SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of December 20, 2023 by and between Conifer Holdings Inc., a Michigan corporation (the “Company”), and Clarkston 91 West LLC, a Michigan limited liability company (“Purchaser”).
Recitals
Whereas, the Company and Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act;
Whereas, the Company desires to issue to Purchaser, upon the terms and conditions stated in this Agreement, 1,000 shares of Series A Preferred Stock, no par value per share (“Series A Preferred Stock”), of the Company, for a purchase price of six million dollars ($6,000,000) (the “Series A Preferred Stock Payment”); and
Whereas, the shares of the Common Stock issuable upon conversion of the Series A Preferred Stock following receipt of the Shareholder Approval are collectively referred to herein as the “Underlying Shares,” and together with the Series A Preferred Stock, the “Securities.”
Agreement
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and Purchaser hereby agree as follows:
DEFINITIONS
“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 such Person, as such terms are used in and construed under Rule 405 under the Securities Act. With respect to Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as Purchaser will be deemed to be an Affiliate of Purchaser.
“Board of Directors” means the Board of Directors of the Company.
“Business Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
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“Certificate of Designation” means the Certificate of Designation of Series A Preferred Stock to be filed prior to the Closing by the Company with the Department of Licensing and Regulatory Affairs of the State of Michigan in the form of Exhibit A attached hereto.
“Closing” means the closing of the purchase and sale of the Series A Preferred Stock on the Closing Date pursuant to Section 2.1.
“Closing Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or waived, as the case may be, or such other date as the parties may agree.
“Commission” has the meaning set forth in the Recitals.
“Common Stock” means the common stock, no par value per share, of the Company, and also includes any other class of securities into which the Common Stock may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time shares of the Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, shares of the Common Stock or other securities that entitle the holder to receive, directly or indirectly, shares of the Common Stock.
“Company Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).
“Company’s Knowledge” means with respect to any statement made to the Company’s Knowledge, that the statement is based upon the actual knowledge of the officers of the Company having responsibility for the matter or matters that are the subject of the statement, after reasonable inquiry.
“Control” (including the terms “controlling”, “controlled by” or “under common control with”) with respect to any Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.
“Fundamental Transaction” means any event pursuant to which (a) the Company effects (i) any merger of the Company with (but not into) another Person, in which shareholders of the Company immediately prior to such transaction own less than a majority of the outstanding stock of the surviving entity, or (ii) any merger or consolidation of the Company into another Person, (b) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (c) any tender offer or exchange offer approved or authorized by the
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Company’s Board of Directors is completed pursuant to which holders of at least a majority of the outstanding Common Stock tender or exchange their shares for other securities, cash or property, or (d) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 6.11 below or as a result of a transaction, the primary purpose of which is to change the jurisdiction of incorporation of the Company).
“GAAP” means U.S. generally accepted accounting principles.
“Insolvent” means, with respect to any Person, (a) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s debts as they become due, (b) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (c) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is currently proposed to be conducted.
“Lien” means any lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right or other restrictions of any kind.
“Material Adverse Effect” means a material adverse effect on the results of operations, shareholders’ equity, assets, business or financial condition of the Company and its Subsidiaries taken as a whole, except that any of the following, either alone or in combination, shall not be deemed a Material Adverse Effect: (a) effects caused by changes or circumstances affecting general market conditions in the U.S. or applicable foreign economy or which are generally applicable to the industry in which the Company operates, provided that such effects are not borne disproportionately by the Company, or (b) effects caused by earthquakes, floods, hurricanes, wildfires or other large-scale natural disasters, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof.
“Material Contract” means any contract of the Company or a subsidiary of the Company that has been filed or was required to have been filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.
“Michigan Courts” means the state and federal courts with jurisdiction over Oakland County, Michigan.
“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
“Principal Trading Market” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading, which, as of the date of this Agreement and the Closing Date, shall be the Nasdaq Capital Market.
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“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened, before or by any federal, state, county, local or foreign court, arbitrator, governmental or administrative agency, regulatory authority, stock market, stock exchange or trading facility.
“Required Approvals” has the meaning set forth in Section 3.1(e) hereof.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“SEC Report” has the meaning set forth in Section 3.1(h) hereof.
“Series A Purchase Price” means $6,000 per share of Series A Preferred Stock.
“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, include any subsidiary of the Company formed or acquired after the date hereof.
“Takeover Laws” shall have the meaning set forth in Section 7(d).
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Trading Market (other than the OTCMarkets), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTCMarkets), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTCMarkets, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported in the OTCMarkets Pink Open Market (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading Market” means whichever of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the OTCMarkets on which the Common Stock is listed or quoted for trading on the date in question.
“Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the Certificate of Designation and any other documents or agreements explicitly contemplated hereunder.
PURCHASE AND SALE
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REPRESENTATIONS AND WARRANTIES
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The Company and Purchaser acknowledge and agree that no party to this Agreement has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article III and the Transaction Documents.
OTHER AGREEMENTS OF THE PARTIES
[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
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SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT, (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OR (III) UNLESS SOLD TO THE COMPANY.
The Company acknowledges and agrees that Purchaser may from time to time pledge, and/or grant a security interest in, some or all of the legended Securities in connection with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin loan. Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by Purchaser transferee of the pledge. No notice shall be required of such pledge, but Purchaser’s transferee shall promptly notify the Company of any such subsequent transfer or foreclosure of such legended Securities. Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Securities or for any agreement, understanding or arrangement between Purchaser and its pledgee or secured party. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act and the regulations promulgated to appropriately amend the list of selling shareholders thereunder. Purchaser acknowledges and agrees that, except as otherwise provided in Section 4.1(c), any Securities subject to a pledge or security interest as contemplated by this Section 4.1(b) shall continue to bear the legend set forth in this Section 4.1(b) and be subject to the restrictions on transfer set forth in Section 4.1(a).
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CONDITIONS PRECEDENT TO CLOSING
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MISCELLANEOUS
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If to the Company: Conifer Holdings Inc.
3001 West Big Beaver Road
Troy, Michigan 48084
Telephone No.: (248) 559-0840
Attention: Chief Executive Officer
Email: npetcoff@cnfrh.com
With a copy to (which shall not constitute notice):
Honigman LLP
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226-3506
Telephone No.: 269.337.7702
Attention: Donald J. Kunz, Esq.
Email: dkunz@honigman.com
If to Purchaser: Clarkston 91 West LLC
303 E 3rd Street #110
Rochester, Michigan 48307
Attn.:
Telephone:
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With a copy to (which shall not constitute notice):
Kerr Russell
500 Woodward Avenue, Suite 2500
Detroit, Michigan 48226
Telephone no.: 313.961.0200
Attention: John D. Gatti
Email: jgatti@kerr-russell.com
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Signatures on the Following Page
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In Witness Whereof, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Conifer Holdings Inc.
By: /s/ Nicholas J. Petcoff Name: Nicholas J. Petcoff Title: Co-Chief Executive Officer |
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| Clarkston 91 West LLC
By: /s/ Salvatore F. Gianino Name: Salvatore F. Gianino Title: Manager |
Signature Page to
Securities Purchase Agreement
Exhibit A
Conifer Holdings Inc.
Certificate of Designation of
Series A Preferred Stock
Exhibit A
Exhibit B
CONIFER HOLDINGS INC.
CEO CERTIFICATE
December 20, 2023
Reference is made to that certain Securities Purchase Agreement, dated as of December 20, 2023 (the “Purchase Agreement”), by and amongst Conifer Holdings Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages thereto (the “Purchasers”). This CEO’s Certificate (this “Certificate”) is being delivered pursuant to Section 2.2(a)(ii) of the Purchase Agreement. Capitalized terms used but not defined herein shall have the respective meanings set forth in the Purchase Agreement.
I, Nicholas J. Petcoff, Co-Chief Executive Officer of the Company, do hereby certify, solely in my capacity as Co-Chief Executive Officer of the Company, that:
1. Each individual whose name, titles and signature appear below is a duly elected or appointed, qualified and acting representative of the Company holding the title set forth opposite his name below, and that the signature set forth opposite each individual’s name is the genuine signature of that individual; each such individual is authorized to sign on behalf of the Company as of the date of the execution of this Certificate and was so authorized on the date of execution of the Transaction Documents and related documents.
Name | Title | Signature | ||
Harold J. Meloche | Chief Financial Officer
| /s/ Harold J. Meloche | ||
Brian J. Roney | President
| /s/ Brian J. Roney |
2. Attached hereto as Exhibit A is a true, correct, complete and current copy of the resolutions of the Board of Directors of the Company (the “Board”) or the Transaction Committee of the Board (the “Transaction Committee”), as applicable, approving the transactions contemplated by the Purchase Agreement and the other Transaction Documents and the issuance of the Securities, which resolutions were duly adopted by the Board or the Transaction Committee, as applicable, and none of such resolutions has been amended, modified or repealed in any respect, and all of such resolutions are in full force and effect on the date hereof.
3. Attached hereto as Exhibit B is a true, correct, complete and current copy of the Amended and Restated Certificate of Incorporation of the Company, as amended to date, including the Certificates of Designation, and the same has not been subsequently amended.
4. Attached hereto as Exhibit C is a true, correct, complete and current copy of the Bylaws of the Company and the same have not been subsequently amended.
Exhibit B
In Witness Whereof, the undersigned has executed and delivered this certificate for and on behalf of Conifer Holdings Inc. as of the date first set forth above.
Conifer Holdings Inc.
By: /s/ Nicholas J. Petcoff
Name: Nicholas J. Petcoff
Title: Co-Chief Executive Officer
Exhibit B
Exhibit C
ACCREDITED INVESTOR QUESTIONNAIRE
Exhibit C
Schedule 3.1(a)
Subsidiaries of Conifer Holdings Inc.
Subsidiary | State of Formation |
Conifer Insurance Company | Michigan |
Red Cedar Insurance Company | District of Columbia |
Conifer Insurance Services | Michigan |
White Pine Insurance Company | Michigan |
Sycamore Specialty Underwriters, LLC (50% ownership) | Michigan |
Schedule 3.1(a)