STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 11th day of
March, 1998 by and between FBL Financial Group, Inc., an Iowa corporation (the
"Seller") and Farm Bureau Mutual Insurance Company, an Iowa corporation (the
"Buyer").
WITNESSETH:
WHEREAS, the Seller is the owner, beneficially and of record, of all the issued
and outstanding shares of the capital stock of Utah Farm Bureau Insurance
Company, a Utah domiciled insurance company (the "Company"); and
WHEREAS, the Seller desires to sell, and the Buyer desires to purchase, all of
such capital stock, all in accordance with the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1: DEFINITIONS
Unless otherwise defined herein or unless the context otherwise requires,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in Annex A attached hereto and by this reference incorporated herein.
ARTICLE 2: SALE AND PURCHASE OF STOCK
2.1 SALE AND PURCHASE.
Upon the terms and subject to the conditions of this Agreement, at the Closing
the Seller will sell, assign and transfer to the Buyer, and the Buyer will
repurchase from the Seller, the Stock.
2.2 PURCHASE PRICE.
In consideration for the Stock and the other performances contemplated hereby,
the Buyer shall pay to the Seller the sum of Twenty-Five Million Dollars
($25,000,000) cash plus a 5-year earnout based on a 50% sharing of the amount by
which the incurred losses achieved on the Utah direct business are better than
those assumed by the independent appraiser (Xxxxxxxxxxx-Xxxxxx Xxxxxx) in its
appraisal (with a maximum of $2 million per year with respect to any annual
earnout payment). The assumed incurred losses are based on a loss ratio of
68.7%, 69.53%, 68.87%, 67.49% and 65.69% in 1998 through 2002, respectively. The
earnout will be calculated in the manner set forth on the Earnout Calculations
attached hereto as Exhibits A, B and C. The loss ratios shall be determined
before any intracompany pooling and net of outside reinsurance. Loss reserves
for the Company's business during the earnout period shall be set by mutual
agreement of the parties, and if either party requests, by an independent
analyst selected by the parties.
2.3 THE CLOSING.
(a) Unless this Agreement shall have been terminated pursuant to Article 9,
a closing (the "Closing") will be held on March 31, 1998, if all
conditions precedent to Closing of both parties set forth in Article 7
and Article 8 have then been satisfied or waived by that date (the
"Scheduled Closing Date"). The Closing may be postponed if any of the
conditions provided for in Article 7 and Article 8 hereof shall not
have been satisfied or waived by that date by the party whose
condition(s) so remains unsatisfied by written notice to the other
party. In such event, the Closing shall occur on such date as the
postponing party shall specify, or if there shall be no such
specification or both parties shall have exercised a right to postpone,
then five Business Days following the date all such conditions shall
have been satisfied or waived (the date the Closing actually occurs the
"Closing Date"), but in no event shall the Closing occur later than
December 31, 1998, unless the parties hereto shall agree in writing to
an extension thereof (such date as it may be extended in accordance
herewith the "Termination Date"). The Closing shall be held at such
time and place as the parties may agree.
(b) At the Closing, the Buyer shall transfer to the Seller $25,000,000 and
the Seller shall deliver to the Buyer certificates for the Stock,
together with (i) stock powers for the same duly executed in Blank by
the Seller and (ii) such other instruments and agreements as Buyer
shall reasonably require. The parties shall further deliver such other
agreements, certificates, legal opinions and other documents required
under this Agreement and such other documents as the parties may
mutually agree to evidence the fulfillment or waiver of the conditions
contained in Article 7 and Article 8 hereof or otherwise deemed
necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as disclosed by the Seller to the Buyer in a schedule attached to this
Agreement, the Seller represents and warrants to the Buyer as follows:
3.1 ORGANIZATION.
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of Iowa with all requisite corporate power
and authority to own and to sell the Stock and to execute, deliver and
perform this Agreement and each other agreement, instrument and
document required to be executed and delivered by the Seller in
connection herewith.
(b) The Company is a corporation and domestic insurer duly organized,
validly existing and in good standing under the laws of Utah with all
requisite corporate power and authority
to own, lease and operate its properties and other assets and to
conduct its business as now owned or conducted by it.
3.2 AUTHORIZATION.
The execution and delivery by the Seller of this Agreement and each other
agreement, instrument and document to be executed and delivered by the Seller in
connection herewith are duly and validly authorized and no other corporate
action on the part of the Seller will be required in connection therewith. This
Agreement has been, and each other agreement, instrument and document to be
executed and delivered by the Seller in connection herewith will be, duly
executed and delivered by the Seller. This Agreement constitutes, and each such
other agreement, instrument and document will constitute (assuming due
authorization, execution and delivery by each other party thereto) legal, valid
and binding obligations of the Seller enforceable against it in accordance with
their respective terms, except as many be affected by bankruptcy, insolvency,
moratorium or similar laws relating to or affecting creditors' rights generally
or by equitable principles.
3.3 APPROVALS.
The execution, delivery and performance of this Agreement by Seller and Buyer
will not require any consent, waiver, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
for the filings and approvals by the insurance regulatory authority of Utah and
Iowa, the Xxxx-Xxxxx-Xxxxxx filing ("H-S-R Filing"), and any pre-acquisition
notifications as required under state law (the "Approvals").
3.4 ABSENCE OF CONFLICTS.
Neither the execution and delivery of this Agreement or any other agreement,
instrument and document to be executed and delivered by the Seller in connection
therewith nor the consummation by the Seller of the transactions contemplated
hereby or thereby will violate or conflict with so as to have Material Adverse
Effect on the Company (i) the Articles of Incorporation or Bylaws of the
Company, (ii) the Articles of Incorporation or Bylaws of the Seller, (iii) any
applicable statute, rule, regulation, order, decree, judgment or other law or
requirement of any court, tribunal, government agency or other authority,
federal, state or local (sometimes hereinafter referred to collectively as
"Laws"), or (iv) any contract, agreement, note, bond, mortgage, indenture, deed,
license or other instrument (any thereof a "Contract") to which the Seller or
the Company is a party or by which the Seller or the Company or any shares of
the Stock is bound.
3.5 TITLE TO STOCK.
The Seller (i) has good title, beneficially and of record, to the Stock, free
and clear of all claims and encumbrances, (ii) is in rightful possession of duly
and validly authorized and issued certificates evidencing their ownership of
record of the Stock, and (iii) has full right, power and authority to sell,
transfer, convey and deliver to the Buyer good title to the Stock, free and
clear of all claims or encumbrances.
3.6 CAPITALIZATION OF THE COMPANY.
As of the date hereof, the authorized capital stock of the Company consists of
Two Million (2,000,000) shares of Common Stock, par value $1.00, of which Nine
Hundred Thousand (900,000) shares are issued and outstanding and owned
beneficially and of record by the Seller, and Two Hundred Thousand (200,000)
shares of Preferred Stock, par value $100.00, of which none are issued and
outstanding. Each outstanding share of the Stock has been duly authorized, is
validly issued, fully paid and nonassessable and was not issued in violation of
any preemptive rights of any shareholder. There are no Contracts obligating the
Company or the Seller (i) to issue, sell, pledge, dispose of or encumber any
shares of, or any options, warrants or rights of any kind to acquire, or any
securities that are convertible into or exchangeable for, any shares of, any
class of capital stock of the Company or (ii) to redeem, purchase or acquire, or
offer to acquire, any shares of, or any outstanding option, warrant or right to
acquire, or any securities that are convertible into or exchangeable for, any
shares of, any class of capital stock of the Company.
3.7 ASSETS.
As of 12/31/97, the assets of the Company are as reflected in the Company's
Annual Statement, and since that time there have been no changes, damages,
destruction or losses in the assets of the Company which individually or the
aggregate have had a Material Adverse Effect on the Company.
3.8 INTELLECTUAL PROPERTY.
The Company has not and is not infringing upon or otherwise violating the rights
of any third party with respect to any intellectual property used in the conduct
of its business. The Company owns no intellectual property rights.
3.9 COMPLIANCE WITH LAW.
The Company is in compliance with all applicable Laws the failure to comply with
which might have a Material Adverse Effect upon it.
3.10 TAXES.
(a) All tax returns and estimates, of any kind, required to be filed by or
with respect to the Company ("Tax Returns") have been timely filed with
the appropriate governmental agencies and authorities for each period
for which any such Tax Returns were due. All information provided in
such returns, reports and estimates was true, complete and accurate in
all Material respects. All taxes and other charges shown by each Tax
Returns to be payable have been paid, including all tax assessments
and/or levies imposed upon the Company or its property. No waiver of
any statute of limitations executed by or relating to the Company with
respect to any tax is in effect for any period. No audit of any tax
Return of the company is in process nor has an appointment for or
notice of any such audit been requested or given by any taxing
authority. No issue or issues currently pending or unsettled, singly or
collectively, with any taxing authority in connection with any returns
and reports referred to in this Section 3.10 which are likely to, if
determined adversely to the Company, have a Material Adverse effect on
it. To the extent applicable, proper and accurate amounts have been
withheld by the Company and paid over to the appropriate governmental
authorities for all periods in full and complete compliance with the
tax withholding provisions of applicable Law; to the extent applicable,
proper and accurate returns have been filed by the Company for all
periods for which returns were due with respect to income tax
withholding, social security, unemployment and other trust fund or
employer taxes, and the amounts shown on such returns to be due and
payable have been paid in full or adequate provision therefor has been
made.
3.11 INSURANCE HOLDING COMPANY SYSTEM REGISTRATION.
The Company is an insurer which is registered with all necessary state insurance
regulatory authorities as a member of an insurance holding company system and
the Company has timely filed all required amendments to the registration
statement by which such registration was effected.
3.12 TRANSACTIONS WITH AFFILIATES.
All transactions, including without limitation dividends and distributions,
between the Company and the Seller or its Affiliates have complied in all
Material respects with the standards set forth in, and the approval provisions
of, applicable state insurance Law.
3.13 STATUTORY REPORTS.
(a) The Company has timely filed with the appropriate insurance regulatory
authorities in each jurisdiction in which it is licensed to do business
or is otherwise required to so file all annual statements, reports and
amendments thereto required under the laws of such jurisdictions and
has received renewal Certificates of Authority from all such insurance
regulatory authorities issuing the same.
(b) All of the registration statements and amendments referenced in Section
3.11 above, and all of the annual statements, reports and amendments
referenced in subsection (a) of this Section 3.13 (the "Insurance
Statements") were in compliance in all Material respects with
applicable laws when filed and, as of their respective dates, did not
contain any Materially false statements of fact or omit to state any
Material fact necessary to make the statements made therein not
misleading in light of the circumstances under which such statements
were made. No Material deficiencies in any such Insurance Statements
have been asserted in writing by any insurance regulatory authority.
3.14 INSURANCE.
The Company is insured with respect to its property and the conduct of its
business. The Company has not been denied any insurance or indemnity bond and no
insurance carrier has canceled or reduced any insurance coverage of the Company.
3.15 POWERS OF ATTORNEY.
The Company has not granted any powers of attorney to any Person.
3.16 DISCLOSURE.
No representation or warranty by the Seller in this Agreement nor any schedule,
exhibit or certificate furnished or to be furnished by the Seller pursuant
hereto contains or will contain any untrue statement of a Material fact or omits
or will omit any Material fact necessary in order to make the statements
contained therein not misleading.
3.17 STOCK BOOKS.
The stock books and stock records for the Company are true and correct in all
material respects and reflect all of the issuances and transfers of shares of
the capital stock of the Company.
3.18 SELLER'S CLAIMS.
The Seller does not have any claims against the Company.
3.19 FINANCIAL STATEMENTS. The financial statements of the Company for the
year-ended December 31, 1997 (the "Financial Statements"), copies of which have
been delivered by Seller to Buyer, have been prepared in accordance with
generally accepted accounting principles consistently applied and present fairly
the financial condition and results of operations of the Company as of the dates
and for the periods indicated and are accurate in all Material respects. There
are no liabilities of the Company, whether absolute, accrued, fixed, contingent,
unknown,
unforeseen or otherwise, which individually or in the aggregate would have a
Material Adverse Effect on the Company and are not reflected on the balance
sheet included in the Financial Statements.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Seller as follows:
4.1 ORGANIZATION.
The Buyer is a corporation duly organized, validly existing and in good standing
under the laws of Iowa with all requisite corporate power and authority to
execute, deliver and perform this Agreement and each other agreement, instrument
or document to be executed and delivered by the Buyer in connection herewith.
4.2 AUTHORIZATION.
The execution and delivery by the Buyer of this Agreement and each other
agreement, instrument or document to be executed and delivered by the Buyer in
connection herewith have been duly and validly authorized by the Buyer's Board
of Directors or Executive Committee thereof, and no other corporate action on
the part of the Buyer will be required in connection therewith. This Agreement
has been, and each other agreement, instrument and document to be executed and
delivered by the Buyer in connection herewith will be, duly executed and
delivered by the Buyer, and this Agreement constitutes, and each such other
agreement, instrument and document will constitute (assuming due authorization,
execution and delivery by each other party thereto) legal, valid and binding
obligations of the Buyer enforceable against it in accordance with their
respective terms, except as may be affected by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally or by equitable principles.
4.3 APPROVALS.
Except for the Approvals, no filing or registration with, and no consent,
approval, authorization, permit, certificate or order of any court, tribunal or
governmental agency or authority (federal, state or local) is required by any
applicable Law or by any applicable judgment, order or decree or any applicable
rule or regulation of any court, tribunal or governmental agency or authority
(federal, state or local) to permit the Buyer to execute, deliver or perform
this Agreement or any other agreement, instrument and document to be executed
and delivered by the Buyer in connection herewith.
4.4 ABSENCE OF CONFLICTS.
Neither the execution and delivery of this Agreement or any other agreement,
instrument and document to be executed and delivered by the Buyer in connection
therewith nor the consummation by the Buyer of the transactions contemplated
hereby or thereby will violate or conflict with so as to have a Material Adverse
Effect on the Buyer with respect to (i) the Buyer's Articles of Incorporation or
By-laws, (ii) any applicable Law, or (iii) any contract, agreement, note, bond,
mortgage, indenture, deed, license or other instrument or obligation to which
the Buyer is a party or by which the Buyer or any of its properties or assets
are bound.
4.5 INVESTMENT.
The Buyer is purchasing the Stock pursuant to this Agreement for investment for
its own account and not with a view to the distribution of all or any part
thereof as such term is used in Section 2(11) of the Securities Act of 1933, as
amended.
4.6 DISCLOSURE.
No representation or warranty made by the Buyer in this Agreement nor any
schedule, exhibit or certificate furnished or to be furnished to the Seller by
the Buyer pursuant hereto contains or will contain any untrue statement of a
Material fact or omits or will omit any Material fact necessary in order to make
the statements contained therein not misleading.
ARTICLE 5: COVENANTS OF THE SELLER
5.1 ACCESS.
Upon reasonable notice, the Seller shall cause the Company to afford the Buyer's
officers, employees, counsel, accountants and other authorized representatives
access, during normal business hours throughout the period prior to the Closing
Date, to all of books, accounts, records and other data (including without
limitation all corporate, personnel, litigation and other legal, accounting and
tax documents and records, all contracts and commitments, all policy forms and
administrative forms and records, and all regulatory reports, filings and data)
of the Company in order that Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of the Company and,
during such period, the Seller shall cause the Company to furnish promptly to
the Buyer all such information as the Buyer may reasonably request.
5.2 CONDUCT.
The Seller covenants and agrees that, prior to the Closing Date, and except (i)
for actions relating to obtaining any Consents necessary or desirable to the
consummation of the transactions contemplated hereby, (ii) for such other
matters, if any, which the Buyer shall approve in writing, which approval shall
not be unreasonably withheld and (iii) as otherwise may be expressly permitted
by this Agreement, the Company shall be operated only in the ordinary course
consistent with prior practice, and without limiting the foregoing the Company
shall not (i) amend its charter or bylaws; (ii) issue, sell, pledge or dispose
of any shares of, or any options, warrants or rights of any kind to acquire, or
any securities that are convertible into or exchangeable for, any shares of, the
capital stock of any class of the Company; (iii) split, combine or reclassify
any of its outstanding capital stock or declare, set aside or pay any dividend
payable in cash, stock, property or otherwise with respect to the outstanding
capital stock of the Company; or (iv) redeem, purchase or otherwise acquire any
of the outstanding capital stock of the Company.
5.3 LICENSES.
The Seller shall maintain in effect between the date hereof and Closing all
licenses of the Company currently in existence.
5.4 FURTHER ASSURANCES.
The Seller shall, from and after the closing, execute, acknowledge and deliver
such documents and perform such acts as may be reasonably necessary or
appropriate more fully to vest in the Buyer full right, title and interest in
and to the Stock and generally to cause the satisfactory completion and
consummation of the transactions contemplated by this Agreement, without further
consideration or cost or expense to the Buyer.
ARTICLE 6: MUTUAL COVENANTS
6.1 AGREEMENT TO MAKE REASONABLE EFFORTS.
Subject to the terms and conditions herein provided, each of the parties hereto
agrees to use all reasonable efforts to take, or to cause to be taken, all
actions and to do, or to cause to be done, all things necessary, proper or
advisable to consummate and to make effective as promptly as practicable the
transactions contemplated by this Agreement, including without limitation using
their joint, cooperative efforts to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, including
filings which may be required under all applicable state insurance Laws and
submissions of information required by governmental agencies and authorities;
provided, however, that (i) nothing in this Section or elsewhere in this
Agreement shall require either party hereto incur expenses in connection with
the transactions contemplated hereby which are not reasonable under the
circumstances in relation to the size of the transactions contemplated hereby or
to require the Buyer, the Seller or the Company to make any divestiture of a
significant asset, to make or commit to any undertaking which would involve a
Material change in its operations or to commit to future restrictions on its
rights or opportunities to alter the structure or operations of itself or of an
Affiliate (other than as contemplated by this Agreement) in order to obtain any
such waiver, consent or approval, and (ii) the Seller shall be responsible for
obtaining all Consents from the state domicile of the Company, and (iii) the
Buyer shall be responsible for Consents with respect to the State of Iowa.
6.2 EXPENSES, FEES AND COMMISSIONS.
All costs and expenses incurred by the Seller and/or the Company in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the Seller and all such expenses incurred by the Buyer shall be paid by the
Buyer. Subject to the foregoing (i) the parties hereto agree that no third
person claiming a fee or commission has in any way brought the parties together
or been instrumental in the making of this Agreement and (ii) each party agrees
to indemnify the other against any claim by any other third person for any
commission, brokerage or finder's fee or other payment with respect to this
Agreement or the transactions contemplated hereby based on any alleged agreement
or understanding between such party and such third person, whether expressed or
implied from the actions of such party.
6.3 TAX MATTERS.
(a) The Buyer shall cause to be prepared and timely filed all required tax
returns for taxable periods beginning on or after the Closing Date.
(b) The Seller shall be liable for and shall indemnify and hold harmless
the Buyer and the Company from and against any unpaid tax liability,
including deficiencies, interest and penalties, relating to the Company
arising or accruing, or with respect to any taxable period of the
Company ending, on or before the Closing Date.
ARTICLE 7: CONDITIONS
7.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The respective obligations of each party hereto to consummate the transactions
contemplated hereby shall be subject, at the option of each such party, to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) there shall have been obtained the Approvals and any applicable waiting
periods shall have expired or terminated without objection or
imposition of any condition by any governmental authority; and
(b) no Law shall have been enacted, no suit, action or proceeding initiated
or threatened and no judgment or order shall have been issued and shall
remain in effect in any action or proceeding before any court, tribunal
or governmental agency or authority, federal, state or local, that
would prevent, restrict, impose conditions on, delay or make illegal
the consummation of the transactions contemplated hereby.
7.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SELLER.
The obligation of the Seller to consummate the transactions contemplated hereby
shall be subject at the option of the Seller, to the fulfillment at or prior to
the Closing Date of the following condition:
(a) the representations and warranties of the Buyer contained in Article 4
herein shall be accurate as of the Closing Date as if such
representations and warranties had been made at and as of that time,
and all the terms, covenants and conditions of this Agreement to be
complied with and performed by the Buyer on or before the Closing Date
shall have been duly complied with and performed in all Materials
respects.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF BUYER.
The obligation of the Buyer to consummate the transactions contemplated hereby
shall be subject at the option of the Buyer, to the fulfillment at or prior to
the Closing Date of the following conditions:
(a) the representations and warranties of the Seller contained in Article 3
shall be accurate as of the Closing Date as if such representations and
warranties had been made at and as of that time, and all the terms,
covenants and conditions of this Agreement to be complied with and
performed by the Seller on or before the Closing Date shall have been
duly complied with and performed in all Material respects; and
(b) since December 31, 1997, there shall have been no Material Adverse
Change in the Company.
ARTICLE 8: CLOSING
8.1 ACTIONS TAKEN AT CLOSING BY SELLER.
At the Closing, Seller shall deliver to Buyer, the delivery of which shall
constitute a condition precedent to Buyer's obligations to close hereunder, the
following:
(a) Stock certificates representing all of the Stock duly endorsed in
blank, or accompanied by stock powers duly endorsed in blank;
(b) A closing certificate dated as of the Closing Date and certifying as
to:
(1) the truth and accuracy in all Material respects of the
representations and warranties made by Seller as of that date;
(2) the fulfillment of the conditions to exist or to be complied
with or performed by Seller as conditions to the obligations
of Buyer; and
(3) the fact that no litigation, proceeding, investigation or
inquiry is pending or threatened that might result in action
to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or involving any of the
Company's assets, properties, business or operations that
might result in any Material adverse change in its respective
assets, properties, business, financial condition, operations
or prospects.
(c) For the Company, a copy of the Articles of Incorporation, together with
all amendments thereto.
(d) Copies of all policies of insurance to which the Company is a party or
under which the Company, or any officer or director of the Company, is
or has been covered at any time within the five years preceding the
Closing Date;
(e) Copies of any contract or arrangement, other than a policy of
insurance, for the transfer of sharing of any risk by the Company;
(f) Originals or copies of all historical books and records of the company
dating back at least to the date of the last final exam report of the
Company issued by the state department of insurance then responsible
for such examination.
8.2. ACTIONS TAKEN AT CLOSING BY BUYER.
At the Closing, Buyer shall deliver to Seller, delivery of which shall
constitute a condition precedent to Seller's obligations to close hereunder, the
following:
(a) The payment of $25,000,000 as described in Section 2.2;
(b) A closing certificate dated as of the Closing Date and certifying as
to:
(1) the truth and accuracy in all Material respects of the
representations and warranties made by Buyer as of that date;
(2) the fulfillment of the conditions to exist or to be complied
with or performed by Buyer as conditions to the obligations of
Seller; and
(3) the fact that no litigation, proceeding, investigation or
inquiry is pending or threatened that might result in action
to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or involving any of the
Company's assets, properties, business or operations that
might result in any Material adverse
change in its respective assets, properties, business,
financial condition, operations or prospects.
(c) Evidence of the due adoption by the Board of Directors or the Executive
Committee of Buyer of corporate resolutions attached to such
certificate authorizing the execution and delivery of this Agreement
and the taking of all actions contemplated hereby and thereby.
ARTICLE 9: TERMINATION
9.1 TERMINATION.
This Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing Date:
(a) by mutual consent of Seller and the Buyer;
(b) by any party hereto if the transactions contemplated hereby shall not
have been consummated on or before the Termination Date;
(c) by the Seller if a condition to its obligation to close set forth in
this Agreement is not met on the Scheduled Closing Date or any date to
which Seller has postponed the Closing Date and the Seller does not
postpone Closing or waive such condition in writing in accordance
herewith; and
(d) by the Buyer if a condition to it obligation to close set forth in this
Agreement is not met on the Scheduled Closing Date or any date to which
Buyer has postponed the Closing Date and the Buyer does not postpone
Closing or waive such condition in writing in accordance herewith.
ARTICLE 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Except for claims by the IRS, claims arising under ERISA, or claims arising
under CERCLA, RCRA or any other state or federal environmental law or
regulation, any of which arise out of any acts or omissions of Seller or the
Company occurring prior to the Closing Date, which claims shall survive the
Closing Date indefinitely; the representations and warranties of Seller and the
representations and warranties of Buyer contained in this Agreement shall
survive the Closing Date for a period ending March 31, 2003. Said
representations, warranties, obligations, covenants, indemnities and agreements
shall not be affected by, and shall remain in full force and
effect notwithstanding any investigation at any time made by or on behalf of any
party hereto or any information any party may have with respect thereof.
10.2 INDEMNIFICATION BY THE SELLER.
Subject to Section 10.1, without otherwise limiting or diminishing the
warranties, representations or covenants contained in this Agreement, or the
rights or remedies available to Buyer for the breach of this Agreement or other
indemnities provided for herein, Seller hereby agrees to indemnify and hold
Buyer and its successors, assigns, shareholders, directors, officers, agents and
employees harmless from and against:
(a) Any and all liabilities of the Company, whether absolute, accrued,
fixed, contingent, unknown, unforeseen or otherwise, existing at the
Closing Date or arising out of any acts, omissions or state of facts
occurring or existing prior to the Closing Date except liabilities
reflected in the Financial Statements and except liabilities which
individually or in the aggregate do not have a Material Adverse Effect
on the Company; and
(b) Any and all liabilities, losses, damages, deficiencies, claims or
expenses, including reasonable attorneys' fees, arising in connection
with or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Seller under this
Agreement or any agreement or instrument delivered pursuant to this
Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including reasonable attorneys' fees,
incident to any of the foregoing.
Seller shall have no obligation under this Section 10.2 to indemnify Buyer or
its successors, assigns, shareholders, directors, agents or employees from any
liability arising out of any acts, omissions or state of facts occurring after
the Closing Date.
10.3 INDEMNIFICATION BY THE BUYER.
The Buyer will defend, indemnify and hold harmless the Seller from, against and
in respect of any and all liabilities, losses, damages, deficiencies or expenses
resulting from the misrepresentation or breach of warranty of the Buyer or from
the breach of any covenant or agreement by the Buyer contained herein.
10.4 INDEMNIFIABLE CLAIMS; DAMAGES.
Any claim or claims properly asserted under Section 10.2 or 10.3 above are
referred to hereinafter as an "Indemnifiable Claim(s)." The amount of any such
Indemnifiable Claim(s) is referred to hereinafter as "Damages."
10.5 PROCEDURE FOR INDEMNIFICATION.
(a) The party against which an Indemnifiable Claim is asserted (the
"Indemnifying Party") shall have the right in the case of a Third-Party
Claim to elect to conduct, at its own expense, the defense against such
claim, with counsel reasonably satisfactory to the party seeking
indemnification (the "Indemnified Party") upon written notice to the
Indemnified Party (the "Defense Notice"). Except with the written
consent of the Indemnified Party, the Indemnifying Party shall not, in
the defense of an Indemnifiable Claim asserted by any Person not a
party hereto against any party hereto (a "Third Party Claim"), consent
to the entry of any judgment (other, than a judgment of dismissal on
the merits without costs), or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Party a release from all liability in
respect of such claim or litigation, or which is not consented to by
the Indemnified Party, which consent, however, may not be unreasonably
withheld or delayed.
(b) In any event the Indemnified Party and the Indemnifying Party will
cooperate with and make available to each other such assistance and
materials as may reasonably be requested by the other, all at the
expense of the Indemnifying Party, except as otherwise provided herein;
and the Indemnified Party shall have the right, at its own expense, to
participate in the defense, with counsel reasonably satisfactory to the
Indemnifying Party.
ARTICLE 11: MISCELLANEOUS
11.1 WAIVER AND AMENDMENT.
Any provision of this Agreement may be waived in writing at any time by the
party that is entitled to the benefits of such provision. This Agreement may not
be amended, modified or supplemented at any time, except by an instrument in
writing signed on behalf of each party hereto.
11.2 PUBLIC STATEMENTS.
Each party hereto agrees to consult with and obtain the prior consent of, the
other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby and shall not
issue any press release or make any such public statement prior to such
consultation and consent, except as may be required by applicable Law or
applicable stock exchange policy.
11.3 BENEFIT AND ASSIGNMENT.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto;
provided, however, that this Agreement
shall not be assignable by either party hereto except by operation of law or
with the prior express written consent of the other. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto, and their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
11.4 NOTICES.
All notices, request, claims, demands and other communications hereunder shall
be in writing and shall be given by personal delivery or by registered or
certified mail, postage prepaid, return receipt requested, to the respective
parties as follows:
If to the Seller: FBL Financial Group, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Attn:
If to the Buyer: Farm Bureau Mutual Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Attn:
or to such other address as any such person shall have furnished to the other in
writing in accordance herewith. Any notice which is delivered personally or by
telephonic facsimile transmission in the manner provided herein will be deemed
to have been duly given to the person to whom it is directed upon actual receipt
by such person. Any notice which is addressed and mailed in the manner herein
provided will be conclusively presumed to have been duly given to the party to
which it is addressed at the close of business, local time of the recipient, on
the third day after the day it is so placed in the mail.
11.5 GOVERNING LAW; VENUE.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Iowa, without giving effect to the principles of conflicts of law
that might otherwise apply, as to all matters, including, without limitation,
matters of validity, construction, effect, performance and remedies.
11.6 SEVERABILITY.
If any term, provision, covenant or restriction in this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants
and restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated.
11.7 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which taken together shall constitute but one and the same
agreement.
11.8 HEADINGS.
This section headings herein are for convenience only and shall not effect the
construction hereof.
11.9 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties and supersedes
all other prior agreements and understandings, both oral and written, between
the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date first above written.
BUYER SELLER
FARM BUREAU MUTUAL FBL FINANCIAL GROUP, INC.
INSURANCE COMPANY
BY /s/XXXXXX X. XXXXXXXXXXX BY /s/XXXXXX X. XXXXXX
ITS PRESIDENT ITS CHIEF EXECUTIVE OFFICER
ANNEX A
SCHEDULE OF CERTAIN DEFINED TERMS
In addition to the other terms defined herein, the following terms when used in
the Agreement shall have the meanings set forth below:
"Affiliate" (except as immediately provided below) shall mean with respect to
any Person, any other person directly or indirectly controlling, controlled by
or under common control with, such Person. For the purposes of this definition,
"control" (including with correlative meanings the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean the Stock Purchase Agreement herewith between the Seller
and the Buyer.
"Closing Date" shall have the meaning set forth in Section 2.3(a) of the
Agreement.
"Consent" shall mean any consent, approval, authorization, permit, certificate
or order of any person, court, tribunal or governmental agency or authority
(federal, state or local).
"Contract" shall have the meaning set forth in Section 3.4 of the Agreement.
"Damages" shall have the meaning set forth in Section 10.4 of the Agreement.
"Defense Notice" shall have the meaning set forth in Section 10.5(a) of the
Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Indemnifiable Claim" or "Indemnifiable Claims" shall have the mean set forth in
Section 10.4 of the Agreement.
"Indemnified Party" shall have the meaning set forth in Section 10.5(a) of the
Agreement.
"Indemnifying Party" shall have the meaning set forth in Section 10.5(a) of the
Agreement.
"Insurance Statements" shall have the meaning accorded to such term in Section
3.13(b) of the Agreement.
"Laws" shall have the meaning set forth in Section 3.4 of the Agreement.
"Material", as applied to any subject matter, means an event, condition or item
of such magnitude that a reasonable and prudent Person in similar circumstances
to that of Buyer or Seller, as the case may be, would have legitimate concern
for the consequences and might, among other things, choose to forego
consummation of this transaction, negotiate the purchase price further, seek
additional indemnities, obtain insurance "cover", require remedial action or
otherwise be responsive thereto. In circumstances where this is readily
quantifiable the threshold will be $25,000 in consequence or other result,
measurable individually or in the aggregate with respect to a series of
circumstances.
"Material Adverse Change/Effect" means any event which is Material and adverse
to the business, financial condition or earnings of the Person designated.
"Person" shall mean an individual, partnership, corporation, joint stock
company, trust, joint venture, association or unincorporated organization, or
any other form of business or professional entity.
"Purchase Price" shall have the mean set forth in Section 2.2.
"Stock" shall mean all the issued and outstanding shares of the capital stock of
the Company.
"Tax Returns" shall have the meaning set forth in Section 3.10(a) of the
Agreement.
"Third Party Claims" shall have the meaning set forth in Section 10.5(a) of the
Agreement.
Exhibit "A"
UTAH FARM BUREAU INSURANCE COMPANY SALE
EARNOUT CALCULATION
USING ACTUAL 1997 UTAH RESULTS
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Expected Loss & LAE Ratio 79.48% 80.43% 79.68% 78.07% 76.00%
Loss Ratio/Loss & LAE Ratio 0.8644 0.8644 0.8644 0.8644 0.8644
----------------------------------------------------
Expected Loss Ratio 68.70% 69.53% 68.87% 67.49% 65.69%
Actual Loss Ratio -- Note 1 62.20% 62.20% 62.20% 62.20% 62.20%
----------------------------------------------------
Ratio Difference 6.50% 7.33% 6.67% 5.29% 3.49%
Earned Premium (000s) -- Note 2 29,744 31,787 35,328 39,501 44,327
----------------------------------------------------
Dollar Difference (000s) 1,935 2,329 2,357 2,088 1,549
----------------------------------------------------
50% of Dollar Difference (000s) 967 1,165 1,179 1,044 774
====================================================
Note 1 -- For purposes of this example, the 1997 loss ratio is used.
For the calculation, the actual Utah direct loss ratio for that year
would be used.
Note 2 -- The earned premium shown is the assumed premiums from the Xxxxxxxxxxx
report.
Actual Utah direct earned premiums would be used in the actual
calculation.
Exhibit "B"
UTAH FARM BUREAU INSURANCE COMPANY SALE
EARNOUT CALCULATION
EXAMPLE OF MAXIMUM CALCULATION
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Expected Loss & LAE Ratio 79.48% 80.43% 79.68% 78.07% 76.00%
Loss Ratio/Loss & LAE Ratio 0.8644 0.8644 0.8644 0.8644 0.8644
--------------------------------------------------------------------------
Expected Loss Ratio 68.70% 69.53% 68.87% 67.49% 65.69%
Actual Loss Ratio -- Note 1 62.20% 62.20% 55.00% 62.20% 56.00%
--------------------------------------------------------------------------
Ratio Difference 6.50% 7.33% 13.87% 5.29% 9.69%
Earned Premium (000s) -- Note 2 29,744 31,787 35,328 39,501 44,327
--------------------------------------------------------------------------
Dollar Difference (000s) 1,935 2,329 4,901 2,088 4,297
--------------------------------------------------------------------------
50% of Dollar Difference (000s) 967 1,165 2,450 1,044 2,148
==========================================================================
--------------------------------------------------------------------------
Maximum amount paid 967 1,165 2,000 1,044 2,000
==========================================================================
Note 1 -- For purposes of this example, loss ratio selected to show effect
of $2 million maximum.
For the calculation, the actual Utah direct loss ratio for that year
would be used.
Note 2 -- The earned premium shown is the assumed premiums from the
Xxxxxxxxxxx report.
Actual Utah direct earned premiums would be used in the actual
calculation.
Exhibit "C"
UTAH FARM BUREAU INSURANCE COMPANY SALE
EARNOUT CALCULATION
EXAMPLE OF NEGATIVE YEAR
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Expected Loss & LAE Ratio 79.48% 80.43% 79.68% 78.07% 76.00%
Loss Ratio/Loss & LAE Ratio 0.8644 0.8644 0.8644 0.8644 0.8644
-----------------------------------------------------------------------------
Expected Loss Ratio 68.70% 69.53% 68.87% 67.49% 65.69%
Actual Loss Ratio -- Note 1 62.20% 62.20% 70.00% 62.20% 71.00%
-----------------------------------------------------------------------------
Ratio Difference 6.50% 7.33% -1.13% 5.29% -5.31%
Earned Premium (000s) -- Note 2 29,744 31,787 35,328 39,501 44,327
-----------------------------------------------------------------------------
Dollar Difference (000s) 1,935 2,329 (398) 2,088 (2,352)
-----------------------------------------------------------------------------
50% of Dollar Difference (000s) 967 1,165 (199) 1,044 (1,176)
=============================================================================
-----------------------------------------------------------------------------
Actual amount paid 967 1,165 -- 1,044 --
=============================================================================
Note 1 -- For purposes of this example, loss ratio selected to show effect
of negative years.
For the calculation, the actual Utah direct loss ratio for that year
would be used.
Note 2 -- The earned premium shown is the assumed premiums from the
Xxxxxxxxxxx report.
Actual Utah direct earned premiums would be used in the actual
calculation.