(a)

 

 

$22,000,000.00 to be paid to Sellers in cash; and

 

 

(b)

 

 

either:

 

 

(i)

 

 

in the event the Bond Gains are equal to or greater than $15,000,000.00, one-half (50%) of that amount by which the total amount of the Bond Gains exceeds $15,000,000.00, which amount, if any, shall be paid to Sellers in cash in addition to the amount set forth in Section 2.02(a); or

 

 

(ii)

 

 

in the event the Bond Gains are less than $15,000,000.00, all (100%) of that amount by which $15,000,000.00 exceeds the total amount of the Bond Gains shall be deducted from the amount set forth in Section 2.02(a).

 

 

(a)

 

 

At the Closing, Buyer shall:

 

 

(i)

 

 

deliver to each Seller (in accordance with each Seller’s Pro Rata Share):

 

 

(A)

 

 

the Purchase Price less the Indemnification Escrow Amount by wire transfer of immediately available funds to an account designated in writing by such Seller to Buyer no later than three (3) Business Days prior to the Closing Date; and

 

 

(B)

 

 

the Escrow Agreement, the Coinsurance Agreement and all other agreements, documents, instruments or certificates required to be delivered by Buyer at or prior to the Closing pursuant to Section 7.03 of this Agreement.

 

 

(ii)

 

 

deliver to the Escrow Agent:

 

 

(A)

 

 

the Indemnification Escrow Amount (such amount, including any interest or other amounts earned thereon and less any disbursements therefrom in accordance with the Escrow Agreement, the “Indemnification Escrow Fund”) by wire transfer of immediately available funds to accounts designated by the Escrow Agent, to be held for the purpose of securing the indemnification obligations of Seller set forth in ARTICLE VIII and the obligations of Seller in Section 6.10; and

 

 

(B)

 

 

the Escrow Agreement.

 

 

(b)

 

 

At the Closing, Seller shall deliver to Buyer:

 

 

(i)

 

 

stock certificates evidencing the Shares, free and clear of all Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto; and

 

 

(ii)

 

 

the Escrow Agreement, the Coinsurance Agreement and all other agreements, documents, instruments or certificates required to be delivered by Seller at or prior to the Closing pursuant to Section 7.02 of this Agreement.

 

 

(a)

 

 

If Seller is not a natural person, Seller is a corporation, trust, limited liability or partnership duly organized, validly existing and in good standing under the Laws of the state of its organization (as applicable). Seller has full power and authority to enter into the Transaction Documents, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of the Transaction Documents, the performance by Seller of its obligations hereunder and thereunder, and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of Seller.

 

 

(b)

 

 

If Seller is a natural person, Seller has full legal capacity to enter into the Transaction Documents, to carry out his or her obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.

 

 

(c)

 

 

The Transaction Documents have been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by the other parties thereto) the Transaction Documents constitute a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms.

 

 

(a)

 

 

The authorized capital stock of the Company consists of 2,900,000 shares of common stock, par value $1.00 per share (“Common Stock”), of which 800,020 shares are issued and outstanding and constitute the Shares. Except as set forth on Schedule 3.03(a), all of the Shares have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by Seller, free and clear of all Encumbrances. Upon consummation of the transactions contemplated by this Agreement, Buyer shall own all of the Shares, free and clear of all Encumbrances. The Shareholders of the Company and the Shares held by each are set forth on Schedule A.

 

 

(b)

 

 

All of the Shares were issued in compliance with applicable Laws. None of the Shares were issued in violation of any agreement, arrangement or commitment to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.

 

 

(c)

 

 

There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Company or obligating Seller or the Company to issue or sell any shares of capital stock of, or any other interest in, the Company. The Company does not have outstanding or authorized any stock appreciation, phantom stock, profit participation or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares.

 

 

(d)

 

 

(i) The Surplus Note is the only debenture owed by the Company; (ii) that % Surplus Debenture executed by the Company, dated December 3, 2008, was never consummated and is null and void; and (iii) the total amount of the Company’s obligations on all debentures as of the date hereof is $6,411,506.00.

 

 

(a)

 

 

The Company owns 100% of the issued and outstanding common stock or limited liability company interests of the Company Subsidiaries (the “Subsidiary Equity”). All of the Subsidiary Equity has been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by the Company, free and clear of all Encumbrances.

 

 

(b)

 

 

Other than the Company Subsidiaries and International Star, neither the Company nor any Company Subsidiary owns or has any interest in any shares or have an ownership interest in any other Person.

 

 

(c)

 

 

Upon consummation of the transactions contemplated by this Agreement, the Company shall own all of the Subsidiary Equity, free and clear of all Encumbrances.

 

 

(d)

 

 

All of the Subsidiary Equity was issued in compliance with applicable Laws. None of the Subsidiary Equity were issued in violation of any agreement, arrangement or commitment to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.

 

 

(e)

 

 

There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Subsidiary Equity or obligating any Company Subsidiary or the Company to issue or sell any shares of capital stock or membership interest of, or any other interest in, any Company Subsidiary. No Company Subsidiary has any outstanding or authorized any stock appreciation, phantom stock, profit participation or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Subsidiary Equity.

 

 

(a)

 

 

Complete copies of the Company Group's audited financial statements consisting of the balance sheet of each member of the Company Group as of December 31 in each of the years 2016, 2017 and 2018 and the related statements of income and retained earnings, stockholders' equity and cash flow for the years then ended (the “Audited Financial Statements”), and unaudited financial statements consisting of the balance sheet of each member of the Company Group as of June 30, 2019 and the related statements of income and retained earnings, stockholders' equity and cash flow for the six-month period then ended (the “Interim Financial Statements” and together with the Audited Financial Statements, “Financial Statements”) are included in the Disclosure Schedules. The Financial Statements have been prepared have been prepared in accordance with the statutory accounting rules prescribed or permitted by the Louisiana Insurance Department, applied on a consistent basis throughout the periods indicated. The Financial Statements are based on the books and records of the relevant member of the Company Group, and fairly present the financial condition of such member of the Company Group as of the respective dates they were prepared and the results of the operations of such member of the Company Group for the periods indicated. The balance sheet of the Company as of December 31, 2018 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Company as of June 30, 2019 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”. The Company Group maintains a standard system of accounting established and administered in accordance with the statutory accounting rules prescribed by the Louisiana Insurance Department.

 

 

(b)

 

 

For the last three (3) calendar years and 2019 year to date, the Company (and each Company Subsidiary, if applicable) has filed all required Financial Statements, together with all exhibits, interrogatories, notes, actuarial opinions, affirmations, certifications, schedules or other material supporting documents in connection therewith, required to be filed with the Louisiana Insurance Department on forms prescribed or permitted by the Louisiana Insurance Department.

 

 

(c)

 

 

Except as set forth in Schedule 3.06(c) or in the notes to the Financial Statements, no material weakness or significant deficiency with respect to any of the Financial Statements has been asserted in writing or otherwise communicated to any member of the Company Group.

 

 

(d)

 

 

The Company has delivered to Buyer copies of all material actuarial reports prepared by appointed actuaries with respect to any member of the Company Group and the business of the Company Group for the last three (3) calendar years and 2019 year to date, and all attachments, opinions, certifications, addenda, supplements and modifications thereto.

 

 

(e)

 

 

The Company has delivered to Buyer true and complete copies of all risk-based capital calculations and accompanying analyses and reports submitted by the Company (or any other Company Subsidiary) to the Louisiana Insurance Department for the last three (3) calendar years.  Except as indicated in the Financial Statements or in any amended calculations submitted to the Louisiana Insurance Department as reflected in Schedule 3.06(e), such calculations were true and accurate, in all material respects, as of the respective dates as of which such calculations were prepared.

 

 

(f)

 

 

Except for the Financial Statements, and except for monthly internal income statements and balance sheets prepared by the Company Group, copies of which have previously been delivered to Buyer, and except as set forth in Section 3.06(f) of the Disclosure Schedules, no other financial statements have been prepared by or with respect to any member of the Company Group (whether on a GAAP, statutory, consolidated, hybrid or other basis).

 

 

(g)

 

 

Except as set forth in the Financial Statements or Schedule 3.06(g), (a) there are no Liabilities between a member of Company Group, on the one hand, and Seller or any of its Affiliates (other than a member of the Company Group), on the other hand, and (b) neither Seller nor any of its Affiliates (other than a member of the Company Group) provide or cause to be provided to the Company Group any products, services, equipment, facilities, or similar items that, in the case of this clause (b), individually or in the aggregate are material to the business or condition of the Company Group.

 

 

(a)

 

 

event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

 

(b)

 

 

amendment of the charter, by-laws or other organizational documents of the Company Group;

 

 

(c)

 

 

split, combination or reclassification of any shares of its capital stock;

 

 

(d)

 

 

issuance, sale or other disposition of any of its capital stock, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;

 

 

(e)

 

 

declaration or payment of any dividends or distributions on or in respect of any of its capital stock or redemption, purchase or acquisition of its capital stock;

 

 

(f)

 

 

material change in any method of accounting or accounting practice of the Company Group, except as required by statuary accounting or as disclosed in the notes to the Financial Statements;

 

 

(g)

 

 

material change in the Company Group's cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

 

 

(h)

 

 

entry into any Contract that would constitute a Material Contract or amend or terminate any Material Contract;

 

 

(i)

 

 

incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;

 

 

(j)

 

 

transfer, assignment, sale or other disposition of any of the assets shown or reflected in the Financial Statements or cancellation of any debts or entitlements;

 

 

(k)

 

 

transfer or assignment of or grant of any license or sublicense under or with respect to any Company Intellectual Property or Company IP Agreements;

 

 

(l)

 

 

abandonment or lapse of or failure to maintain in full force and effect any Company IP Registration;

 

 

(m)

 

 

material damage, destruction or loss (whether or not covered by insurance) to its property;

 

 

(n)

 

 

any capital investment in, or any loan to, any other Person;

 

 

(o)

 

 

acceleration, termination, material modification to or cancellation of any Contract (including, but not limited to, any Material Contract) to which any member of the Company Group is a party or by which it is bound;

 

 

(p)

 

 

any material capital expenditures;

 

 

(q)

 

 

imposition of any Encumbrance upon any of the Company Group properties, capital stock or assets, tangible or intangible, except for Permitted Encumbrances;

 

 

(r)

 

 

(i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, managers, Producers, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $20,000, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, manager, independent contractor or consultant;

 

 

(s)

 

 

hiring or promoting any person as or to (as the case may be) an officer or hiring or promoting any employee below officer except to fill a vacancy in the ordinary course of business;

 

 

(t)

 

 

adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, manager, Producer, independent contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;

 

 

(u)

 

 

any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its stockholders or current or former directors, managers, officers and employees;

 

 

(v)

 

 

entry into a new line of business or abandonment or discontinuance of existing lines of business;

 

 

(w)

 

 

adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

 

 

(x)

 

 

purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $50,000, individually (in the case of a lease, per annum) or $50,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;

 

 

(y)

 

 

acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof;

 

 

(z)

 

 

action by the Company to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period;

 

 

(aa)

 

 

action by any member of the Company Group to amend the employment relationship with any Key Employee; or

 

 

(bb)

 

 

any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

 

 

(a)

 

 

Section 3.09(a) of the Disclosure Schedules lists all of the following Contracts of the Company Group (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Real Property (including without limitation, brokerage contracts) required to be listed or otherwise disclosed in Section 3.10(b) of the Disclosure Schedules and all Company IP Agreements, being “Material Contracts”):

 

 

(i)

 

 

each Contract of the Company Group involving aggregate consideration in excess of $25,000 and which, in each case, cannot be cancelled by the Company without penalty or without more than ninety (90) days' notice;

 

 

(ii)

 

 

all Contracts that require the Company Group to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions;

 

 

(iii)

 

 

all Contracts that provide for the indemnification by the Company Group of any Person or the assumption of any Tax, environmental or other liability of any Person;

 

 

(iv)

 

 

all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any Real Property of the Company Group (whether by merger, sale of stock, sale of assets or otherwise);

 

 

(v)

 

 

all Producer, manufacturer's representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which any member of the Company Group is a party;

 

 

(vi)

 

 

all Contracts or arrangements with employees, independent contractors, Producers or consultants (or similar arrangements) to which any member of the Company Group is a party;

 

 

(vii)

 

 

all arrangements that offer or purport to offer equity interests or the right to receive equity interests in any member of the Company Group or any cash or severance or other bonus or incentive in connection with any change of control of any member of the Company Group or otherwise;

 

 

(viii)

 

 

all reinsurance, coinsurance or other similar Contracts;

 

 

(ix)

 

 

except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including, without limitation, guarantees) of the Company Group;

 

 

(x)

 

 

all Contracts with any Governmental Authority to which any member of the Company Group is a party (“Government Contracts”);

 

 

(xi)

 

 

all Contracts that limit or purport to limit the ability of any member of the Company Group to compete in any line of business or with any Person or in any geographic area or during any period of time;

 

 

(xii)

 

 

any Contracts to which any member of the Company Group is a party that provide for any joint venture, partnership or similar arrangement by the Company Group;

 

 

(xiii)

 

 

all Contracts between or among any member of the Company Group on the one hand and any Affiliate of any member of the Company Group (which shall be also identified on Schedule 3.23(n));

 

 

(xiv)

 

 

all Contracts between or among any member of the Company Group on the one hand and Seller or any Affiliate of Seller (other than any member of the Company Group) on the other hand (other than those set forth in the immediately preceding subparagraph);

 

 

(xv)

 

 

all Contracts between any member of the Company Group, on the one hand, and International Star, on the other hand;

 

 

(xvi)

 

 

all collective bargaining agreements or Contracts with any Union to which any member of the Company Group is a party; and

 

 

(xvii)

 

 

any other Contract that is material to any member of the Company Group and not previously disclosed pursuant to this Section 3.09.

 

 

(b)

 

 

Each Material Contract is valid and binding on any member of the Company Group in accordance with its terms and is in full force and effect. None of the members of the Company Group or, to Seller's Knowledge, any other party thereto is in breach of or default, in any material respect, under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Material Contract. To Seller’s Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any material right or obligation or the loss of any material benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been delivered to Buyer.

 

 

(a)

 

 

Other than as set forth on Schedule 3.10(a), the Company Group has good and valid (and, in the case of owned Real Property, good and marketable fee simple) title to, or a valid leasehold interest in, all Real Property and personal property and other assets. Except as set forth on Schedule 3.10(a), all such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

 

 

(i)

 

 

liens for Taxes not yet due and payable;

 

 

(ii)

 

 

mechanics, carriers', workmen's, repairmen's or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of the Company;

 

 

(iii)

 

 

easements, rights of way, zoning ordinances and other similar Encumbrances affecting Real Property which (A) are recorded in the conveyance or mortgage records of the Parish or County where the Real Property is located or (B) are not, individually or in the aggregate, material to the business of the Company; or

 

 

(iv)

 

 

other than with respect to owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of the Company.

 

 

(b)

 

 

Section 3.10(b) of the Disclosure Schedules lists (i) the street address of each parcel of Real Property; (ii) if such property is leased or subleased by any member of the Company Group, the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. With respect to owned Real Property, Seller has delivered to Buyer true, complete and correct copies of the deeds and other instruments (as recorded) by which such Real Property was acquired, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of Seller or any member of the Company Group and relating to the Real Property. With respect to leased Real Property, Seller has delivered to Buyer true, complete and correct copies of any leases affecting the Real Property. No member of the Company Group is a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of the Company's business do not violate any Law, covenant, condition, restriction, easement, license, Permit or agreement. Except as set forth on Schedule 3.10(b), no material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than any member of the Company Group. There are no Actions pending nor, to Seller's Knowledge, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.

 

 

(c)

 

 

The Lease, by and between the Company, as lessor, and A & M Shehee Interests, LLC, as lessee, dated as of April 16, 2014 (the “A&M Shehee Lease”) is still in effect as a reconducted lease on a “month to month” basis;

 

 

(d)

 

 

 The option to purchase referenced in the A&M Shehee Lease has not been exercised, and Seller has received no communications related to the exercise of such option.

 

 

(a)

 

 

Section 3.12(a) of the Disclosure Schedules contains a correct, current, and complete list of: (i) all Company IP Registrations, specifying as to each, as applicable: the title, mark, or design; the record owner and inventor(s), if any; the jurisdiction by or in which it has been issued, registered, or filed; the patent, registration, or application serial number; the issue, registration, or filing date; and the current status (ii) all unregistered Trademarks included in the Company Intellectual Property;  (iii) all proprietary software of the Company Group; and (iv) all other Company Intellectual Property used or held for use in the Company's business as currently conducted.

 

 

(b)

 

 

Section 3.12(b) of the Disclosure Schedules contains a correct, current, and complete list of all Company IP Agreements, specifying for each the date, title, and parties thereto, and separately identifying the Company IP Agreements: (i) under which any member of the Company Group is a licensor or otherwise grants to any Person any right or interest relating to any Company Intellectual Property; (ii) under which any member of the Company Group is a licensee or otherwise granted any right or interest relating to the Intellectual Property of any Person; and (iii) which otherwise relate to the Company Group's ownership or use of Intellectual Property, in each case identifying the Intellectual Property covered by such Company IP Agreement. Seller has provided Buyer with true and complete copies (or in the case of any oral agreements, a complete and correct written description) of all Company IP Agreements, including all modifications, amendments and supplements thereto and waivers thereunder. Each Company IP Agreement is valid and binding on the Company in accordance with its terms and is in full force and effect. Neither the Company nor, to Seller’s Knowledge, any other party thereto is, or is alleged to be, in breach of or default under, or has provided or received any notice of breach of, default under, or intention to terminate (including by non-renewal), any Company IP Agreement.

 

 

(c)

 

 

The Company is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record, owner of all right, title, and interest in and to the Company Intellectual Property, and has the valid and enforceable right to use all other Intellectual Property used or held for use in or necessary for the conduct of the Company's business as currently conducted and as proposed to be conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances. All assignments and other instruments necessary to establish, record, and perfect the Company's ownership interest in the Company IP Registrations have been validly executed, delivered, and filed with the relevant Governmental Authorities and authorized registrars.

 

 

(d)

 

 

Neither the execution, delivery or performance of the Transaction Documents, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of, or require the consent of any other Person in respect of, the Company's right to own or use any Company Intellectual Property or Licensed Intellectual Property.

 

 

(e)

 

 

All of the Company Intellectual Property and Licensed Intellectual Property are valid and enforceable, and all Company IP Registrations are subsisting and in full force and effect. The Company has taken all reasonable and necessary steps to maintain and enforce the Company Intellectual Property and Licensed Intellectual Property and to preserve the confidentiality of all Trade Secrets included in the Company Intellectual Property, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements. All required filings and fees related to the Company IP Registrations have been timely submitted with and paid to the relevant Governmental Authorities and authorized registrars.  Seller has provided Buyer with true and complete copies of all material documents, certificates, office actions, correspondence, assignments, dockets, and other instruments relating to the Company IP Registrations, whenever possible in an editable format.

 

 

(f)

 

 

The conduct of the Company Group's business as currently and formerly conducted and as proposed to be conducted, including the use of the Company Intellectual Property and Licensed Intellectual Property in connection therewith, and the products, processes and services of each member of the Company Group have not infringed, misappropriated or otherwise violated, and will not infringe, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person. To Seller’s Knowledge, no Person has infringed, misappropriated or otherwise violated any Company Intellectual Property or Licensed Intellectual Property.

 

 

(g)

 

 

There are no Actions (including any opposition, cancellation, revocation, review, or other proceeding), whether settled, pending, or threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation, or other violation by any member of the Company Group of the Intellectual Property of any Person; (ii) challenging the validity, enforceability, registrability, patentability, or ownership of any Company Intellectual Property or Licensed Intellectual Property or any member of the Company Group's right, title, or interest in or to any Company Intellectual Property or Licensed Intellectual Property; or (iii) by any member of the Company Group or by the owner of any Licensed Intellectual Property alleging any infringement, misappropriation, or other violation by any Person of the Company Intellectual Property or such Licensed Intellectual Property. To Seller’s Knowledge, there are no facts or circumstances that could reasonably be expected to give rise to any such Action. No member of the Company Group is subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to restrict or impair the use of any Company Intellectual Property or Licensed Intellectual Property.

 

 

(h)

 

 

Section 3.12(h) of the Disclosure Schedules contains a correct, current, and complete list of all social media accounts used in the Company Group's business. The Company Group has complied, in all material respects, with all terms of use, terms of service, and other Contracts and all associated policies and guidelines relating to its use of any social media platforms, sites, or services (collectively, “Platform Agreements”). There are no Actions, whether settled, pending, or threatened, alleging any (A) breach or other violation of any Platform Agreement by the Company; or (B) defamation, violation of publicity rights of any Person, or any other violation by any member of the Company Group in connection with its use of social media.

 

 

(i)

 

 

To Seller’s Knowledge, all Company IT Systems are in good working condition and are sufficient for the operation of the Company's business as currently conducted and as proposed to be conducted. In the past five (5) years, there has been no malfunction, failure, continued substandard performance, denial-of-service, or other cyber incident, including any cyberattack, or other impairment of the Company IT Systems that has resulted or is reasonably likely to result in disruption or damage to the business of any member of the Company Group. The Company Group has taken all commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity of the Company IT Systems, including implementing and maintaining appropriate backup, disaster recovery, and software and hardware support arrangements.

 

 

(j)

 

 

The Company Group has complied with (i) all applicable Laws and (ii) all internal or publicly posted policies, notices, and statements concerning the collection, use, processing, storage, transfer, and security of personal information in the conduct of the Company Group's business, except to the extent such noncompliance would not have, and would not reasonably be expected to have, a Material Adverse Effect. In the past five (5) years, the Company Group has not (i) experienced any actual, alleged, or suspected data breach or other security incident involving personal information in its possession or control or (ii) been subject to or received any written notice of any audit, investigation, complaint, or other Action by any Governmental Authority or other Person concerning the Company Group's collection, use, processing, storage, transfer, or protection of personal information or actual, alleged, or suspected violation of any applicable Law concerning privacy, data security, or data breach notification, and there are no facts or circumstances that could reasonably be expected to give rise to any such Action.

 

 

(a)

 

 

Other than as set forth on Schedule 3.14(a), there are no Actions pending or, to Seller's Knowledge, threatened (a) against or by the Company Group affecting any of its properties or assets (or by or against Seller or any Affiliate thereof and relating to any member of the Company Group); or (b) against or by the Company Group, Seller or any Affiliate of Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Seller’s Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

 

(b)

 

 

Except as set forth on Schedule 3.14(b), there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Company Group or any of its properties or assets.

 

 

(a)

 

 

Except as set forth on Schedule 3.15, the Company Group has complied, and is now complying, with all Laws applicable to it or its business, properties or assets, except to the extent such noncompliance would not have, and would not reasonably be expected to have, a Material Adverse Effect.

 

 

(b)

 

 

All Permits required for the Company Group to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 3.15(b) of the Disclosure Schedules lists all current Permits issued to the Company Group, including the names of the Permits and their respective dates of issuance and expiration. To Seller’s Knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 3.15(b) of the Disclosure Schedules.

 

 

(a)

 

 

The Company Group is currently and has been in compliance with all Environmental Laws and has not, and Seller has not, received from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) written or oral request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

 

 

(b)

 

 

The Company Group has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in Section 3.16(b) of the Disclosure Schedules) necessary for the ownership, lease, operation or use of the business or assets of the Company Group and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect by Seller through the Closing Date in accordance with Environmental Law, and to Seller’s Knowledge, there is no condition, event or circumstance that might prevent or impede, after the Closing Date, the ownership, lease, operation or use of the business or assets of the Company Group as currently carried out. With respect to any such Environmental Permits, Seller has undertaken, or will undertake prior to the Closing Date, all measures necessary to facilitate transferability of the same, and to Seller’s Knowledge, there is no condition, event or circumstance that might prevent or impede the transferability of the same, nor have they received any Environmental Notice or written or oral communication regarding any material adverse change in the status or terms and conditions of the same.

 

 

(c)

 

 

No real property currently or formerly owned, operated or leased by any member of the Company Group is listed on, or has been proposed for listing on, the National Priorities List (or CERCLIS) under CERCLA, or any similar state list.

 

 

(d)

 

 

There has been no Release of Hazardous Materials in contravention of Environmental Law with respect to the business or assets of the Company Group or any real property currently or formerly owned, operated or leased by the Company Group, and neither the Company Group nor Seller has received an Environmental Notice that any real property currently or formerly owned, operated or leased in connection with the business of the Company Group (including soils, groundwater, surface water, buildings and other structure located on any such real property) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by, Seller or the Company Group.

 

 

(e)

 

 

Neither the Company Group nor Seller has allowed or created a condition likely to result in a violation of Environmental Law.

 

 

(f)

 

 

Section 3.16(f) of the Disclosure Schedules contains a complete and accurate list of all active, inactive, or abandoned aboveground or underground storage tanks owned or operated by the Company Group.

 

 

(g)

 

 

Section 3.16(g) of the Disclosure Schedules contains a complete and accurate list of all off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company Group or Seller and any predecessors as to which the Company Group or Seller may retain liability, and none of these facilities or locations has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar state list, and neither Seller nor the Company Group has received any Environmental Notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations used by the Company Group or Seller.

 

 

(h)

 

 

Neither Seller nor the Company Group has retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law.

 

 

(i)

 

 

Seller has delivered to Buyer and listed in Section 3.16(i) of the Disclosure Schedules: (i) any and all environmental reports, studies, audits, records, sampling data, site assessments, risk assessments, economic models and other similar documents with respect to the business or assets of the Company Group or any currently or formerly owned, operated or leased real property which are in the possession or control of Seller or Company Group related to compliance with Environmental Laws, Environmental Claims or an Environmental Notice or the Release of Hazardous Materials; and (ii) any and all material documents concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control Hazardous Materials or otherwise ensure compliance with current or future Environmental Laws (including, without limitation, costs of remediation, pollution control equipment and operational changes).

 

 

(j)

 

 

To Seller’s Knowledge, as of the Closing Date, there is no, or no reasonable anticipation of, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of the Company Group as currently carried out.

 

 

(a)

 

 

Section 3.17(a) of the Disclosure Schedules contains a true and complete list of each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off (PTO), medical, vision, dental, disability, welfare, Code Section 125 cafeteria, fringe benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by the Company Group for the benefit of any current or former employee, officer, director, manager, retiree, independent contractor, Producer or consultant of any member of the Company Group or any spouse or dependent of such individual, or under which the Company Group or any of its ERISA Affiliates has or may have any liability, or with respect to which Buyer or any of its Affiliates would reasonably be expected to have any liability, contingent or otherwise (as listed on Section 3.17(a) of the Disclosure Schedules, each, a “Benefit Plan”). The Company has separately identified in Section 3.17(a) of the Disclosure Schedules (i) each Benefit Plan that contains a change in control provision and (ii) each Benefit Plan that is maintained, sponsored, contributed to, or required to be contributed to by the Company Group primarily for the benefit of employees outside of the United States (a “Non-U.S. Benefit Plan”).

 

 

(b)

 

 

With respect to each Benefit Plan, Seller has delivered to Buyer accurate, current and complete copies of each of the following: (i) where the Benefit Plan has been reduced to writing, the plan document together with all amendments; (ii) where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by the Transaction Documents or otherwise; (iv) copies of any summary plan descriptions, summaries of material modifications, summaries of benefits and coverage, COBRA communications, employee handbooks and any other written communications (or a description of any oral communications) relating to any Benefit Plan; (v) in the case of any Benefit Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service and any legal opinions issued thereafter with respect to such Benefit Plan’s continued qualification; (vi) in the case of any Benefit Plan for which a Form 5500 must be filed, a copy of the two most recently filed Forms 5500, with all corresponding schedules and financial statements attached; (vii) actuarial valuations and reports related to any Benefit Plans with respect to the two most recently completed plan years; (viii) the most recent nondiscrimination tests performed under the Code; and (ix) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor, Department of Health and Human Services, Pension Benefit Guaranty Corporation or other Governmental Authority relating to the Benefit Plan.

 

 

(c)

 

 

Except as set forth in Section 3.17(c) of the Disclosure Schedules, each Benefit Plan and any related trust (other than any multiemployer plan within the meaning of Section 3(37) of ERISA (each a “Multiemployer Plan”)) has been established, administered and maintained in accordance with its terms and in compliance with all applicable Laws (including ERISA and, the Code and any applicable local Laws). Each Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code (a “Qualified Benefit Plan”) is so qualified and received a favorable and current determination letter from the Internal Revenue Service with respect to the most recent five (5) year filing cycle, or with respect to a prototype or volume submitter plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan or volume submitter plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred that could reasonably be expected to adversely affect the qualified status of any Qualified Benefit Plan. Nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably be expected to subject the Company Group or any of its ERISA Affiliates or, with respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Sections 4975 or 4980H of the Code.

 

 

(d)

 

 

Neither the Company Group nor any of its ERISA Affiliates has (i) incurred or reasonably expects to incur, either directly or indirectly, any material liability under Title I or Title IV of ERISA or related provisions of the Code or applicable local Law relating to employee benefit plans; (ii) failed to timely pay premiums to the Pension Benefit Guaranty Corporation; (iii) withdrawn from any Benefit Plan; (iv) engaged in any transaction which would give rise to liability under Section 4069 or Section 4212(c) of ERISA; (v) incurred taxes under Section 4971 of the Code with respect to any Single Employer Plan; or (vi) participated in a multiple employer welfare arrangements (MEWA).

 

 

(e)

 

 

With respect to each Benefit Plan (i) no such plan is a Multiemployer Plan/except as set forth in Section 3.17(e) of the Disclosure Schedules.  With respect to any Benefit Plan that is a Multiemployer Plan, (A) all contributions required to be paid by the Company Group or its ERISA Affiliates have been timely paid to the applicable Multiemployer Plan; (B) neither the Company Group nor any ERISA Affiliate has incurred any withdrawal liability under Title IV of ERISA which remains unsatisfied, and (C) a complete withdrawal from all such Multiemployer Plans would not result in any material liability to the Company Group and no Multiemployer Plan is in critical, endangered or seriously endangered status or has suffered a mass withdrawal; (ii) except as set forth in Section 3.17(e) of the Disclosure Schedules, no such plan is a “multiple employer plan” within the meaning of Section 413(c) of the Code or a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA); (iii) no Action has been initiated by the Pension Benefit Guaranty Corporation to terminate any such plan or to appoint a trustee for any such plan; (iv) no such plan or the plan of any ERISA Affiliate maintained or contributed to within the last six (6) years is a Single Employer Plan subject to Title IV of ERISA; and (v) no “reportable event,” as defined in Section 4043 of ERISA, with respect to which the reporting requirement has not been waived has occurred with respect to any such plan.

 

 

(f)

 

 

Each Benefit Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to Buyer, the Company Group or any of their Affiliates other than administrative expenses typically incurred in a termination event. The Company Group has no commitment or obligation and has not made any representations to any employee, officer, director, manager, independent contractor, Producer or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.

 

 

(g)

 

 

Except as set forth in Section 3.17(g) of the Disclosure Schedules and other than as required under Sections 601 to 608 of ERISA or other applicable Law, no Benefit Plan provides post-termination or retiree health benefits to any individual for any reason, and neither the Company Group nor any of its ERISA Affiliates has any liability to provide post-termination or retiree health benefits to any individual or ever represented, promised or contracted to any individual that such individual would be provided with post-termination or retiree health benefits.

 

 

(h)

 

 

Except as set forth in Section 3.17(h) of the Disclosure Schedules, there is no pending or, to Seller's Knowledge, threatened Action relating to a Benefit Plan (other than routine claims for benefits), and no Benefit Plan has within the three (3) years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.

 

 

(i)

 

 

Since January 1, 2019, there has been no amendment to, announcement by Seller, the Company Group or any of their Affiliates relating to, or change in employee participation or coverage under, any Benefit Plan or collective bargaining agreement that would increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year (other than on a de minimis basis) with respect to any director, manager, officer, employee, independent contractor, Producer or consultant, as applicable. None of Seller, the Company Group, nor any of their Affiliates has any commitment or obligation or has made any representations to any director, manager, officer, employee, independent contractor, Producer or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement.

 

 

(j)

 

 

Each Benefit Plan that is subject to Section 409A of the Code has been administered in compliance with its terms and the operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including notices, rulings and proposed and final regulations) thereunder. The Company Group does not have any obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest or penalties incurred pursuant to Section 409A of the Code.

 

 

(k)

 

 

Each individual who is classified by the Company Group as an independent contractor has been properly classified for purposes of participation and benefit accrual under each Benefit Plan.

 

 

(l)

 

 

Except as set forth in Section 3.17(l) of the Disclosure Schedules, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former director, manager, officer, employee, independent contractor, Producer or consultant of the Company Group to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation (including stock-based compensation) due to any such individual; (iii) limit or restrict the right of the Company Group to merge, amend, or terminate any Benefit Plan; (iv) increase the amount payable under or result in any other material obligation pursuant to any Benefit Plan; (v) result in “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (vi) require a “gross-up” or other payment to any “disqualified individual” within the meaning of Section 280G(c) of the Code. Seller has delivered to Buyer true and complete copies of any Section 280G calculations prepared (whether or not final) with respect to any disqualified individual in connection with the transactions.

 

 

(m)

 

 

Except as set forth in Section 3.17(m) of the Disclosure Schedules, no service provider to the Company Group or any ERISA Affiliate provides such services under any form of leasing agreement.

 

 

(n)

 

 

Except as set forth in Section 3.17(n) of the Disclosure Schedules, no Producer who is not an employee of the Company Group or an ERISA Affiliate, nor any independent contractor, consultant or other individual who is not an employee of the Company Group or an ERISA Affiliate, is eligible for coverage under any Benefit Plan.

 

 

(a)

 

 

Section 3.18(a) of the Disclosure Schedules contains a list of all persons who are employees, independent contractors, Producers or consultants of the Company Group as of the date hereof, including any employee who is on a leave of absence of any nature, paid or unpaid, authorized or unauthorized, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full-time or part-time); (iii) hire or retention date; (iv) current annual base compensation rate or contract fee; (v) commission, bonus or other incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof. Except as set forth in Section 3.18(a) of the Disclosure Schedules, as of the date hereof, all compensation, including wages, commissions, bonuses, fees, fringe benefits, and other compensation, payable to all employees, independent contractors, Producer or consultants of the Company Group for services performed on or prior to the date hereof have been paid in full and there are no outstanding agreements, understandings or commitments of the Company Group with respect to any compensation, commissions, bonuses, fees, or fringe benefits.

 

 

(b)

 

 

Except as set forth in Section 3.18(b) of the Disclosure Schedules, the Company Group is not, and has not been for the past three (3) years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not been for the past three (3) years, any Union representing or purporting to represent any employee of the Company Group, and, no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. Except as set forth in Section 3.18(b) of the Disclosure Schedules, there has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting the Company Group or any of its employees. The Company Group has no duty to bargain with any Union.

 

 

(c)

 

 

The Company Group is and has been in compliance in all material respects with the terms of the collective bargaining agreements and other Contracts listed on Section 3.18(b) of the Disclosure Schedules and all applicable Laws pertaining to employment and employment practices to the extent they relate to employees, volunteers, interns, consultants, Producers and independent contractors of the Company Group, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers' compensation, leaves of absence, paid sick leave and unemployment insurance. All individuals characterized and treated by the Company Group as independent contractors, consultants or Producers are properly treated as independent contractors under all applicable Laws. All employees of the Company Group classified as exempt under the Fair Labor Standards Act and state and local wage and hour Laws are properly classified. The Company Group is in compliance with and has complied with all immigration Laws, including Form I-9 requirements and any applicable mandatory E-Verify obligations. Except as set forth in Section 3.18(c) of the Disclosure Schedules, there are no Actions against the Company Group pending, or to Seller's Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, Producer, volunteer, intern or independent contractor of the Company Group, including, without limitation, any charge, investigation or claim relating to unfair labor practices, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, employee classification, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers' compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment related matter arising under applicable Laws.

 

 

(d)

 

 

Except as set forth on Schedule 3.18(d), no director, manager, officer, employee, agent, Producer, consultant, or contractor of the Company Group, or any other Person, has any rights under, or is a party to, any agreement to receive payment in connection with the change of control of a member of the Company Group.

 

 

(a)

 

 

All Tax Returns filed or required to have been filed by the Company Group have been timely filed, and each such Tax Return is true, correct, accurate and prepared in accordance with applicable Laws. No Tax Returns required to be filed by the Company Group are currently under extension for filing.  All Taxes due and owing by the Company Group (whether or not shown on any Tax Return) have been timely paid.

 

 

(b)

 

 

The Company Group has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

 

 

(c)

 

 

The Company Group has properly collected and remitted all sales, use, value added, and similar Taxes with respect to sales or leases made to, purchases made from, or services provided to, as applicable, its customers or has properly received and retained any appropriate Tax exemption certificates and other documentation for all sales, leases, or purchases made, or services provided, without charging or remitting sales, use, value added, and similar Taxes.

 

 

(d)

 

 

No claim has been made by any taxing authority in any jurisdiction where the Company Group does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.

 

 

(e)

 

 

No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Company Group.

 

 

(f)

 

 

The amount of the Company Group's Liability for unpaid Taxes for all periods ending on or before Interim Balance Sheet Date does not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the Interim Balance Sheet. The amount of the Company Group's Liability for unpaid Taxes for all periods following the Interim Balance Sheet Date shall not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) as adjusted for the passage of time in accordance with the past custom and practice of the Company Group (and which accruals shall not exceed comparable amounts incurred in similar periods in prior years).  Since the Interim Balance Sheet Date, the Company Group has not incurred any liability for Taxes arising from gains or losses from unusual or infrequent events, which events would necessitate a separate disclosure under GAAP.

 

 

(g)

 

 

Section 3.19(g) of the Disclosure Schedules sets forth:

 

 

(i)

 

 

the taxable years of the Company Group as to which the applicable statutes of limitations on the assessment and collection of Taxes have not expired; and

 

 

(ii)

 

 

those years, if any, in past five (5) tax years for which examinations by the taxing authorities have been completed or those taxable years for which examinations are presently being conducted.

 

 

(h)

 

 

All deficiencies asserted, or assessments made, against the Company Group as a result of any examinations by any taxing authority have been fully paid.

 

 

(i)

 

 

The Company Group is not a party to any Action by any taxing authority. There are no pending or, threatened Actions by any taxing authority, and the Company Group has not received from any taxing authority any request for information related to Tax matters.

 

 

(j)

 

 

Seller has delivered to Buyer copies of all federal, state, local and foreign income, franchise and similar Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by, the Company Group for all Tax periods ending on or after December 31, 2014.

 

 

(k)

 

 

There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company Group.

 

 

(l)

 

 

The Company Group is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement.

 

 

(m)

 

 

No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any taxing authority with respect to the Company Group.

 

 

(n)

 

 

The Company Group has not been a member of an affiliated, combined, consolidated or unitary Tax group for Tax purposes. The Company Group has no Liability for Taxes of any Person (other than the Company Group) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor, by contract or otherwise.

 

 

(o)

 

 

The Company Group will not be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of:

 

 

(i)

 

 

any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date;

 

 

(ii)

 

 

an installment sale or open transaction occurring on or prior to the Closing Date;

 

 

(iii)

 

 

any intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code, or similar provision of state, local or foreign law;

 

 

(iv)

 

 

a prepaid amount received or deferred revenue accrued on or before the Closing Date;

 

 

(v)

 

 

any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or

 

 

(vi)

 

 

any election under Section 108(i) of the Code.

 

 

(p)

 

 

Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2. The Company Group is not, nor has it been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(a) of the Code.

 

 

(q)

 

 

The Company Group has not (i) been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code or (ii) otherwise distributed stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 and/or 361 of the Code.

 

 

(r)

 

 

The Company Group is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).

 

 

(s)

 

 

The Company Group is not, and has not been, a party to any Contract, agreement, plan or arrangement, including the Transaction Documents, which could give rise to the payment of any amount that would not be deductible or on which a penalty or excise tax could be imposed, either on the payor or payee, pursuant to Sections 404, 409A or 4999 of the Code;

 

 

(t)

 

 

The Company Group is not subject to any applicable Tax holidays or other similar preferential programs that could terminate as a result of the transactions contemplated by the Transaction Documents;

 

 

(u)

 

 

The Company Group is not, and has not been, a party to any Contract, agreement, plan or arrangement, including the Transaction Documents, that has resulted or could result in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code, or similar provision of state, local or foreign Law;

 

 

(v)

 

 

The Company Group does not have, and has not had, a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise have, or had, an office or fixed place of business in a country other than the United States of America; or

 

 

(w)

 

 

Each Company Subsidiary (other than Kilpatrick Financial, Inc.) is and has been since its formation treated as a partnership or entity disregarded as an entity separate from its owner for Tax purposes and (ii) no Governmental Authority responsible for the assessment or collection of Tax has challenged the treatment described in clause (i).

 

 

(x)

 

 

No Company Group member has ever been an "S" corporation and no "S" election has ever been filed with respect to a Company Subsidiary.

 

 

(a)

 

 

The minute books and stock record books of the Company Group, all of which have been delivered to Buyer, are complete and correct and have been maintained in accordance with sound business practices. At the Closing, all of those books and records will be in the possession of the Company.

 

 

(b)

 

 

To Seller’s Knowledge, the minute books of the Company Group from January 1, 1999 through the Closing Date contain, in all material respects, accurate and complete records of all meetings, and actions taken by written consent of, the stockholders, the board of directors and any committees of the board of directors or board of managers, as applicable, of each member of the Company Group, and no meeting, or action taken by written consent, of any such stockholders, board of directors, board of managers, or committee has been held for which minutes have not been prepared and are not contained in such minute books.

 

 

(a)

 

 

Each member of the Company Group has timely filed (taking into account permitted extensions timely obtained, if any) all material regulatory reports, schedules, statements, documents, filings, submissions, forms, registrations and other documents, together with any amendments required to be made with respect thereto, that each was required to file with any Governmental Authority, including state health and insurance regulatory authorities (“Regulatory Filings”) and any applicable federal regulatory authorities.  All such Regulatory Filings complied with applicable Law.  To the extent required by applicable law, all premium rates, rating plans, policy forms and terms established or used by the Company Group that are required to be filed with and/or approved by a governmental authority have been so filed and/or approved, the premiums charged by the Company Group conform to the premiums so filed and/or approved, and comply with the laws applicable thereto, and no such premiums are subject to any investigation by any governmental authority.

 

 

(b)

 

 

The Company Group’s licenses are valid and in full force and effect, and no member of the Company Group is in material default under any license or accreditation, none of the licenses or accreditations will be terminated as a result of the transactions contemplated hereby and no member of the Company Group has received notice that the Company Group is in violation of any of the terms or conditions of any license or accreditation.

 

 

(c)

 

 

All insurance Contract benefits, growth and interest payable by the Company Group to any other Person that is a party to or bound by any insurance, reinsurance, coinsurance, or other similar Contract with the Company Group have been paid in accordance with the terms of the insurance, reinsurance, coinsurance and other Contracts under which they arose, except for such benefits, growth and interest for which the Company Group reasonably believes there is a reasonable basis to contest payment.

 

 

(d)

 

 

No outstanding insurance Contract issued, reinsured, or underwritten by any member of the Company Group entitles the holder thereof or any other Person to receive dividends, distributions, or to share in the income of any member of the Company Group or to receive any other benefits based on the revenues or earnings of any member of the Company Group or any other Person.

 

 

(e)

 

 

The underwriting standards utilized and ratings applied by the Company Group and, as of the date of this Agreement, by any other Person that is a party to or bound by any reinsurance, coinsurance, or other similar Contract with any member of the Company Group conform to industry accepted underwriting standards, and to the standards and ratings required pursuant to the terms of the respective reinsurance, coinsurance, or other similar Contracts.

 

 

(f)

 

 

All of the Company Group’s liability under insurance Contracts issued, reinsured, or underwritten by the Company Group which is beyond the Company Group’s normal retention is fully reinsured under valid reinsurance Contracts with reinsurers which (i) are solvent, and (ii) all amounts to which any member of the Company Group is entitled under reinsurance, coinsurance, or other similar Contracts (including without limitation amounts based on paid and unpaid losses) as of the date of this Agreement are fully collectible.

 

 

(g)

 

 

Each Producer, at the time such Producer wrote, sold, or produced business for the Company Group, was duly licensed as an insurance agent (for the type of business written, sold, or produced by such Producer) in the particular jurisdiction in which such Producer wrote, sold, or produced such business for the Company Group.

 

 

(h)

 

 

No such Producer violated (or with or without notice or lapse of time or both, would have violated) any term or provision of any Law or any writ, judgment, decree, injunction, or similar order applicable to the writing, sale, or production of business for the Company Group.

 

 

(i)

 

 

As of the date hereof, there is no investigation, audit, examination or inquiry relating to any member of the Company Group or its respective business in progress or contemplated by any Governmental Authority.

 

 

(j)

 

 

No claim or assessment is pending or, to Seller’s Knowledge, threatened against any member of the Company Group by action of any state insurance guaranty association in connection with that association’s fund relating to insolvent insurers.

 

 

(k)

 

 

The Company has delivered to Buyer true, complete and correct copies of (i) all material reports of examination (including financial, market conduct and similar examinations) of any member of the Company Group issued by any Governmental Authority or accreditation agency and all material correspondence or orders related thereto, (ii) all material registrations, filings and submissions made by or on behalf of any member of the Company Group to any Governmental Authority or accreditation agency and all material correspondence or orders related thereto, and (iii) insurance holding company system registrations, applications and filings made by or on behalf of any member of the Company Group, and all material correspondence or orders related thereto, in each case within the three (3) years prior to the Closing. All material deficiencies or violations noted in the examination reports described in clause (i) above, if any, have been resolved to the satisfaction of the Governmental Authority or accreditation agency that noted such deficiencies or violations.

 

 

(l)

 

 

All premium rates, rating plans and policy terms established and used by the Company Group that are required to be filed with or approved by any Governmental Authority have been so filed and approved, and the premiums charged conform in all respects to the premiums so filed and approved and comply with all applicable Laws.  No such premiums are subject to any investigation or other proceeding by any Governmental Authority.

 

 

(m)

 

 

To Seller’s Knowledge, each member of the Company Group is in compliance with all applicable deposit, reserve, capital, net worth and other financial requirements, including statutory and risk-based capital requirements, which are applicable to the Company Group or its business.

 

 

(n)

 

 

Other than as set forth on Schedule 3.23(n), there are no agreements between any member of the Company Group and any Affiliate of the Company Group that are currently in force and effect, or which previously were in force and effect at any time since January 1, 2018.  All regulatory notices and approvals required for or in respect of such affiliated interest agreements have been given and/or obtained, as applicable, in accordance with applicable legal requirements and no notice of objection, violation or disapproval has been received by any member of the Company Group relative to any such affiliated interest agreement.

 

 

(o)

 

 

All compensation, including wages, commissions, bonuses, fees and other compensation, payable to all Producers, agents or representatives of the Company Group for services performed have been paid in full and there are no outstanding agreements, understandings or commitments of any member of the Company Group with respect to any compensation, commissions, bonuses or fees.

 

 

(a)

 

 

Except as disclosed in Schedule 3.24(a), (i) each of the insurance plan products of the Company Group, including the benefit design and structure, administration, bid submission and pricing and calculation of pricing thereof, comply, in all material respects, with all applicable Laws and contractual requirements, the Company Group’s internal policies and the applicable insurance policies or plans under which they arose and (ii) all insurance claims paid or benefits provided by the Company Group have been paid or provided, in all material respects, in accordance with the terms of the applicable insurance policies or plans under which they arose.

 

 

(b)

 

 

All reserves and other similar amounts with respect to insurance as established or reflected in the Financial Statements as of and for the period ended June 30, 2019 were computed in accordance with commonly accepted actuarial standards consistently applied, were fairly stated in accordance with the benefits specified by the provisions of the related insurance Contracts and in the related reinsurance, coinsurance, and other similar Contracts of the Company Group and meet the requirements of the insurance Laws of the State of Louisiana and of the states in which such insurance Contracts were issued or delivered and when considered in light of the assets held by the Company Group with respect to the reserves and related actuarial items, including without limitation then current assumptions concerning investment earnings on the assets and considerations anticipated to be received and retained under the insurance Contracts, mortality and morbidity experience, persistency and expenses, all such reserves and related actuarial items held in support of the insurance Contracts of the Company Group, were good, sufficient and adequate as of June 30, 2019 (under commonly accepted actuarial standards consistently applied and fairly stated in accordance with sound actuarial principles), to cover, in all material respects, the amount of all reasonably anticipated matured and unmatured benefits, dividends, claims, expenses and other Liabilities of the Company Group under all insurance Contracts under which the Company Group has or will have any liability (including, without limitation, any liability arising under or as a result of any reinsurance, coinsurance, or other similar Contract).

 

 

(c)

 

 

The Company Group owns assets that qualify as legal reserve assets under applicable insurance Laws in an amount at least equal to all such statutory reserves and other similar amounts.

 

 

(a)

 

 

not adopt, modify or propose any material change in the governance or other organizational documents of the Company Group;

 

 

(b)

 

 

cause the Company Group to preserve and maintain all of its material Permits;

 

 

(c)

 

 

cause the Company Group to pay its debts, Taxes and other obligations when due unless validly contested;

 

 

(d)

 

 

cause the Company Group to maintain the properties and assets owned, operated or used by the Company Group in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear and dispositions of assets in the ordinary course of business consistent with past practices;

 

 

(e)

 

 

cause the Company Group to continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;

 

 

(f)

 

 

cause the Company Group to take commercially reasonable actions to defend and protect its properties and assets from infringement or usurpation;

 

 

(g)

 

 

cause the Company Group to perform all of its material obligations under all Contracts relating to or affecting its properties, assets or business;

 

 

(h)

 

 

cause the Company Group to properly maintain its books and records;

 

 

(i)

 

 

cause the Company Group to not materially change the employment relationship with any Key Employee;

 

 

(j)

 

 

cause the Company Group to comply with all applicable Laws and the terms of all Benefit Plans;

 

 

(k)

 

 

cause the Company Group not to take or permit any action that would cause any of the changes, events or conditions described in Section 3.08 to occur;

 

 

(l)

 

 

cause the Company Group to take commercially reasonable actions to maintain in full force and effect any Company IP Registration; and

 

 

(m)

 

 

not implement any facility closings or employee layoffs that could implicate the WARN Act.

 

 

(a)

 

 

From the date hereof until termination of this Agreement, Seller shall not, and shall not authorize or permit any of its Affiliates (including the Company Group) or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller shall immediately cease and cause to be terminated, and shall cause its Affiliates (including the Company Group) and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company Group; (ii) the issuance or acquisition of shares of capital stock or other equity securities of the Company Group; or (iii) the sale, lease, exchange or other disposition of any significant portion of the Company's properties or assets or those of the Company Subsidiaries.

 

 

(b)

 

 

In addition to the other obligations under this Section 5.03, Seller shall promptly (and in any event within three (3) Business Days after receipt thereof by Seller or its Representatives) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.

 

 

(c)

 

 

Seller agrees that the rights and remedies for noncompliance with this Section 5.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.

 

 

(a)

 

 

From the date hereof until the Closing, Seller shall promptly notify Buyer in writing of:

 

 

(i)

 

 

any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Seller hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 to be satisfied;

 

 

(ii)

 

 

any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

 

 

(iii)

 

 

any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and

 

 

(iv)

 

 

any Actions commenced or, to Seller's Knowledge, threatened against, relating to or involving or otherwise affecting Seller or the Company Group that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.14 or that relates to the consummation of the transactions contemplated by this Agreement.

 

 

(b)

 

 

Buyer's receipt of information pursuant to this Section 5.04 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement (including Section 8.02 and Section 9.01(b)) and shall not be deemed to amend or supplement the Disclosure Schedules.

 

 

(a)

 

 

For a period of two (2) years commencing on the Closing Date (the “Restricted Period”), Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory (other than on behalf of a member of the Company Group); (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally interfere with the business relationships (whether formed prior to or after the date of this Agreement) between the Company Group and customers or suppliers of the Company Group. Notwithstanding the foregoing, Seller may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.

 

 

(b)

 

 

During the Restricted Period in the Territory, Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, hire or solicit any employee of the Company Group or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, that nothing in this Section 5.07(b) shall prevent Seller or any of its Affiliates from hiring (i) any employee whose employment has been terminated by the Company Group or Buyer or (ii) after one hundred and eighty (180) days from the date of termination of employment, any employee whose employment has been terminated by the employee.

 

 

(c)

 

 

During the Restricted Period, in the Territory, Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, hire, associate with, or solicit any Producer that has a then current business relationship with any member of the Company Group, or that has had a business relationship with any member of the Company Group in the preceding twelve (12) month period, or encourage any such Producer to cease working or associating with the Company Group, except pursuant to a general solicitation which is not directed specifically to any such Producer.

 

 

(d)

 

 

During the Restricted Period, and in the Territory, Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of the Company Group or potential clients or customers of the Company Group for purposes of diverting their business or services from the Company Group.

 

 

(e)

 

 

Seller acknowledges that a breach or threatened breach of this Section 5.07 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

 

(f)

 

 

Seller acknowledges that the restrictions contained in this Section 5.07 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 5.07 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, including the severing or removal of any term or provision deemed invalid so that the remaining terms and provisions can be enforced, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 5.07 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

 

(a)

 

 

Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of the Transaction Documents and the performance of its obligations pursuant to the Transaction Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

 

 

(b)

 

 

Seller and Buyer shall use reasonable best efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 3.05 of the Disclosure Schedules.

 

 

(c)

 

 

Without limiting the generality of the parties' undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use all reasonable best efforts to:

 

 

(i)

 

 

respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by the Transaction Documents;

 

 

(ii)

 

 

avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by the Transaction Documents; and

 

 

(iii)

 

 

in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by the Transaction Documents has been issued, to have such Governmental Order vacated or lifted.

 

 

(d)

 

 

If any consent, approval or authorization necessary to preserve any right or benefit under any Contract to which the Company Group is a party is not obtained prior to the Closing, Seller shall, subsequent to the Closing, cooperate with Buyer and the Company Group in attempting to obtain such consent, approval or authorization as promptly thereafter as practicable.  If such consent, approval or authorization cannot be obtained, Seller shall use its best efforts to provide the Company Group with the rights and benefits of the affected Contract for the term thereof, and, if Seller provides such rights and benefits, the Company Group shall assume all obligations and burdens thereunder.

 

 

(e)

 

 

All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller or the Company Group with Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

 

 

(f)

 

 

Notwithstanding the foregoing, nothing in this Section 5.08 shall require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Buyer, the Company Group or any of their respective Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer of the transactions contemplated by this Agreement; or (iii) any material modification or waiver of the terms and conditions of this Agreement.

 

 

(g)

 

 

Books and Records.  The Company Group will, until the Closing, preserve intact its present business organization, reputation, and policyholder relations; maintain all licenses, qualifications, and authorizations of the Company Group to do business in each jurisdiction in which it is so licensed, qualified, or authorized; except as otherwise provided in this Agreement, maintain in full force and effect all Contracts, documents, and arrangements; maintain all material assets and properties of the Company Group in the working order and condition as the same exist on the date of this Agreement, ordinary wear and tear excepted; maintain books and records (including personnel files and those related to Tax matters) of the Company Group relating to periods prior to the Closing and exercise commercially reasonable efforts, consistent with past practices, to maintain and protect the confidential and proprietary nature of the Company Group’s policyholder lists, lists of the Company Group’s Producers, billing records and commission statements and other materials relating to the Company Group’s sales and marketing practices or in force business.

 

 

(a)

 

 

Prior to or on the Closing Date, as determined by Buyer in its sole discretion, Seller shall cause each Benefit Plan set forth on Schedule 5.09(a) to be separated, divided, or spun off as necessary so that each member of the Company Group is either a sponsor of or participant in Benefit Plans applicable to only members of the Company Group.  Buyer shall not have responsibility or liability with respect to any Benefit Plan not expressly assumed at Closing or with respect to any asserted or unasserted claims under any Benefit Plan which exists at Closing except with respect to those claims related to Persons, and their dependents, covered by the Benefit Plans expressly assumed by the Company Group at Closing.

 

 

(b)

 

 

At the written request of Buyer provided no later than fifteen (15) days prior to the Closing Date, each of member of the Company Group shall, at least one (1) Business Day prior to the Closing Date, adopt written resolutions (or take other necessary and appropriate action) to terminate certain Benefit Plans of the Company Group member, or participation in and sponsorship of such Benefit Plan, and to fully vest all participants under such Benefit Plan, such termination and vesting to be effective no later than the Business Day preceding the Closing Date. The Company Group shall provide Buyer with an advance copy of such proposed resolutions (and any related documents) and a reasonable opportunity to comment thereon prior to adoption or execution.

 

 

(c)

 

 

Seller will comply with the provisions in Section 5.09(a) and 5.09(b) to Buyer’s satisfaction and provide Buyer all documentation necessary to give effect to the provisions in Section 5.09(a) and 5.09(b) at least ten (10) days prior to the Closing Date.

 

 

(a)

 

 

Without the prior written consent of Buyer, Seller (and, prior to the Closing, the Company Group, its Affiliates and their respective Representatives) shall not, to the extent it may affect, or relate to, the Company Group, make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer or the Company Group in respect of any Post-Closing Tax Period. Seller agrees that Buyer is to have no liability for any Tax resulting from any action of Seller, the Company Group, its Affiliates or any of their respective Representatives, and agrees to indemnify and hold harmless Buyer (and, after the Closing Date, the Company Group) against any Tax or reduction of any Tax asset.

 

 

(b)

 

 

With respect to any Pre-Closing Tax Period, Seller shall not be liable for any increase in tax liability that occurs should the Company (after the Closing) amend any Tax Return, except to the extent such amendment was required by Law or to correct a material error.  Any such amendment shall be submitted by Buyer to Seller (together with schedules, statements and, to the extent requested by Seller, supporting documentation) at least thirty (30) days prior to the due date (including extensions) of such amendment, and Buyer shall make changes reasonably requested by Seller to such amendment before filing, provided that Seller delivers such changes to Buyer within ten (10) days of receiving the proposed amendment. Seller shall use its commercially reasonable efforts to assist Buyer in the foregoing.

 

 

(c)

 

 

All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with the Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

 

 

(d)

 

 

Buyer shall prepare, or cause to be prepared, all Tax Returns required to be filed by the Company Group after the Closing Date with respect to a Pre-Closing Tax Period. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by Law) and without a change of any election or any accounting method and shall be submitted by Buyer to Seller (together with schedules, statements and, to the extent requested by Seller, supporting documentation) at least thirty (30) days prior to the due date (including extensions) of such Tax Return, and Buyer shall make changes reasonably requested by Seller to such Tax Return before filing, provided that Seller delivers such changes to Buyer within ten (10) days of receiving the proposed Tax Return. The Company shall make the “closing-of-the-books” election pursuant to Internal Revenue Regulation Section 1.382-6 under Section 382 of the Internal Revenue Code of 1986, as amended. Seller shall use its commercially reasonable efforts to assist Buyer in the foregoing.

 

 

(a)

 

 

in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property, or (iii) required to be withheld, deemed equal to the amount which would be payable if the taxable year ended with the Closing Date (or in accordance with the “closing-of-the-books” election); and

 

 

(b)

 

 

in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period.

 

 

(a)

 

 

No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

 

 

(b)

 

 

Buyer shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 3.05 in form and substance reasonably satisfactory to Buyer and Seller, and no such consent, authorization, order and approval shall have been revoked.

 

 

(a)

 

 

The representations and warranties of Seller contained in the Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

 

 

(b)

 

 

Seller shall have duly performed and complied with all agreements, covenants and conditions required by the Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Seller shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

 

 

(c)

 

 

As of the Closing, all directors, managers, and officers of the Company Group shall have delivered executed resignations as a director, manager, or officer, as applicable, of such member of the Company Group (effective upon, and subject to, the occurrence of the Closing).

 

 

(d)

 

 

No Action shall have been commenced against Buyer, Seller or the Company Group, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.

 

 

(e)

 

 

The Company Group shall have fully satisfied (including with respect to rights of timely notification) or obtained enforceable waivers in respect of any preemptive or similar rights directly or indirectly affecting any shares of capital stock or other equity interests of the Company Group.

 

 

(f)

 

 

All approvals, consents and waivers that are listed on Section 3.05 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing, including without limitation, those approvals required by the Louisiana Insurance Department.

 

 

(g)

 

 

Full releases of the pledges and security interests created under those certain agreements titled “Security Agreement and Pledge”, each dated December 2, 2016, and executed by Andrew Michael Shehee, Nell Elizabeth Shehee, and Margaret Scott Shehee, as debtors, in favor of the Executrix, as secured party (the “Estate Pledge Agreements”).

 

 

(h)

 

 

Written confirmation from the Executrix, that other than the Estate Pledge Agreements, the Estate has no other rights to or liens on the Shares.

 

 

(i)

 

 

Completion of all curative title work as more particularly set forth on Schedule 7.02(i).

 

 

(j)

 

 

From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.

 

 

(k)

 

 

The Company shall have delivered a legal opinion of Baldwin Haspel Burke & Mayer, LLC, counsel to the Company, in form and substance reasonably satisfactory to Buyer, as set forth on Exhibit D.

 

 

(l)

 

 

The Escrow Agreement and Coinsurance Agreement shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to Buyer.

 

 

(m)

 

 

At least three (3) Business Days before Closing, Seller shall have delivered to Buyer the Closing Indebtedness Certificate.

 

 

(n)

 

 

Seller shall have delivered to Buyer a good standing certificate (or its equivalent) for each member of the Company Group from the secretary of state or similar Governmental Authority of the jurisdiction under the Laws in which such Company Group member is organized.

 

 

(o)

 

 

Seller shall have delivered to Buyer a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that Seller is not a foreign person within the meaning of Section 1445 of the Code.

 

 

(p)

 

 

Seller shall have delivered, or caused to be delivered, to Buyer stock certificates evidencing the Shares, free and clear of Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank.

 

 

(q)

 

 

Buyer shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Seller, that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied.

 

 

(r)

 

 

Where Seller is not an individual, Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors or board of managers, as applicable, of Seller authorizing the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

 

 

(s)

 

 

Where Seller is not an individual, Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying the names and signatures of the officers of Seller authorized to sign the Transaction Documents and the other documents to be delivered hereunder and thereunder.

 

 

(t)

 

 

Seller shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

 

 

(u)

 

 

Seller shall have amended and restated the Human Resource Service Agreement, dated as of June 27, 2013, between the Company and Rose-Neath, and related provider agreements, to the satisfaction of Buyer.

 

 

(v)

 

 

Buyer shall have received the necessary documentation as required in Section 5.09(c).

 

 

(w)

 

 

Buyer shall have received a waiver and release of the option to purchase in the A&M Shehee Lease and necessary documentation as required to extend the term of the A&M Shehee Lease through April 30, 2022.

 

 

(x)

 

 

Buyer shall have received all necessary documentation as required to extend the term of that certain Lease, by and between the Company, as lessor, and Care Management Group, LLC, as lessee, dated as of September 30, 2016, through September 30, 2022.

 

 

(y)

 

 

The Coinsurance Agreement shall be in full force and effect and the insurance business subject thereto shall not have been recaptured by the Company; provided, that, Buyer shall have waived this condition should the recapture occur due to Buyer’s election to cause the recapture in accordance with the Coinsurance Agreement.

 

 

(a)

 

 

The representations and warranties of Buyer contained in the Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date.

 

 

(b)

 

 

Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by the Transaction Documents to be performed or complied with by it prior to or on the Closing Date.

 

 

(c)

 

 

No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.

 

 

(d)

 

 

The Escrow Agreement and Coinsurance Agreement shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to Seller.

 

 

(e)

 

 

Buyer shall have delivered to Seller cash in an amount equal to the Purchase Price less the Indemnification Escrow Amount by wire transfer of immediately available funds, to an account or accounts designated at least three (3) Business Days prior to the Closing Date by Seller in a written notice to Buyer.

 

 

(f)

 

 

Buyer shall have delivered to the Escrow Agent by wire transfer of immediately available funds the Indemnification Escrow Amount.

 

 

(g)

 

 

The LDI shall have approved for payment the total amount owed by the Company to Rose-Neath pursuant to the Surplus Note.

 

 

(h)