and if the Threshold is exceeded, the Seller shall be required to
pay only those amounts in excess of the Threshold Amount up to the Maximum
Indemnification Amount, and (ii) the Seller shall not be required to make
indemnification payments for any claim for indemnification pursuant to Section
9.2(a)(i) to the extent indemnification payments would exceed in the aggregate
Twenty Million Dollars ($20,000,000.00) (the “Maximum Indemnification Amount”);
provided,
however,
the
Seller’s obligation and liability for any and all breaches of the
representations and warranties set forth in (i) Section 4.1, 4.2, 4.3(b), 4.5,
4.6, 5.1, 5.2, 5.7(c), or 5.7(d) or as set forth in Article VIII hereof shall
not be subject to the Threshold and shall not count toward determining whether
the Maximum Indemnification Amount has been reached, and (ii) Section 5.14
shall
not be subject to the Threshold. In determining the amount to which the Buyer
is
entitled to assert a claim for indemnification pursuant to this Article IX,
only
actual Damages, net of all Tax benefits actually realized by the Buyer in the
year of receipt of any indemnity payment. The Seller and the Buyer acknowledge
and agree that any event, transaction, circumstance, or liability, whether
contingent or accrued, for which adequate reserves by the Company have been
established on the Closing Date, shall not be used at any time as the basis
of
any claim for indemnification under Article VIII or this Article IX, or
considered in any way in determining whether the Threshold or the Maximum
Indemnification Amount has been reached. In addition, in connection with an
alleged breach of the Seller’s representations, warranties and covenants under
this Agreement, the Buyer’s Damages shall be net of all reserves established by
the Company as of the Closing Date in connection with the particular item or
contingency in dispute.
-
43
-
(b) The
obligation of the Seller to indemnify the Buyer under Section 8.1 and
Section 9.2(a) above shall expire, with respect to any representation,
warranty, covenant or agreement of the Seller, on the date on which the survival
of such representation, warranty, covenant or agreement shall expire in
accordance with Sections 8.6 and 9.1 above, except with respect to any written
claims for indemnification which the Buyer has delivered to the Seller prior
to
such date.
(c) The
obligation of the Buyer to indemnify the Seller under Section 9.2(b) above
shall
expire, with respect to any representation, warranty, covenant or agreement
of
the Buyer, on the date on which the survival of such representation, warranty,
covenant or agreement shall expire in accordance with Section 9.1 above, except
with respect to written claims for indemnification which the Seller has
delivered to the Buyer prior to such date.
(d) Promptly
after receipt by an indemnified party under this Article IX hereof of notice
of
any claim or the commencement of any Action, the indemnified party shall, if
a
claim in respect thereof is to be made against the indemnifying party under
this
Article IX hereof, notify the indemnifying party in writing of the claim or
the
commencement of that Action stating in reasonable detail the nature and basis
of
such claim and a good faith estimate of the amount thereof, provided that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to the indemnified party unless and only to the extent such
failure materially and adversely prejudices the ability of the indemnifying
party to defend against or mitigate damages arising out of such claim. If any
claim shall be brought against an indemnified party, it shall notify the
indemnifying party thereof and the indemnifying party shall be entitled to
participate therein, and to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party, and to settle and compromise any such
claim or Action; provided,
however,
that
the indemnifying party shall not agree or consent to the application of any
equitable relief upon the indemnified party without its written consent. After
notice from the indemnifying party to the indemnified party of its election
to
assume the defense of such claim or Action, the indemnifying party shall not
be
liable for other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided,
however,
that if
the indemnifying party elects not to assume such defense, the indemnified party
may retain counsel satisfactory to it and to defend, compromise or settle such
claim on behalf of and for the account and risk of the indemnifying party,
and
the indemnifying party shall pay all reasonable fees and expenses of such
counsel for the indemnified party promptly as statements therefor are received;
and, provided, further, that the indemnified party shall not consent to entry
of
any judgment or enter into any settlement or compromise without the written
consent of the indemnifying party which consent shall not be unreasonably
withheld. The Buyer and the Seller each agree to render to each other such
assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such claim or proceeding. The indemnified party shall
also have the right to select its own counsel, at its own expense, to represent
the indemnified party and to participate in the defense of such claim, as
applicable.
-
44
-
Section
9.4 Remedies Exclusive.
Except
as otherwise specifically provided in Article II, Section 7.6, Section 7.13
and
Article VIII hereof, the remedies provided in this Article IX shall be the
exclusive remedies of the parties hereto from and after the Closing in
connection with any breach of a representation or warranty, or non-performance,
partial or total, of any covenant or agreement contained herein. The provisions
of this Article IX shall apply to claims for indemnification asserted as between
the parties hereto as well as to third-party claims.
Section
9.5 Mitigation.
The
parties shall cooperate with each other with respect to resolving any
indemnifiable claim, including by making commercially reasonable efforts to
mitigate or resolve any such claim or Liability. Each party shall use
commercially reasonable efforts to address any claims or Liabilities that may
provide a basis for an indemnifiable claim such that each party shall respond
to
any claims or Liabilities in the same manner it would respond to such claims
or
Liabilities in the absence of the indemnification provisions of this Agreement.
Section
9.6 Treatment
of Payments.
All
payments made pursuant to this Article IX shall be treated as an adjustment
to
the Purchase Price.
ARTICLE
X
MISCELLANEOUS
Section
10.1 No
Third-Party Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any Person other than
the
parties and their respective successors and permitted assigns.
Section
10.2 Entire
Agreement.
This
Agreement (including the documents referred to herein) and the Disclosure
Schedules and Exhibits hereto constitutes the entire agreement among the parties
with respect to the subject matter hereof and there are no other understandings,
agreements, or representations by or among the parties, written or oral, related
in any way to the subject matter hereof.
Section
10.3 Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties named
herein and their respective successors and permitted assigns. No party may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other parties
hereto.
Section
10.4 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
-
45
-
Section
10.5 Headings.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
Section
10.6 Notices.
All
notices hereunder shall be sufficiently given for all purposes hereunder if
in
writing and delivered personally, sent by documented overnight delivery service
or, to the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth below.
Notices to the Buyer and Holdings shall be addressed to:
00
Xxx-xx-Xxxxx Xxxx, Xxxxx 0000
Xxxxxxxx
XX 00
Xxxxxxx
Attn:
Xxx
Xxxxx
Facsimile
No.: 000-000-0000
E-mail:
xxxxxx@xxxxxx.xx
with
copies to:
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxxxxxxx
Facsimile
No.: 000-000-0000
Email:
xxxxxxxxxxxx@xxxxxxx.xxx
or
at
such other address and to the attention of such other Person as the Seller
may
designate by written notice to the Buyer. Notices to the Seller shall be
addressed to:
GMACI
Holdings, LLC
000
Xxxxxxxx Xxxxxxxxxx, Xxx 000
M/C:
000-000-000
Xxxxxxxxxx,
XX 00000-0000
Attn:
Xxxx X. Xxxx, Xx.
Facsimile
No.: (248-263-7393)
E
Mail:
xxxx.x.xxxx@xxxxxx.xxx
with
copies to:
General
Counsel
GMACI
Holdings, LLC
000
Xxxxxxxx Xxxxxxxxxx, Xxx 000
M/C:
000-000-000
Xxxxxxxxxx,
XX 00000-0000
Attn:
Xxxxxx X. Xxxxx
Facsimile
No.: (248-263-4051)
E
mail:
xxxxxx.x.xxxxx@xx.xxx
-
46
-
or
at
such other address and to the attention of such other Person as the Buyer may
designate by written notice to the Seller.
Section
10.7 Governing
Law, Jurisdiction, Waiver of Jury Trial and Specific Performance.
(a) This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict
of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(b) Subject
to Section 10.8, each of the parties hereto irrevocably and unconditionally
submits to the exclusive jurisdiction of the U.S. District Court for the
Southern District of New York, sitting in New York, New York, or, if such court
does not have jurisdiction, the Supreme Court of the State of New York, County
of New York for purposes of enforcing this Agreement. In any such action, suit
or other proceeding, each of the parties hereto irrevocably and unconditionally
waives and agrees not to assert by way of motion, as a defense or otherwise
any
claims that it is not subject to the jurisdiction of the above court, that
such
action or suit is brought in an inconvenient forum or that the venue of such
action, suit or other proceeding is improper. Each of the parties hereto also
agrees that any final and unappealable judgment against a party hereto in
connection with any action, suit or other proceeding shall be conclusive and
binding on such party and that such award or judgment may be enforced in any
court of competent jurisdiction, either within or outside of the United States.
A certified or exemplified copy of such award or judgment shall be conclusive
evidence of the fact and amount of such award or judgment. Without limiting
the
foregoing, each party agrees that service of process on such party by written
notice as provided in Section 10.6 shall be deemed effective service of
process on such party.
(c) Subject
to Section 10.8, each of the Parties hereto hereby irrevocably waives any and
all right to trial by jury in any legal proceeding arising out of or related
to
this Agreement or the Transaction Documents or the transactions contemplated
hereby or thereby. The waivers in Section 10.7(b) and in this Section
10.7(c) have been made with the advice of counsel and with a full understanding
of the legal consequences thereof and shall survive the termination of this
Agreement.
(d) Notwithstanding
anything to the contrary contained herein, it is agreed that any party hereto
shall be entitled to an injunction or injunctions to prevent breaches of Section
7.6 of this Agreement and to enforce specifically the terms and provisions
thereof, this being in addition to any other remedy to which they are entitled
hereunder or otherwise.
Section
10.8 Arbitration.
(a) Any
disputes, controversies, or claims, arising out of or relating to one or more
Arbitrable Agreement, including, without limitation, in respect of the validity,
formation, or breach of any such agreement, shall be finally settled by binding
arbitration as set forth below.
-
47
-
(b) The
Arbitrable Agreement Parties intend to provide for a single forum for the
resolution of any disputes between or among them within paragraph (a) above.
Each Arbitrable Agreement Party, by virtue of executing such agreement
containing a clause providing for arbitration under the arbitration provisions
of this Agreement, shall be deemed to have irrevocably agreed, for itself and
any other party that claims under such Arbitrable Agreement by or through such
Arbitrable Agreement Party, to submit to binding arbitration hereunder. Without
prejudice to whether or not assignment or delegation is otherwise permissible
under an Arbitrable Agreement, each Arbitrable Agreement Party hereby covenants
(i) not to assign any of its rights, or delegate or contract for third-party
performance of any of its obligations, under any Arbitrable Agreement to or
with
any party that is not an Arbitrable Agreement Party unless such other party
agrees in writing to submit to arbitration hereunder; and (ii) to indemnify
any
other Arbitrable Agreement Party for any additional costs of arbitration, or
any
inability of such other Arbitrable Agreement Party to prove its case in
arbitration, or obtain an adequate remedy, that the arbitration panel determines
likely resulted from a failure to comply with (i). If a party obligated to
arbitrate by virtue of having executed the written agreement specified in (i)
above is an Affiliate of the original Arbitrable Agreement Party, such party
shall for all other purposes of an arbitration hereunder be deemed to be an
Arbitrable Agreement Party. Otherwise, such a party shall be deemed to be an
“Arbitration Joinder Party.” In any event, the trustee under the Trust Agreement
shall be deemed to be an Arbitration Joinder Party.
(c) Each
Arbitrable Agreement Party hereby appoints the Buyer or the Seller (or their
respective successors), as the case may be, as its exclusive agent and attorney
in fact to demand arbitration, to appoint an arbitrator, to receive notices
relating to arbitration, and to conduct arbitration on its behalf. The Buyer
shall be such agent for all Arbitrable Agreement Parties that are Affiliates
of
the Buyer at the time the arbitration is demanded, and all such Arbitration
Agreement Parties, together with the Buyer, shall constitute the “Buyer
Parties.” The Seller shall be such agent and attorney in fact for all Arbitrable
Agreement Parties that are Affiliates of the Seller at the time the arbitration
is demanded, and all such Arbitration Agreement Parties, together with the
Seller, shall constitute the “Seller Parties.” The Buyer Parties shall
constitute a single party for purposes of the arbitration, and shall jointly
file any brief or other submission to the arbitration panel, and the arbitration
panel shall have the power to order discovery from, and award relief against,
any of them regardless of whether they otherwise participate in the arbitration.
The Seller Parties shall constitute a single party for purposes of the
arbitration, and shall jointly file any brief or other submission to the
arbitration panel, and the arbitration panel shall have the power to order
discovery from, and award relief against, any of them regardless of whether
they
otherwise participate in the arbitration. Any Arbitration Joinder Party against
whom arbitration is demanded shall be deemed to have joined in the arbitrator
appointment made on behalf of the Arbitrable Agreement Party that assigned
to,
delegated to, or contracted with, it for purposes paragraph (b)
above,
or, in
the case of the trustee under the Trust Agreement, in the appointment made
on
behalf of the Buyer Parties.
Such
Arbitration Joinder Party shall have the right, however, to submit separate
briefs and other submissions to the arbitration panel, and any award made by
the
arbitration panel against it shall be stated separately within the
award.
-
48
-
(d) The
Seller or the Buyer may commence arbitration by written demand to the other
(and, if arbitration is against sought an Arbitration Joinder Party, to such
Arbitration Joinder Party), specifying: (i) the general nature of the disputes,
controversies or claims; (ii) the Arbitrable Agreements under which they arise;
(iii) the Arbitrable Agreement Parties on whose behalf arbitration is demanded;
(iv) the Arbitrable Agreement Parties and Arbitration Joinder Parties against
whom arbitration is sought; and (vi) whether the demanding party contends that
the disputes, controversies or claims are principally under this Agreement
or
under the Insurer SPAs. Whichever of the Buyer or the Seller receives such
demand may, within ten (10) business days of receipt, respond with a
counter-claim demand providing the same information and/or by disputing whether
the disputes, controversies or claims are principally under this Agreement
or
under the Insurer SPAs.
(e) If
the
Seller and the Buyer agree that the disputes, controversies or claims to be
arbitrated are principally under this Agreement or under the Insurer SPAs,
or if
the demand so asserted and was not timely disputed, then the arbitration shall
be administered by the American Arbitration Association (the “AAA”) in
accordance with its Commercial Arbitration Rules then in effect, including
its
Procedures for Large, Complex Commercial Disputes, as modified herein (the
“AAA
Rules”). In addition, if there is a timely-asserted dispute as to whether the
disputes, controversies or claims to be arbitrated are principally under this
Agreement or under the Insurer SPAs, then the arbitration shall be administered
by the AAA in accordance with the AAA Rules, provided that, if the arbitration
panel determines that the disputes, controversies or claims to be arbitrated
are
not principally under this Agreement or under the Insurer SPAs, it shall award
to the party that disputed such contention (i.e., the contention by the other
party that the disputes, controversies or claims to be arbitrated were
principally under this Agreement or under the Insurer SPAs) its share of any
additional costs by virtue of administration by the AAA and under the AAA Rules,
including the costs and expenses of any expert witness that would not have
otherwise been required. In all other cases, arbitration shall proceed under
the
then-most recent XXXXX-US Practical Guide to Reinsurance Arbitration Procedures,
as modified herein (“XXXXX Rules”).
(f) Arbitration
shall be before a panel of three disinterested arbitrators, one selected by
the
Seller on behalf of the Seller Parties, one selected by the Buyer on behalf
of
the Buyer Parties, and an umpire selected by the two arbitrators so selected.
No
arbitrator may be appointed until after expiration of the time period for
determining whether the arbitration is to proceed under the AAA Rules or under
the XXXXX Rules. For all arbitrations proceeding under the XXXXX Rules, the
arbitrators and umpire shall be either present or former executives or officers
of insurance or reinsurance companies, or arbitrators certified by XXXXX-US.
After expiration of the time period for determining whether the arbitration
is
to proceed under the AAA Rules or under the XXXXX Rules, either party may issue
a written demand sent to the other by overnight courier requiring that both
parties name their respective arbitrator on a specified business day no less
than thirty (30) days after the date of the naming demand. If either party
fails
to appoint its arbitrator by such deadline, the other party may appoint a
neutral arbitrator for it. Should the two arbitrators fail to choose an umpire
within thirty (30) days of the appointment of the second arbitrator, the umpire
shall be selected in accordance with the AAA Rules or the XXXXX-US Umpire
Selection Procedure, as the case may be.
-
49
-
(g) The
arbitration procedures shall be as follows:
|
(i)
|
The
seat of arbitration shall be New York, New York, but the arbitration
panel
may order that the hearings be held
elsewhere.
|
|
(ii)
|
The
parties may, by agreement, suspend any deadline hereunder or under
the AAA
Rules or the XXXXX Rules for the purpose of meeting and conferring
in an
attempt in good faith to agree upon a resolution of such
dispute.
|
|
(iii)
|
The
arbitration panel shall allow such discovery as the panel determines
is
appropriate under the circumstances. Any dispute regarding discovery
shall
be determined by the arbitration
panel.
|
|
(iv)
|
The
arbitration panel shall not be obligated to follow the strict rules
of law
or evidence. In addition, while the arbitration panel shall interpret
all
of the Arbitrable Agreements in accordance with their intent, it
shall
also specifically apply to such agreements, where applicable, the
custom
and practice of the insurance and reinsurance industry with a view
to
effecting the general purpose of such
agreements.
|
|
(v)
|
The
arbitration panel may award full or partial summary judgment under
the
same circumstances as a United States federal district court. In
addition,
where the arbitration panel determines that full and final relief
can be
given with respect to less than all of disputes, claims or controversies
asserted in the arbitration, it may issue a final partial award,
on which
judgment may be entered to the same extent as if a full final
award.
|
|
(vi)
|
Any
award shall be in writing and shall set forth the reasons for the
disposition of any claim, and the arbitration panel shall have thirty
(30)
days thereafter to reconsider and modify such decision if any party
so
requests within ten (10) days after the decision.
|
|
(vii)
|
The
majority decisions of the arbitration panel shall be final, binding,
and
non-appealable with respect to all persons, including (without limitation)
persons who have failed or refused to participate in the arbitration
process.
|
|
(viii)
|
The
arbitrator panel shall have authority to award relief under legal
or
equitable principles, including interim or preliminary relief, and
to
allocate responsibility for the costs of the arbitration and to award
recovery of reasonable attorneys’ fees and expenses in such manner as is
determined to be appropriate by the arbitration panel, except as
provided
above. The arbitration panel shall have no authority to award exemplary,
special, or punitive damages.
|
|
(ix)
|
Judgment
upon the award rendered by the arbitrator(s) may be entered in any
court
having personal and subject matter jurisdiction. The Buyer and the
Seller
each hereby submit to the personal jurisdiction of the Federal and
State
courts of New York for the purpose of confirming any such award and
entering judgment thereon in accordance with the Federal Arbitration
Act,
notwithstanding any other choice of law provision in any Arbitrable
Agreement.
|
-
50
-
|
(x)
|
All
arbitration proceedings hereunder, and all evidence given or discovered
pursuant hereto, shall be maintained in confidence by all parties
and by
the arbitration panel, except as necessary to enforce any award or
in any
subsequent dispute between the
parties.
|
|
(xi)
|
The
fact that the arbitration procedures hereunder shall have been or
may be
invoked shall not excuse any party from performing its obligations
under
this Agreement or any Transaction Document, and during the pendency
of any
such procedure all parties shall continue to perform their respective
obligations in good faith.
|
|
(xii)
|
All
applicable statutes of limitation shall be tolled while the procedures
hereunder are pending. The parties will take such action, if any,
required
to effectuate such tolling.
|
Section
10.9 Amendments
and Waivers.
This
Agreement may not be modified or amended except by an instrument or instruments
in writing signed by the party against whom enforcement of any such modification
or amendment is sought. Either party hereto may, only by an instrument in
writing, waive compliance by the other party hereto with any term or provision
of this Agreement on the part of such other party hereto to be performed or
complied with. The waiver by any party hereto of a breach of any term or
provision of this Agreement shall not be construed as a waiver of any subsequent
breach.
Section
10.10 Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction.
Section
10.11 Expenses.
Except
as otherwise provided herein, whether or not the transactions contemplated
hereby are consummated, each of the parties hereto will bear its own costs
and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
Section
10.12 Construction.
The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
-
51
-
Section
10.13 Incorporation
of Exhibits and Disclosure Schedules and Confidentiality
Agreement.
The
Exhibits, and Disclosure Schedules and Confidentiality Agreement identified
in
this Agreement are incorporated herein by reference and made a part hereof.
[Signature
page follows]
-
52
-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
|
GMACI
HOLDINGS LLC
|
||
|
By:
|
||
|
Title:
|
||
|
MAIDEN
HOLDINGS NORTH AMERICA, LTD.
|
||
|
By:
|
||
|
Title:
|
||
|
By:
|
||
|
Title:
|
||
BETWEEN
GMACI
LLC
AND
MAIDEN
HOLDINGS NORTH AMERICA, LTD.
RELATING
TO THE PURCHASE AND SALE OF ALL OF
THE
OUTSTANDING EQUITY INTERESTS
OF
GMAC
RE LLC
DATED
OCTOBER 31, 2008
SELLER’S
DISCLOSURE SCHEDULE
|
Section
4.4
|
Seller
Consents
|
|
Section
5.2(a)
|
Company
Capitalization
|
|
Section
5.2(d)
|
Subsidiaries
|
|
Section
5.3
|
Noncontravention
with respect to the Company
|
|
Section
5.4
|
Company
Consents
|
|
Section
5.5(b)
|
Leases
|
|
Section
5.5(d)
|
Assets
and Rights Held by Affiliates
|
|
Section
5.6
|
Insurance
|
|
Section
5.7(a)
|
Financial
Statements
|
|
Section
5.7(b)
|
Actuarial
Materials
|
|
Section
5.8
|
Absence
of Undisclosed Liabilities
|
|
Section
5.9(b)
|
Events
Subsequent to June 30, 2008
|
|
Section
5.10
|
Legal
Compliance
|
|
Section
5.11(a)
|
Intellectual
Property - Owned Intangible Property
|
|
Section
5.11(b)
|
Intellectual
Property - Licensed Intangible Property
|
|
Section
5.1(c)(i)
|
Patents,
Trademarks, Service Marks and Copyrights
|
|
Section
5.(a11(c)(ii)
|
Claims
Against Intellectual Property Rights
|
|
Section
5.11(d)
|
Written
Notices of Infringement of Intellectual Property
|
|
Section
5.12
|
Material
Contracts
|
|
Section
5.13
|
Litigation
|
|
Section
5.14
|
Licenses,
Permits, and Exemptions
|
|
Section
5.15
|
Affiliate
Transactions
|
|
Section
5.16
|
Accounts
Receivable
|
|
Section
5.18
|
Employee
Relations
|
|
Section
5.19
|
Employee
Plan Liabilities
|
|
Section
5.20
|
Employment
Agreements
|
|
Section
5.21
|
Company
Relationships
|
|
Section
7.6
|
Exclusions
from Noncompetition
|
|
Section
8.1(f)
|
Taxes
|
BUYER’S
DISCLOSURE SCHEDULE
|
Section
6.4
|
Consents
|
SCHEDULES
|
Schedule
3.2(a)(i)
|
Assignment
of Membership Interests
|
|
Schedule
9.2(a)
|
Other
Seller Indemnifications
|
SCHEDULE
3.2(A)(I)
ASSIGNMENT
OF MEMBERSHIP INTEREST
This
Assignment of Membership Interest (“Assignment”) is entered into as of the ___
day of October 2008 by the GMACI Holdings LLC, a Delaware limited liability
company (“Assignor”), in favor of Maiden Holdings North America, Ltd., a
Delaware corporation (“Assignee”).
RECITALS:
|
A.
|
Assignor
owns a 100% of the membership interest (the “Membership Interest”) in GMAC
Re LLC (“Company”), a Delaware limited liability
company.
|
|
B.
|
Pursuant
to that certain Security Purchase Agreement by and between Assignee
and
Assignor dated October ______, 2008, Assignor has agreed to transfer
and
assign to Assignee all of Assignor’s interest in
Company.
|
ASSIGNMENT:
FOR
VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, Assignor hereby conveys, transfers and assigns to the Assignee,
its successors and assigns, effective as of the date hereof, all of Assignor’s
right, title, and interest in Assignor’s Membership Interest.
IN
WITNESS WHEREOF, Assignor has executed this instrument as of the date first
above written.
ASSIGNOR
GMACI
HOLDINGS LLC
|
By:
|
|
|
Name:
|
|
|
Title:
|
SCHEDULE
9.2(a)
OTHER
SELLER INDEMNIFICATIONS
Liabilities
arising in connection with the USAgencies class action lawsuit described on
Section 5.13 of Seller’s Disclosure Schedule to the extent such liabilities are
not accrued or reserved by Motors in the reserves transferred to Maiden pursuant
to the Reinsurance Agreement.
TABLE
OF CONTENTS
|
Page
|
|||
|
ARTICLE
I
|
DEFINITIONS
|
1
|
|
|
Section
1.1
|
General
Provisions.
|
1
|
|
|
Section
1.2
|
Definitions.
|
2
|
|
|
ARTICLE
II
|
PURCHASE
AND SALE OF INTERESTS
|
10
|
|
|
|
|||
|
Section
2.1
|
Purchase
and Sale of Interests.
|
10
|
|
|
|
|||
|
Section
2.2
|
Purchase
Price.
|
11
|
|
|
Section
2.3
|
Cash
Payment at Closing
|
11
|
|
|
Section
2.4
|
Final
Closing Balance Sheet
|
11
|
|
|
Section
2.5
|
Adjustment
to Purchase Price.
|
13
|
|
|
Section
2.6
|
Payment
and Interest.
|
13
|
|
|
Section
2.7
|
Purchase
Price Allocation.
|
13
|
|
|
ARTICLE
III
|
THE
CLOSING
|
14
|
|
|
Section
3.1
|
Time
and Place of Closing.
|
14
|
|
|
Section
3.2
|
Deliveries
at Closing.
|
14
|
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES REGARDING THE SELLER
|
16
|
|
|
Section
4.1
|
Organization.
|
16
|
|
|
Section
4.2
|
Authorization
of Transaction.
|
17
|
|
|
Section
4.3
|
Noncontravention.
|
17
|
|
|
Section
4.4
|
Consents.
|
17
|
|
|
Section
4.5
|
Brokers'
Fees.
|
17
|
|
|
Section
4.6
|
The
Interests.
|
17
|
|
|
ARTICLE
V
|
REPRESENTATIONS
AND WARRANTIES REGARDING THE COMPANY
|
18
|
|
|
Section
5.1
|
Organization,
Qualification, and Corporate Power.
|
18
|
|
|
Section
5.2
|
Capitalization
and Subsidiaries.
|
18
|
|
|
Section
5.3
|
Noncontravention
with respect to the Company.
|
18
|
|
|
|
|||
|
Section
5.4
|
Consents.
|
19
|
|
|
Section
5.5
|
Title
and Related Matters.
|
19
|
|
|
Section
5.6
|
Insurance.
|
20
|
-i-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
Section
5.7
|
Financial
Statements.
|
20
|
|
|
Section
5.8
|
Absence
of Undisclosed Liabilities.
|
21
|
|
|
Section
5.9
|
Events
Subsequent to June 30, 2008.
|
21
|
|
|
Section
5.10
|
Legal
Compliance.
|
22
|
|
|
Section
5.11
|
Intellectual
Property.
|
23
|
|
|
Section
5.12
|
Contracts.
|
24
|
|
|
Section
5.13
|
Litigation.
|
26
|
|
|
Section
5.14
|
Licenses, Permits, and
Exemptions.
|
26
|
|
|
Section
5.15
|
Affiliate
Transactions.
|
26
|
|
|
Section
5.16
|
Accounts
Receivable
|
26
|
|
|
Section
5.17
|
Employees
|
27
|
|
|
Section
5.18
|
Employee
Relations
|
27
|
|
|
Section
5.19
|
Employee
Benefit Plans and Programs
|
28
|
|
|
Section
5.20
|
Employment
Agreements
|
28
|
|
|
Section
5.21
|
Company
Relationships
|
28
|
|
|
Section
5.22
|
Renewal
Rights
|
28
|
|
|
Section
5.23
|
Environmental
Matters
|
29
|
|
|
Section
5.24
|
Disclosure.
|
29
|
|
|
Section
5.25
|
Exclusion
of Implied Representations and Warranties.
|
29
|
|
|
ARTICLE
VI
|
REPRESENTATIONS
AND WARRANTIES REGARDING THE BUYER
|
29
|
|
|
Section
6.1
|
Organization.
|
29
|
|
|
Section
6.2
|
Authorization
of Transaction.
|
29
|
|
|
Section
6.3
|
Noncontravention.
|
30
|
|
|
Section
6.4
|
Consents.
|
30
|
|
|
Section
6.5
|
A.M.
Best Rating.
|
30
|
|
|
Section
6.6
|
Buyer
Parent SEC Documents.
|
30
|
|
|
Section
6.7
|
Capital
Commitment
|
30
|
|
|
Section
6.8
|
Brokers'
Fees.
|
31
|
|
|
Section
6.9
|
Disclosure.
|
31
|
-ii-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
Section
6.10
|
Exclusion
of Implied Representations and Warranties.
|
31
|
|
|
ARTICLE
VII
|
POST-CLOSING
COVENANTS
|
31
|
|
|
Section
7.1
|
Notices
and Consents.
|
31
|
|
|
Section
7.2
|
Corporate
Names.
|
31
|
|
|
Section
7.3
|
General.
|
31
|
|
|
Section
7.4
|
Litigation
Support.
|
32
|
|
|
Section
7.5
|
Confidentiality
|
32
|
|
|
Section
7.6
|
Seller’s
Noncompetition.
|
33
|
|
|
Section
7.7
|
Completion
of Rights Offering
|
33
|
|
|
Section
7.8
|
Third
Party Consents.
|
34
|
|
|
Section
7.9
|
Licensing
of the Company by the Buyer.
|
34
|
|
|
Section
7.10
|
Financial
Statements with Respect to the Carved-Out Business of
GMAC.
|
34
|
|
|
Section
7.11
|
Maintenance
of Post-Closing Business
|
34
|
|
|
|
|||
|
Section
7.12
|
COBRA
Benefits.
|
35
|
|
|
Section
7.13
|
Buyer
Covenant Regarding Restricted Businesses
|
36
|
|
|
ARTICLE
VIII
|
TAXES
|
38
|
|
|
Section
8.1
|
Tax
Representations.
|
38
|
|
|
Section
8.2
|
Tax
Indemnity by the Seller.
|
39
|
|
|
Section
8.3
|
Tax
Cooperation; Allocation of Taxes.
|
39
|
|
|
Section
8.4
|
Payments.
|
40
|
|
|
Section
8.5
|
Other
Taxes.
|
40
|
|
|
Section
8.6
|
Survival
Periods.
|
41
|
|
|
ARTICLE
IX
|
SURVIVAL,
INDEMNIFICATION
|
41
|
|
|
Section
9.1
|
Survival
of Representations and Warranties, Covenants and
Agreements
|
41
|
|
|
Section
9.2
|
Indemnification.
|
41
|
|
|
Section
9.3
|
Limitations.
|
43
|
|
|
Section
9.4
|
Remedies Exclusive.
|
45
|
|
|
Section
9.5
|
Mitigation.
|
45
|
-iii-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
Section
9.6
|
Treatment
of Payments.
|
45
|
|
|
ARTICLE
X
|
MISCELLANEOUS
|
45
|
|
|
Section
10.1
|
No
Third-party Beneficiaries.
|
45
|
|
|
Section
10.2
|
Entire
Agreement.
|
45
|
|
|
Section
10.3
|
Succession
and Assignment.
|
45
|
|
|
Section
10.4
|
Counterparts
|
45
|
|
|
Section
10.5
|
Headings
|
46
|
|
|
Section
10.6
|
Notices
|
46
|
|
|
Section
10.7
|
Governing
Law.
|
47
|
|
|
Section
10.8
|
Arbitration.
|
47
|
|
|
Section
10.9
|
Amendments
and Waivers
|
51
|
|
|
|
|||
|
Section
10.10
|
Severability
|
51
|
|
|
Section
10.11
|
Expenses
|
51
|
|
|
Section
10.12
|
Construction
|
51
|
|
|
Section
10.13
|
Incorporation
of Exhibits and Disclosure Schedules and Confidentiality
Agreement
|
52
|
-iv-
