STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of this 4th day of June, 2003, by and between The Xxx X. and Xxxxx
Xxxx Mitte Foundation, a Texas nonprofit corporation (the "Foundation"), and
American Physicians Service Group, Inc., a Texas corporation ("Purchaser").
RECITALS
WHEREAS, Purchaser desires to purchase from the Foundation, and the
Foundation desires to sell to Purchaser, 312,484 shares (the "Shares") of common
stock, par value $.20 per share (the "Common Stock"), of Financial Industries
Corporation, a Texas corporation (the "Company"), owned by the Foundation at a
purchase price equal to $14.64 per share (the "Share Price") and under the other
terms and conditions set forth herein;
WHEREAS, the Foundation desires that the Purchase (as defined below)
shall count towards the amounts of shares of Common Stock for which the
Foundation must receive purchase offers as more fully described in Section 2.4
of that certain Compromise Settlement Agreement and Mutual Release, dated as of
May 15, 2003, between the Company, Xxxxxx Xxxxxx, Xxx X. Xxxxx, Xxxxx Xxxx
Mitte, Xxxxx Xxxxx, Jan Mitte and the Foundation (the "Settlement Agreement");
WHEREAS, the Foundation intends that, at the time the Purchase is
consummated pursuant to the terms hereof, the Shares will not be subject to the
proxy described in Section 2.1 of the Settlement Agreement or any other terms of
the Settlement Agreement.
AGREEMENT
For and in consideration of the mutual promises and covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. SALE OF SHARES.
1.1 PURCHASE AND SALE; Closing. Subject to the terms and conditions of this
Agreement, and in reliance on the respective representations and warranties of
the Foundation and Purchaser, Purchaser hereby acquires from the Foundation, and
the Foundation sells to Purchaser (the "Purchase"), the Shares. The aggregate
purchase price for the Shares (the "Purchase Price") shall be $4,574,766. The
Purchase Price shall be paid in cash, tendered by Purchaser by wire transfer of
immediately available funds to the Foundation in accordance with the
Foundation's wire transfer instructions set forth on Exhibit A attached hereto
at the closing of the Purchase (the "Closing"). The Shares acquired in the
Purchase shall be delivered to Purchaser at the Closing, free and clear of any
and all liens, claims, security interests, pledges, mortgages, restrictions or
encumbrances of any kind (the "Encumbrances"), other than those restrictions
arising from applicable federal and state securities laws. The Closing shall
occur concurrently with the execution of this Agreement and at such place and
time as the parties may mutually agree. The date on which the Closing actually
occurs is referred to herein as the "Closing Date".
1.2 CLOSING DELIVERIES. AT THE CLOSING:
(a) THE FOUNDATION. The Foundation shall deliver, or cause to be delivered, to
Purchaser the following:
(i) a certificate or certificates representing the Shares registered in the
Foundation's name, together with a duly executed stock power endorsed to
Purchaser; (ii) a receipt for the payment of the Purchase Price received by the
Foundation; and (iii) a copy of a unanimous consent of the Directors of the
Foundation authorizing the Foundation to execute and deliver this Agreement and
consummate the transactions contemplated hereby.
(b) PURCHASER. Purchaser shall deliver, or cause to be delivered, to the
Foundation the Purchase Price by wire transfer of immediately available funds.
1.3 SALES AND TRANSFER TAXES. Any taxes, fees and other charges of any kind
imposed by any governmental or taxing authority and any transfer, recording or
similar fees and charges arising out of or in connection with the transactions
contemplated by this Agreement shall be borne by the party primarily responsible
for such taxes and other fees and charges under applicable law.
Section 2.
REPRESENTATIONS AND WARRANTIES OF THE FOUNDATION. The Foundation hereby
represents and warrants to Purchaser that:
2.1 AUTHORITY. The Foundation is a nonprofit corporation validly existing and in
good standing under the laws of the State of Texas. The Foundation has full
power and authority to execute, deliver and perform this Agreement and any other
agreements, documents and instruments contemplated by this Agreement
(collectively, the "Documents") to which it is a party. The execution, delivery
2
and performance of this Agreement and the Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by the directors of the Foundation (the "Board") and
no other proceedings or actions on the part of the Foundation are necessary to
authorize this Agreement or any of the Documents to which it is a party or the
consummation of the transactions contemplated hereby or thereby. This Agreement
and such Documents have been and will be duly and validly executed and delivered
by the Foundation, and, assuming this Agreement and such Documents constitute
the valid and binding obligations of Purchaser, this Agreement and such
Documents constitute valid and binding agreements of the Foundation, enforceable
against the Foundation in accordance with their terms.
2.2 SHARE OWNERSHIP. The Foundation is the sole record owner and beneficial
owner of the Shares. The Foundation has good and valid title to the Shares, free
and clear of any Encumbrances except restrictions arising from applicable
federal and state securities laws. No person or entity has a right to acquire or
direct the disposition, or holds a proxy or other right to vote or direct the
vote, of the Shares. Other than this Agreement, there is no option, warrant,
right, call, proxy, agreement, commitment or understanding of any nature
whatsoever, fixed or contingent, that directly or indirectly (a) calls for the
sale, pledge or other transfer or disposition of any of the Shares, any interest
therein or any rights with respect thereto, or relates to the voting,
disposition, exercise, conversion or control of the Shares, or (b) obligates the
Foundation to grant, offer or enter into any of the foregoing.
2.3 SHARES. The sale by the Foundation of the Shares and the delivery of the
certificates representing the Shares to Purchaser against receipt of payment
therefor pursuant hereto will transfer to Purchaser good and valid title to the
Shares, free and clear of all Encumbrances (a) except restrictions arising from
applicable federal and state securities laws, and (b) Encumbrances created by
Purchaser.
2.4 NONCONTRAVENTION. The execution, delivery and performance of this Agreement
and the Documents to which it is a party by the Foundation does not and will not
(a) violate or conflict with or result in a breach of any provision of the
organizational documents of the Foundation, (b) violate or conflict with any law
or order, writ, judgment, injunction, decree, stipulation, determination, or
award (a "Governmental Order") entered into by or with any federal, state,
local, or any foreign government, governmental, regulatory, or administrative
3
authority, agency or commission or any court (a "Governmental Authority")
applicable to the Foundation or any of its assets and properties, or (c)
conflict with, result in any violation or breach of or constitute a default (or
an event which, with the giving of notice or lapse of time, or both, would
become a default) under, require any notice or consent under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in any loss of any benefit, the triggering of any payment by, or the increase in
other obligation of, the Foundation or the creation of any Encumbrance on any
assets or properties of the Foundation pursuant to any material contract,
license, permit, franchise or other instrument or arrangement to which the
Foundation is a party or by which it, or any of such assets or properties is
bound or affected, except for, in the case of clauses (b) and (c), such
conflicts, violations, breaches, defaults or other occurrences that would not
(i) materially impair the ability of the Foundation to perform its obligations
under this Agreement or (ii) prevent or materially delay the consummation of any
of the transactions contemplated hereby.
2.5 CONSENTS AND APPROVALS. No consent from or filing with any person or entity
(including, without limitation, any Governmental Authority) on the part of the
Foundation is required in connection with the execution or delivery by the
Foundation of this Agreement or any of the Documents to which it is a party or
the consummation by the Foundation of the transactions contemplated hereby or
thereby, other than (a) filings with the Securities and Exchange Commission (the
"SEC") and state securities laws administrators and the National Association of
Securities Dealers and (b) the filing of appropriate documents with, and to the
extent necessary, approval of, the Commissioners of Insurance of the State of
Washington and State of Texas and such notices and consents as may be required
under the insurance laws of any jurisdiction in which the Company or its
subsidiaries is domiciled or does business.
2.6 BROKER'S FEES. The Foundation has not entered into any agreement,
arrangement or understanding with any person or entity that will result in the
obligation of Purchaser or the Company to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
4
Section 3. REPRESENTATIONS OF PURCHASER.
Purchaser represents and warrants to the Foundation that:
3.1 AUTHORITY. Purchaser is validly existing and in good standing under the laws
of the State of Texas. Purchase has full power and authority to execute, deliver
and perform this Agreement and any Documents to which it is a party. The
execution, delivery and performance of this Agreement and the Documents to which
it is a party and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Purchaser and no other proceedings or actions on the part of Purchaser are
necessary to authorize this Agreement or any of the Documents to which it is a
party or the consummation of the transactions contemplated hereby or thereby.
This Agreement and such Documents have been and will be duly and validly
executed and delivered by Purchaser, and, assuming this Agreement and such
Documents constitute the valid and binding obligations of the Foundation, this
Agreement and such Documents constitute valid and binding agreements of
Purchaser, enforceable against Purchaser in accordance with their terms.
3.2 NONCONTRAVENTION. The execution, delivery and performance of this Agreement
and the Documents to which it is a party by Purchaser does not and will not (a)
violate or conflict with or result in a breach of any provision of the
organizational documents of Purchaser, (b) violate or conflict with any law or
Governmental Order applicable to Purchaser or any of its assets and properties,
or (c) conflict with, result in any violation or breach of or constitute a
default (or an event which, with the giving of notice or lapse of time, or both,
would become a default) under, require any notice or consent under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in any loss of any benefit, the triggering of any payment by, or the
increase in other obligation of, Purchaser or the creation of any Encumbrance on
any assets or properties of Purchaser pursuant to any material contract,
license, permit, franchise or other instrument or arrangement to which Purchaser
is a party or by which it, or any of its assets or properties is bound or
affected, except for, in the case of clauses (b) and (c), such conflicts,
violations, breaches, defaults or other occurrences that would not (i)
materially impair the ability of Purchaser to perform its obligations under this
Agreement or (ii) prevent or materially delay the consummation of any of the
transactions contemplated hereby.
5
3.3 CONSENTS AND APPROVALS. No consent from or filing with any person or entity
(including, without limitation, any Governmental Authority) on the part of
Purchaser is required in connection with the execution or delivery by Purchaser
of this Agreement or any of the Documents to which it is a party or the
consummation by Purchaser of the transactions contemplated hereby or thereby,
other than (a) filings with the SEC, state securities laws administrators and
the National Association of Securities Dealers and (b) the filing of appropriate
documents with, and to the extent necessary, approval of, the Commissioners of
Insurance of the State of Washington and State of Texas and such notices and
consents as may be required under the insurance laws of any jurisdiction in
which the Company or its subsidiaries is domiciled or does business.
3.4 INVESTMENT REPRESENTATIONS. PURCHASER:
(a) is an accredited investor, and has not retained or consulted with any
purchaser representative, as such terms are defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
in connection with its execution of this Agreement and the Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby;
(b) has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Company;
(c) will acquire the Shares for its own account for investment and not
with the view toward resale or redistribution in a manner that would require
registration under the Securities Act; and
(d) is able to bear the economic riskof an investment in the Shares.
3.5 BROKER'S FEES. Purchaser has not entered
into any agreement, arrangement or understanding with any person or entity that
will result in the obligation of the Foundation to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
Section 4. COVENANTS.
4.1 EXPENSES. All expenses incurred by the parties hereto shall be borne solely
and entirely by the party that has incurred such expenses.
6
4.2 CONFIDENTIALITY; PUBLICITY.
(a) CONFIDENTIALITY. Each party shall, and shall cause its officers, directors,
employees, affiliates, agents and representatives to, not disclose to any other
person or entity (other than its affiliates, agents and representatives bound by
obligations of confidentiality) or use (other than to perform its obligations
under this Agreement) any Confidential Information of the other party without
the prior written consent of such other party. "Confidential Information" means,
with respect to a party, information (i) that is designated as such orally or in
writing by that party when or before it is disclosed to the other party or (ii)
that the receiving party may reasonably be expected to know, based on the nature
of the information or the circumstances of its disclosure, the disclosing party
maintains in confidence. Without limiting the previous sentence, information
regarding the transactions described in this Agreement and the Documents is
Confidential Information of both parties. This Section 4.2(a) does not apply to
any disclosure (i) required by any law, any rule or regulation of any
Governmental Authority, or any Governmental Order; (ii) required to comply with
the disclosure requirements of the Securities and Exchange Commission, the
Nasdaq National Market, or other securities exchanges; or (iii) to employees,
officers, directors, attorneys, and advisors of the disclosing party as
necessary or desirable for the conduct of the business of the disclosing party,
provided that prior to such disclosure, such persons shall be bound by an
obligation of confidentiality substantially similar to the confidentiality
obligations hereunder; provided, however, if a party is required under this
Section 4.2(a) to disclose any Confidential Information of the other party, the
disclosing party shall use reasonable commercial efforts, to the extent legally
permissible, to (x) notify the other party in advance of such disclosure and (y)
if requested, assist the other party in contesting such disclosure (at the
expense of such other party).
(b) PUBLICITY. Neither party nor any of their
respective affiliates shall issue or cause the publication of any press release
or other announcement with respect to this Agreement or the transactions
contemplated hereby without a prior consultation of the other party, except as
may be required by any law, any rule or regulation of any Governmental
Authority, or any Governmental Order or by the disclosure requirements of the
Securities and Exchange Commission, the Nasdaq National Market, or other
securities exchanges, and will use reasonable efforts to provide copies of such
release or other announcement to the other party, and give due consideration to
such comments as the other party may have, prior to such release.
7
Section 5.
INDEMNIFICATION.
5.1 SURVIVAL. The representations, warranties covenants and
other agreements of the parties contained herein or in any Document shall
survive the Closing.
5.2 INDEMNIFICATION BY THE FOUNDATION. The Foundation shall
indemnify Purchaser and its affiliates, partners, principals, officers,
directors, managers, members, employees, independent contractors, agents,
representatives, and other similarly situated parties, and the successors, heirs
and personal representatives of any of them (collectively, "Purchaser
Indemnified Parties"), against and hold them harmless from any and all damage,
claim, loss, reasonable liability and expense (including, without limitation,
reasonable expenses of investigation and attorneys' fees and expenses)
(collectively, "Damages") incurred or suffered by any Purchaser Indemnified
Party arising out of or relating to any breach of any representation, warranty,
covenant or other agreement of the Foundation contained herein or in any
Document to which the Foundation is a party. Purchaser acknowledges that in
connection with this Agreement and the transactions contemplated hereby, except
for the representations, warranties, covenants and other agreements of the
Foundation contained herein or in any Document to which the Foundation is a
party, Purchaser has not relied in any respect on the Foundation to provide
Purchaser information regarding the Company and the Foundation has provided no
such information. Notwithstanding the provisions of this Section 5.2, the
maximum liability (the "Maximum Liability") of the Foundation under this
Agreement shall be the aggregate amount paid to the Foundation by Purchaser for
the Shares.
5.3 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify the
Foundation and its affiliates, partners, principals, officers, directors,
employees, independent contractors, agents, representatives and other similarly
situated parties, and the successors, heirs and personal representatives of any
of them (collectively, the "Foundation Indemnified Parties"), against and hold
them harmless from any and all Damages incurred or suffered by any Foundation
Indemnified Party arising out of or relating to any breach of any
representation, warranty, covenant or other agreement of Purchaser contained
herein or in any Document. Notwithstanding the provisions of this Section 5.3,
the maximum liability of Purchaser under this Agreement shall be the aggregate
amount paid by Purchaser to the Foundation for the Shares acquired by Purchaser.
8
5.4 INDEMNIFICATION; NOTICE AND SETTLEMENTS. A party seeking indemnification
pursuant to Section 5.2 or 5.3 (an "Indemnified Party") with respect to a claim,
action or proceeding initiated by a person or entity that is not a Purchaser
Indemnified Party or a Foundation Indemnified Party shall give prompt written
notice to the party from whom such indemnification is sought (the "Indemnifying
Party") of the assertion of any claim, or the commencement of any action or
proceeding, in respect of which indemnity may be sought hereunder; provided that
the failure to give such notice shall not affect the Indemnified Party's rights
to indemnification hereunder, unless such failure shall prejudice in any
material respect the Indemnifying Party's ability to defend such claim, action
or proceeding. The Indemnifying Party shall have the right to assume the defense
of any such action or proceeding at its expense. If the Indemnifying Party shall
elect not to assume the defense of any such action or proceeding, or fails to
make such an election within 20 days after it receives such notice pursuant to
the first sentence of this Section 5.4, the Indemnified Party may assume such
defense at the expense of the Indemnifying Party. The Indemnified Party shall
have the right to participate in (but not control) the defense of an action or
proceeding defended by the Indemnifying Party hereunder and to retain its own
counsel in connection with such action or proceeding, but the fees and expenses
of such counsel shall be at the Indemnified Party's expense unless (a) the
Indemnifying Party and the Indemnified Party have mutually agreed in writing to
the retention of such counsel or (b) the named parties in any such action or
proceeding (including impleaded parties) include the Indemnifying Party and the
Indemnified Party, and the Indemnified Party shall have been advised in writing
by such counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the Indemnifying
Party. Under such circumstances, the Indemnifying Party shall reimburse the
Indemnified Party for the Indemnified Party's reasonable attorney's fees and
expenses. The Indemnifying Party may settle any such action or claim at its own
expense, provided that the Indemnifying Party shall not settle any such action
or claim or consent to the entry of any judgment without the prior written
consent of the Indemnified Party if such settlement or judgment (i) includes any
admission of wrongdoing by the Indemnified Party or any of the Indemnified
Party's officers, directors, employees or controlling persons (the "Indemnified
Party's Representatives"), (ii) includes any consent to any type of injunctive
relief affecting the Indemnified Party or any of the Indemnified Party's
Representatives, (iii) excludes an unconditional release by the person or entity
9
asserting such action or claim of the Indemnified Party and the Indemnified
Party's Representatives from all liability with respect to such action or claim,
or (iv) requires the Indemnified Party or any of the Indemnified Party's
Representatives to undertake any obligations or incur any costs that are not
paid in advance by the Indemnifying Party.
Section 6. MISCELLANEOUS.
6.1 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by operation of law or
otherwise without the prior written consent of the parties hereto, which consent
may be granted or withheld in the sole discretion of the parties. Subject to the
preceding sentence, the provisions of this Agreement shall be binding upon, and
inure to the benefit of, the permitted respective successors, assigns, heirs,
executors and administrators of the parties hereto.
6.2 Entire Agreement. This Agreement, including the Documents and all schedules
and exhibits hereto, embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings relating to such subject
matters.
6.3 COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Signatures delivered by telecopy shall be
considered for all purposes to be the same as original signatures.
6.4 SEVERABILITY. If any provision of this Agreement is held by final judgment
of a court of competent jurisdiction to be invalid, illegal or unenforceable,
such invalid, illegal or unenforceable provision shall be severed from the
remainder of this Agreement, and the remainder of this Agreement shall be
enforced. In addition, the invalid, illegal or unenforceable provision shall be
deemed to be automatically modified, and, as so modified, to be included in this
Agreement, such modification being made to the minimum extent necessary to
render the provision valid, legal and enforceable.
6.5 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, IRRESPECTIVE OF ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE OF ANY JURISDICTION THAT MIGHT REFER THE
10
GOVERNANCE OR CONSTRUCTION OF THIS AGREEMENT TO THE LAWS OF ANY OTHER
JURISDICTION. THIS AGREEMENT CAN BE PERFORMED IN WHOLE OR IN PART IN XXXXXX
COUNTY, TEXAS, AND VENUE FOR ANY ACTION RELATING TO THIS AGREEMENT SHALL BE
PROPER ONLY IN FEDERAL OR STATE COURTS LOCATED WITHIN XXXXXX COUNTY, TEXAS. EACH
PARTY AGREES THAT IT MUST BRING ANY ACTION RELATED TO THIS AGREEMENT OR ANY
DOCUMENT ONLY IN THE FEDERAL OR STATE COURTS LOCATED WITHIN XXXXXX COUNTY,
TEXAS.
6.6 NOTICES. Any notices or demands required or permitted to be given
hereunder shall be deemed sufficiently given if in writing and delivered,
transmitted or mailed (with all postage and charges prepaid), addressed to the
recipient at the address provided below, or at such other address as any party
may from time to time designate by written notice to the other parties given in
accordance with this Section 6.6. Any such notice, if personally delivered or
transmitted by facsimile, shall be deemed to have been given on the date so
delivered or transmitted or, if mailed, be deemed to have been given on the day
after such notice is placed in the United States mail in accordance with this
Section 6.6.
Foundation: The Xxx X. and Xxxxx Xxxx Mitte Foundation
0000 Xxx Xxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Purchaser: American Physicians Service Group, Inc.
0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxx 00000
Attn: Chairman and Chief Executive Officer
Facsimile No.: (000) 000-0000
6.7 FURTHER ASSURANCES. Each party of this Agreement hereby covenants and
agrees, without the necessity of any further consideration, to execute and
deliver any and all such further documents and take any and all such other
actions as may be reasonably necessary to appropriately carry out the intent and
purposes of this Agreement and the Documents and the transactions contemplated
hereby and thereby. Each party will use its good faith efforts to carry out and
comply with the provisions of this Agreement.
6.8 No Third-Party Beneficiaries. Except as provided in Sections 5.2 and 5.3,
this Agreement shall not confer any rights or remedies upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns.
11
6.9 Amendments. This Agreement may not be amended or modified except by
an instrument in writing signed by each of the parties.
[Signature page follows]
SIGNATURE PAGE
TO
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the day and year first above written.
FOUNDATION: THE XXX X. AND XXXXX XXXX MITTE FOUNDATION
By: /s/ Xxx X. Xxxxx
---------------------------------
Name: Xxx X. Xxxxx
---------------------------------
Title: President
---------------------------------
PURCHASER: AMERICAN PHYSICIANS SERVICE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
-----------------------------------
Title: Chairman of the Board and Chief Executive Officer
------------------------------------------------------
