Exhibit 10(f)

 

AMENDMENT NO. 2 TO LLC INTEREST PURCHASE AGREEMENT

 

THIS AMENDMENT NO. 2 TO LLC INTEREST PURCHASE AGREEMENT (this “Amendment”) is
made and entered into as of the 29th day of December, 2004, by and among ALFA
CORPORATION, a Delaware corporation (“Buyer”). ALFA MERGER SUB, LLC, a Tennessee
limited liability company (“Merger Sub”). JOHN CHARLES RUSSELL, an individual
resident of the State of Tennessee (“John Russell”). CAROL LYNN RUSSELL, an
individual resident of the State of Tennessee (“Carol Russell”). THE TRUSTS
IDENTIFIED ON THE SIGNATURE PAGES HERETO (the “Seller Trusts”). THE COMMUNITY
FOUNDATION OF MIDDLE TENNESSEE, INC., a Tennessee not-for-profit corporation
(the “Foundation”) (John Russell, Carol Russell, the Seller Trusts and the
Foundation are, collectively, “Sellers”), and THE VISION INSURANCE GROUP, LLC, a
Tennessee limited liability company (“Vision”).

 

W I T N E S S E T H:

 

WHEREAS, Buyer, Merger Sub, Sellers and Vision are parties to that certain LLC
Interest Purchase Agreement dated as of August 30, 2004, as amended by Amendment
No. 1 to LLC Interest Purchase Agreement, Converting to a Plan of Merger, dated
December 15, 2004 (the “Agreement”); and

 

WHEREAS, the parties desire to further amend the Agreement, as hereinafter more
particularly set forth;

 

NOW, THEREFORE, for and in consideration of the premises, the mutual covenants
contained herein and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereby
covenant and agree as follows:

 

I. Definitions

 

All capitalized terms used in this Amendment which are not otherwise defined
herein are used with the same meaning attributed to such capitalized terms in
the Agreement.

 

II. Letters of Credit

 

1. Section 2.2(b)(i) is hereby amended by deleting the entire text thereof and
replacing such deleted text with the following:

 

“(i) Fifteen Million Dollars ($15,000,000), subject to adjustment as provided in
Section 2.5 and less the aggregate amount of the Existing A/R LOC and Future
Claims LOC, shall be paid in cash (the “Cash Portion”).”

 

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2. Section 2.4(a) is hereby amended by deleting the entire text thereof and
replacing such deleted text with the following:

 

“(a) Existing Accounts Receivable. Within thirty days after the Closing, John
Russell may at his election deliver to Buyer an irrevocable letter of credit in
a form mutually acceptable to John Russell and Buyer (the “Existing A/R LOC”)
for $1,277,734, which is the aggregate outstanding amount owed to Vision and
Texas MGA as of December 31, 2004 pursuant to the MSC Agreement and the American
Safety Agreement (the “Existing A/R”). At Closing, Buyer shall withhold such
amount from the Cash Portion paid to John Russell, and Buyer will deliver that
amount to John Russell by wire transfer within three Business Days of Buyer’s
receipt of the executed Existing A/R LOC. Not later than January 31, 2006, Buyer
and Sellers Representative shall mutually determine whether Vision has not then
collected any portion of the Existing A/R, and either:

 

(i) if John Russell never delivered the Existing A/R LOC, then Buyer shall
retain any such uncollected amount from the Closing Date holdback and pay any
remainder of such holdback to John Russell within three Business Days after the
uncollected amount is determined; or

 

(ii) if John Russell delivered the Existing A/R LOC, John Russell shall pay to
Buyer in cash any such uncollected amount within three Business Days after the
uncollected amount is determined or, if John Russell does not make such payment,
Buyer shall be entitled to draw such amount under the Existing A/R LOC.

 

Buyer shall either retain the Closing Date holdback, or the Existing A/R LOC
shall remain in effect for the benefit of Buyer, until the process described in
this subsection 2.4(a) has been completed.”

 

3. Section 2.4(b)(ii) is hereby amended by deleting the entire text thereof and
replacing such deleted text with the following:

 

“(ii) Within thirty days after the Closing, John Russell may at his election
deliver to Buyer an irrevocable letter of credit in a form mutually acceptable
to John Russell and Buyer (the “Future Claims LOC”) in the amount of $734,507,
which is the aggregate “Outstanding” amount reflected on the Monthly Treaty
Reports for November 30, 2004 for the MSC Agreement (excluding the portion of
such amount reimbursable by ACE INA Group as a reinsurer for insurance policies
written on or after July 1, 2001) and for the American Safety Agreement. At
Closing, Buyer shall withhold such amount from the Cash Portion paid to John
Russell, and Buyer will deliver that amount to John Russell by wire transfer
within three Business Days of Buyer’s receipt of the executed Future Claims

 

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LOC. Buyer shall either retain the Closing Date holdback, or the Future Claims
LOC shall remain in effect for the benefit of Buyer, through the completion in
2008 of the annual procedure described below; provided, however, that if John
Russell desires that any Future Claims LOC have a one-year term, Buyer shall be
entitled to draw the full amount under the Future Claims LOC if a replacement
letter of credit with identical terms is not delivered to Buyer prior to each
one-year expiration.”

 

4. Section 2.4(b)(iii)(2) is hereby amended by deleting the entire text thereof
and replacing such deleted text with the following:

 

“(2) Not later than January 31 of each of 2006, 2007 and 2008, Buyer and Sellers
Representative shall mutually determine the amount of MSC and American Safety
Claims paid during the immediately preceding calendar year and the amount of MSC
and American Safety Reimbursements received during such period. In each of 2006
and 2007, the amount of the Closing Date holdback described in Section
2.4(b)(ii) above, or the amount of the Future Claims LOC if one was delivered to
Buyer, may be reduced by the amount of the MSC and American Safety
Reimbursements received in 2005 and 2006, respectively. In 2008, once the amount
of MSC and American Safety Claims and MSC and American Safety Reimbursements for
2007 have been determined, if the aggregate MSC and American Safety Claims (not
including any such claims relating to MSC and American Safety that are then less
than ninety days old, unless Buyer has a reasonable basis for believing that
such claims are uncollectible) exceeds the aggregate MSC and American Safety
Reimbursements, either:

 

(i) if John Russell never delivered the Future Claims LOC, then Buyer shall
retain any such excess from the Closing Date holdback and pay any remainder of
such holdback to John Russell within three Business Days after the uncollected
amount is determined; or

 

(ii) if John Russell delivered the Future Claims LOC, John Russell shall pay to
Buyer in cash any such excess within three Business Days after the uncollected
amount is determined or, if John Russell does not make such payment, Buyer shall
be entitled to draw such amount under the Future Claims LOC.”

 

5. Section 2.6(b)(ix) is hereby amended by deleting the entire text thereof and
replacing such deleted text with “[INTENTIONALLY OMITTED].”

 

III. Escrow Agreement

 

1. Section 2.6(b)(vii) is hereby amended by deleting the entire text thereof and
replacing such deleted text with “[INTENTIONALLY OMITTED].”

 

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2. Section 2.6(c)(viii) is hereby amended by deleting the entire text thereof
and replacing such deleted text with “[INTENTIONALLY OMITTED].”

 

3. Article 5 is hereby amended by inserting the following new Section 5.16:

 

“Section 5.16 Litigation Indemnification Agreement. On December 30, 2004, Alfa,
Vision and John Russell shall execute and deliver an agreement in substantially
the form of Exhibit I hereto (the “Litigation Indemnification Agreement”), and
Vision shall deposit $500,000 with the Escrow Agent (as defined in the
Litigation Indemnification Agreement).”

 

4. The parties agree that the form of Exhibit I to the Agreement shall be the
form of Litigation Indemnification Agreement attached to this Amendment.

 

IV. Kerper and Bowron LLC

 

1. Section 5.7(b) is hereby amended by replacing the word “Kemper” with the word
“Kerper.”

 

2. Article 5 is hereby amended by inserting the following new Section 5.7(c):

 

“(c) On the Closing Date, John Russell shall: (i) pay to Kerper and Bowron LLC
any and all fees due to Kerper and Bowron LLC under the Broker Agreement; (ii)
provide Kerper and Bowron LLC an executed copy of this Agreement; and (iii)
provide Kerper and Bowron LLC a schedule of all of the payments due John Russell
under Section 2.3 of this Agreement.”

 

V. Buyer’s Rights of Setoff

 

1. Section 8.6 is hereby amended by deleting the entire text thereof and
replacing such deleted text with the following:

 

“Section 8.6 Buyer’s Rights of Setoff. To the extent that Seller Indemnitors owe
any amount to the Buyer Indemnitees under this Article 8, and such amount is not
paid in accordance with Section 8.4(f), Buyer shall have the right to setoff
such amount at Buyer’s election: (a) against any Earnout Payment due to Sellers
pursuant to Section 2.3 hereof; (b) the Existing A/R LOC, the Future Claims LOC
or the amount of the holdbacks held by Buyer pursuant to Sections 2.4(a) and
2.4(b)(ii); or (c) during the thirty-six months immediately following the
Closing Date (or, with respect to the Bur Dispute (as defined below), until the
date that such Bur Dispute is fully and finally resolved, whether by dismissal
with prejudice, settlement agreement or a final and nonappealable judgment),

 

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against any Buyer Shares that are delivered to John Russell at Closing by
canceling such Buyer Shares on Buyer’s stock records (applying the per share
price of Buyer Common Stock in effect on the last date that payment was due to
Buyer under Section 8.4(f)), in which event John Russell shall return to Buyer
the original stock certificate and Buyer shall issue a new certificate for any
remaining Buyer Shares not canceled pursuant to the setoff.” For purposes of
this Agreement, the “Bur Dispute” means that certain lawsuit filed by Eric Bur,
as plaintiff, against Vision Insurance Group, LLC, John C. Russell and Carol
Russell, as defendants, case file number 04-3640-IV, filed in Tennessee State
Court, Davidson County, and any and all successor and related litigation and
other claims.

 

VI. Adjusted Initial Purchase Price

 

1. Per Section 2.5(a) of the Agreement, the Cash Portion of the Initial Purchase
Price is hereby adjusted as follows:

 

Vision’s total assets per the Closing Interim Statements

   $ 9,337,485  

Less

        

Vision’s total liabilities per the Closing Interim Statements

     (6,037,471 )     

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Equity

     3,300,014  

Less certain adjustments:

        

Special Bonus payments

     (4,568,182 )

Employer’s taxes on Special Bonuses

     (72,346 )

Balance of Dorinco obligation ($275,000 accrued at 11/30/04)

     (200,000 )

Perez settlement payment to MSC (deposited into escrow)

     (500,000 )

Plus

        

Capital contribution from John Russell

     3,725,000       

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Interim Net Members’ Equity

     1,684,486  

Less target amount per Agreement

     (1,664,794 )     

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Amount Added to the Cash Portion

     19,692  

Plus Cash Portion

     15,000,000       

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Adjusted Cash Portion

   $ 15,019,692       

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2. The following sets forth the allocation of the Initial Purchase Price, as
adjusted per Section VI.1 above:

 

Name of Vision Member

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   Percentage
of Interest
Owned

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    Amount of
Cash Portion
at Closing

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   Amount of
Buyer Shares

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John Charles Russell

   75 %   $ 10,014,769    $ 5,000,000

Carol Lynn Russell

   1 %   $ 200,197      None

John Charles Russell, as Trustee of The John Charles Russell 2004 Annuity Trust
No. 1

   5 %   $ 1,000,985      None

John Charles Russell, as Trustee of The John Charles Russell 2004 Annuity Trust
No. 2

   10 %   $ 2,001,969      None

John Charles Russell, as Trustee of The John Charles Russell 2004 Annuity Trust
No. 3

   8 %   $ 1,601,575      None

The Community Foundation of Middle Tennessee, Inc.

   1 %   $ 200,197      None     

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Totals

   100 %   $ 15,019,692    $ 5,000,000     

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VII. Miscellaneous

 

1. This Amendment may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.

 

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2. Except as expressly set forth herein, the parties make no other amendment,
alteration or modification of the Agreement nor do they, nor does any of them,
by executing this Amendment, waive any provision of the Agreement or any right
that they or it may have thereunder.

 

[SIGNATURES BEGIN ON NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.

 

ALFA CORPORATION By:  

/s/ Jerry A. Newby

Name:

 

Jerry A. Newby

Title:

 

President and Chief Executive Officer

ALFA MERGER SUB, LLC

By:

 

/s/ Jerry A. Newby

Name:

 

Jerry A. Newby

Title:

 

Chief Manager

JOHN CHARLES RUSSELL

/s/ John C. Russell

CAROL LYNN RUSSELL

/s/ Carol L. Russell

JOHN CHARLES RUSSELL, TRUSTEE OF THE JOHN CHARLES RUSSELL 2004 ANNUITY TRUST NO.
1

/s/ John C. Russell

 

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JOHN CHARLES RUSSELL, TRUSTEE OF THE JOHN CHARLES RUSSELL 2004 ANNUITY TRUST NO.
2

/s/ John C. Russell

JOHN CHARLES RUSSELL, TRUSTEE OF THE JOHN CHARLES RUSSELL 2004 ANNUITY TRUST NO.
3

/s/ John C. Russell

 

THE COMMUNITY FOUNDATION OF MIDDLE TENNESSEE, INC. By:    

Name:

   

Title:

    THE VISION INSURANCE GROUP, LLC

By:

 

/s/ John C. Russell

   

John Charles Russell

President

 

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JOHN CHARLES RUSSELL, TRUSTEE OF THE JOHN CHARLES RUSSELL 2004 ANNUITY TRUST NO.
2   JOHN CHARLES RUSSELL, TRUSTEE OF THE JOHN CHARLES RUSSELL 2004 ANNUITY TRUST
NO. 3  

 

THE COMMUNITY FOUNDATION OF MIDDLE TENNESSEE, INC. By:  

/s/ Robin Satyshur

Name:

 

Robin Satyshur

Title:

 

Professional Services Liaison

THE VISION INSURANCE GROUP, LLC

By:

       

John Charles Russell

President