Stock Purchase Agreement

This STOCK PURCHASE AGREEMENT, dated as of December 10, 2018, is made by and among Standard Diversified Inc., a Delaware corporation (“Purchaser”), and WT Holdings, Inc., a Tennessee corporation, (“WT”), Penny Fern Hart, an individual (“Hart” together with WT, the “Stockholders”) and WT, not in its individual capacity, but as the Stockholders’ Representative pursuant to Section 5.15 hereof (the “Stockholders’ Representative”). Purchaser, the Stockholders and the Stockholders’ Representative are sometimes collectively referred to herein as the “Parties” and individually referred to herein as a “Party”.

WHEREAS, the Stockholders are the record and beneficial owners of all of the outstanding shares of common stock (the “Shares”) of The Tri-State Consumer, Inc., a New York corporation (the “Company”);

WHEREAS, the Company and its Subsidiaries are engaged in the underwriting, brokering, sale and administration of home and automobile insurance (the “Business”); and

WHEREAS, the Stockholders wish to sell, and Purchaser wishes to cause its wholly-owned subsidiary, Pillar General Inc., a Delaware corporation (“Pillar General”), to purchase, the Shares on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser and the Stockholders agree as follows:

Section 1.1          Definitions.

(a)          As used in this Agreement, the following terms shall have the following meanings:

“Action” means any legal, administrative, arbitration or other similar proceeding, claim, action or governmental or regulatory investigation of any nature.

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Stock Purchase Agreement, together with the Exhibits attached hereto, and the Stockholders Disclosure Schedule.

“Books and Records” means originals or copies of all books and records (including documents and data), in whatever form maintained, in the possession or control of the Stockholders, the Company or any of its Subsidiaries to the extent that they pertain or relate to the assets, liabilities, properties, business, conduct and operations of the Company, its Subsidiaries or the Business, including all Permits held by the Company and its Subsidiaries, all corporate records of the Company and its Subsidiaries, statutory filings as required under applicable Law, administrative records, claim records, sales records, underwriting records, financial records, Tax records, compliance records, complaint logs, litigation files and personnel records of the Employees.

“Business Day” means any day other than a day on which commercial banks located in New York, New York are authorized or required to be closed for the conduct of regular banking business.

“Business Material Adverse Effect” means any event, occurrence, fact, condition, circumstance, effect or change that, individually or in the aggregate, materially adverse to (a) the business, results of operations, financial condition or assets of the Company or its Subsidiaries, or (b) the ability of any Stockholder to perform its obligations under this Agreement or the Transaction Documents to which such Stockholder is a party in a timely manner or to consummate the transactions contemplated hereby and thereby on a timely basis; provided, however, that “Business Material Adverse Effect” shall not include any event, occurrence, fact, condition, circumstance, effect or change, to the extent arising out of or attributable to:  (i) general economic or political conditions; (ii) conditions generally affecting the homeowners or automobile insurance business; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof, currency fluctuations or changes in exchange rates, or any material decline in the any U.S. market index or any change in prevailing U.S. interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required by this Agreement or any action taken (or omitted to be taken) at the written request of Purchaser; (vi) any changes in applicable Laws or accounting rules (including GAAP and SAP); (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; or (viii) any failure by the Company or its Subsidiaries to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); provided further, however, that any event, occurrence, fact, condition, circumstance, effect or change referred to in clauses (i) through (iv) or (vi) immediately above shall only be excluded in determining the existence of a Business Material Adverse Effect described in (a) above so long as such matter does not have a disproportionate effect on the Company or its Subsidiaries, taken as a whole, relative to other comparable entities operating in the industry in which the Company or its Subsidiaries operate.

“Closing” means the closing of the sale and purchase of the Shares as contemplated by this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company Benefit Plan” means a Plan that (i) provides compensation or employee benefits of any kind for or to Employees that the Company or its Subsidiaries, or any ERISA Affiliate, sponsors, maintains or contributes to, or (ii) with respect to which the Company or any of its Subsidiaries, or any ERISA Affiliate, has any liability, contingent or otherwise.

“Company Intellectual Property” means all Intellectual Property that is owned by the Company or its Subsidiaries.

“Company IP Agreements” means all material licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and other Contracts (including any right to receive or obligation to pay royalties or any other consideration) relating to Intellectual Property to which any of the Company or any of its Subsidiaries is a party, beneficiary or otherwise bound, other than licenses for commercial off-the-shelf software.

“Company IP Registrations” means Company Intellectual Property that is subject to any issuance registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“Company Information” means all proprietary information, whether written or oral, concerning the Company, any of its Subsidiaries or its business that was obtained by virtue of ownership of the Company and its Subsidiaries, except to the extent that the applicable Stockholder can show that such information (i) is generally available to and known by the public through no fault of such Stockholder, any of its Affiliates or its respective Representatives; or (ii) is lawfully acquired by such Stockholder, any of its respective Affiliates or its respective Representatives from and after the Closing from sources which, to such Stockholder’s knowledge, are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation.

 “Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of February 22, 2018, between Purchaser (f/k/a Standard Diversified Opportunities Inc.) and WT.

“Contracts” means all agreements, contracts, commitments and undertakings, indentures, notes, bonds, loans, instruments, licenses, leases, mortgages or arrangements that are legally binding.

“Covered Taxes” means any Taxes (i) payable or due with respect to the Company or any of its Subsidiaries for any Pre-Closing Tax Period, (ii) imposed as a result of the Company or any of its Subsidiaries having been a member of any consolidated, combined or affiliated group of companies pursuant to any provision of joint and several liability under Treasury Regulations Section 1.1502-6 and any corresponding or similar provision of state, local, or foreign applicable Law, (iii) imposed by reason of the Company or any of its Subsidiaries having liability for Taxes of another Person arising under principles of transferee or successor liability as a result of events occurring before the Closing or (iv) arising from or attributable to any inaccuracy in or breach of any representation or warranty made in Section 3.5.

“Data Input Inaccuracies” means inaccuracies or omissions in (i) the inputting of factual data, including data (and omission of data) relating to the inventory of Insurance Contracts in force, the terms of such Insurance Contracts, the relevant information related to the insureds of such Insurance Contracts and transactions related thereto, or (ii) the coding, compilation or aggregation of such factual data.

“Debt” means (a) any Liabilities of the Company or any of its Subsidiaries created or assumed by the Company or any of its Subsidiaries (i) for borrowed money, (ii) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation, deed of trust or mortgage) given in connection with the acquisition of, or exchange for, any property or assets, (iii) for the payment of money as lessee under leases that should be, in accordance with GAAP, recorded as capital leases for financial reporting purposes, (iv) for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, (v) for the deferred purchase price of property, goods or services, (vi)  any Liability in respect of deferred compensation for services, or (vii) under interest rate or currency swap transactions (valued at the termination value thereof); (b) any Liability described in the preceding clause (a) of any other Person that is guaranteed as to payment of principal or interest by the Company or in effect guaranteed by the Company through an agreement, contingent or otherwise, to purchase, repurchase or pay the related indebtedness or to pledge any security therefor; (c) all Liabilities secured by an Encumbrance (other than a Permitted Encumbrance) upon property owned by the Company or any of its Subsidiaries and/or upon which Liabilities the Company or any of its Subsidiaries customarily pays interest or principal, whether or not the Company or any of its Subsidiaries has assumed or become liable for the payment of such Liabilities; and (d) any amendment, renewal, extension, revision or refunding of any such Liabilities.

“Domiciliary Regulator” means the New York State Department of Financial Services.

“Employees” means on any date all employees of the Company or any of its Subsidiaries who on such date have formerly been or are employed by the Company or any of its Subsidiaries, whether actively employed, on approved leave of absence or layoff or on salary continuation, sickness, accident, disability or military leave.

“Encumbrances” means any and all liens, charges, security interests, mortgages, pledges, equitable interest, option, easement, encroachment, right of way, right of first refusal, encumbrance or other adverse claim of any kind, but excluding any restrictions on transfer under applicable Law.

“Environmental Laws” means any applicable Law which relates to or otherwise imposes liability or standards of conduct concerning environmental protection, health and safety of persons, discharges, emissions, releases or threatened releases of any noises, odors or Hazardous Materials into ambient air, water or land, or otherwise relating to the manufacture, processing, generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of Hazardous Materials, including the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act, as amended, the Occupational Safety and Health Act, as amended, the Resource Conservation and Recovery Act, as amended, the Toxic Substances Control Act, as amended, the Federal Water Pollution Control Act, as amended, the Clean Water Act, as amended, any so-called “Superlien” law, and any other similar federal, state or local law.

“Environmental Permits” means all Permits, approvals, identification numbers, licenses and other authorizations required under any Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means any Person required at any particular time to be aggregated with the Company under Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

“GAAP” means United States generally accepted accounting principles.

“GAAP Consistently Applied” means GAAP using the same accounting methods, policies, practices, principles, and procedures, with consistent classifications, judgments, inclusions, and valuation and estimation methodology, as were used and applied by the Company in preparing the GAAP Financial Statements.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulatory organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.

“Hazardous Material” means any (i) hazardous substance, toxic substance, hazardous waste or pollutant (as such terms are defined by or within the meaning of any Environmental Law), (ii) material or substance which is regulated or controlled as a hazardous substance, toxic substance, pollutant or other regulated or controlled material, substance or matter pursuant to any Environmental Law, (iii) petroleum, crude oil or fraction thereof, (iv) asbestos-containing material, (v) polychlorinated biphenyls, (vi) lead-based paint or (vii) radioactive material.

“Indemnified Party” means any Person claiming indemnification under any provision of Article VII.

“Indemnifying Party” means any Person against whom a claim for indemnification is being asserted under any provision of Article VII.

“Independent Accountant” means an impartial nationally recognized firm of independent certified public accountants and actuaries appointed by mutual agreement of Purchaser and the Stockholders’ Representative hereunder.

“Insurance Company” means Tri-State Consumer Insurance Company, an insurance company domiciled in the State of New York.

“Insurance Contract” means any insurance policy, contract, binder, slip or certificate and any reinsurance agreement written or assumed by the Insurance Company with respect to the Business and entered into with a customer, policyholder or cedant.

“Insurance Liabilities” means the following Liabilities of the Insurance Company:  (a) all Liabilities arising under the Insurance Contracts, including Extra Contractual Obligations; (b) all loss adjustment expenses and expense reimbursement amounts arising out of or relating to the Insurance Contracts; (c) premium taxes due in respect of premiums written with respect to the Insurance Contracts; (d) assessments and similar charges with respect to the Insurance Contracts in connection with the participation by the Insurance Company, whether voluntary or involuntary, in any guaranty association or risk pool established or governed by any Governmental Authority, as well as costs of other products and services related to the Subject Policies; (e) commissions payable with respect to the Insurance Contracts in respect of premiums written; (f) and all Liabilities for amounts payable for returns or refunds of premiums with respect to the Insurance Contracts.

“Intellectual Property” means any and all United States and foreign rights in:  (a) patents (including design patents, industrial designs and utility models), patent applications (including docketed patent disclosures awaiting filing, reissues, divisions, renewals, provisionals, continuations, continuations-in-part and extensions), and patent disclosures awaiting filing determination; (b) registered trademarks, service marks, trade names, Internet domain names, trade dress, logos, business and product names, slogans, acronyms, tag-lines, social media usernames, and other digital identifiers and other indicia of origin, and any goodwill associated and symbolized therewith and applications to register or renew the registration of any of the foregoing; (c) registered copyrights and applications to register or renew the registration of any of the foregoing; and (d) the following to the extent not registered Intellectual Property:  (i) unregistered trademarks, service marks, trade names, trade dress, logos, business and product names, slogans, acronyms, tag-lines and other similar designations of source or origin, any common law rights therein, and any goodwill associated therewith; (ii) unregistered copyrights, rights in copyrightable subject matter in published and unpublished works of authorship, and any common law rights therein; (iii) inventions, processes, methods, algorithms, models, tools, Software architectures, discoveries, techniques, designs, formulae, trade secrets and know-how and any confidential information related thereto; (iv) rights in Software; (v) datasets, databases and related documentation; and (vi) all similar intellectual property rights and tangible embodiments of any of the foregoing (in any media, including electronic media, now known or later developed).

“IRS” means the United States Internal Revenue Service.

“IT Systems” means the hardware, Software, data, databases, data communication lines, network and telecommunications equipment, Internet-related information technology infrastructure, wide area network and other information technology equipment, owned, leased or licensed by the Company or any of its Subsidiaries.

“knowledge” (or words of similar import) means, with respect to any Person, such Person’s actual knowledge (not constructive, implied or imputed knowledge, and without due inquiry and investigation), as of any particular date.  Without limiting the foregoing, with respect to the Stockholders (and for WT), “knowledge” means the actual knowledge (as defined above) of those natural Persons set forth on Exhibit A.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, writ, injunction, decree, other requirement or rule of law of any Governmental Authority.

“Lease” means any lease, leasehold interest, sublease or license, including any amendment with respect thereto, pursuant to which the Company or any of its Subsidiaries uses or holds any material Leased Real Property.

“Leased Real Property” means the real property leased by the Company or any of its Subsidiaries, as tenant, and used to operate the Business, together with all buildings and other structures, facilities or improvements currently located thereon, all fixtures thereto, and all easements, licenses, rights and other appurtenances relating to the foregoing.

“Liability” means any and all liabilities, obligations, debts and commitments of any kind, character or description, whether asserted or unasserted, known or unknown, secured or unsecured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, matured or unmatured or otherwise.

“Liquid Asset Valuation” means, as of any date of determination, an amount equal to (i) 79% of (ii) the liquid asset marked to market valuation change of the stocks and bonds held at book adjusted carrying value on the balance sheet of the Insurance Company prepared in accordance with SAP Consistently Applied (i.e., the difference between the carrying value of such securities at book value in accordance with SAP Consistently Applied, and the market value of such securities (i.e., the “marked to market adjustment”)).  Such market valuation shall be determined by Intercontinental Exchange, Inc. or one of its Subsidiaries or Affiliates based on the closing bid price on the day before the Closing Date.

“Loss Development Amount” means with respect to the Subject Policies, an amount equal to (i) the aggregate amount of payments made by the Insurance Company during the period between the Closing Date and the Measurement Date with respect to Insurance Liabilities outstanding as of the Closing Date, plus (ii) the Reserves with respect to the Subject Policies as of the Measurement Date.

 “Losses” means any and all losses, damages, fines, fees, penalties, deficiencies, Liabilities, claims, demands, judgments, settlements, interest, awards and costs and expenses (including reasonable expenses of investigation and collection, reasonable attorneys’ fees and disbursements and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers) and any incidental, indirect or consequential damages, losses or liabilities, but specifically excluding (except to the extent paid to a third party pursuant to a Third Party Claim) any lost profits, diminution in value or punitive damages.

“Malware” means any virus, Trojan horse, time bomb, key-lock, spyware, worm, malicious code or other software program designed to or able to, without the knowledge and authorization of the Company or any of its Subsidiaries, disrupt, disable, harm, interfere with the operation of or install itself within or on any Software, computer data, network memory or hardware.

“Permit” means any permit, license, franchise, approval, consent, registration, clearance, variance, exemption, order, certificate or authorization by or of any Governmental Authority.

“Permitted Encumbrances” means (i) Encumbrances for Taxes or other governmental charges not yet due and payable or which are being contested in good faith and for which adequate accruals or reserves have been established under GAAP or SAP, as applicable; (ii) mechanics’, carriers’, warehousemen’s, workers’ and other similar Encumbrances; (iii) easements, rights of way, building, zoning and other similar encumbrances or title defects; and (iv) Encumbrances granted to any lender at the Closing in connection with any financing by Purchaser of the transactions contemplated hereby, (v) pledges, deposits or other Encumbrances securing the performance of bids, trade contracts, leases or statutory obligations (including workers’ compensation, unemployment insurance or other social security legislation), (vi) minor imperfections of title, none of which, individually or in the aggregate, materially detracts from the value of the affected properties, materially impairs the use of the affected properties in the manner such properties currently are being used or materially impairs the operations of the Company or its Subsidiaries, and (vii) Encumbrances created in the ordinary course of business in connection with the leasing, licensing, or financing of equipment, supplies or other tangible assets.

“Person” means any natural person, corporation, general partnership, limited partnership, limited or unlimited liability company, proprietorship, trust, joint venture, other business entity or Governmental Authority.

“Plan” means any employment, consulting, bonus, incentive compensation, deferred compensation, pension, profit-sharing, retirement, stock bonus, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock or other equity-based arrangement, leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, medical, dental, vision, welfare, accident, disability, workmen’s compensation or other insurance, severance, separation, termination, change of control, retention, collective bargaining or other benefit plan, understanding, agreement, practice, policy or arrangement of any kind, whether written or oral, and whether or not subject to ERISA, including any “employee benefit plan” within the meaning of Section 3(3) of ERISA.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date and, with respect to a Straddle Period, the portion of such Straddle Period ending on the Closing Date.

“Prime Rate” means the rate equal to the United States Prime Rate as published from time-to-time in the Eastern print edition of The Wall Street Journal.

“Producer” means any producer, broker, agent, general agent, managing general agent, master broker agency, broker general agency, financial specialist, or group of the same or other Person responsible for marketing or producing Insurance Contracts on behalf of the Insurance Company prior to the Closing.

“Producer Contracts” means any written contract or agreement entered into by the Company or any Subsidiary thereof with respect the solicitation and sale of Insurance Contracts on behalf of the Company or any such Subsidiary.

“Purchaser Material Adverse Effect” means any event, occurrence, fact, condition, circumstance, effect or change that, individually or in the aggregate, materially adverse to (a) the business, results of operations, financial condition or assets of the Purchaser or its Subsidiaries, or (b) the ability of Purchaser or any of its Affiliates to perform its obligations under this Agreement or the Transaction Documents in a timely manner or to consummate the transactions contemplated hereby and thereby on a timely basis; provided, however, that “Purchaser Material Adverse Effect” shall not include any event, occurrence, fact, condition, circumstance, effect or change, to the extent arising out of or attributable to:  (i) general economic or political conditions; (ii) conditions generally affecting the homeowners or automobile insurance business; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof, currency fluctuations or changes in exchange rates, or any material decline in the any U.S. market index or any change in prevailing U.S. interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required by this Agreement; (vi) any changes in applicable Laws or accounting rules (including GAAP and SAP); (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; or (viii) any failure by Purchaser or its Subsidiaries to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); provided further, however, that any event, occurrence, fact, condition, circumstance, effect or change referred to in clauses (i) through (iv) or (vi) immediately above shall only be excluded in determining the existence of a Purchaser Material Adverse Effect described in (a) above so long as such matter does not have a disproportionate effect on Purchaser or its Subsidiaries, taken as a whole, relative to other comparable entities operating in the industry in which Purchaser or its Subsidiaries operate.

“Real Property” means the real property owned, leased or subleased by any of the Company or its Subsidiaries, together with all buildings, structures and facilities located thereon.

“Reinsurance Contracts” means all Contracts, treaties, facultative certificates, policies or other arrangements, to which the Company is a party or by which the Company is bound or subject, providing for ceding or assumption of reinsurance, excess insurance or retrocession, including, without limitation, all reinsurance policies, and retrocession agreements, in each case as such Contract, treaty, facultative certificate, policy or other arrangement may have been amended, modified or supplemented irrespective of how such arrangement is accounted for.

“Representative” means, with respect to any Person, any and all directors, officers, managers, employees, consultants, financial advisors, counsel, accountants and other agents or representatives of such Person.

“Reserves” means, as of a given date, the statutory reserves (net of third party reinsurance and any receivables from involuntary pools or associations) of the Insurance Company with respect to Insurance Liabilities, including loss reserves (including case reserves and reserves for losses incurred but not reported), loss adjustment expense reserves, and unearned premium reserves, calculated in accordance with SAP.

“Restricted Jurisdictions” means the State of New York.

“SAP” means statutory accounting principles prescribed or permitted for insurance companies by the New York State Department of Financial Services.

“SAP Consistently Applied” means SAP using the same accounting methods, policies, practices, principles, and procedures, with consistent classifications, judgments, inclusions, and valuation and estimation methodology, as were used and applied by the Insurance Company in preparing the SAP Financial Statements.

“Schedule BA Assets” means the long-term invested assets as would be required to be reflected on Schedule BA of the NAIC Annual Statement Blank or the successor to such Schedule.

“Software” means all computer software, including but not limited to application software, system software, firmware, middleware, mobile digital applications, assemblers, applets, compilers and binary libraries, including all source code and object code versions of any and all of the foregoing, in any and all forms and media.

“Statutory Surplus” means, as of any date of determination, an amount equal to the surplus as regards policyholders of the Insurance Company as of such date as would be required to be reflected in line 37, column 1 in the “Liabilities, Surplus and Other Funds” section of the NAIC Annual Statement Blank or the successor to such line number, as calculated based on a balance sheet prepared in accordance with SAP Consistently Applied.

 “Straddle Period” means any Tax period that begins before and ends after the Closing Date.

“Subject Policies” means all Insurance Contracts written or assumed by the Insurance Company prior to and including Closing Date.

 “Subsidiary” means, with respect to any Person, any other Person (i) of which the first Person owns directly or indirectly more than 50% of the equity interest in the other Person; (ii) of which the first Person or any other Subsidiary of the first Person is a general partner; or (iii) of which securities or other ownership interests having ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions with respect to the other Person are at the time owned by the first Person and/or one or more of the first Person’s Subsidiaries.

“Superstorm Sandy Matter” means the Action by the Domiciliary Regulator alleging violations of applicable Law by the Insurance Company relating to its procedures and handling of claims in connection with Superstorm Sandy. For the avoidance of doubt, the Superstorm Sandy Matter shall not be deemed a Third Party Claim.

“Target Liquid Asset Valuation” means an amount equal to $3,318,000.00.

“Target Surplus” means an amount equal to (i) $45,200,000 less (ii) the Extraordinary Dividend Amount.

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, payroll, social security (or similar), unemployment, workers’ compensation, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other similar tax, duty, fee, assessment or governmental charge of any kind whatsoever, including any interest, penalties, or additions thereto, whether disputed or not.

“Tax Authority” means the IRS and any other state, local or foreign Governmental Authority responsible for the administration of any Taxes.

“Tax Benefit” means, with respect to any Losses, the net reduction in cash Taxes, if any, actually realized by the Indemnified Party or its Affiliates in the year of such Losses, treating the applicable tax item as the last item used in calculating such net reduction in cash Taxes and taking into account the actual or anticipated receipt of the related indemnity payment.

“Tax Return” means any return, declaration, report, claim for refund or information return or statement required to be filed with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Termination Date” means date that is twelve (12) calendar months from the date of this Agreement, as may be extended under this Agreement.

“Transaction Documents” means this Agreement and the Certificate of Designation.

“WARN Act” means the United States Worker Adjustment and Retraining Notification Act of 1988, as amended, and any applicable state or local mass layoff or plant-closing Law.

“Weathers Matter” means the matter of Ronald B. Weathers, a/a/o Alex Rios against Tri State Consumer Insurance Company, Penny Hart and Jasmine Eng, with respect to a certain claim of bad faith by the Insurance Company.

Section 1.2          Other Defined Terms and Rules of Construction.

(a)          Other terms defined are in the other parts of this Agreement indicated below:

(b)         For the purposes of this Agreement, except to the extent that the context otherwise requires:

(i)           when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;

(ii)          the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

(iii)         whenever the words “include,” “includes” or “including” (or similar terms) are used in this Agreement, they are deemed to be followed by the words “without limitation”;

(iv)         the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

(v)          all terms defined in this Agreement have their defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;

(vi)         the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

(vii)        if any action is to be taken by any Party hereto pursuant to this Agreement on a day that is not a Business Day, such action shall be taken on the next Business Day following such day;

(viii)       references to a Person are also to its permitted successors and assigns; and

(ix)          the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

(c)        This Agreement is the product of negotiation by the parties having the assistance of counsel and other advisors.  It is the intention of the parties that neither Party shall be considered the drafter hereof and that this Agreement not be construed more strictly with regard to one Party than to any other.

Section 2.1          Purchase and Sale.  At the Closing, upon the terms and subject to the conditions of this Agreement, each Stockholder will sell, transfer, assign, convey and deliver to Pillar General, and Purchaser will cause Pillar General to purchase and accept from each Stockholder, all of the Shares owned by such Stockholder set forth opposite such Stockholder’s name on Schedule 2.1 of the Stockholders Disclosure Schedule attached hereto (which Schedule includes each Stockholder’s percentage ownership of the Shares (with respect to each, the “Pro Rata Percentage”)), free and clear of all Encumbrances.  Purchaser shall have the right, exercisable in its discretion, to allocate a portion of the Shares to be purchased under this Agreement to Maidstone Insurance Company, a New York corporation (“Maidstone”), which is an Affiliate of Purchaser.

Section 2.2          Purchase Price.

(a)          The purchase price to be paid to the Stockholders for the Shares in the aggregate shall be an amount equal to $54,080,000 the (“Base Purchase Price”) plus or minus offsetting adjustments for (i) the Estimated Closing Statutory Surplus, and (ii) the Estimated Liquid Asset Valuation, all as determined in accordance with Section 2.7, as is finally determined and adjusted in accordance with Sections 2.8, 2.9 and 7.7. (as so adjusted, the “Purchase Price”).

(b)          At the Closing, Purchaser shall deliver or cause to be delivered to WT a number of shares of Preferred Stock, with a par value of $.01 per share, of Purchaser (“Preferred Shares”) determined by dividing (a) $25,000,000 by (b) $1,000.00. The powers, preferences, voting and other rights, privileges, qualifications, limitations and restrictions of or applicable to Preferred Shares are set forth on Certificate of Designation attached hereto as Exhibit B.

(c)          At Closing, Purchaser shall pay or cause to be paid the Base Purchase Price, subject to the adjustments set forth in Section 2.7 (as the case may be, the “Closing Payment”), as follows, by wire transfer of immediately available U.S. funds to such account(s) and pursuant to such wire instructions as are designated by the Stockholders’ Representative to Purchaser in writing at least two (2) Business Days prior to the Closing:

(i)            as contemplated by Section 5.16, the unpaid principal amount of, all interest on, all premiums, if any, and all other costs, expenses and other amounts owed to the applicable Person in respect of all Debt of the Company (all such Debt, “Closing Debt”); and

(ii)           after deducting $25,000,000, being the consideration attributable to the Preferred Shares, the balance of the Base Purchase Price to each Stockholder in the amounts set forth on Schedule 2.1 of the Stockholders Disclosure Schedule.

Section 2.3            Closing.  Subject to the terms and conditions of this Agreement, the Closing shall be held (via escrow delivery) at the offices of Nixon Peabody LLP, 100 Summer Street, Boston, Massachusetts, at 10:00 a.m. local time on, as reasonably determined by the Purchaser and reasonably acceptable to the Stockholders’ Representative, (i) the last Business Day of the calendar month in which the last of the conditions set forth in Article VI has been satisfied or waived (other than conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) or (ii) the first Business Day of the calendar month after the last of the conditions set forth in Article VI has been satisfied or waived (other than conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) or; provided that if the last such condition is satisfied or waived later than the 20^th of a calendar month, then as reasonably determined by the Purchaser and reasonably acceptable to the Stockholders’ Representative, (x) either of the foregoing days, (y) the last Business Day of the month following the month in which the last of the conditions set forth in Article VI has been satisfied or waived (other than conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time), or (z) the first Business Day of the month following the month after the last of the conditions set forth in Article VI has been satisfied or waived (other than conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time); and provided, further, that the Closing may be held such other time or place as Purchaser and the Stockholders’ Representative mutually agree (the date on which the closing occurs, the “Closing Date”).  The Closing shall be effective as of 11:59 p.m. New York time on the Closing Date.

Section 2.4            Closing Deliveries.  At the Closing:

(a)            In addition to the payments and deliveries described in Sections 2.2(b) and (c), Purchaser shall deliver or cause to be delivered to the Stockholders’ Representative:

(i)            the Transaction Documents, duly executed by Purchaser;

(ii)           stock certificates or record transfer evidencing the Preferred Shares, duly executed by all required officers of Purchaser, together with the Certificate of Designation duly executed, approved, and filed by Purchaser; and

(iii)          such other documents, instruments or certificates as Purchaser may reasonably request.

(b)           The Stockholders shall deliver to Purchaser:

(i)          stock certificate(s) evidencing the Shares, in each case endorsed in blank or with an executed blank stock power attached sufficient to vest good and valid title to the Shares in Pillar General or Maidstone, as the case may be, free and clear of any Encumbrances;

(ii)          evidence that all Closing Debt has been fully paid and the Company has obtained the release of all Encumbrances (other than Permitted Encumbrances), including the termination of any related UCC filings, which may exist with respect to such Closing Debt, against the Shares, the assets or properties of the Business, the Company or its Subsidiaries; provided that to the extent that any such payment of such Closing Debt or procurement of release requires the prior payment of any amount, the Company shall procure a payoff letter from the holder of such Closing Debt or Encumbrance which evidences the amount required to be paid, and Purchaser shall have the right to pay such amount directly to such holder at Closing out of the funds included in the Closing Payment as contemplated by Section 2.2(c)(i) hereof;

(iii)          written resignations of all directors (or equivalent persons) and officers of the Company and each of its Subsidiaries identified by Purchaser to the Stockholders’ Representative prior to the Closing, in each case, effective as of the Closing Date and in form and substance reasonably acceptable to Purchaser;

(iv)          a certification in the form contained in Section 1.1445-2(b)(2)(iv)(B) of the United States Department of the Treasury Regulations to the effect that no Stockholder is a “foreign person.”

(v)          the Transaction Documents, duly executed by the Stockholders;

(vi)          all Books and Records of the Company and its Subsidiaries not already in the possession of the Company or its Subsidiaries; and

(vii)         such other documents, instruments or certificates as Purchaser may reasonably request.

Section 2.5             Purchase Price Allocation.  Unless otherwise required by Law, no Party shall take a position on any Tax Return inconsistent with the allocation of the total Purchase Price to the Shares.

Section 2.6            Withholding.  Purchaser shall be entitled to deduct and withhold any Taxes required by Law to be deducted or withheld from any payment to any Stockholder hereunder, and any amounts so withheld or deducted shall be treated as paid to a Stockholder for all purposes of this Agreement. If Purchaser is required by Law to deduct or withhold any Taxes from any payment to any Stockholder hereunder, Purchaser shall (i) promptly (but no later than five (5) Business Days before such payment) notify the applicable Stockholder in writing as to the basis for and amount of any such deduction or withholding and (ii) reasonably cooperate with such Stockholder (including providing to such Stockholder any appropriate statements, forms or other documents) to reduce or eliminate such deduction or withholding).  Purchaser shall provide reasonable evidence of the payment of any amounts withheld to the relevant Tax Authority.

Section 2.7            Closing Payment.  No later than five (5) Business Days prior to the Closing Date, the Stockholders’ Representative shall deliver to Purchaser (i) an unaudited balance sheet of the Insurance Company as of the last day of the month ended immediately prior to the Closing Date (the “Estimation Date”) but giving effect to the distribution of the  Extraordinary Dividend, prepared in accordance with SAP Consistently Applied (the “Estimated Closing Balance Sheet”), (ii) the Stockholders’ calculation of the Statutory Surplus based on the Estimated Closing Balance Sheet (the “Estimated Closing Statutory Surplus”) and the Liquid Asset Valuation (the “Estimated Closing Liquid Asset Valuation”), each  as of the Estimation Date, (iii) the amount of any adjustments to the Closing Payment pursuant to this Section 2.7 and (iv) the amount necessary to pay off the Closing Debt as contemplated by Section 5.16.  The Closing Payment will equal the Base Purchase Price, adjusted as follows:

(a)           (1) if the Estimated Closing Statutory Surplus is less than the Target Surplus, the Base Purchase Price shall be reduced by an amount equal to the amount by which the Target Surplus exceeds the Estimated Closing Statutory Surplus; and (2) if the Estimated Closing Statutory Surplus is greater than the Target Surplus, the Base Purchase Price shall be increased by an amount equal to the amount by which the Estimated Closing Statutory Surplus exceeds the Target Surplus; and

(b)           (1) if the Estimated Closing Liquid Asset Valuation is less than the Target Liquid Asset Valuation, the Base Purchase Price shall be reduced by an amount equal to the amount by which the Target Liquid Asset Valuation exceeds the Estimated Closing Liquid Asset Valuation; and (2) if the Estimated Closing Liquid Asset Valuation is greater than the Target Liquid Asset Valuation, the Base Purchase Price shall be increased by an amount equal to the amount by which the Estimated Closing Liquid Asset Valuation exceeds the Target Liquid Asset Valuation.

Section 2.8             Closing Purchase Price Adjustment.

(a)          No later than ninety (90) days after the Closing Date, Purchaser shall deliver to the Stockholders’ Representative (i) an unaudited balance sheet of the Insurance Company as of the Closing Date and giving effect to the Closing and the Extraordinary Dividend prepared in accordance with SAP Consistently Applied (the “Closing Date Balance Sheet”) (ii) Purchaser’s calculation (including any supporting reports or schedules) of the Statutory Surplus based on the Closing Balance Sheet (the “Closing Date Statutory Surplus”) and the Liquid Asset Valuation (the “Closing Date Liquid Asset Valuation”), each as of the Closing Date (collectively, the “Closing Date Calculations”) and (iii) the amount of any adjustments to the Purchase Price pursuant to this Section 2.8.

(b)          The Stockholders’ Representative shall have thirty (30) days from the date on which the Closing Date Balance Sheet and the Closing Date Calculations are delivered to it to review the Closing Date Balance Sheet and the Closing Date Calculations (such period of time, the “Adjustment Review Period”).  The Closing Date Balance Sheet and Closing Date Calculations shall become final and binding upon the Parties at 5:00 p.m. New York City time on the 30th day of the Adjustment Review Period unless the Stockholders’ Representative gives written notice to Purchaser on or prior to such time (such written notice, an “Adjustment Notice of Disagreement”) stating that it believes the Closing Date Balance Sheet or the Closing Date Calculations contain mathematical errors or were not prepared in accordance with SAP Consistently Applied, or disputing the market value used in the Liquid Asset Valuation.  Any Adjustment Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted.  If an Adjustment Notice of Disagreement is received by Purchaser in a timely manner, then the Closing Date Balance Sheet and the Closing Date Calculations (as revised in accordance with this sentence) shall become final and binding upon the Stockholders and Purchaser on the earlier of (x) the date the Stockholders’ Representative and Purchaser resolve in writing any differences they have with respect to the matters specified in the Adjustment Notice of Disagreement or (y) the date any disputed matters are finally resolved in writing by the Independent Accountant.  If an Adjustment Notice of Disagreement is not timely received by Purchaser, the Closing Date Balance Sheet and the Closing Date Calculations, each in the form determined by Purchaser, shall become so final and binding upon the Parties upon the expiration of the Adjustment Review Period).

(c)           During the 15-day period following the delivery of an Adjustment Notice of Disagreement (such period of time, the “Adjustment Resolution Period”), the Stockholders’ Representative and Purchaser shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Adjustment Notice of Disagreement.  In the event that the Stockholders’ Representative and Purchaser are unable to agree on any item or items specified in the Adjustment Notice of Disagreement within the Adjustment Resolution Period, each of the Stockholders’ Representative and Purchaser shall prepare separate written reports of such unresolved item or items and deliver such reports to the Independent Accountant within 15 days after the expiration of the Adjustment Resolution Period.  The Parties shall use their respective commercially reasonable efforts to cause the Independent Accountant, acting as an expert, not an arbitrator, to, as soon as practicable and in any event within 15 days of receiving such written reports, determine the manner in which such item or items shall be treated in the Closing Date Balance Sheet or the Closing Date Calculations, as the case may be; provided, however, that the dollar amount of each item in dispute shall be determined within the range of dollar amounts proposed by the Stockholders’ Representative, on the one hand, and Purchaser, on the other hand.  The Parties acknowledge and agree that (i) the review by and the determinations of the Independent Accountant shall be limited to, and only to, the unresolved item or items contained in the reports prepared and submitted to the Independent Accountant by the Stockholders’ Representative and Purchaser and (ii) the determinations by the Independent Accountant shall be based solely on (A) such reports submitted by the Stockholders’ Representative and Purchaser and the basis for the Stockholders’ and Purchaser’s respective positions and (B) SAP Consistently Applied or GAAP Consistently Applied, as applicable.  The Stockholders’ Representative and Purchaser agree to enter into an engagement letter with the Independent Accountant containing customary terms and conditions for this type of engagement.  The Parties shall use their commercially reasonable efforts to cooperate with and provide non-privileged information and documentation, including work papers, as the Independent Accountant reasonably requests.  Any such information and documentation provided by any Party to the Independent Accountant shall be concurrently delivered to the other Party subject, in the case of a Party’s work papers, to such other Party hereto entering into a customary release agreement with respect thereto.  None of the Parties shall disclose to the Independent Accountant, and the Independent Accountant shall not consider for any purpose, any settlement discussions or settlement offers made by any of the Parties with respect to any objection under this Section 2.8.  The determinations by the Independent Accountant as to the item or items in dispute shall be in writing and shall be final, binding and conclusive, absent manifest error, for all purposes of determining the Closing Date Calculations and shall have the same effect for all purposes as if such determinations had been embodied in a final judgment, entered by a court of competent jurisdiction, and either Party may petition the New York courts to reduce such decision to judgment.  The fees, costs and expenses of retaining the Independent Accountant shall be borne by the Parties in the same proportion as the aggregate amount of the unresolved items that is unsuccessfully disputed by each Party (as determined by the Independent Accountant) bears to the total amount of the unresolved items submitted to the Independent Accountant.  Following the resolution of all disputed items (or if there is no dispute, promptly following the 30^th day of the Adjustment Review Period), Purchaser shall revise the Closing Date Balance Sheet or the Closing Date Calculations, as the case may be, to reflect the resolution of any disputed items (as so revised or the Closing Date Balance Sheet and Closing Date Calculations delivered by Purchaser without revision if no Adjustment Notice of Disagreement is timely received, the “Final Closing Date Balance Sheet and Calculations”) and shall deliver a copy thereof to the Stockholders’ Representative.  The Statutory Surplus of the Insurance Company as of the Closing Date and giving effect to the Closing reflected in such Final Closing Date Balance Sheet and Calculations shall be referred to as the “Final Closing Statutory Surplus”. The Liquid Asset Valuation of the Insurance Company as of the Closing Date and giving effect to the Closing reflected in such Final Closing Date Balance Sheet and Calculations shall be referred to as the “Final Closing Liquid Asset Valuation”.

(d)           Effective upon the end of the Adjustment Review Period (if an Adjustment Notice of Disagreement is not timely received), or upon the resolution of all matters set forth in the Adjustment Notice of Disagreement either by mutual agreement of the Parties or by the Independent Accountant, the Purchase Price shall be subject to adjustment as follows:

(i)           (1) if the Final Closing Statutory Surplus is less than the Estimated Closing Statutory Surplus, the Purchase Price shall be reduced by the amount of such shortfall, which amount shall be paid by the Stockholders to Purchaser in accordance with the provisions of this Section 2.8(d); and (2) if the Final Closing Statutory Surplus is greater than the Estimated Closing Statutory Surplus, the Purchase Price shall be increased by the amount of such excess, which amount shall be paid by Purchaser to the Stockholders in accordance with the provisions of this Section 2.8(d); and

(ii)         (1) if the Final Closing Liquid Asset Valuation is less than the Estimated Closing Liquid Asset Valuation, the Purchase Price shall be reduced by the amount of such shortfall, which amount shall be paid by the Stockholders to Purchaser in accordance with the provisions of this Section 2.8(d); and (2) if the Final Closing Liquid Asset Valuation is greater than the Estimated Closing Liquid Asset Valuation, the Purchase Price shall be increased by the amount of such excess, which amount shall be paid by Purchaser to the Stockholders in accordance with the provisions of this Section 2.8(d).

All required payments between the Stockholders and Purchaser pursuant to this Section 2.8(d) shall be netted against each other, as applicable, and paid pursuant to this Section 2.8(d).  With respect to the adjustment to the Purchase Price (A) in the event the net amount of adjustments under this Section 2.8(d) results in the Stockholders being required to pay a net Purchase Price reduction to Purchaser, the Stockholders, severally and not jointly (based on their Pro Rata Percentages), shall pay to Purchaser such net amount by wire transfer of immediately available funds within ten (10) Business Days following the delivery of the Final Closing Date Balance Sheet and Calculations, or (B) in the event the net amount of adjustments under this Section 2.8(d) results in Purchaser being required to pay a net Purchase Price reduction to the Stockholders, Purchaser shall pay such net amount to the Stockholders (based on their Pro Rata Percentages) by wire transfer of immediately available funds within ten (10) Business Days following the delivery of the Final Closing Date Balance Sheet and Calculations to an account or accounts designated by the Stockholders ’ Representative.

Section 2.9             Loss Development Purchase Price Adjustment.

(a)           The Purchase Price may be additionally increased or decreased by an amount up to $1,975,000 (the “Loss Development Collar”) in accordance with the terms and conditions of this Section 2.9.

(b)           No later than forty-five (45) days after the second anniversary of the Closing Date (such anniversary, the “Measurement Date”), Purchaser shall deliver to the Stockholders’ Representative a statement (“Loss Development Statement”) of the Reserves with respect to the Subject Policies as of the Closing Date consistent with and as reflected in the Final Closing Date Balance Sheet and Calculations (the “Closing Date Reserves”) and Purchaser’s calculation of the Loss Development Amount.

(c)         The Stockholders’ Representative shall have thirty (30) days from the date on which the Loss Development Statement is delivered to it to review the Loss Development Statement (such period of time, the “Loss Development Review Period”).  The Loss Development Statement shall become final and binding upon the Parties at 5:00 p.m. New York City time on the 30th day of the Loss Development Review Period unless the Stockholders’ Representative gives written notice to Purchaser on or prior to such time (such written notice, a “Loss Development Notice of Disagreement”) stating that it believes the Loss Development Statement contains mathematical errors or was not prepared in accordance with SAP Consistently Applied.  Any Loss Development Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted.  If a Loss Development Notice of Disagreement is received by Purchaser in a timely manner, then Loss Development Statement (as revised in accordance with this sentence) shall become final and binding upon the Stockholders and Purchaser on the earlier of (x) the date the Stockholders’ Representative and Purchaser resolve in writing any differences they have with respect to the matters specified in the Loss Development Notice of Disagreement or (y) the date any disputed matters are finally resolved in writing by the Independent Accountant.  If a Loss Development Notice of Disagreement is not timely received by Purchaser, the Loss Development Statement, in the form determined by Purchaser, shall become so final and binding upon the Parties upon the expiration of the Loss Development Review Period).

(d)          During the 15-day period following the delivery of a Loss Development Notice of Disagreement (such period of time, the “Loss Development Resolution Period”), the Stockholders’ Representative and Purchaser shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Loss Development Notice of Disagreement.  In the event that the Stockholders’ Representative and Purchaser are unable to agree on any item or items specified in the Loss Development Notice of Disagreement within the Loss Development Resolution Period, each of the Stockholders’ Representative and Purchaser shall prepare separate written reports of such unresolved item or items and deliver such reports to the Independent Accountant within 15 days after the expiration of the Loss Development Resolution Period.  The Parties shall use their respective commercially reasonable efforts to cause the Independent Accountant, acting as an expert, not an arbitrator, to, as soon as practicable and in any event within 15 days of receiving such written reports, determine the manner in which such item or items shall be treated in the Loss Development Statement; provided, however, that the dollar amount of each item in dispute shall be determined within the range of dollar amounts proposed by the Stockholders’ Representative, on the one hand, and Purchaser, on the other hand.  The Parties acknowledge and agree that (i) the review by and the determinations of the Independent Accountant shall be limited to, and only to, the unresolved item or items contained in the reports prepared and submitted to the Independent Accountant by the Stockholders’ Representative and Purchaser and (ii) the determinations by the Independent Accountant shall be based solely on (A) such reports submitted by the Stockholders’ Representative and Purchaser and the basis for the Stockholders’ and Purchaser’s respective positions and (B) SAP Consistently Applied.  The Stockholders’ Representative and Purchaser agree to enter into an engagement letter with the Independent Accountant containing customary terms and conditions for this type of engagement.  The Parties shall use their commercially reasonable efforts to cooperate with and provide non-privileged information and documentation, including work papers, as the Independent Accountant reasonably requests.  Any such information and documentation provided by any Party to the Independent Accountant shall be concurrently delivered to the other Party subject, in the case of a Party’s work papers, to such other Party hereto entering into a customary release agreement with respect thereto.  None of the Parties shall disclose to the Independent Accountant, and the Independent Accountant shall not consider for any purpose, any settlement discussions or settlement offers made by any of the Parties with respect to any objection under this Section 2.9.  The determinations by the Independent Accountant as to the item or items in dispute shall be in writing and shall be final, binding and conclusive, absent manifest error, for all purposes of determining the Final Loss Development Amount and shall have the same effect for all purposes as if such determinations had been embodied in a final judgment, entered by a court of competent jurisdiction, and either Party may petition the New York courts to reduce such decision to judgment.  The fees, costs and expenses of retaining the Independent Accountant shall be borne by the Parties in the same proportion as the aggregate amount of the unresolved items that is unsuccessfully disputed by each Party (as determined by the Independent Accountant) bears to the total amount of the unresolved items submitted to the Independent Accountant.  Following the resolution of all disputed items (or if there is no dispute, promptly following the 30^th day of the Loss Development Review Period), Purchaser shall revise the Loss Development Amount to reflect the resolution of any disputed items (as so revised or the Loss Development Statement delivered by Purchaser without revision if no Loss Development Notice of Disagreement is timely received, the “Final Loss Development Statement”) and shall deliver a copy thereof to the Stockholders’ Representative.  The Loss Development Amount reflected in such Final Loss Development Statement shall be referred to as the “Final Loss Development Amount”.

(e)           Effective upon the end of the Loss Development Review Period (if a Loss Development Notice of Disagreement is not timely received), or upon the resolution of all matters set forth in the Loss Development Notice of Disagreement either by mutual agreement of the Parties or by the Independent Accountant, the Purchase Price shall be subject to adjustment as follows:  (i) if the Final Loss Development Amount exceeds the Closing Date Reserves (a “Negative Loss Development”), the Purchase Price shall be reduced by the lesser of (i) the Loss Development Collar and (ii) seventy-nine percent (79%) of the amount of the Negative Loss Development (as the case may be, a “Negative Adjustment”), which shall be paid by the Stockholders to Purchaser in accordance with the provisions of this Section 2.9(e); and (ii) if the Closing Date Reserves exceed the Final Loss Development Amount (a “Positive Loss Development”), the Base Purchase Price shall be increased by the lesser of (i) the  Loss Development Collar and (ii) seventy-nine percent (79%) of the amount of the Positive Loss Development (as the case may be, a “Positive Adjustment”), which shall be paid by Purchaser to the Stockholders in accordance with the provisions of this Section 2.9(e).  With respect to the adjustment to the Purchase Price (A) in clause (i) of this Section 2.9(e), the Stockholders, severally and not jointly (based on their Pro Rata Percentages), shall pay to Purchaser the amount of the Negative Adjustment by wire transfer of immediately available funds within ten (10) Business Days following the delivery of the Final Loss Development Statement and (B) in clause (ii) of this Section 2.9(e), Purchaser shall pay by wire transfer of immediately available funds, within ten (10) Business Days following the delivery of the Final Loss Development Statement, the amount of the Positive Adjustment to the Stockholders (pro rata based on their Pro Rata Percentages) to an account or accounts designated by the Stockholders.

(f)           Any Party’s right to indemnification pursuant to Article VII shall not be deemed to limit, supersede or otherwise affect, or be limited, superseded or otherwise affected by, such Party’s rights under this Section 2.9, except to the extent such Losses are expressly taken into account in the Final Loss Development Statement. Without prejudice to any other right or remedy Purchaser has or may have, Purchaser may set off any Liability Purchaser has to either Stockholder under this Section 2.9 against and to the extent of any finally determined through final judicial process (or mutually agreed upon) Losses for which such Stockholder is obligated to Purchaser pursuant to Article VII.  To the extent of any unresolved or pending claims made by Purchaser in good faith pursuant to Article VII against either Stockholder, Purchaser shall have the right to hold back from any Liability Purchaser has to such Stockholder under this Section 2.9 the amount of Losses subject to such unresolved or pending claims, provided that Purchaser shall instead deposit such amount into an escrow account with an unaffiliated, institutional third party until the final resolution thereof.

With respect to the representations set forth in Sections 3.1, 3.2, 3.3(a), and 3.29 specifically relating to matters specific to an individual Stockholder (“Stockholder Specific Representations”), such Stockholder (and only such Stockholder) hereby represents and warrants to Purchaser, and with respect to all other representations set forth in this Article III, each of the Stockholders severally and not jointly hereby represents and warrants to Purchaser, in each case, except with respect to each Section of this Article III for such disclosures as are set forth in the section of the disclosure schedule delivered by the Stockholders to Purchaser prior to the execution and delivery of this Agreement (the “Stockholders Disclosure Schedule”) that corresponds to such Section in this Article III (it being understood that disclosure of any matter in any section of the Stockholders Disclosure Schedule shall be deemed disclosed for other Sections in this Article III to the extent the relevance of such disclosure to such other Sections in this Article III is readily apparent on the face of such disclosure or by virtue of the nature of such disclosure, notwithstanding the omission of an appropriate cross reference thereto), as of the date hereof, as follows:

Section 3.1           Organization and Qualification of Stockholders. Each of the Stockholders that is a corporation is duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to own, license, use, lease and operate its assets and properties and to carry on its business (including the Business) as it is now being conducted.

Section 3.2            Authority; Non-Contravention; Approvals.

(a)           Each of the Stockholders that is a corporation has all requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations and the transactions contemplated by this Agreement and such other Transaction Documents.  The execution and delivery of this Agreement and such other Transaction Documents and the performance by such Stockholder of its obligations and the transactions contemplated by this Agreement and such other Transaction Documents, if so required, have been approved by the Board of Directors of such Stockholder, and no other corporate or other proceedings on the part of such Stockholder are necessary to authorize the execution and delivery of this Agreement and such other Transaction Documents by such Stockholder and the performance by such Stockholder of its obligations and the transactions contemplated by this Agreement and such other Transaction Documents.  Each Stockholder has the right and capacity to (i) make, execute and deliver this Agreement and the other Transaction Documents to which such Stockholder is (or will be) a party and (ii) perform his, her or its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  This Agreement, and when executed and delivered each Transaction Document to which each Stockholder is (or will be) a party, has been (or will be) duly executed and delivered by such Stockholder and constitutes (or will constitute), the valid and legally binding obligation of such Stockholder, enforceable against such Stockholder in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency and similar Laws affecting creditors’ rights generally and general principles of equity (whether considered in equity or at law).

(b)           Except as set forth in Section 3.2 of the Stockholders Disclosure Schedule, the execution and delivery by each Stockholder of this Agreement and the other Transaction Documents to which such Stockholder is a party, and the performance by such Stockholder of his, her or its obligations and the transactions contemplated by this Agreement and such other Transaction Documents will not (i) conflict with or result in a breach of any provision of any certificate of incorporation or bylaws (or similar organizational documents) of such Stockholder, (ii) require any consent of or other action by any Person under, result in a violation or breach of or constitute a default (or an event which, with or without notice or lapse of time or both, would constitute a default) under, result in the creation or imposition of an Encumbrance (other than a Permitted Encumbrance) upon any property, assets or rights of such Stockholder, the Company or any of its Subsidiaries pursuant to, or result in the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under any contract or other instrument of any kind to which such Stockholder or the Company or any of its Subsidiaries is now a party or by which any of their respective properties, assets or rights are bound or any Permit held by and applicable to the assets or business of the Company and its Subsidiaries or (iii) violate any Law applicable to such Stockholder, the Company or any of its Subsidiaries or any of their respective assets, except, in each case, with respect to the preceding clauses (ii) and (iii) as would not, individually or in the aggregate, be material.

(c)           Except as set forth in Section 3.2 of the Stockholders Disclosure Schedule, no material declaration, filing or registration with, or notice to, or authorization, consent, order or approval of, any Governmental Authority or other Person is required to be obtained or made by a Stockholder, the Company or the Company’s Subsidiaries in connection with or as a result of the execution and delivery and performance of this Agreement and the other Transaction Documents to which such Stockholder is a party, or the consummation by such Stockholder of the transactions contemplated by this Agreement and such other Transaction Documents, other than such declarations, filings, registrations, notices, authorizations, consents, orders or approvals which, if not made or obtained, as the case may be, would not be material.

Section 3.3            Capital Stock of the Company and its Subsidiaries.

(a)           The authorized capital stock of the Company consists of 200 shares of common stock, no par value per share, of which only the Shares are issued and outstanding.  Each Stockholder is the record and beneficial owner of the Shares set forth opposite the name of such Stockholder on Schedule 2.1 of the Stockholders Disclosure Schedule free and clear of all Encumbrances, except for any Encumbrances created by this Agreement and restrictions on transfer under federal and state securities laws. Upon the delivery of the Shares by the Stockholders to Purchaser in the manner contemplated under Article II, Purchaser will acquire the beneficial and sole and exclusive legal title to the Shares, free and clear of all Encumbrances, except for restrictions on transfer under federal and state securities laws or Encumbrances created or incurred by Purchaser or its Affiliates.  All of the Shares have been duly authorized, validly issued, fully paid and are non-assessable, were offered, issued and sold in compliance with all applicable Laws, were not issued in violation of and, except as set forth in Section 3.3 of the Stockholders Disclosure Schedule, are free of any preemptive rights, rights of first refusal or similar restrictions.  Except as set forth in  Section 3.3 of the Stockholders Disclosure Schedule, there are no:  (i) outstanding securities convertible into or exchangeable for equity interests of the Company; (ii) options, warrants, calls, subscriptions or other rights, agreements or commitments obligating the Company to issue, transfer, purchase or sell any equity interests of the Company; (iii) voting trusts, proxies, or other agreements or understandings to which the Company is a party or by which the Company is bound with respect to the voting, transfer or other disposition of equity interests of the Company or (iv) contractual obligations or commitments of any character restricting the transfer of, or requiring the registration for sale of any shares of capital stock of or other voting or equity interests of the Company.

(b)           Section 3.3 of the Stockholders Disclosure Schedule sets forth for each of the Company’s Subsidiaries the amount of its authorized capital stock, the amount of its outstanding capital stock and the record and beneficial owners of its outstanding capital stock, and there are no other shares of capital stock or other equity securities of any such Subsidiary issued, reserved for issuance or outstanding.  There are no:  (i) outstanding securities convertible into or exchangeable for equity interests of any of such Subsidiaries; (ii) options, warrants, calls, subscriptions or other rights, agreements or commitments obligating the Company or its Subsidiaries to issue, transfer, purchase or sell any equity interests of any of such Subsidiaries; (iii) voting trusts, proxies, or other agreements or understandings to which the Company is or its Subsidiaries are party or by which the Company or its Subsidiaries are bound with respect to the voting, transfer or other disposition of equity interests of any of such Subsidiaries or (iv) contractual obligations or commitments of any character restricting the transfer of, or requiring the registration for sale of any shares of capital stock of or other voting or equity interests of any of such Subsidiaries.  All the outstanding shares of capital stock of each such Subsidiary have been duly authorized, validly issued, fully paid and are non-assessable, were offered, issued and sold in compliance with all applicable Laws, were not issued in violation of and, as of the Closing, will be free of any Encumbrances, preemptive rights, rights of first refusal or similar restrictions, except for restrictions on transfer under federal and state securities laws or Encumbrances created or incurred by Purchaser or its Affiliates.  Other than the Company’s Subsidiaries set forth in Section 3.3 of the Stockholders Disclosure Schedule, the Company does not directly or indirectly own any equity interest in any other Person, except for investment assets held in the ordinary course of business that do not constitute an interest of more than 5% of the total equity interests in any such Person. Except for the Shares, neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other securities, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter with respect to the Company.

Section 3.4           Corporate Organization of the Company and its Subsidiaries.  Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of its state of formation or incorporation and has all necessary corporate power and authority to carry on its business as now being conducted and to own, use, lease and license its properties, assets and rights.  The Company and its Subsidiaries are duly qualified, licensed or admitted to do business and in good standing in every jurisdiction in which such qualification, licensing or admission is necessary because of the nature of the property owned, leased or operated by it or the nature of the business conducted by it, except where the failure to do so has not had and would not have a Business Material Adverse Effect.  The Stockholders have made or will make available to Purchaser complete and correct copies of the certificate of incorporation, by-laws, corporate minute books (to the extent existing) and stock ledgers (to the extent existing) of the Company and its Subsidiaries as currently in effect, and each of the Company and its Subsidiaries are not in violation of any provision of such documents.  At the Closing, all such books and records will be in the possession of the Company or the applicable Subsidiary or otherwise delivered to Purchaser.

Section 3.5             Taxes.

(a)           All Tax Returns required to be filed by, or on behalf of or with respect to, the Company or any of its Subsidiaries have been timely filed and are complete and correct in all respects.  All Taxes that have become due, whether or not shown as due on such Tax Returns have been duly and timely paid.  No written notices respecting asserted or assessed deficiencies for any Tax have been received by the Company or any of its Subsidiaries for any Tax periods that are unresolved as of the Closing Date, and to the knowledge of the Stockholders, no Tax Authority has threatened to the Company or any of its Subsidiaries to assert any such deficiencies.  There is no audit, examination or investigation by any Tax Authority presently pending or, to the knowledge of the Stockholders, threatened with respect to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries is a party to any action or proceeding by any Tax Authority for the assessment or collection of Taxes, nor has any such event been asserted or to the knowledge of the Stockholders, threatened, and neither the Company nor any of its Subsidiaries is currently pursuing an appeal of any Tax imposed against it. The Company and each of its Subsidiaries have made all withholdings of Taxes required to be made under all applicable United States, foreign, state and local Tax regulations and such withholdings have either been paid to the respective governmental agencies, properly set aside in accounts for such purpose, or accrued, reserved against, and entered upon the books of the Company or its Subsidiaries and all IRS Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed by the Company and its Subsidiaries.

(b)           The Stockholders have furnished or will make available to Purchaser true and complete copies of all income and other material Tax Returns filed by the Company and each Subsidiary for which the statute of limitations on assessment has not expired.

(c)           The aggregate unpaid Taxes of the Company and its Subsidiaries (a) did not, as of the Interim Balance Sheet Date, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Interim Sheet and (b) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in preparing its financial statements and accruing for Tax liabilities.

(d)           Other than with respect to the affiliated group of which the Company is the parent, since January 1, 2011, neither the Company nor any of the Company’s Subsidiaries (i) has been a member of an affiliated, consolidated, combined or unitary group for purposes of filing Tax Returns or paying Taxes or (ii) has any liability for the Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of law), as a transferee or successor, by contract, or otherwise.

(e)          Since January 1, 2011, no claim has been made in writing by a Tax Authority in a jurisdiction where the Company or any of the Company’s Subsidiaries does not file Tax Returns that the Company (or such Subsidiary) is or may be subject to taxation by that jurisdiction.

(f)            Neither the Company nor its Subsidiaries has waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency (other than a waiver or extension which is no longer in effect).

(g)           Neither the Company nor its Subsidiaries is party to or bound by, or has any liability for the Taxes of any Person under, any Tax sharing, Tax allocation, Tax distribution, Tax gross-up or Tax indemnity agreement or arrangement, other than the agreement set forth in Section 3.5 of the Stockholders Disclosure Schedule.

(h)           Neither the Company nor its Subsidiaries has participated in any transaction that, as of the date hereof, is a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code or Treasury Regulation Section 1.6011-4(b).

(i)           No private letter rulings or closing agreements have been applied for or obtained by any of the Company or any of the Company’s Subsidiaries that will have any effect on the Tax Returns, Tax positions or other filings of the Company or any of the Company’s Subsidiaries subsequent to the Closing Date.

(j)            Neither the Company nor any of its Subsidiaries has been, nor will any of them be, required to include any item of income in, or exclude any item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date (i) pursuant to Section 481 or 263A of the Code or any comparable provision under state, local or foreign Tax Laws as a result of transactions, events, or accounting methods employed prior to the transactions contemplated hereby, (ii) as a result of any installment sale or open transaction disposition made on or prior to the Closing Date, (iii) as a result of any prepaid amount received on or prior to the Closing Date or (iv) any election pursuant to Section 108(i) of the Code or any comparable provision of state, local or foreign Tax Law.

(k)          There is no limitation on the utilization of any Tax attributes of the Company or any of its Subsidiaries under any of Sections 269, 382, 383, 384 or 1502 of the Code (or any comparable provision or provisions of state, local or foreign Law), other than any such limitations resulting from the transactions contemplated by this Agreement.

(l)            Neither the Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation” within the meaning of Section 355 of the Code (x) in the two years prior to the date of this Agreement or (y) in a distribution that could otherwise constitute a “plan” or “series of related transactions” in conjunction with the transaction contemplated by this Agreement.

(m)          There are no Encumbrances (other than Permitted Encumbrances) on any of the assets of the Company or any of its Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax.

(n)           Neither the Company nor any of its Subsidiaries is the beneficiary of any Tax incentive, Tax rebate, Tax holiday or similar arrangement or agreement with any Governmental Authority

(o)          Neither the Company nor any of its Subsidiaries has agreed, nor has any obligation, to pay, gross up, reimburse or otherwise indemnify any current or former employee, contractor or other service provider for any Taxes, including potential Taxes imposed under Code Section 409A or Code Section 4999.

(p)           This Agreement (either alone or in combination with any other event) will not result in any “parachute payment” as defined under Code Section 280G.

Section 3.6             Financial Statements.

(a)           Copies of (i) consolidated audited financial statements consisting of the consolidated balance sheets including the Company and its Subsidiaries as of December 31 in each of the years ending 2015, 2016 and 2017, the related consolidated statements of operations and income and retained earnings, and cash flows for the years then ended on such dates (each of the foregoing financial statements, including the notes thereto, are referred to collectively as the “Financial Statements”), and (ii) unaudited financial statements that include the consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2018 and the related statements of operations and income and retained earnings and cash flows for the year to date period then ended (the “Interim Financial Statements” and together with the Financial Statements, the “GAAP Financial Statements”) are set forth in Section 3.6 of the Stockholders Disclosure Schedule.  The GAAP Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse), and except that unaudited financial statements may not contain all footnotes required by GAAP.  The GAAP Financial Statements are based on the Books and Records of the Company and its Subsidiaries, and fairly present, in all material respects, the financial condition of the Company and its Subsidiaries as of the respective dates they were prepared and the results of their operations and their cash flows for each of the periods indicated.  The consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2017 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date”, and the consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2018 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”.  The Insurance Company maintains a standard system of accounting established and administered in accordance with SAP in all material respects.  The Books and Records of the Company and its Subsidiaries have been maintained in all material respects in compliance with all applicable Laws and reasonable business practices.  At the Closing Date, all Books and Records will be in the possession of the Company or its applicable Subsidiary or otherwise delivered to Purchaser.  To the knowledge of the Stockholders, the Books and Records of the Company and its Subsidiaries contain no material Data Input Inaccuracies.

(b)          The Stockholders have heretofore delivered to or made available to Purchaser complete and correct copies of the Annual Statements of the Insurance Company filed with the Domiciliary Regulator for the years 2015, 2016 and 2017, together with all exhibits and schedules thereto (the “Annual Statements”).  The Stockholders have furnished, and will furnish to Purchaser, as soon as practicable after their preparation, complete and correct copies of each Quarterly Statement of the Insurance Company filed with the Domiciliary Regulator for periods up through the quarter ended September 30, 2018 and all exhibits and schedules thereto (the “Quarterly Statements”, and together with the Annual Statements, the “SAP Financial Statements”).  The SAP Financial Statements have been prepared in accordance with SAP throughout the periods involved and in accordance with the Books and Records of the Insurance Company, except as expressly set forth or disclosed in the notes, exhibits or schedules thereto.  The SAP Financial Statements fairly and accurately present in all material respects the assets, liabilities and capital and surplus of the Insurance Company, as of the dates thereof in accordance with SAP, applied consistently with past practice, and the results of its operations, changes in surplus and cash flows for each of the periods indicated, subject, in the case of the Quarterly Statements, to normal year-end adjustments.  The Annual Statement for 2017 has been prepared in accordance with accounting practices prescribed or permitted by the National Association of Insurance Commissioners and the New York State Department of Financial Services.  All permitted practices have been approved by the Domiciliary Regulator in writing at or prior to the time used by the Insurance Company in connection with the applicable SAP Financial Statements, and such approval is currently in effect without an expiration date.  No material deficiency has been asserted by any Governmental Authority with respect to any of the SAP Financial Statements that has not been resolved to the satisfaction of the applicable Governmental Authority prior to the date hereof.

(c)           The Company and its Subsidiaries have devised and maintained systems of internal accounting controls sufficient to provide reasonable assurances that (i) all transactions are executed in accordance with management’s specific authorization or in accordance with written policies and procedures, (ii) all transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP or SAP, as applicable, and to maintain proper accounting for items, (iii) access to their property and assets is permitted only in accordance with management’s specific authorization or in accordance with written policies and procedures and (iv) recorded accountability for items is compared with actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

Section 3.7            Undisclosed Liabilities.  The Company and its Subsidiaries have no Liabilities, except (a) for Liabilities specifically reflected, disclosed or reserved against in the Interim Balance Sheet or specifically disclosed in the notes thereto as of the Interim Balance Sheet Date, (b) for Liabilities incurred after the Interim Balance Sheet Date in the ordinary course of business consistent with past practice, (c) for Liabilities under Material Contracts or under Contracts not required to be listed on Schedule 3.13 of the Stockholders Disclosure Schedule (other than any Liabilities arising out, in connection with or as a result of any breach of any such Contract) and (d) for Liabilities otherwise set forth on Schedule 3.7 of the Stockholders Disclosure Schedule.

Section 3.8           Absence of Certain Changes, Events and Conditions.  Except as disclosed in Schedule 3.8 of the Stockholders Disclosure Schedule, from the Interim Balance Sheet Date to the date of this Agreement, (a) the Company and its Subsidiaries have conducted their businesses in the ordinary course (other than with respect to its activities in connection with the proposed sale of the Company and the negotiation, execution and performance of this Agreement and the other Transaction Documents) and (b) there has not been any material event or change (including any disposal of material assets or business operations or the termination of any Material Contract).  Since the Interim Balance Sheet Date to the date hereof, neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that, if taken after the date hereof, would constitute a breach of Section 5.1.

Section 3.9             Labor Relations.

(a)          Section 3.9 of the Stockholders Disclosure Schedule is a complete and accurate list of all Employees as of the date hereof, listing:  most recent hire or rehire dates, leave status as applicable, job title, location and the rate of compensation (including the portions thereof attributable to salary, bonus and other compensation, respectively) as of the Interim Balance Sheet Date.

(b)           There is no unfair labor practice, grievance, charge, arbitration, complaint, lawsuit or other employment-related proceeding pending or, to the knowledge of the Stockholders, threatened against the Company or any of its Subsidiaries.

(c)         Except as set forth in Section 3.9 of the Stockholders Disclosure Schedule, the Company and its Subsidiaries, are each in material compliance with all applicable Laws respecting labor, employment, workers’ compensation, occupational safety and health requirements, plant closings, withholding of taxes, employment discrimination, disability rights or benefits, equal opportunity, labor relations, immigration matters, Form I-9 matters, employee leave issues, unemployment insurance and related matters, terms and conditions of employment, and wages and hours, and, to the knowledge of the Stockholders, none of them have engaged in any material unfair labor practices.  To the knowledge of the Stockholders, all individuals who provide services to the Company or any of its Subsidiaries have at all times been accurately classified by the Company or such Subsidiaries with respect to such services as an employee or a non-employee, and as exempt from overtime rules or not so exempt.

(d)           None of the Company or its Subsidiaries is a party to, otherwise bound by, subject to or has any liability with respect to, any collective bargaining agreement, labor union contract, or other arrangement or understanding with a labor union or labor organization, and there are no unions other organizations representing, purporting to represent or attempting to represent any Employees, nor do the Stockholders know of any activities or proceedings of any labor union or other Person to organize any current Employees.  There is no labor strike, collective labor dispute, slowdown, work stoppage or lockout pending or, to the knowledge of the Stockholders, threatened against the Company or its Subsidiaries that would reasonably be expected to result in a material liability to the Company or any of its Subsidiaries.

(e)           Neither the Company nor any of its Subsidiaries has effectuated a “plant closing” or “mass layoff” as those terms are defined in the WARN Act, affecting in whole or in part any site of employment, facility, operating unit or Employee, without complying with all provisions of the WARN Act, or implemented any early retirement, separation or window program within the twelve (12) months prior to the date of this Agreement, nor has the Company or any of its Subsidiaries announced any such action or program for the future.

Section 3.10          Compliance with Laws.  Except as disclosed in Section 3.10 of the Stockholders Disclosure Schedule, since January 1, 2013, the Company and each of its Subsidiaries have complied, and are now complying, with all Laws applicable to it or its business, properties, assets or rights in all material respects.  Except as disclosed in Section 3.10 of the Stockholders Disclosure Schedule, the Company and its Subsidiaries have not at any time since January 1, 2015, (i) received any written or to the knowledge of the Stockholders, oral notice or other written or, to the knowledge of the Stockholders, oral communication from any Governmental Authority regarding any actual or alleged material violation of, or failure on the part of the Company or its Subsidiaries to comply in all material respects with, any Law or (ii) to the knowledge of the Stockholders, been placed under investigation with respect to any material violation of any Law.

Section 3.11           Litigation and Proceedings.  Except as disclosed in Section 3.11 of the Stockholders Disclosure Schedule or with respect to the Superstorm Sandy Matter and the Weathers Matter, and other than Actions arising in the ordinary course of business from or related to the obligations of the Insurance Company under any Insurance Contracts that are not Extra Contractual Obligations, there (i) are no pending or, to the knowledge of the Stockholders, threatened, Actions against the Stockholders (solely with respect to the Business), the Company or any of its Subsidiaries or any of their respective properties, assets or rights, (ii) is not any Action challenging the validity or propriety of, or that has the effect of preventing, materially delaying or making illegal or otherwise interfering with any of the transactions contemplated by this Agreement or the Transaction Documents and (iii) is no injunction, order, judgment, decree, award or regulatory restriction imposed upon the Stockholders (solely with respect to the Business), the Company, or any of its Subsidiaries or any of their respective properties, assets or rights which (x) restricts the ability of the Company, or any of its Subsidiaries to conduct the Business in the ordinary course of business consistent with past practices, (y) enjoins or would reasonably be expected to have the effect of preventing any of the transactions contemplated by this Agreement or the Transaction Documents or (z) that would reasonably be expected to result in any Losses to the Company or any of its Subsidiaries.

Section 3.12           Permits.

(a)          All material Permits required to be held by the Company or its Subsidiaries for the Company and its Subsidiaries to own or lease, operate and use their respective assets or properties or conduct business in each of the jurisdictions in which the Company or such Subsidiaries conducts or operates business in the manner conducted as of the date hereof have been obtained by it and are valid and in full force and effect.  The Company and its Subsidiaries are, and at all times since January 1, 2015 have been, in material compliance with all of the terms and requirements of each such Permit.  Section 3.12 of the Stockholders Disclosure Schedule lists each such Permit and the issuing Governmental Authority, and, as applicable, the types of insurance products for which each Permit applies.

(b)          With respect to the Permits of the Company and its Subsidiaries, the Company and its Subsidiaries have not at any time since January 1, 2015 received any written or to knowledge of the Stockholders, oral notice from any Governmental Authority regarding any actual or proposed revocation, suspension or termination of, or material modification to, any such Permit, in each case other than any such item that has been cured or otherwise resolved to the satisfaction of such Governmental Authority or that is no longer being pursued by such Governmental Authority following a response by the Company or such Subsidiary.  The Company and its Subsidiaries are not the subject of any regulatory, supervision, conservation, rehabilitation, liquidation, receivership, insolvency or other similar proceeding and, to the knowledge of the Stockholders, no such proceeding is threatened.

(c)           The Insurance Company is not a “commercially domiciled insurer” under applicable Law and is not otherwise treated as domiciled in a jurisdiction other than New York.

(d)          All material filings required to be made by the Company pursuant to applicable Law to any applicable Governmental Authority were timely filed and were, at the time of filing, true, complete and accurate and in compliance with applicable Law in all material respects.  No material deficiencies have been asserted by any Governmental Authority with respect to such filings that have not been remedied prior to the date hereof.  True and complete copies have been or will be made available to Purchaser of the reports (or the most recent drafts thereof, to the extent any final reports are not available and such drafts have been provided to the Company), reflecting the results of any financial examinations or market-conduct examinations of the Company or any of the Company’s Subsidiaries conducted by any Governmental Authority since January 1, 2015.

Section 3.13           Contracts and Other Agreements.

(a)           Section 3.13 of the Stockholders Disclosure Schedule sets forth a true and complete list of all of the following Contracts to which the Company or its Subsidiaries is a party or by which any of their respective assets is bound, other than (x) Reinsurance Contracts, (y) Contracts which are cancellable by the Company or such Subsidiary on 30 days’ notice or less without penalty or other payment by the Company or its Subsidiaries, and (z) Contracts contemplated by this Agreement or any other Transaction Document (each, whether or not listed in Section 3.13 of the Stockholders Disclosure Schedule, a “Material Contract”):

(i)            all partnership, joint venture, shareholders’ or other similar contacts with any Person;

(ii)          all Contracts with a stockholder, director or officer of the Company or any of its Subsidiaries, other than employment agreements or customary confidentiality agreements and invention assignment agreements entered into with Employees generally, but including any Contract that would require the payment of a cash bonus to any director, officer or employee of the Company or any of its Subsidiaries as a result of the consummation of the transactions contemplated hereby;

(iii)          all Contracts that (A) contain covenants binding upon the Company or any of its Subsidiaries that restrict the ability of the Company or any of its Subsidiaries to compete in any business or in any geographic area in a manner that is material to the Company and its Subsidiaries, taken as a whole, or (B) grant any exclusive rights to make, sell, or distribute the Company’s material products and services, or otherwise prohibit or limit in any material respect the right of the Company or its Subsidiaries to develop, manufacture, market, sell, or distribute any material products or services;

(iv)          all Contracts under which the Company or any of its Subsidiaries has advanced or loaned any funds or has guaranteed any obligations of another Person;

(v)          any Contract (or group of related Contracts with respect to a single transaction or series of related transactions) that involve future payments, performance or services or delivery of goods or materials to or by the Company any of its Subsidiaries of an aggregate amount or value of more than $50,000.00 in any calendar year;

(vi)          all Contracts that are in respect of employment, compensation bonus, retention, severance pay, termination pay, change of control and deferred compensation, and other similar Contracts, between the Company or its Subsidiaries and any Employee or consultant or contractor to the Company or its Subsidiaries;

(vii)        all Contracts that relate to any settlement agreement, other than (a) releases immaterial in nature or entered into with former employees or independent contractors of the Company in the ordinary course of business in connection with the cessation of such employee’s or independent contractor’s employment with or services to the Company, (b) settlement agreements for cash only (which has been paid or accrued for) or (c) settlement agreements entered into more than two (2) years prior to the date of this Agreement under which none of the Company or Subsidiaries have any continuing obligations, liabilities, or rights (excluding releases), in each case material to the Company and its Subsidiaries taken as a whole;

(viii)       (A) any Contract between the Company, on the one hand, and the Stockholders or any Affiliate of the Stockholders (other than the Company), on the other hand, (B) any guarantee by the Stockholders or any Affiliate of the Stockholders (other than the Company) in favor of or in respect of any obligations of the Company or (C) any Contract between the Company or any of its Subsidiaries, on the one hand, and any director or officer of the Company (or any Affiliate of such a director or officer (other than the Company)), on the other hand;

(ix)          promissory notes, mortgages, indentures, loan or credit agreements, security agreements and other agreements and instruments or any other Debt relating to the borrowing of money or extension of credit to the Company or any of its Subsidiaries or the direct or indirect guarantee by the Company or any of its Subsidiaries of any obligation for borrowed money or other Debt of any Person;

(x)           the Producer Contracts with the fifteen (15) largest Producers (measured by the aggregate gross written premium of the Business) for the twenty-four-month period ended August 30, 2018;

(xi)          any collective bargaining agreement;

(xii)          Contracts with the ten largest vendors (measured by total annual payments made to vendors) of the Company for the year ended December 31, 2017;

(xiii)        any Contracts pursuant to which the Company (A) is licensed or otherwise permitted to use any Intellectual Property (excluding licenses for commercially available “off-the-shelf” Software licensed to the Company for a one-time or annual fee of less than $50,000) and (B) licenses or otherwise permits any Person to use any Intellectual Property owned by the Company;

(xiv)        any Contract which relates to the acquisition or disposition by the Company of any business or operations, capital stock or assets of any Person or any real estate as to which there are any material ongoing obligations of the Company;

(xv)        any Contract relating to any material interest rate, derivatives or hedging transaction;

(xvi)        any investment advisory agreements or any other Contracts relating to investment management, investment advisory or subadvisory services to which the Company is a party;

(xvii)       any third-party administration Contracts;

(xviii)      any Contract that provides the counterparty thereto with any additional rights or the Company with any additional obligations in the event of a ratings downgrade of the Company;

(xix)         all Company IP Agreements; and

(xx)          any other Contract (not otherwise required to be disclosed pursuant to any of the foregoing clauses) material to the Business.

(b)          As of the date of this Agreement, each Material Contract and Producer Contract to which the Company or its Subsidiaries is a party is in full force and effect and constitutes a legal, valid, binding agreement, enforceable against the Company or any Subsidiary thereof, as applicable, and, to the knowledge of the Stockholders, each other party thereto, in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency and similar Laws affecting creditors’ rights generally and general principles of equity (whether considered in equity or at law).  Except as set forth on Section 3.13 of the Stockholders Disclosure Schedule, none of the Company, its Subsidiaries or, to the knowledge of the Stockholders, any other party to each such contract is in material violation or breach of, or in material default under, nor has there occurred an event or condition that with the passage of time or giving of notice (or both) would constitute a material default under, or permit the termination of, any such Contract.  Except as set forth on Section 3.13 of the Stockholders Disclosure Schedule, no Material Contract contains any provision which by its own terms would result in a modification of the agreement by reason of the consummation of the transactions contemplated hereby or the other Transaction Documents.  Except as set forth on Section 3.13 of the Stockholders Disclosure Schedule, neither the Company nor its Subsidiaries have received written notice of the cancellation or termination of any Material Contract.  Except as set forth on Section 3.13 of the Stockholders Disclosure Schedule, (i) none of the Material Contracts contain any provision providing that the other party thereto may terminate, amend or alter the pricing or other terms thereof by reason of the transactions contemplated by this Agreement or otherwise, and (ii) to the knowledge of the Stockholders, no other party to a Material Contract has threatened in writing to cancel or not renew any Material Contract, whether as a result of the consummation of the transactions contemplated by this Agreement or otherwise.

(c)           Except as set forth on Section 3.13 of the Stockholders Disclosure Schedule, the Stockholders have heretofore delivered or made available to Purchaser true and complete copies of each Material Contract and Company IP Agreement set forth on Section 3.13 of the Stockholders Disclosure Schedule, together with all material amendments and supplements thereto, and the form(s) of Producer Contracts used in the Business, if any.

Section 3.14           Intellectual Property.

(a)          Section 3.14 of the Stockholders Disclosure Schedule lists, by Company and each of the Company’s Subsidiaries, all (i) Company IP Registrations and (ii) Company Intellectual Property, other than unregistered designs, trademarks, copyrights and other unregistered Intellectual Property that, individually or in the aggregate, are not material to the conduct of the Business.  All the Company Intellectual Property has been duly registered in, filed in or issued by the appropriate Governmental Authority where such registration, filing or issuance is necessary for the conduct of the business of the Company and its Subsidiaries as presently conducted.  Each item of the Company Intellectual Property that is registered Intellectual Property is subsisting and, to the knowledge of the Stockholders, valid and enforceable.

(b)           The Company or its Subsidiaries are 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 as of the Closing, will be free and clear of Encumbrances other than Permitted Encumbrances.  Since January 1, 2015, none of the Company or its Subsidiaries has received any written communication from any Person asserting any ownership interest in any Company Intellectual Property.

(c)           All Persons (including current and former employees and independent contractors) who created or contributed to any portion of, or otherwise would have rights in or to, Company Intellectual Property that is material to the conduct of the Business have executed enforceable written agreements that validly and irrevocably assign to the Company or one of its Subsidiaries all of their rights in and to such Company Intellectual Property, or the Company owns all such Company Intellectual Property pursuant to applicable Law.

(d)          The Company’s and its Subsidiaries’ rights in the Company Intellectual Property are subsisting and, to the knowledge of the Stockholders, valid and enforceable.  The Company and its Subsidiaries have taken reasonable steps to (i) maintain the validity and enforceability of the Company Intellectual Property that is material to the Business and (ii) protect and preserve the confidentiality of all material confidential information and trade secrets used or practiced in the Business.

(e)           Since January 1, 2015, the conduct of the Business has not been and is not infringing, misappropriating, diluting, violating or conflicting with the Intellectual Property or other rights of any Person, except for such violations, misappropriations, dilutions, conflicts or infringements that, individually or in the aggregate, have not been and would not reasonably be expected to be material to the conduct of the Business.  To the knowledge of the Stockholders, since January 1, 2015, none of the Company Intellectual Property has been or is being infringed, misappropriated, diluted, violated or otherwise used or made available for use by any Person without a license or permission from the Company or a Subsidiary.  Since January 1, 2015, none of the Stockholders, the Company or the Company’s Subsidiaries has received any written communication alleging that the Company or its Subsidiaries infringed, misappropriated, violated, diluted or conflicted with any rights relating to Intellectual Property of any Person.

(f)           There are no claims pending or, to the knowledge of the Stockholders, threatened against the Company or its Subsidiaries by any Person with respect to the ownership, validity, enforceability, effectiveness or use in the Business of any Intellectual Property or by any of the Company or its Subsidiaries or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of the Company Intellectual Property.

(g)          Neither the Company nor any of its Subsidiaries, in the conduct of the Business, uses or distributes, or has used or distributed, any Software licensed, provided, or distributed under any open source license, including any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation) or any Software that contains or is derived from any such Software (“Open Source Software”) in any manner that would require any source code of the Software owned by the Company or any of its Subsidiaries to be disclosed, licensed for free, publicly distributed, attributed to any person or dedicated to the public.  The Company and its Subsidiaries are in compliance with all terms and conditions of all relevant licenses (including all requirements relating to notices and making source code available to third parties) for all Open Source Software used in the Business.

(h)          The IT Systems (i) are in good repair and operating condition (ordinary wear and tear excepted) and are adequate and suitable (including with respect to working condition, security, performance and capacity) for the purposes for which they are being used or held for use and (ii) to the knowledge of the Stockholders, do not contain any Malware that would reasonably be expected to materially interfere with the ability of the Company and its Subsidiaries to conduct the Business or present a material risk of unauthorized access, disclosure, use, corruption, destruction or loss of any personally identifiable information, data or non-public information.

(i)            Other than as disclosed on Section 3.14 of the Stockholders Disclosure Schedule, the Company and its Subsidiaries (A) have implemented, maintained, and complied in all material respects with written security, business continuity and backup and disaster recovery plans and procedures that are materially consistent with industry best practices with respect to the IT Systems, and (B) have taken commercially reasonable steps to test such plans and procedures, and such plans and procedures are effective in all material respects.  Since January 1, 2015, (x) to the knowledge of the Stockholders, there has been no failure, breakdown, persistent substandard performance, unauthorized access or use, or other adverse event affecting any of the IT Systems, and (y) the Company and its Subsidiaries have not been notified by any third Person (including pursuant to an audit of the Business by such third Person) of, nor do the Stockholders have any knowledge of, any material data security, information security or other technological deficiency with respect to the IT Systems, in each case of (x) and (y), that has caused or would reasonably be expected to cause any material disruption to the conduct of the Business or present a material risk of unauthorized access, disclosure, use, corruption, destruction or loss of any personally identifiable information, data or non-public information.

(j)           Since January 1, 2015, (i) a privacy statement regarding the collection, retention, storage, protection, security, use, disclosure, distribution, transmission, maintenance and disposal (collectively, “Use”) of the personally identifiable information, data and non-public information of individuals who are visitors to the websites or mobile applications of the Company and its Subsidiaries (a “Privacy Statement”) has at substantially all times been posted and accessible to individuals on each website or mobile application of the Company and its Subsidiaries; (ii) the Company and its Subsidiaries have adopted and maintained a written information security program (“WISP”) consistent with applicable Laws to govern the Use of all personally identifiable information, data and non-public information of individuals Used by or on behalf of the Company and its Subsidiaries, and (iii) the Company and its Subsidiaries have been and are in compliance in all materially respects with the Privacy Statements  and WISP (as applicable to any given set of personally identifiable information, data and non-public information collected by or on behalf of the Company or any of its Subsidiaries) and with any and all applicable Laws, regulatory guidelines, contractual requirements, terms of use, and payment card industry standards pertaining to Use of personally identifiable information, data and non-public information.

(k)          Since January 1, 2015, neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Stockholders, any third Person working on behalf of any of them, has received any written claims, notices or complaints regarding the Company’s, its Subsidiaries’ or such third Person’s information practices or the Use of any personally identifiable information, data and non-public information of individuals, or alleging a violation of any individual’s privacy, personal or confidentiality rights under the Privacy Statement or otherwise from any Person or any other Governmental Authority.  To the knowledge of the Stockholders, since January 1, 2015, there has been no unauthorized access to personally identifiable information, data or non-pubic information of individuals maintained by or on behalf of the Company or its Subsidiaries.

Section 3.15           Real Property.

(a)           Other than as disclosed in Section 3.15 of the Stockholders Disclosure Schedule, neither the Company nor any Subsidiary thereof owns any direct, indirect or beneficial interest in real property. Section 3.15 of the Stockholders Disclosure Schedule sets forth a true and complete listing, as of the date hereof, of all Leases and the address, the name of landlord, the name of the tenant, the rent, the term, the entity in possession of any sublease, the amount of security deposit, if any, and whether the real property is used exclusively by the Company or is shared with other businesses operated by the Stockholders or any Affiliates of the Stockholders for each Lease. The Stockholders have delivered or made available to Purchaser correct and complete copies of the Leases (as amended or supplemented).  Each Lease is legal, valid, binding, in full force and effect, and enforceable in accordance with its respective terms against the Company and, to the knowledge of the Stockholders, against the other parties thereto, except as such enforceability may be limited by applicable bankruptcy, insolvency and similar Laws affecting creditors’ rights generally and general principles of equity (whether considered in equity or at law).

(b)           Other than as disclosed in Section 3.15 of the Stockholders Disclosure Schedule, each Lease grants the Company or its Subsidiary, as applicable, the exclusive right to use and occupy the premises and rights demised and intended to be demised thereunder.  Except as set forth in Section 3.15 of the Stockholders Disclosure Schedule, the Company and its Subsidiaries have the right to quiet enjoyment of all material property leased by them for the term of each such Lease (or any renewal option) relating thereto.  Other than as disclosed in Section 3.15 of the Stockholders Disclosure Schedule, there are no subtenants occupying any portion of the Leased Real Properties and except for the Company, its Subsidiaries and such subtenants, no other person or entity has any right to occupy or possess any portion of the Leased Real Properties.  Neither the Company’s nor any of the Company’s Subsidiaries’ interests in any of the Leased Real Properties, as the case may be, has been pledged, assigned, hypothecated, mortgaged, or otherwise encumbered in any manner other than Permitted Encumbrances or Encumbrances which will be released and discharged as of the Closing.

Section 3.16           Reinsurance Matters.

(a)          Section 3.16 of the Stockholders Disclosure Schedule sets forth a complete list of all Reinsurance Contracts.  As of the date of this Agreement, each Reinsurance Contract is in full force and effect and constitutes a legal, valid, binding agreement, enforceable against the Company or any of the Company’s Subsidiaries, as applicable, and, to the knowledge of the Stockholders, each other party thereto, in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency and similar Laws affecting creditors’ rights generally and general principles of equity (whether considered in equity or at law).  Neither the Insurance Company nor, to the knowledge of the Stockholders, any other party to each such contract is in material violation or material breach of, or in material default under, nor has there occurred an event or condition that with the passage of time or giving of notice (or both) would constitute a material default by the Insurance Company (or, to the knowledge of the Shareholders, any other party thereto) under, or permit the termination by the other party (or, to the knowledge of the Stockholders, the Insurance Company) of, any such contract.  No Reinsurance Contract contains any provision which by its own terms would result in a modification of the agreement by reason of the consummation of the transactions contemplated hereby or the other Transaction Documents.  No consent is required from any party to a Reinsurance Contract in connection with the transactions provided for in this Agreement.

(b)         To the knowledge of the Stockholders, since the commencement date of each Reinsurance Contract (A) the financial condition of any reinsurer party to any Reinsurance Contract has not been materially impaired with the result that a default thereunder may reasonably be anticipated, (B) there has not been any dispute with respect to any material amounts recoverable or payable by the Insurance Company pursuant to any Reinsurance Contract and (C) no reinsurer party to a Reinsurance Contract has denied coverage with respect to any current or prospective material claim.  All amounts owed under any Reinsurance Contracts have been timely paid in accordance with their respective terms.  The Insurance Company is entitled under SAP to take full credit in its statutory financial statements for all amounts recoverable by it pursuant to any of its Reinsurance Contracts, and all such amounts are reflected in the SAP Financial Statements.  All risks shown in the SAP Financial Statements as subject to reinsurance are reinsured, subject to the retentions and levels of reinsurance provided in each Reinsurance Contract.  Except as set forth on Section 3.16 of the Stockholders Disclosure Schedule, none of the Reinsurance Contracts contain any provision providing that the other party thereto may terminate, recapture, amend or alter the pricing or other terms thereof by reason of the transactions contemplated by this Agreement.  The Insurance Company is not a party to any separate written or oral agreements with any reinsurer party to a Reinsurance Contract that would under any circumstances reduce, limit, mitigate or otherwise affect any actual or potential loss to the parties under any Reinsurance Contract, other than the agreements and understandings that are explicitly set forth in such Reinsurance Contract.

Section 3.17          Insurance Coverage.  Section 3.17 of the Stockholders Disclosure Schedule sets forth an accurate, current and complete list of all insurance policies insuring the Company or its Subsidiaries relating to the assets, properties, business, operations, employees, officers or directors of the Company and its Subsidiaries as of the date of this Agreement.  All such policies are in full force and effect and all premiums due and payable thereon have been paid.  Neither the Stockholders nor the Company or its Subsidiaries have received or, to the knowledge of the Stockholders, been threatened with, a notice of cancellation, nonrenewal, denial of claims, premium increase or alteration of coverage of any such policy and, to the knowledge of the Stockholders, no state of facts exists which might form the basis for termination, cancellation, premium increase or alteration of coverage of any such policy.

Section 3.18           Employee Benefits and Related Matters.

(a)           Section 3.18 of the Stockholders Disclosure Schedule contains a true, complete and correct list, as of the date of this Agreement, of each material Company Benefit Plan.  With respect to each material Company Benefit Plan, the Stockholders have made or will make available to Purchaser, to the extent applicable:  (i) true, complete and correct copies of all plan documents and related trust agreements, insurance contracts or other funding arrangements; (ii) the most recent annual funding report, or such similar reports, statements or information returns required to be filed with or delivered to any Governmental Authority (including reports filed on Form 5500 with accompanying schedules and attachments), if any; (iii) the most recent determination, qualification or opinion letter or similar document issued by any Governmental Authority for each such Company Benefit Plan intended to qualify for favorable tax treatment and any pending application thereof; (iv) all current summary plan descriptions; (v) all material amendments and modifications to any such Company Benefit Plan; and (vi) for the last two (2) years, all material written communications received from or sent to the IRS, the Pension Benefit Guaranty Corporation, the Department of Labor or any other Governmental Authority.  Neither the Stockholders, nor the Company or any of its Subsidiaries has communicated to any Employee its commitment to amend or modify any Company Benefit Plan or to establish or implement any other employee or retiree benefit or compensation plan or arrangement.

(b)          With respect to each Company Plan that is intended to be qualified within the meaning of Section 401(a) of the Code, the IRS has issued a favorable determination letter or opinion letter or advisory letter upon which the Company or its Subsidiaries are entitled to rely under IRS pronouncements, that such plan is qualified under Section 401(a) of the Code, and to the Stockholders’ knowledge, no act or omission has occurred since the date of the most recent determination or opinion letter which would materially adversely affect its qualification.

(c)          No Plan to which the Company or any ERISA Affiliate has ever had an obligation to contribute is a “multiple employer plan” sponsored by more than one employer, within the meaning of Sections 4063 or 4064 of ERISA, a “multiemployer plan” as such term is defined in Section 4001(a)(3) of ERISA or a defined benefit pension plan subject to Title IV of ERISA.   Neither the Company nor any of its Subsidiaries would reasonably be expected to incur any material liability or obligation by reason of being on any date an ERISA Affiliate of any Person (other than the Company and its Subsidiaries).

(d)         Each Company Benefit Plan has been maintained, funded and administered in all material respects in compliance with its terms and with all applicable Laws, including ERISA and the Code.  To the knowledge of the Stockholders, no nonexempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has occurred with respect to any Company Benefit Plan that would reasonably be expected to subject the Company or its Subsidiaries to any material liability.  Neither the Company nor any of its Subsidiaries have incurred any current or projected material liability in respect of post-employment or post-retirement health, medical, or life insurance benefits for any Employee, except as required to avoid an excise Tax under Section 4980B of the Code or as may be required under any other applicable Law.

(e)           Except as set forth on Section 3.18 of the Stockholders Disclosure Schedule, none of the execution, delivery or performance of this Agreement or the transactions contemplated by this Agreement (whether alone or in conjunction with any other event, including any termination of employment on or following the date hereof) will (i) entitle any Employee to any compensation or benefit, (ii) accelerate the time of payment or vesting, or trigger any payment or funding or increase the amount, or enhance the terms or conditions, of any compensation or benefit under any Company Benefit Plan, or (iii) result in any forgiveness of indebtedness under any Company Benefit Plan.

(f)           No amount, economic benefit or other entitlement that will be received (whether in cash or property or vesting of property) as a result of the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement (whether alone or in conjunction with any other event, including any termination of employment on or following the date hereof) by any “disqualified individual” (as defined in Section 280G(c) of the Code) with respect to the Company and its Subsidiaries will constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).  No Employee is entitled to receive any gross-up, make-whole or additional payment by reason of any Taxes (including any Taxes under Section 409A or 4999 of the Code) being imposed on such Person or any interest or penalty related thereto.

(g)           Neither the Company nor any of its Subsidiaries is, or has ever been, a “covered health insurance provider” under Section 162(m)(6)(C)(i) of the Code.

Section 3.19          Environmental Laws.  The Company and its Subsidiaries are, and since January 1, 2015 have been, in material compliance with all applicable Environmental Laws, and possess and are in material compliance with all Environmental Permits required under such laws for the conduct of the Business.  To the knowledge of the Stockholders, there are no past, present or future events, conditions, circumstances, practices, plans or legal requirements that would prevent the Company and its Subsidiaries from, or increase the burden on the Company and its Subsidiaries in, complying in all material respects with applicable Environmental Laws or obtaining, renewing or complying in all material respects with all Environmental Permits required under such laws for the conduct of the Business.  None of the Stockholders, the Company or its Subsidiaries has received any written or, to the knowledge of the Stockholders, oral communication alleging that the Company or any of its Subsidiaries are not in compliance with, or have Liability relating to, any Environmental Laws.  There is no Action pending or, to the knowledge of the Stockholders, threatened against the Company or any of its Subsidiaries arising under Environmental Laws, and there are no outstanding orders, judgments, consent decrees, injunctions, determinations or awards against the Company or any of the Subsidiaries arising under Environmental Laws.  There are, and have been since January 1, 2015, no conditions at any real property owned by a Stockholder, the Company or its Subsidiaries that would give rise to any material Liability of the Company or its Subsidiaries under any Environmental Law.  To the knowledge of the Stockholders, there are, and have been since January 1, 2015, no conditions at any real property operated or otherwise used by the Company or its Subsidiaries, or at any other location with respect to the Business, that would give rise to any material Liability of the Company or its Subsidiaries under any Environmental Law.  The Stockholders have made or will make available to Purchaser copies of all environmental assessments, investigations and studies in the possession, custody or control of the Stockholders, the Company or any of its Subsidiaries, relating to properties or assets currently or formerly owned, leased, operated or used by the Company or any of its Subsidiaries.

Section 3.20          Anti-Money Laundering, OFAC and Anti-Bribery Compliance.  Since January 1, 2015, each of the Company and its Subsidiaries has been in compliance in all material respects with all requirements applicable to it regarding anti-money laundering and anti-terrorist rules and regulations. The operations of the Company and the Company’s Subsidiaries are and have been conducted since January 1, 2015 in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”), and no Action by or before any court or Governmental Authority or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Stockholders, threatened.  None of the Company, any of its Subsidiaries or, to the knowledge of the Stockholders, any Representative of the Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).  Since January 1, 2015, neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Stockholders, any of their directors, officers, agents or employees, has directly or indirectly made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business for the Company or its Subsidiaries, (ii) to pay for favorable treatment for business secured by the Company or its Subsidiaries, or (iii) to obtain special concessions or for special concessions already obtained by the Company or its Subsidiaries.

Section 3.21          Transactions with Affiliates.  Section 3.21 of the Stockholders Disclosure Schedule sets forth a true and complete list of each Contract between the Company or any of the Company’s Subsidiaries, on the one hand, and the Stockholders or any of their respective Affiliates, on the other hand (“Related Party Contracts”).  Except for the Schedule BA Assets, neither the Company or any of its Subsidiaries directly or indirectly owns or has the right or the obligation to acquire any interest or investment (whether debt or equity) in, or the obligation to make a capital contribution to or investment in any Affiliate of a Stockholder.  Except as otherwise provided for in Section 3.21 of the Stockholders Disclosure, none of the Contracts set forth in Section 3.21 of the Stockholders Disclosure Schedule will continue in effect after the Closing.

Section 3.22          Actuarial Memoranda and Reserves.

(a)          The Stockholders have delivered or made available to Purchaser a copy of all actuarial reports and memoranda prepared by actuaries, whether internal or external, with respect to the Business since January 1, 2015 and all attachments, addenda, supplements and modifications to the actuarial memoranda or such other actuarial reports.  No data provided in connection with the preparation of such reports and memoranda was inaccurate or incomplete in any material respect or contained any material Data Input Inaccuracies.

(b)          The reserves and other liabilities for claims, losses (including, without limitation incurred but not reported losses), loss adjustment expenses (whether allocated or unallocated) and unearned premiums of the Insurance Company recorded in the SAP Financial Statements, as of the respective dates of such SAP Financial Statements (i) have been computed in accordance in all material respects with presently accepted actuarial standards consistently applied, and were fairly stated in all material respects in accordance with sound actuarial principles, (ii) have been based on actuarial assumptions which produced reserves at least as great as those called for in any Insurance Contract provision as to reserve basis and method, and are in accordance in all material respects with all other Insurance Contract provisions, (iii) met in all material respects all requirements of applicable Law and regulatory requirements of the Domiciliary Regulator and are at least as great as the minimum aggregate amounts required by such Domiciliary Regulator, (iv) have been computed on the basis of assumptions consistent with those used to compute the corresponding items in such SAP Financial Statements and (v) included provision for all actuarial reserves and related statement items which ought to be established as required to be certified by the actuaries of the Insurance Company pursuant to applicable insurance Laws.

Section 3.23           Insurance Contracts.

(a)           To the extent required under applicable Law, all policy forms and rates in use by the Insurance Company, and all endorsements, riders, applications and certificates pertaining thereto, are on forms approved by the applicable Governmental Authority or which have been filed and not objected to by such Governmental Authority within the period provided for objection, in each case except as has not resulted in, and would not reasonably be expected to, individually or in the aggregate, result in, a material violation of applicable Law by, or a material fine on, the Insurance Company.

(b)         Since January 1, 2015, the Insurance Company has timely paid all guaranty fund assessments that have been due, claimed or asserted by any state guaranty fund or association or by any Governmental Authority charged with the supervision of insurance companies in any jurisdiction in which the Company does business.  Except for regular periodic assessments in the ordinary course of business or assessments based on developments that are publicly known within the insurance industry, no claim or assessment is pending or, to the knowledge of the Stockholders, threatened against the Insurance Company by any state insurance guaranty association in connection with such association’s fund relating to insolvent insurers, except for any such claims or assessments that are not, and would not reasonably be expected, individually or in the aggregate, to be materially adverse to the Insurance Company.

(c)           Except as set forth on Section 3.23 of the Stockholders Disclosure Schedule, since January 1, 2015, all benefits due and payable under any Insurance Contract issued by the Insurance Company have been paid in accordance with the terms of the Insurance Contract under which such benefits arose, and such payments were not delinquent and were paid (or will be paid) without fines or penalties, except for such benefits for which the Insurance Company (i) believes there is a reasonable basis to contest payment or (ii) has established an appropriate reserve in respect thereof.

Section 3.24          Producers.  Except as set forth in Section 3.24 of the Stockholders Disclosure Schedule, since January 1, 2015, (i) each Producer, at any time that it wrote, sold or produced Business for the Insurance Company, was duly licensed, authorized and appointed (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 and, to the knowledge of the Stockholders, no such Producer violated any term or provision of applicable Law relating to the writing, sale or production of Business for the Insurance Company, (ii) to the knowledge of the Stockholders, no Producer has breached the terms of any agency or broker contract with the Insurance Company or violated any applicable Law or policy of the Insurance Company in the solicitation, negotiation, writing, sale or production of Business for the Insurance Company, and (iii) to the knowledge of the Stockholders, no Producer has been enjoined, indicted, convicted or made the subject of any consent decree or judgment on account of any violation of applicable Law in connection with such Producer’s actions in his, her or its capacity as Producer for the Insurance Company or any enforcement or disciplinary proceeding alleging any such violation.

Section 3.25          Title to Assets.  Except as set forth in Section 3.25 of the Stockholders Disclosure Schedule, the Company and its Subsidiaries have good and valid title to, or otherwise have the right to use pursuant to a valid and enforceable lease, license or similar contractual arrangement, all of their respective material assets (real and personal, tangible and intangible, including all Intellectual Property and investment assets) that are used or held for use in connection with the business and operations of the Insurance Company as conducted as of the date hereof or are reflected on the SAP Financial Statements for the year ended December 31, 2017 or were acquired after December 31, 2017, in each case free and clear of any Encumbrance other than Permitted Encumbrances. Any Permitted Encumbrances on such assets, individually or in the aggregate, do not materially interfere with the current use of any such asset by the Insurance Company or materially detract from the value of any such asset.  Each investment asset reflected as an admitted asset on the SAP Financial Statements is in compliance with applicable insurance investment laws.  Except as set forth in Section 3.25 of the Stockholders Disclosure Schedule, no investment asset is in default or is non-performing.

Section 3.26           Sufficiency of Assets.  The assets that the Company and its Subsidiaries will continue to have good and valid title to, or the right to use, following the Closing constitute all of the assets satisfactory for the conduct of the business and operations of the Company and its Subsidiaries as currently conducted.  The structures and material equipment included in such assets are in satisfactory repair and operating condition, subject only to ordinary wear and tear, and are adequate and suitable for the purposes for which they are presently being used or held for use in all material respects. To the knowledge of the Stockholders, there are no facts or conditions affecting any assets material to the Business that interfere with the use, occupancy or operation of such assets in any material respect.

Section 3.27           Debt.  Section 3.27 of the Stockholders Disclosure Schedule sets forth all outstanding Debt of the Company and its Subsidiaries, and all Encumbrances on the assets and properties of the Business and on the Company and the Shares securing such Debt.

Section 3.28          Bank Accounts; Powers of Attorney.  Section 3.28 of the Stockholders Disclosure Schedule sets forth (a) the name of each bank in which the Company or its Subsidiaries have an account, lock box or safe deposit box, (b) a list of all accounts, lock boxes and safe deposit boxes held with respect to each such bank, and (c) the names of all Persons authorized to draw thereon or have access thereto.

Section 3.29          Investment Intent.  WT is acquiring the Preferred Shares for its own account, for investment purposes only and not with a view to the distribution (as such term is used in Section 2(11) of the Securities Act) thereof.  WT understands that the offer and sale of the Preferred Shares have not been registered under the Securities Act and cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available, except to the extent otherwise provided for in the Certificate of Designation.

Section 3.30          Brokers.  No broker, finder, investment banker or other intermediary retained by or authorized to act on behalf of the Stockholders, the Company or any of its Subsidiaries, is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of any of the Stockholders, the Company or its Subsidiaries.

Section 3.31           Miscellaneous.  Except for the representations and warranties expressly contained in this Article III (including the related portions of the Stockholders Disclosure Schedule), none of the Stockholders, the Company or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Stockholders or the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Company, its Subsidiaries, or any of Stockholders furnished or made available to Purchaser or its Representatives (including any information, documents or material delivered to Purchaser or made available to Purchaser in any data room, management presentations or in any other form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Company or its Subsidiaries, or any representation or warranty arising from statute or otherwise in Law.

Purchaser represents and warrants to each of the Stockholders as of the date hereof as follows:

Section 4.1          Organization and Qualification.  Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, license, use or lease and operate its assets, properties and rights and to carry on its business as it is now conducted.

Section 4.2             Authority; Non-Contravention; Approvals.

(a)          Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations and the transactions contemplated by this Agreement and the other Transaction Documents.  The execution and delivery of this Agreement and the other Transaction Documents and the performance by Purchaser of its obligations and the transactions contemplated by this Agreement and the other Transaction Documents have been approved by the Board of Directors of Purchaser, and no other corporate or other proceedings on the part of Purchaser are necessary to authorize the execution and delivery of this Agreement and the other Transaction Documents by Purchaser and the performance by Purchaser of its obligations and the transactions contemplated by this Agreement and the other Transaction Documents.  This Agreement has been, and on the Closing Date the Transaction Documents will be, duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery of this Agreement and the other Transaction Documents by the Stockholders, constitute or upon their execution will constitute, legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms.

(b)          The execution and delivery by Purchaser of this Agreement and the other Transaction Documents and the performance by it of the transactions contemplated by this Agreement and the other Transaction Documents will not (i) conflict with or result in a breach of any provision of the certificate of incorporation or bylaws (or similar organizational documents) of Purchaser; (ii) result in a violation or breach of or constitute a default (or an event which, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination of, or the loss of a benefit under or accelerate the performance required by, or result in a right of termination, modification, cancellation or acceleration under, the terms, conditions or provisions of any contract or other instrument or any kind to which Purchaser is now a party or by which Purchaser, any of its Affiliates or any of its respective properties, assets or rights may be bound or affected; or (iii) violate any order, writ, injunction, decree, statute, treaty, rule or regulation applicable to Purchaser or any of its Affiliates except in each case with respect to the preceding clauses (ii) and (iii) above, as would not, individually or in the aggregate, be material.

(c)          Except for notices and applications to, and approvals of, the Domiciliary Regulator with respect to the transactions contemplated by this Agreement, no declaration, filing or registration with, or notice to, or authorization, consent, order or approval of, any Governmental Authority, excluding the Domiciliary Regulator, or other Person is required to be obtained or made in connection with or as a result of the execution and delivery and performance of this Agreement and the other Transaction Documents by Purchaser or its Affiliates or the consummation by Purchaser or its Affiliates of the transactions contemplated by this Agreement and the other Transaction Documents, other than such declarations, filings, registrations, notices, authorizations, consents, orders or approvals which, if not made or obtained, as the case may be, would not be material.

Section 4.3            Financing.  Purchaser has as of the date hereof, a financing commitment letter in the amount of twenty million dollars ($20,000,000) in form attached hereto as Exhibit C (the “Commitment Letter”), and Purchaser will have, on the Closing Date, cash and/or a financing commitment providing cash sufficient to pay the Closing Payment and to make any other payments required to be made by Purchaser in connection with the transactions contemplated by this Agreement and to perform its obligations with respect to the transactions contemplated by this Agreement and the other Transaction Documents.

Section 4.4             Capitalization.

(a)          The authorized capital stock of Purchaser consists of 50,000,000 shares of Preferred Stock, with a par value of $.01 per share, of which no shares are currently outstanding, 300,000,000 shares of Class A Common Stock, with a par value of $.01 per share, of which 9,290,048 shares are currently outstanding, and 30,000,000 shares of Class B Common Stock, with a par value of $.01 per share, of which 7,821,165 shares are currently outstanding.  All of the issued and outstanding shares of Purchaser’s capital stock have been duly authorized and validly issued and are fully paid and nonassessable. Upon the delivery of the Preferred Shares by Purchaser to the Stockholders in the manner contemplated under Article II, all of the Preferred Shares will be duly authorized, validly issued, fully paid and non-assessable, and the Stockholders will acquire the beneficial and sole and exclusive legal title to the Preferred Shares, free and clear of all Encumbrances, except for restrictions on transfer under federal and state securities laws or Encumbrances created or incurred by the Stockholders.

(b)           All of the Preferred Shares are being offered and will be issued and sold in compliance with all applicable Laws, will not be issued in violation of and are free of any preemptive rights, rights of first refusal or similar restrictions.

Section 4.5             SEC Reports, Material Changes, and Other Public Company Matters.

(a)           Purchaser has filed all reports, schedules, forms, statements and other documents required to be filed by Purchaser under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including under Section 13(a) or 15(d) thereof, since January 1, 2015 (the above materials, including exhibits and documents incorporated by reference therein, the “SEC Reports”), on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. Purchaser has not received any letters of comment from the staff of the U.S. Securities and Exchange Commission (the “Commission”) that have not been satisfactorily resolved as of the date hereof.

(b)          The consolidated financial statements of Purchaser and its Subsidiaries included in the SEC Reports comply in all material respects with accounting requirements and the rules and regulations of the Commission as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the consolidated financial position of Purchaser and its Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(c)           Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that would reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse Effect, (ii) Purchaser has not incurred any Liabilities other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) Liabilities not required to be reflected in Purchaser’s financial statements under GAAP or disclosed in filings made with the Commission, (iii) Purchaser has not altered its method of accounting or changed its principal registered public accounting firm, (iv) Purchaser has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) Purchaser has not issued any equity securities, except under existing Purchaser equity compensation plans. Purchaser does not have pending before the Commission any request for confidential treatment of information.

(d)           Purchaser maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the Exchange Act and has been designed by Purchaser’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP; Purchaser’s internal control over financial reporting is effective and Purchaser is not aware of any material weaknesses in its internal control over financial reporting; there has been no fraud, whether or not material, that involves management or other employees who have a significant role in Purchaser’s internal control over financial reporting; since the date of the latest audited financial statements included or incorporated by reference in Purchaser’s SEC Reports, there has been no change in Purchaser’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, Purchaser’s internal control over financial reporting. Purchaser maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to Purchaser is made known to Purchaser’s principal executive officer and principal financial officer by others within those entities; such disclosure controls and procedures are effective. Purchaser is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated by the Commission thereunder.

(e)          Purchaser is, and has no reason to believe that it will not, upon the issuance of the Preferred Shares, continue to be, in compliance with the listing and maintenance requirements for continued listing on the New York Stock Exchange in all material respects. Assuming the representations and warranties of the Stockholders are true and correct in all material respects, the consummation of the transactions contemplated by this Agreement will not contravene the rules and regulations of the New York Stock Exchange. There are no proceedings pending or, to the knowledge of Purchaser, threatened against Purchaser relating to the continued listing of Purchaser’s common stock on the New York Stock Exchange, and Purchaser has not received any notice of, nor to the knowledge of Purchaser is there any basis for, the delisting of Purchaser’s common stock from the New York Stock Exchange.

Section 4.6            Investment Intent.  Purchaser, Pillar General and to the extent applicable, Maidstone are acquiring the Shares for their own account, for investment purposes only and not with a view to the distribution (as such term is used in Section 2(11) of the Securities Act) thereof.  Purchaser understands that the Shares have not been registered under the Securities Act and cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.

Section 4.7          Accredited Investor.  Each of Purchaser, Pillar General and Maidstone is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, and is able to bear any economic risks associated with the transactions contemplated by this Agreement.  Each of Purchaser. Pillar General and Maidstone has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares, and is capable of bearing the economic risks of such investment, including a complete loss of its investment in the Shares.

Section 4.8          Brokers.  No broker, finder, investment banker or other intermediary retained by or authorized to act on behalf of Purchaser, is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the Transaction Documents based upon arrangements made by or on behalf of Purchaser or its Affiliates.

Section 4.9          Independent Investigation. Purchaser acknowledges and agrees (on its own behalf, as well as on behalf of Pillar General and Maidstone)  that: (a) should Purchaser decide not to terminate this Agreement pursuant to Section 9.2  and to consummate the transactions contemplated hereby, each of Purchaser, Pillar General and Maidstone will have relied solely upon its own investigation of the Company including based on the information provided by the Stockholders and the express representations and warranties of the Stockholders set forth in Article III of this Agreement (including the related portions of the Stockholders Disclosure Schedule); (b) none of the Stockholders, the Company or any other Person has made any representation or warranty as to the Stockholders, the Company or this Agreement, except as expressly set forth in  Article III of this Agreement (including the related portions of the Stockholders Disclosure Schedule); and (c) none of the Stockholders, the Company or any other Person has made any representation or warranty with respect to any cost estimates, projections or other predictions. Purchaser acknowledges (on its own behalf, as well as on behalf of Pillar General and Maidstone) that (i) there are uncertainties inherent in attempting to make estimates, projections and other predictions; (ii) each of Purchaser, Pillar General and Maidstone is familiar with such uncertainties; (iii) each of Purchaser, Pillar General and Maidstone is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other predictions so furnished; and (iv) under no circumstances shall any of Purchaser, Pillar General and Maidstone have any claim against either of the Stockholders or any of their officers, directors, Affiliates, agents or Representatives with respect to any estimates, projections or other predictions as described in this Section 4.9.

Section 5.1             Conduct of the Business.

(a)           During the period from the date of this Agreement to the Closing, except as expressly permitted or required by this Agreement, as reasonably necessary to consummate the transactions contemplated hereby, or as consented to in writing by Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Stockholders shall cause the Company and its Subsidiaries to use their commercially reasonable best efforts to (i) conduct their business only in the ordinary course of business consistent with past practice, (ii) comply in all material respects with all applicable Laws; and (iii) consistent with past practices, maintain and preserve intact the present organization, business and franchise of the Company and its Subsidiaries and relationships with customers, suppliers, licensors, licensees, contractors, distributors, regulators and others having business relationships with the Company or its Subsidiaries.  For the avoidance of doubt, the obligations under this Section 5.1(a) shall not require the Stockholders or the Company or any of their Affiliates to take any action in relation to any actual or proposed Stockholders Burdensome Condition.  Without limiting the generality of the foregoing, from the date of this Agreement to the Closing, except as expressly permitted or required by this Agreement or with respect to matters set forth in Section 5.1(a) of the Stockholders Disclosure Schedule (all of which shall be deemed consented to), the Stockholders shall not and shall cause the Company and its Subsidiaries not to do any of the following without Purchaser’s written consent (such consent not to be unreasonably withheld, conditioned or delayed):

(i)            sell, lease, encumber, transfer or otherwise dispose of any of its assets, properties or rights or acquire any assets, properties or rights having a purchase price, either individually or in the aggregate, in excess of $50,000;

(ii)           grant any new equity awards to any director, officer, employee, independent contractor of the Company or any of its Subsidiaries;

(iii)         incur, create, guaranty or assume any Debt not otherwise currently existing (other than under its existing bank facility) or otherwise become responsible for Debt of any other Person, except unsecured current obligations and liabilities incurred in the ordinary course of business, or take any action that results in an Encumbrance, other than a Permitted Encumbrance, being imposed on any asset, property or right of the Company or any Subsidiary thereof;

(iv)         enter into any agreement or commitment or make, authorize or commit to make any capital expenditures that exceed, individually or in the aggregate, $50,000 except for capital expenditures in the amounts and for the purpose set forth in the Company’s or its Subsidiaries’ current capital expenditures budget as previously made available to Purchaser;

(v)          cancel any debts or waive any claims or rights that are material to the Company or a Subsidiary, other than in the ordinary course of business;

(vi)          except in the ordinary course of business and consistent with past practice, enter into or assume any Contract or Company IP Agreement that would qualify as a Material Contract under Section 3.13(a) or amend or terminate any Material Contract;

(vii)         enter into or assume any Contract that would qualify as a Reinsurance Contract under Section 3.16 or amend or terminate any Reinsurance Contract, other than the renewal of any expiring Reinsurance Contract in the ordinary course of business;

(viii)         adopt a plan of complete or partial liquidation or rehabilitation or authorize or undertake a dissolution, rehabilitation consolidation, restructuring, recapitalization or other reorganization or create or acquire any new Subsidiaries;

(ix)          issue, sell, convey, pledge, otherwise dispose of, encumber, repurchase, reclassify, split or redeem any capital stock or evidence of indebtedness or other securities of the Company or any of its Subsidiaries, or grant any options, warrants, calls, rights or commitments or any other agreements of any character obligating it to issue any shares of capital stock or other equity interests in the Company or any of its Subsidiaries or any evidence of indebtedness or other securities;

(x)           repurchase, redeem, or otherwise acquire, or grant any rights or enter into any Contracts or commitments to repurchase, redeem, or acquire, any outstanding shares of the capital stock or other securities of, or other ownership interests in, the Company or any of its Subsidiaries, or declare, set aside, make, or pay any dividend, disbursement or other distribution with respect to its capital stock or other securities or ownership interests except (i) dividends, disbursements or other distributions which do not require approval of the Domiciliary Regulatory, (ii) the Extraordinary Dividend, and (iii) the Hart Dividend;

(xi)          effect any recapitalization, reclassification, or similar change in the capitalization of the Company or any of its Subsidiaries;

(xii)          pay, settle or compromise any material Tax audit or liability (other than payment for Taxes on a timely basis), amend any material Tax Return, make, change or revoke any material election  related to Taxes, change any taxable period or any Tax accounting method, enter into any agreement relating to Taxes or otherwise with a Tax Authority, consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment, surrender any right to claim a material Tax refund, offset or other reduction in Tax liability, in each case with respect to the Company or its Subsidiaries;

(xiii)         make or authorize any change in its certificate of incorporation or bylaws;

(xiv)        enter into a new line of business, abandon or discontinue an existing line of business, surrender or relinquish or discontinue any certificate of authority or other Permit;

(xv)         (A) enter into, adopt, amend or terminate any Plan, other than for non-material amendments to Plans affecting the Employees generally and arising in the ordinary course of business and consistent with past practice (e.g., with respect to open enrollment for health plans), (B) increase the salary, bonus or other compensation (including any severance, profit sharing, retirement or insurance benefits) payable to any Employee or the benefits of any Employee, other than increases to non-officer base salaries in the ordinary course of business and consistent with past practice, or (C) pay or otherwise grant any benefit not required by any Plan, or enter into any contract to do any of the foregoing, except in the case of each of (A)-(C) to the extent required by applicable Law;

(xvi)        acquire or enter into any lease of, any real property or any direct or indirect interest in any real property;

(xvii)       fail to pay or satisfy when due any material liability (other than any such liability that is being contested in good faith);

(xviii)      settle or compromise any Action other than (1) the Superstorm Sandy Matter but only to the extent such settlement or compromise does not result in the imposition of a Purchaser Burdensome Condition, (2) the Weathers Matter, or (3) any Actions arising in the ordinary course of business from or related to the obligations of the Insurance Company under any Insurance Contracts;

(xix)         make any material change in its underwriting, reinsurance, claims administration, pricing, reserving, accounting or investment practices or policies, including changes to investment guidelines (except as required by GAAP, SAP or applicable actuarial rules or changes in in Law or the interpretation by a Governmental Authority) or enforcement thereof or adjust the Reserves relating to any Extra Contractual Obligations or the Superstorm Sandy Matter in any manner that is not consistent with historical accounting principles, policies and practices, except in relation to the settlement thereof;

(xx)          fail to keep, or cause to be kept, all insurance policies set forth in Section 3.17 of the Stockholders Disclosure Schedule, or commercially reasonable replacements therefor, in full force and effect through the close of business on the Closing Date;

(xxi)         make any material change in internal accounting controls, disclosure controls or procedures, or investment guidelines; or

(xxii)        take, or agree or otherwise commit to take, any of the foregoing actions.

The Stockholders shall provide reasonable prior notice to Purchaser of the Company’s or its Subsidiaries’ consideration and negotiation of the transactions individually identified by an asterisk on Section 5.1(a) of the Stockholders Disclosure Schedule.  Purchaser and its Representatives shall have reasonable access to information relating to all transactions set forth on Section 5.1(a) of the Stockholders Disclosure Schedule as contemplated by Section 5.2.

(b)           Notwithstanding any provisions of Section 5.1(a) to the contrary, no notification to or consent from Purchaser shall be required in connection with (i) the purchase and sale of bonds, stocks, mortgages and other investment securities of any type by the Insurance Company in connection with the management of its investment portfolio in accordance with the investment guidelines in effect as of the date hereof in the ordinary course of business of the Insurance Company consistent with past practices or (ii) any termination of employment in the ordinary course of business consistent with past practices.

Section 5.2             Access to Information.

(a)          From the date hereof until the Closing, subject to the provision of Section 5.9, the Stockholders shall, and shall cause the Company and the Company’s Subsidiaries to, (a) provide Purchaser and its Representatives with reasonable access to and right to inspect during normal business hours, upon reasonable prior notice, to (i) Hart (President), Rick Goodman (CFO), and Debbie Collazo (Vice President) and, upon prior consent of Hart (such consent not to be unreasonably withheld, conditioned or delayed, provided that Hart or her designee can participate therein), such other personnel, officers, and employees assets, premises, contracts, documents and properties of the Company and its Subsidiaries and the Books and Records and other information and data relating to the Company and its Subsidiaries; (b) furnish Purchaser and its Representatives with such financial, operating and other data and information related to the Company and its Subsidiaries as Purchaser or any of its Representatives may reasonably request; and (c) instruct the Representatives of the Stockholders and the Company and its Subsidiaries to cooperate with Purchaser in its investigation thereof, provided, that such investigation shall be conducted in a manner as to not unreasonably interfere with the conduct of the business of the Company and its Subsidiaries.  The Stockholders shall cause the Company to furnish Purchaser and its Representatives with all such information and data (including copies of Contracts, Company IP Agreements, Plans and other Books and Records) concerning the Company and its Subsidiaries and operations of the Company and its Subsidiaries as Purchaser or any of such Representatives reasonably may request in connection with such investigation; provided, however, that (i) the auditors and outside accountants of the Company and its Subsidiaries shall not be obligated to make work papers available unless Purchaser has signed a customary agreement relating to access to such work papers in form and substance reasonably acceptable to such auditors or accountants, as applicable, and (ii) the Stockholders shall not be obligated to make (or cause to be made) any information available that would, in the reasonable judgment of the Stockholders, with advice from legal counsel, (x) violate or jeopardize any applicable attorney client or other similar legal privilege or (y) violate any applicable Law or binding agreement entered into prior to the date of this Agreement that is listed on Section 5.2 of the Stockholders Disclosure Schedule.  No investigation by Purchaser or other information received by Purchaser shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Stockholders in this Agreement.  Purchaser shall not use, and shall not permit any of its Affiliates and Representatives to use, any such information in any manner or for any other purpose other than solely in connection with evaluating the Company and the transactions contemplated by this Agreement. All such information shall be kept confidential and limit its use in accordance with the terms of the Confidentiality Agreement, and Purchaser hereby agrees to be bound (and to cause its Subsidiaries to abide by) by the terms of the Confidentiality Agreement as if it was a party thereto.  Notwithstanding the terms of the Confidentiality Agreement, in the event of a termination of this Agreement for any reason, the terms of this Section 5.2(a) and the Confidentiality Agreement will survive such termination for a period of five (5) years following such termination.

(b)          Each of the Stockholders and Purchaser shall use commercially reasonable efforts to provide promptly to the other Party all non-privileged information as such other Party may reasonably request in connection with such other Party’s review of the Closing Date Balance Sheet, the Closing Date Calculations, the Adjustment Notice of Disagreement, the Loss Development Statement, the Loss Development Amount or the Loss Development Notice of Disagreement, as the case may be, including all work papers of the accountants who audited, compiled or reviewed such documents (subject to, in the case of third-party accountants, the relevant party entering into a customary release agreement on terms acceptable to the accountant), and shall otherwise cooperate in good faith with such other Party to arrive at a final resolution of the Closing Date Balance Sheet, the Closing Date Calculations, the Loss Development Statement and the Loss Development Amount.

Section 5.3             Reasonable Efforts.

(a)           Subject to the terms and conditions of this Agreement, each Party shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Party in doing, all things necessary, proper or advisable to consummate and make effective, the transactions contemplated by this Agreement and the other Transaction Documents.

(b)           The Stockholders and Purchaser each shall use its commercially reasonable efforts to obtain as promptly as practicable all Permits required by Law for Purchaser to conduct the Business following the Closing.  Notwithstanding the foregoing, neither Purchaser nor the Stockholders shall be required to expend any material sum to obtain any such Permits.

(c)           The Stockholders and Purchaser will cooperate and, the Stockholders shall, and shall cause the Company and its Subsidiaries to, use their respective commercially reasonable efforts to obtain as promptly as practicable any consents, approvals and waivers required from third Persons pursuant to the Material Contracts in connection with the consummation of the transactions contemplated by this Agreement.  With respect to any Material Contract for which any consent has not been obtained prior to the Closing, in the event that the Closing occurs, the Stockholders shall continue to use commercial reasonable efforts to obtain any such consent after the Closing until either such consent has been obtained or the Stockholders and Purchaser mutually agree, in good faith, that such consent cannot reasonably be obtained. Nothing in this Section 5.3(c) shall require any of Purchaser, the Stockholders or the Company to expend any material sum, make a material financial commitment or grant or agree to any material concession to any third Person to obtain any such consent, approval or waiver.

(d)          Purchaser and the Stockholders shall promptly (and in no event more than seventy-five (75) days after the date of this Agreement make, or cause to be made, all filings and notifications with all Governmental Authorities that may be or may become reasonably necessary, proper or advisable under this Agreement and the other Transaction Documents and applicable Laws to consummate and make effective the transactions contemplated by this Agreement and the other Transaction Documents, including (i) Purchaser causing an appropriate change of control application pursuant to Section 1506 of the New York Insurance Law to be filed with the Domiciliary Regulator with respect to the transactions contemplated by this Agreement and the other Transaction Documents, which filing shall include a description of the Extraordinary Dividend, and (ii) the Stockholders causing the Insurance Company to file an application pursuant to Section 4105 of the New York Insurance Law to be filed with the Domiciliary Regulator with respect to the Extraordinary Dividend. Purchaser shall have the right, exercisable in its sole discretion, to add to the Extraordinary Dividend and the Extraordinary Dividend Amount a distribution of all or a portion of the proceeds received by the Insurance Company in relation to the liquidation of any Schedule BA Assets by the Insurance Company, upon which the Stockholders shall cause the Insurance Company to amend the latter application. Purchaser and the Stockholders shall make any other filing that may be required under any insurance, financial services or similar applicable Law or by any Governmental Authority with jurisdiction over enforcement of any applicable insurance, financial services or similar Law in connection with the transactions contemplated hereby.  Purchaser shall provide a draft of the New York Insurance Law change of control application and all amendments thereto to the Stockholders no less than three (3) Business Days prior to filing.  The Stockholders shall provide a draft of the application pursuant to Section 4105 of the New York Insurance Law with respect to the Extraordinary Dividend and all amendments thereto to Purchaser no less than three (3) Business Days prior to filing.  Purchaser and the Stockholders shall cooperate with each other to facilitate the filing of such applications on the same date.  The Parties shall consider in good faith the views and comments of one another on any filings with Governmental Authorities in connection with the transactions contemplated by this Agreement, including any amendments or supplements to such filings, and shall provide any such amendments or supplements to the other Party no less than three (3) Business Days prior to such filing.  Purchaser shall have responsibility for the filing fees associated with its New York Insurance Law change of control application and any “Form E” or similar market share notifications, and the Company and Purchaser each shall have responsibility for their other respective filing fees associated with any other required filings.  Notwithstanding anything to the contrary contained in this Agreement, whether in this Section 5.3(d) or otherwise, neither Purchaser nor the Stockholders shall be obligated to take or refrain from taking or to agree to it or its Affiliates or any of the Company or its Subsidiaries taking or refraining from any action or to suffer to exist any condition, limitation, restriction or requirement that, individually or in the aggregate with any other actions, conditions, limitations, restrictions or requirements, would or would reasonably be likely to result in a Purchaser Burdensome Condition (in the case of Purchaser) or a Stockholders Burdensome Condition (in the case of the Stockholders).  As used herein, “Purchaser Burdensome Condition” means any condition that would (i) materially and adversely restrict the operation of the business of the Company and its Subsidiaries taken as a whole or Purchaser or its Affiliates, (ii) require Purchaser or any of its Affiliates to take any action that involves divestiture of an existing business of Purchaser or any of its Affiliates, including, after the Closing, the Company or its Subsidiaries, (iii) require Purchaser or any of its Affiliates to make a capital contribution or any guarantee or keep-well to the Insurance Company, (iv) prohibit, restrict or limit the declaration, setting aside or payment of dividends or distributions by the Insurance Company, except, to the extent applicable to this clause (iv), any prohibition, restriction or limitation imposed by statute generally on insurance companies domiciled in the State of New York, or (v) reasonably be expected to materially impair the overall benefit expected to be realized from the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, excluding in all instances any condition contemplated by the so-called special commitments customarily required by the Domiciliary Regulator with respect to the change of control application pursuant to Section 1506 of the New York Insurance Law.  As used herein, “Stockholders Burdensome Condition” means any condition, restriction or requirement which the Stockholders reasonably determine in good faith would, individually or in the aggregate, materially reduce the benefits of the transactions contemplated by this Agreement to the Stockholders or which requires any contribution, guarantee or keep-well commitment or other commitment or other financial, operational or other obligation of the Stockholders or any of their Affiliates. Subject to applicable Laws relating to the sharing of information, the Stockholders (on the one hand) and Purchaser (on the other hand) shall promptly notify each other of any communication it receives from any Governmental Authority relating to the matters that are the subject of this Agreement and the other Transaction Documents to which it is a party and, to the extent practicable, permit the other Party to review in advance, and consider in good faith the views of the other Party in connection with, any proposed written communication to any Governmental Authority in connection with the transactions contemplated by this Agreement and the other Transaction Documents, and promptly provide each other with copies of all correspondence or communications between such Party or any of its Representatives, on the one hand, and any Governmental Authority or members of the staff of any Governmental Authority, on the other hand.  No Party shall participate, agree to participate or permit its Representatives to participate or agree to participate, in any meeting with any Governmental Authority relating to the matters that are the subject of this Agreement unless to the extent reasonably practicable it consults with the other Parties in advance and, to the extent reasonably practicable and permitted by the applicable Governmental Authority, gives the other Parties the reasonable opportunity to attend and participate prior to participating in any meeting with any Governmental Authority in respect of such transactions.  The Stockholders and Purchaser shall coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other Parties may reasonably request in connection with the foregoing.  Notwithstanding anything to the contrary in this Section 5.3(d), no Party nor any of its Affiliates shall be required to disclose to the other, or permit such other Party to participate in any meeting with a Governmental Authority with respect to, (i) any information that in the reasonable judgment of such Party would result in the disclosure of any trade secrets of third parties or violate any of its contractual obligations or obligations with respect to confidentiality, (ii) any personal information (including personal financial information), (iii) any information with respect to the finances or organization of any direct or indirect shareholder of Purchaser or (iv) any privileged information or confidential competitive information.  No Party shall be required to comply with any of the foregoing provisions of this Section 5.3(d) to the extent that such compliance would be prohibited by applicable Law.

Section 5.4             Notification.

(a)            From the date hereof until the Closing, subject to applicable Law, the Stockholders shall promptly notify Purchaser in writing of:

(i)            the occurrence of a Business Material Adverse Effect, or any fact, circumstance, event or action the existence, occurrence or taking of which (A) has resulted in any representation or warranty made by the Stockholders on the date hereof not being true and correct, or (B) has resulted in the failure of any of the conditions set forth in Sections 6.1 or 6.2 to be satisfied;

(ii)           any notice or other written 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 and the other Transaction Documents;

(iii)        any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement and the other Transaction Documents;

(iv)        any Actions commenced or, to the knowledge of the Stockholders, threatened against the Stockholders, the Company or its Subsidiaries that (A) if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.11 or (B) that relates to the consummation of the transactions contemplated by this Agreement; and

(v)         the proposed renewal of any expiring Reinsurance Contract with coverages, retentions, limits, and other terms and conditions materially different than the terms and conditions of the Reinsurance Contracts set forth on Section 3.16 of the Stockholders Disclosure Schedule.

(b)           From the date hereof until the Closing, subject to applicable Law, Purchaser shall promptly notify the Stockholders in writing of:

(i)            the occurrence of a Purchaser Material Adverse Effect, or any fact, circumstance, event or action the existence, occurrence or taking of which (A) has resulted in any representation or warranty made by the Purchaser hereunder not being true and correct or (B) has resulted in the failure of any of the conditions set forth in Sections 6.1 or 6.2 to be satisfied; and

(ii)           any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement and the other Transaction Documents; and

(iii)          any Actions commenced or, to the knowledge of Purchaser, threatened against Purchaser or any of its Affiliates that relates to the consummation of the transactions contemplated by this Agreement.

(c)           Except to the extent provided in this Section 5.4(c), Purchaser’s receipt of information pursuant to Section 5.4(a) shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Stockholders in this Agreement and shall not be deemed to amend or supplement the Stockholders Disclosure Schedule. If the information provided by the Stockholders pursuant to Section 5.4(a) relates to any fact, circumstance, event or action that (i) occurred after the date hereof, (ii) did not otherwise result in or from a breach or default of this Agreement and (iii) if it had existed as of the date hereof, would have been  required to be set forth the Stockholders Disclosure Schedule, such information may be set forth in the form of the Stockholders Disclosure Schedule updated to set forth such information (“Updated Schedules”).  The Stockholders shall give notice of Updated Schedules to Purchaser promptly following the knowledge of the Stockholders of any fact, circumstance, event or action that is the basis for Updated Schedules. If any such fact, circumstance, event or action that is a basis for Updated Schedules is first known to the Stockholders ten (10) Business Days or more prior to the date the approvals required by the Domiciliary Regulator contemplated by Section 5.3(d) have been granted, then if such notice with respect to any fact, circumstance, event or action is not given prior to such date, the Stockholders shall be deemed to have waived their right to give notice of Updated Schedules pursuant to this Section 5.4(a) with respect to such fact, circumstance, event or action.  If the condition set forth in Section 6.1(c) would not be met as a result of the facts, circumstances, events or actions set forth in the Updated Schedules, when considered with any previous Updated Schedules and without any such update(s), then Purchaser may terminate this Agreement upon written notice to the Stockholders’ Representative given no later than the earlier of (i) ten (10) Business Days after the notice of the Updated Schedules is given by Stockholders or (ii) the Closing Date.  In the event that this Agreement is not terminated, effective upon Closing, the Stockholders Disclosure Schedule and the representations and warranties set forth in Articled III shall be deemed modified, amended and supplemented by all Updated Schedules and the disclosures set forth in such Updated Schedules shall not be the basis of any Losses or indemnification claim by any of the Purchaser Indemnified Parties except to the extent otherwise contemplated by Section 7.2. For the avoidance of doubt, an Updated Schedule shall neither contain any matter that existed as of the date hereof nor modify or amend the description of any fact, circumstance, event or action as it existed as of the date hereof, whether or not known to the Stockholders.

(d)          To the extent provided in this Section 5.4(d), the Stockholders shall have the right to amend or supplement the Stockholders Disclosure Schedule with respect to any fact, circumstance, event or action that occurred between January 1, 2013 and January 1, 2015 (“Due Diligence Updates”).  The Stockholders shall give notice of Due Diligence Updates to Purchaser no later than forty-five (45) days after the date of this Agreement.  In the event that this Agreement is not terminated pursuant to Section 9.2, effective after the seventy-fifth (75^th) day after the date of this Agreement, the Stockholders Disclosure Schedule and the representations and warranties set forth in Articled III shall be deemed modified, amended and supplemented by all Due Diligence Updates and the disclosures set forth in such Due Diligence Updates shall not be the basis of any Losses or indemnification claim by any of the Purchaser Indemnified Parties except to the extent otherwise contemplated by Section 7.2.

Section 5.5             Employee Matters.

(a)           After the Closing, to the extent that Purchaser transitions current Employees to alternative employee benefit plans, Purchaser shall use its commercially reasonable efforts to:  (i) give such Employees credit for all service with the Company, its Subsidiaries and past Affiliates under the employee benefit plans, programs, and standard policies of the Company and its Subsidiaries for purposes of eligibility and vesting under such alternative plans, and with respect to vacation and paid-time off, except as such programs and policies conflict with the Purchaser’s existing policies, as allowable by Law.

(b)          From and after the Closing Date, Purchaser will be responsible for performing and discharging all requirements under the WARN Act and similar state and local Laws for the notification of Purchaser’s employees and state and local governmental bodies, to the extent applicable.

(c)           This Section 5.5 shall be binding upon and inure solely to the benefit of each of the Parties and their heirs, executors, personal representatives, successors and permitted assigns, and nothing in this Section 5.5, express or implied, shall be construed to confer upon any other Person (including Employees or any other service providers to the Company or any Subsidiary thereof), any benefit under or right to enforce the provisions of this Section 5.5, including any right to employment or continued employment for any period of time or any right to a particular term or condition of employment, or be construed as an amendment, waiver or creation of any benefit plan.  Nothing contained herein, express or implied, shall be construed to establish, adopt, amend or modify any Company Benefit Plan or other benefit plan, program, policy, agreement or arrangement or otherwise to limit the right of Purchaser, the Company or any Subsidiary of the Company to (A) amend, modify or terminate any such benefit or compensation plan, program, policy, agreement or arrangement or (B) terminate the employment of any Employee, at any time and for any reason, including without cause.

Section 5.6            Public Announcements.  The initial press release with respect to the execution of this Agreement shall be a joint press release prepared by Purchaser and approved by Stockholders’ Representative, such approval not to be unreasonably withheld, conditioned or delayed; provided, however, Purchaser may otherwise disclose information about this Agreement and the transactions contemplated hereby as may be required by Law or by any listing agreement or rules with a national securities exchange or trading market (and in such case shall use commercially reasonable efforts to consult with the Stockholders’ Representative prior to such release or statement) or to any Governmental Authority (it being understood and agreed that Purchaser shall provide the Stockholders with copies of any such disclosure in advance of such release).  The initial press release shall be published within one (1) Business Day of the execution and delivery of this Agreement.  After the publication of the initial press release, until the Closing, neither Purchaser nor the Stockholders nor any of their respective Affiliates shall issue or cause the dissemination of any press release or other public announcements or statements with respect to this Agreement or the transactions contemplated hereby without the consent of the other Party, which consent will not be unreasonably withheld, conditioned or delayed, except as may be required by Law or by any listing agreement with a national securities exchange or trading market (and in such case shall use commercially reasonable efforts to consult the other Party prior to such release or statement). The foregoing notwithstanding, (i) each Party may make internal announcements to their (or, with respect to the Stockholders, the Insurance Company’s) respective employees that are not inconsistent in any material respects with the prior public disclosures regarding the transactions contemplated hereby, and (ii) nothing contained or implied herein shall preclude any Party from releasing any information in connection with enforcing or defending its rights under of this Agreement or in connection with the preparation and filing such Party’s Tax Returns.

Section 5.7            Insurance.  Following the Closing, to the extent that (i) any insurance policies owned or controlled by WT or its respective Affiliates (collectively, “Stockholders Insurance Policies”) cover any loss of the Company, any of its Subsidiaries or their respective current or former officers, directors and employees resulting from, arising out of, based on or relating to, occurrences prior to the Closing and (ii) the Stockholders Insurance Policies permit claims to be made thereunder with respect to such losses to the Company resulting from, arising out of, based on or relating to, occurrences prior to the Closing (the “Company Claims”), WT shall, and shall cause its Affiliates to, reasonably cooperate with Purchaser and the Company and the current and former directors, officers and employees of the Company in submitting Company Claims (or pursuing claims previously made) on behalf of Purchaser, and the Company or such current or former director, officer or employee, as applicable, under any Stockholders Insurance Policy.  Following the Closing, WT shall and shall cause its Affiliates (i) not to seek to change any rights of the Company or their current or former directors, officers or employees under such Stockholders Insurance Policies, (ii) promptly to pay over to the Company any amounts that WT or its Affiliates may receive under such Stockholders Insurance Policies in respect of Losses incurred by the Company (except to the extent that WT has indemnified any Purchaser Indemnified Party for such Losses, and (iii) in the case of directors and officers liability insurance policies, to keep such policies (or policies with coverage substantially as favorable as such policies) in effect for six (6) years following the Closing. With respect to any directors and officers liability insurance policies, such policies will remain for the benefit of all such officers and directors of the Company and its Subsidiaries at any time prior to the Closing Date.  Following the Closing, the Purchaser and the Company will take such reasonable actions as necessary to enable such officers and directors to have the benefit of such policies.

Section 5.8             Further Assurances; Post-Closing Cooperation.

(a)           From time to time after the Closing, as and when requested by any Party without additional consideration, each of the Parties hereto will (or, if appropriate, cause their Affiliates to) execute and deliver such further documents and instruments and take such other actions as may be necessary to make effective the transactions contemplated by this Agreement and the other Transaction Documents subject to Section 5.3 (Reasonable Efforts).  If any Party to this Agreement following the Closing shall have in its possession any asset, property or right that under this Agreement should have been delivered to the other, such Party shall promptly deliver such asset, property or right to the other Party.

(b)           For five years following the Closing, upon reasonable written notice, each Party will afford the other Party and its Representatives (x) in response to the request or at the direction of a Governmental Authority or (y) as required for the preparation and reporting of financial statements or regulatory filings (i) such access during normal business hours as the other Party may reasonably request to books, records and other data and information relating to the Company and its Subsidiaries and (ii) the right to make copies and extracts therefrom at the cost of the Party requesting such copies and extracts.  Anything to the contrary in Section 5.8(a) or (b) notwithstanding, (i) access rights pursuant to Section 5.8(a) or (b) shall be exercised in such manner as not to interfere unreasonably with the conduct of the Business or any other business of the Party granting such access and (ii) the Party granting access may withhold any document (or portions thereof) or information (A) that is subject to the terms of a non-disclosure agreement with a third party, (B) that may constitute privileged attorney-client communications or attorney work product and the transfer of which, or the provision of access to which, as reasonably determined by such party’s counsel, constitutes a waiver of any such privilege or (C) if the provision of access to such document (or portion thereof) or information, as determined by such party’s counsel, would reasonably be expected to conflict with applicable Laws.  Purchaser and the Stockholders shall reimburse the other Party for reasonable out-of-pocket costs and expenses incurred in assisting the other Party or their respective Affiliates pursuant to this Section 5.8. Purchaser or the Stockholders shall be permitted to request approval by the paying Party for any such out-of-pocket costs and expenses in advance of incurring such cost and expenses.

(c)          From and after the Closing, the Stockholders shall, and shall cause its Affiliates and Representatives to, maintain the confidence of any and all information, whether written or oral, concerning Purchaser, the Company, any of its Subsidiaries, or their respective  businesses that was obtained by virtue of ownership of the Company, the completion of the transactions contemplated by this Agreement or otherwise obtained, except to the extent that the Stockholders can show that such information (i) is generally available to and known by the public through no fault of the Stockholders, any of its Affiliates or their respective Representatives; (ii) is lawfully acquired by the Stockholders, any of its Affiliates or their respective Representatives from and after the Closing from sources which, to the knowledge of the Stockholders, are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, (iii) to the extent such information is used for the benefit of the Company or Purchaser or by Hart in the conduct of her role as an employee of the Company or any of their Affiliates, or (iv) to the extent that the Stockholders is required to disclose such information by judicial or administrative process or pursuant to applicable Law. If a Stockholder or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, to the extent permitted by applicable Law, such Stockholder shall promptly notify Purchaser in writing and shall disclose only that portion of such information which such Stockholder is advised by its counsel in writing is legally required to be disclosed; provided that such Stockholder shall, at the direction and expense of Purchaser, use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

(d)           From and after the Closing, Purchaser shall, and shall cause the Company and its Subsidiaries and the Affiliates and Representatives of Purchaser, to maintain the confidence of any and all information, whether written or oral, concerning the Stockholders and any past Affiliate of the Stockholders (other than information relating to the Company and its Subsidiaries) obtained by virtue of Purchaser’s ownership of the Company and its Subsidiaries from and after the Closing except to the extent that Purchaser can show that such information (a) is generally available to and known by the public through no fault of Purchaser, any of its Affiliates or their respective Representatives; (b) is lawfully acquired by Purchaser, any of its Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, or (c) to the extent that Purchaser is required to disclose such information by judicial or administrative process or pursuant to applicable Law.  If Purchaser or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, to the extent permitted by applicable Law, Purchaser shall promptly notify the Stockholders in writing and shall disclose only that portion of such information which Purchaser is advised by its counsel in writing is legally required to be disclosed; provided that Purchaser shall, at the direction and expense of the Stockholders, use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

(e)           Neither Purchaser nor the Stockholders shall be required by this Section 5.8 to (i) take any action that would unreasonably interfere with the conduct of its business or unreasonably disrupt its normal operations or (ii) provide the other Party with access to any books or records (including personnel files) pursuant to this Section 5.8 where such access would violate any Law.

Section 5.9           Contact with Customers and Suppliers.  Prior to the Closing, neither Purchaser nor any Affiliate, officer, director or employee of Purchaser shall contact (and Purchaser shall use commercially reasonable efforts to prevent any of its other Representatives from contacts) any employee, customer, supplier or other person having a commercial relationship with the Company or any Subsidiary thereof with respect to the Business or the transactions contemplated by this Agreement or the other Transaction Documents without the prior written consent of the Stockholders, such consent not to be unreasonably withheld, conditioned or delayed.

Section 5.10           Restriction on Use of Company Information.

(a)           Prior to and after the Closing Date, no Stockholder nor any Affiliate of a Stockholder shall, directly or indirectly, acting alone or with any other Person, use Company Information for the benefit of a Stockholder, any of its current or future Affiliates (other than the Company and its Subsidiaries) or any other Person unrelated to the transactions contemplated by this Agreement, including to divert or attempt to divert any business or customer of the Business in the Restricted Jurisdictions or to otherwise do, perform, advance, or support, directly or indirectly, any other act injurious or prejudicial to the sale of any products or services in the Restricted Jurisdictions.

(b)           Each of the Parties acknowledges that there is no adequate remedy at law for any breach or threatened breach by a Stockholder or his, her or its Affiliates of the covenants and agreements set forth in this Section 5.10 and, accordingly, the Stockholders agree that Purchaser shall, in addition to the other remedies that may be available to it hereunder or at law, be entitled to seek an injunction temporarily or permanently enjoining a Stockholder or his, her or its Affiliates from breaching or threatening to breach such covenants and agreements.

Section 5.11           Interim Financial Statements and Financial Statement Cooperation.

(a)          From the date of this Agreement through the Closing, the Stockholders shall, or shall cause the Company to, furnish promptly to Purchaser after final completion thereof (i) a copy of each annual statement or quarterly statement filed by the Company with the Domiciliary Regulator after the date hereof, together in each case with any exhibits, schedules, amendments, supplements or notes thereto (collectively, the “Interim SAP Financial Statements”), (ii) a copy of quarterly GAAP underwriting income statement related to the Business for the period then ended prepared in the ordinary course of business (the “Interim GAAP Financial Statements”) and, (iii) a copy of all periodic financial, actuarial and other reports relating to the Business prepared by the Company and its Affiliates in the normal course of business.

(b)          The Interim SAP Financial Statements shall be prepared from the Books and Records of the Company and its Subsidiaries and, if required by applicable Law, shall be filed with the Domiciliary Regulator on forms prescribed or permitted by it. The Interim SAP Financial Statements shall be prepared in conformity with SAP.  Each of the balance sheets included in the Interim SAP Financial Statements shall fairly present in all material respects the financial position of the Company as of its date and each of the statements of income and operations included in the Interim SAP Financial Statements shall fairly present in all material respects the results of operations of the Company for the period therein set forth, in each case in accordance with SAP applied on a basis consistent with the SAP Financial Statements.

(c)          The Interim GAAP Financial Statements shall: (i) be prepared from the Books and Records of the Company and its Subsidiaries, (ii) fairly present in all material respects the results of operations of the Business for the period then ended, and (iii) be prepared in conformity with GAAP (subject to normal and recurring year-end adjustments and without notes) applied on a basis consistent with the GAAP Financial Statements.

(d)           From the date of this Agreement through the first anniversary of the Closing Date, WT will reasonably cooperate (and prior to the Closing, will cause the Company and its Subsidiaries to cooperate) with Purchaser, at Purchaser’s sole cost and expense, to enable Purchaser to consolidate the financial statements of the Company and its Subsidiaries into those of Purchaser from and after Closing in a manner that will permit Purchaser to comply with its obligations under applicable Law, including applicable securities Laws.

Section 5.12          Resignations.  The Stockholders shall cause to be delivered to Purchaser on the Closing Date duly signed resignations, effective immediately after the Closing, of the directors of the Company and its Subsidiaries identified by Purchaser to the Stockholders to the prior to the Closing.  Notwithstanding any such resignations or any other provision of this Agreement:

(a)           Purchaser agrees that all rights to indemnification, advancement of expenses and exculpation by the Company or its Subsidiaries now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Closing Date, an officer or director (or comparable position) of the Company or any of its Subsidiaries, as provided in the organizational documents of the Company, such Subsidiaries, or otherwise, in each case as in effect on the date of this Agreement, or pursuant to any Material Contract, shall survive the Closing Date and shall continue (and Purchaser shall cause them to continue) in full force and effect in accordance with their respective terms.

(b)           The obligations of Purchaser under this Section 5.12 shall not be terminated or modified in such a manner as to adversely affect any director or officer (or comparable position) to whom this Section 5.12 applies without the consent of such affected Person (it being expressly agreed that the directors, officers and other Persons to whom this Section 5.12 applies shall be intended third-party beneficiaries of this Section 5.12, each of whom may enforce the provisions of this Section 5.12).

(c)           In the event Purchaser, the Company, any of the Company’s Subsidiaries, or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of Purchaser, the Company, or such Subsidiary, as the case may be, shall assume all of the obligations set forth in this Section 5.12.

Section 5.13           Consultation.  In connection with the continuing operation of the business of the Company and its Subsidiaries and ongoing compliance with this Agreement, not less than once in any period of ten (10) consecutive Business Days between the date hereof and the Closing, subject to any limitations arising under applicable Law, a senior officer of each of the Company and Purchaser shall participate in a live or telephonic meeting at which (i) the applicable executive officer of the Company shall report material operational developments and the general status of ongoing operations pursuant to procedures reasonably requested by Purchaser and (ii) the Parties shall plan for the implementation of the transaction contemplated by this Agreement and Purchaser’s business plan in connection therewith.

Section 5.14         No Solicitation.  Until the earlier of the Closing or the termination of this Agreement, the Stockholders shall not, and shall cause each of its Affiliates and its and their respective Representatives not to, (i) directly or indirectly solicit or encourage any offer or expression of interest or inquiries or proposals for, knowingly assist, participate in or facilitate, or enter into or continue any discussions with respect to, (A) the acquisition by any Person, directly or indirectly, of any of the Shares (but specifically excluding any acquisitions of capital stock in WT), or any material part of the business or assets of the Company or any of its Subsidiaries, (B) any merger, consolidation, or combination with, or any bulk reinsurance transaction involving, the Company or any of its Subsidiaries, (C) the liquidation, dissolution, or re‑organization the Company or any of its Subsidiaries in any manner, or (D) any agreement or understanding (whether or not such agreement or understanding is absolute, revocable, contingent or conditional) for, or otherwise attempt to consummate, any such acquisition, transfer, merger, consolidation, combination or reorganization (each of (A), (B), (C) and (D), an “Alternative Transaction”), or (ii) furnish or permit to be furnished any non‑public information concerning the Company or any of its Subsidiaries or its business and operations to any Person (other than Purchaser and its Representatives) or afford any Person (other than Purchaser and its Representatives) access to the properties, assets, books or records of the Company or any of its Subsidiaries in connection with an Alternative Transaction.  The Stockholders shall immediately terminate and cause to be terminated any existing activities, discussions or negotiations with any Person (and shall require such Person to return or destroy any confidential information relating to the Company or any of its Subsidiaries in the possession of such Person) with respect to an Alternative Transaction, other than Purchaser and shall promptly notify Purchaser and deliver a copy of any inquiry or proposal received by the Stockholders or any of its Affiliates or Representatives thereof with respect to an Alternative Transaction.

Section 5.15           Stockholders’ Representative.

(a)          The Stockholders’ Representative hereby accepts the appointment as “Stockholders’ Representative” pursuant to this Agreement effective on the date hereof, in accordance with the terms set forth in this Section 5.15.  The appointment of the Stockholders’ Representative shall be binding upon the Stockholders and their respective heirs, executors, successors and permitted assigns.

(b)          Solely with respect to each specific instance in this Agreement referencing the Stockholders’ Representative, the Stockholders’ Representative is authorized to act on behalf of each Stockholder in each such Stockholder’s name, place and stead, in any and all capacities, and to do and perform every act and thing required or permitted to be done by such Stockholder in connection therewith, as fully to all intents and purposes as such Stockholder might or could do in person.  For clarity, the Stockholders’ Representative shall not, and is not authorized to, take any action with respect to a Stockholder in any instance hereunder not specifically referencing the Stockholders’ Representative including, without limitation, with respect to Article VII or Section 10.5.

(c)           The Stockholders’ Representative can be removed by the Stockholders for any or no reason, but only by delivery to Purchaser of a written instrument signed by all Stockholders (or their respective heirs, executors or successors-in-interest) at least ten (10) days in advance of the effective date of such removal.  The Stockholders’ Representative may resign for any reason or no reason at any time upon at least ten (10) days prior written notice to Purchaser.

(d)           If the Stockholders’ Representative is dissolved, voluntarily or involuntarily, then a replacement Stockholders’ Representative shall be designated by unanimous written consent of the Stockholders (or their respective heirs, executors or successors-in-interest) and such replacement Stockholders’ Representative shall notify Purchaser in writing of such designation promptly upon such designation, and any such replacement Stockholders’ Representative will have the full power and authority of the Stockholders’ Representative hereunder.

Wyatt, Tarrant & Combs, LLP

Triad Centre III

6070 Poplar Avenue, Suite 300

Memphis, TN 38119

Attn: Lee A. Harkavy