Document:

exv10w39

Exhibit 10.39

CALEDONIAN REINSURANCE SPC

This Renewal Participation Agreement (the “Agreement”) is made as of this 16th day of August, 2005

Between:

Westwind
Holding Company, LLC (“Shareholder”), whose registered office is 7560 Commerce Court,
Sarasota, FL 33423 and Segregated Portfolio 110 (the “Segregated Portfolio”), a segregated
portfolio of Caledonian Reinsurance SPC (the “Company”) whose registered office is at Caledonian
House, PO Box 1043GT, 69 Dr Roy’s Drive, George Town, Grand Cayman, Cayman Islands.

This Agreement sets out the terms which have been agreed in respect of the participation of the
Shareholder in the Segregated Portfolio:

	1.	 	Description of the business to be conducted by the Segregated Portfolio.
	 
	 	 	The Segregated Portfolio has been established to provide workers compensation reinsurance for
Shareholder’s operations in the United States (the “Reinsurance”). Primary policy issuance is
with Guarantee Insurance Company, a Delaware corporation (“Guarantee”), and the Segregated
Portfolio reinsures the Guarantee risk up to certain limits.
	 
	2.	 	The participation
	 
	2.1	 	Shareholder is the owner of one Segregated Portfolio Share (the “SP Share) and wishes to
purchase an additional SP Share in the capital of the Company on and subject to the terms of
the Memorandum and Articles of Association of the Company for a subscription price of US$1.00,
plus up to 20% of the Gross Annual Premium written on policies written by Guarantee for
Shareholder, Shareholder’s affiliates and clients of Shareholder or Shareholder’s affiliates,
provided however, that such additional 20% shall be payable only in the event the Insured
and/or Shareholder fail to meet their collateral funding obligations as set forth in that
certain Collateral Carry Forward Agreement executed on even date herewith between the Insured,
Shareholder and Guarantee. Further subscriptions of SP Shares in the Company designated
Segregated Portfolio Shares may be made on such terms as the parties may subsequently agree.
	 
	2.2	 	Shareholder will participate in the results of the Reinsurance in accordance with this
Agreement.
	 
	2.3	 	The directors of the Company may declare dividends on the SP Share solely out of the profits
made by the Segregated Portfolio arising from the Reinsurance, which dividends will be

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	 	 	calculated in accordance with the Dividends provision of Part 1 of the Schedule attached to
and hereby made part of this Agreement by this reference. The holder of the SP Share will not
be entitled to share in any profits of any other segregated portfolio of the Company or any
other profits of the Company.
	 
	2.4	 	No shareholder of any other segregated portfolio of the Company will be entitled to
participate in any profits of the Segregated Portfolio by virtue of holding such shares.
	 
	2.5	 	The Company may redeem the SP Share in accordance with the Redemption provisions of Part 2 of
the above-referenced Schedule to this Agreement.
	 
	2.6	 	On the first to occur of a winding up of the Segregated Portfolio or the Company, the assets
of the Segregated Portfolio remaining will be distributed solely to the holder of the SP Share
in accordance with the Redemption provisions of Part 2 of the above-referenced Schedule to
this Agreement. The holder of the SP Share will not be entitled to share in any other assets
of the Company available for distribution or any assets of any other segregated portfolio of
the Company.
	 
	2.7	 	The SP Share has not been registered in the United States and shall not be sold, transferred,
hypothecated, pledged or otherwise encumbered and will bear the following legend:

	 	 	 	The share represented by this certificate has not been registered under the Securities
Act of 1933, as amended, of the United States (the “U.S Securities Act”) or any
securities laws of any state of the United States. It may not be offered or transferred
by sale, assignment, pledge or otherwise unless (i) a registration statement for the
share under the Securities Act is in effect or (ii) the Company has received such
agreements and certificates as the Company may require and an opinion of counsel, which
opinion is satisfactory to the Company, to the effect that such registration is not
required under the Securities Act or State securities laws. Transfer of this share is
further restricted as provided in the Participation Agreement between the Company and
the Shareholder. In addition to the transfer restrictions above, the securities
represented by this certificate may not be sold or otherwise transferred if such
transfer would result in the Company being required to register as an investment company
under the Investment Company Act of 1940, as amended, or result in a violation of any
applicable securities law or other applicable law or regulation. Specifically, the share
may not be transferred without the consent of the Cayman Islands Monetary Authority and
in compliance with the requirements of the Insurance Law of the Cayman Islands.

	2.8	 	The Company, on behalf of the Segregated Portfolio and subject to the overall supervision and
discretion of the board of directors of the Company, agrees to make such investments and
divestments of assets of the Segregated Portfolio as Shareholder may reasonably instruct. In
acting on the instructions of Shareholder, neither the Company nor any of its directors,
officers or

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	 	 	employees shall be liable for any loss, claim cost or expense suffered by the Segregated
Portfolio and each of the Company and its directors, officers and employees shall be
indemnified and held harmless by Shareholder and the Segregated Portfolio for any loss, claim,
cost or expense incurred by them in so acting, unless due to fraud, gross negligence,
dishonesty or willful malfeasance of such directors, officers or employees. The Company shall
be entitled to rely on a Shareholder’s instructions, approval and authorisation without
further enquiry if it shall have been given in writing or by facsimile (or by any person whom
the Company reasonably believes to be an authorized officer of Shareholder.).
	 
	3.	 	Limited recourse
	 
	 	 	Notwithstanding any other provision of this Agreement, Shareholder acknowledges and agrees
that no liability shall arise under this Agreement for any reason against Caledonian Insurance
Services Limited, the Company, any portfolio of the Company (other than the Segregated
Portfolio) and Caledonian Bank & Trust Limited and their respective officers, directors,
shareholders, employees, and their attorneys and agents (the “Limited Liability Parties”),
unless due to fraud, gross negligence, dishonesty or willful malfeasance of such entities or
parsons.
	 
	 	 	Notwithstanding any other provision of this Agreement, Shareholder further acknowledges and
agrees that all liability under this Agreement shall be limited to the net proceeds of the
realisation of all the assets of the Segregated Portfolio only, in which case liability shall
be limited only to proved damages, unless due to fraud, gross negligence, dishonesty or
willful malfeasance on the part of any or all of the Limited Liability Parties. If such amount
is insufficient to pay all the obligations hereunder in full for any reason, neither the
Segregated Portfolio or any of the Limited Liability Parties shall have any obligation to make
up the insufficiency, and following exhaustion of such amount, any liability to pay such
insufficiency shall thereafter be extinguished, unless due to fraud, gross negligence,
dishonesty or willful malfeasance of any or all of the Limited Liability Parties.
	 
	 	 	Notwithstanding any other provision of this Agreement, Shareholder covenants, acknowledges and
agrees that it shall not take or seek to take any recourse (including, but not limited to,
action before any court or governmental agency), directly or indirectly, with respect to the
actions or inactions of the Segregated Portfolio or the Company or any obligations of the
Segregated Portfolio or the Company or under this Agreement against:

	 	•	 	any owner of a beneficial interest in the Segregated Portfolio;
	 
	 	•	 	any partner, owner, beneficiary, director, officer, shareholder, employee or
agent of the Segregated Portfolio in his, her or its individual capacity or any of
their respective legal advisers; or
	 
	 	•	 	any of the Limited Liability Parties,

	 	 	unless due to such parties’ fraud, gross negligence, dishonesty or willful malfeasance.
	 
	 	 	Shareholder further covenants, acknowledges and agrees that it shall not take any corporate
action or other steps or legal proceedings for the winding-up, dissolution or re-organisation
or for

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	 	 	the appointment of a receiver, administrator, administrative receiver, trustee, liquidator,
sequestrator or similar officer of the Company or the Segregated Portfolio or of any or all of
the Company or the Segregated Portfolio revenues and assets or analogous proceedings in any
jurisdiction domestic or foreign, unless due to fraud, gross negligence, dishonesty or willful
malfeasance.
	 
	4.	 	Indemnification
	 
	 	 	Shareholder agrees to indemnify and hold harmless the Segregated Portfolio and the Company and
their respective officers, directors, shareholders, employees, and their attorneys, affiliates
and agents (“Indemnified Persons”), and hold each of them harmless from and against any error
of judgment, and any and all loss, damage, claims, demands, or proceedings, liability or
expense, including costs and reasonable attorneys’ fees and expenses (together “Losses”), to
which any Indemnified Person may be put or may incur by reason of or in connection with any
misrepresentation made by Shareholder, any breach of Shareholder’s representations and
warranties Shareholder’s failure to fulfil any of its covenants or agreements under this
Agreement or any Losses suffered or sustained by an Indemnified Person by reason of such
person’s status as an Indemnified Person other than Losses which arise out of or relate to
fraud, gross negligence, dishonesty or willful malfeasance of such Indemnified Person.
	 
	5.	 	Undertakings, Representations and Warranties
	 
	 	 	Shareholder undertakes and represents and warrants to the Company that:

	 	(a)	 	it has had its own opportunity to investigate its participation and the
terms and conditions of its participation and to obtain such legal, tax, accounting
and other professional advice as it considers proper or appropriate and that it is
not relying on any advice, representation or warranty from the Company, and
specifically that it is aware of the provisions of the Cayman Islands Companies Law
(2003 Revision) which relate to segregated portfolio companies;
	 
	 	(b)	 	it has the legal capacity and authority and is permitted by applicable
law to execute and deliver this Agreement;
	 
	 	(c)	 	it is not (i) a U.S. person from whom an investment would not qualify
for an exemption under the U.S. Securities Act of 1933 or would require the Company
to register this Agreement under the U.S. federal or state securities laws or
causes the Company to become subject to the United States Investment Company Act of
1940; or (ii) a person in circumstances (whether directly or indirectly affecting
the Shareholder and whether taken alone or in conjunction with any other person,
connected or not, or any other circumstance appearing to the Company to be
relevant) which in the opinion of the Company might result in the Company incurring
any liability to taxation or suffering any other pecuniary, fiscal or regulatory
disadvantage which the Company might not otherwise incur or suffer;

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	 	(d)	 	all consents required to be obtained and all legal requirements necessary to be
complied with or observed in order for this Agreement or the participation to be
lawful and valid under the laws, rules or regulations of any jurisdiction to which
Shareholder is subject, have been obtained, complied with and observed;
	 
	 	(e)	 	it will notify the Company immediately if it becomes aware that any of
these undertakings, representations and warranties is no longer accurate and
complete;
	 
	 	(f)	 	its participation will not breach any applicable money laundering rules
and regulations of any jurisdiction and that it has provided accurate verification
of its identity;
	 
	 	(g)	 	it acknowledges and agrees that directors, officers, agents and
shareholders of the Company are or may be interested in the insurance manager or
affiliates of the insurance manager as either directors, officers, or shareholders
or otherwise, and that directors, officers, agents and shareholders of the
insurance manager are or may be interested in the Company or segregated portfolios
thereof as directors, officers, shareholders or otherwise and it further
acknowledges that no person so interested shall be liable to account for any
benefit to any other party by reason solely of such interest and without
limitation, the insurance manager will be entitled to retain for its own benefit
and without accounting therefore to the Company or the Segregated Portfolio or
Shareholder any profit arising out of it acting in such capacity or any other
capacity (including banker) to the Company or the Segregated Portfolio and that the
Segregated Portfolio is obligated to pay the Company fees in relation to the
administrative services provided by the Company to the Segregated Portfolio and
that the Segregated Portfolio is to indemnify and hold harmless the Company in
respect of any loss, claim or cost it may incur in the performance of its
administrative services.

	6.	 	Term
	 
	6.1	 	This Agreement will terminate when the Company has no further liability or obligation under
or in respect of the Reinsurance. On termination of this Agreement, the Company shall redeem
the SP Share held by Shareholder for an amount calculated in accordance with the Redemption
provision set out in Part 2 of the above-referenced Schedule and otherwise in accordance with
the Articles of Association of the Company.
	 
	6.2	 	Each party’s further rights and obligations cease immediately on termination of this
Agreement, but termination does not affect a party’s accrued rights and obligations at the
date of termination. Shareholder’s sole right to any payment on termination will be the
amount, if any, calculated in accordance with the Redemption provision set out in Part 2 of
the above-referenced Schedule.
	 
	7.	 	Confidentiality
	 
	7.1	 	For the purposes of this Agreement, “Confidential Information” means all information
disclosed (whether in writing or orally) by a party (the “Disclosing Party”) to the other
party (the “Receiving

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	 	 	Party”) whether before or after the date of this Agreement, including, without limitation,
information relating to the Disclosing Party’s products, operations, processes, plans or
intentions, product information, know-how, market opportunities and business affairs.
	 
	7.2	 	Except as required by the laws of any relevant jurisdiction or by the requirements of its
regulators (including, for the avoidance of doubt, but not limited to, the Company’s
obligations under the Cayman Islands Insurance Law, as revised), during the term of this
Agreement and after termination or expiration of this Agreement for any reason, the Receiving
Party (a) may not use Confidential Information for a purpose other than the performance of its
obligations under this Agreement and (b) may not disclose Confidential Information to a person
(other than the employees, officers, directors, auditors, legal advisers and other duly
authorised agents of the Receiving Party) except with the prior written consent of the
Disclosing Party. Notwithstanding the foregoing, either party may use Confidential Information
(i) in the course of prosecuting or defending any claim or cause of action in any proceedings
of any nature whatsoever, including a threatened proceeding and in the event such records are
sought by legal process in connection with a legal proceeding; (ii) in making any filings with
or statements to any governmental agency of any nature whatsoever; (iii) to the extent either
party in its sole discretion determines disclosure of Confidential Information may be required
by or advisable under applicable law, rule, regulation, order, contract or agreement; (iv) in
communicating with the respective parties, shareholders, prospective shareholders and
creditors; and (v) as the parties deem reasonably necessary, or prudent, in their sole
discretion, in connection with the operation or management of their respective businesses.
	 
	7.3	 	This restriction does not apply to Confidential Information which (a) at the date of this
Agreement, or at any time after that date, becomes publicly known other than by the Receiving
Party’s breach of this Agreement; (b) was known by the Receiving Party before disclosure by
the Disclosing Party to the Receiving Party, or (c) the disclosure of any Confidential
Information in any legal proceedings relating to this Agreement.
	 
	8.	 	Assignment
	 
	 	 	No party to this Agreement may assign or transfer or subcontract or purport to assign or
transfer or subcontract any right or obligation under this Agreement without having first
obtained the written consent the Company.
	 
	9.	 	Notices
	 
	9.1	 	A notice under or in connection with this Agreement shall be in writing and shall be
delivered personally or sent by fax, as follows:

	 	 	 	If to Caledonian Reinsurance SPC or the Segregated Portfolio, to:

Caledonian Reinsurance SPC

PO Box 1043GT

Caledonian House

69 Dr Roy’s Drive

6

 

George Town

Grand Cayman

Cayman Islands

Attention: Conor Jennings,

                  Managing Director

Tel: 345-949-0050

Fax 345-949-8062

	 	 	 	If to Shareholder, to:

Westwind Holding Company, LLC

7560 Commerce Court

Sarasota, FL 33243

Attention: Mr. Steven F. Herrig

Tel. (941) 925-2990

Fax (941) 308-1782

	 	 	or to another person, address, telex number or fax number previously specified by a party by
written notice to the other.
	 
	9.2	 	In the absence of evidence of earlier receipt, a notice is deemed given, if delivered
personally, when left at the address referred to above, or, if sent by fax, on confirmation of
receipt.
	 
	10.	 	General
	 
	10.1	 	This Agreement shall not be amended nor shall any provision of this Agreement be considered
modified or waived unless evidenced in writing signed by Shareholder and the Company on its
own behalf and on behalf of the Segregated Portfolio.
	 
	10.2	 	Shareholder shall not be an employee, partner or co-venturer of the Company or the Segregated
Portfolio and shall have no authority to bind, obligate or represent the Company or the
Segregated Portfolio in any respect.
	 
	10.3	 	A failure to exercise or delay in exercising a right or remedy provided by this Agreement or
by law does not constitute a waiver of the right or remedy or a waiver of other rights or
remedies. No single or partial exercise of a right or remedy provided by this Agreement or by
law prevents further exercise of the right or remedy or the exercise of another right or
remedy.
	 
	10.4	 	Shareholder shall be responsible for all its own costs relating to the negotiation,
preparation, execution and implementation of this Agreement and of each document referred to
in it.
	 
	10.5	 	This Agreement constitutes the entire agreement between the parties as to the subject matter
of this Agreement, and supersedes any previous agreement between the parties relating to the
subject matter of this Agreement.

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	10.6	 	This Agreement may be executed in any number of counterparts, each of which may be
executed by less than all of the parties hereto, each of which shall be enforceable against
the parties actually executing such counterparts, and all of which together shall constitute
one instrument.
	 
	11.	 	Governing Law
	 
	 	 	This Agreement and all matters arising out of or in connection with it shall be governed by
and interpreted in accordance with the laws of the Cayman Islands and the parties to it
irrevocably submit to the exclusive jurisdiction of the courts of the Cayman Islands in
respect of all such matters.

SIGNED FOR AND ON BEHALF OF REINSURER FOR THE ACCOUNT OF THE SEGREGATED PORTFOLIO, A SEGREGATED
PORTFOLIO OF CALEDONIAN REINSURANCE SPC AS OF THE DATE FIRST ABOVE WRITTEN.

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Conor Jennings 	 	 
	 	Title:  	Managing Director 	 	 
	 

SIGNED FOR AND ON BEHALF OF SHAREHOLDER AS OF THE DATE FIRST ABOVE WRITTEN.

	 	 	 	 	 
	 	 	 
	By:  	
 	 	 
	 	Steven F. Herrig 	 	 
	 	Title:  	CEO 	 	 

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SCHEDULE

DIVIDEND & REDEMPTION POLICY

Part 1

Dividends

Dividends can be declared at any time, at the request of the shareholder, out of the available
profits of the Segregated Portfolio, subject to any constraints imposed upon the Segregated
Portfolio by the Cayman Islands Monetary Authority (“CIMA”). Profits are defined as the excess of
insurance and investment income over the insurance losses and administrative expenses of the
Segregated Portfolio, as calculated in accordance with United States generally accepted accounting
principles.

It is anticipated that no dividends will be declared during the first eighteen (18) months of
operation of the Segregated Portfolio, and this will be incorporated into the business plan for the
Segregated Portfolio as presented to CIMA.

Part 2

Redemption

The consideration for the redemption of the SP Share shall be the distribution to the holder of the
SP Share of the assets of the Segregated Portfolio remaining available for distribution at the date
of redemption divided by the number of SP Shares being redeemed. In the event that there is more
than one holder of SP Shares, the assets will be distributed pro rata to the holders of the SP
Shares.

9exv10w41

Exhibit 10.41

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT, dated as of this 1st day of January, 2006
(referred to herein as the “Agreement”) is entered into by and between THE TARHEEL GROUP, INC., a
Delaware corporation, and TARHEEL INSURANCE MANAGEMENT COMPANY, a Delaware corporation and
subsidiary of THE TARHEEL GROUP, INC. (both referred to collectively herein as “Sellers”), and
SUNCOAST HOLDINGS, INC., a Delaware corporation (referred to herein as “Purchaser”).

WITNESSETH:

     WHEREAS, Sellers wish to sell and transfer, and Purchaser has agreed to buy and accept from
Sellers, certain contracts (referred to herein as the “Assumed Contracts”) that Sellers hold with
GUARANTEE INSURANCE COMPANY, a South Carolina corporation (referred to herein as “GIC”) and

     WHEREAS, Sellers and Purchaser wish to enter into this Agreement pursuant to which Sellers
agree to sell and transfer and Purchaser agrees to buy and accept from Sellers the Assumed
Contracts; and

     WHEREAS, Sellers have consulted with GIC and have been assured that GIC has no objection to
the sale and transfer of the Assumed Contracts to Purchaser;

     NOW, THEREFORE, in consideration of the foregoing, and of the mutual agreements hereinafter
set forth, and other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Purchaser and Sellers hereby agree as follows:

I. PURCHASE AND SALE OF ASSUMED CONTRACTS

	A.	 	Subject to and upon the terms and conditions of this Agreement, at the closing of the
transaction contemplated herein (referred to herein as the “Closing”), Sellers shall sell,
transfer, convey, assign and deliver to Purchaser and Purchaser shall purchase, accept and
acquire from Sellers, all of Sellers’ right, title and interest, as of the time and date of
Closing as set forth in Section 2 below (referred to herein as the “Closing Date”), in and to
all of the Assumed Contracts identified below, including any and all goodwill generated
therefrom, free and clear of any encumbrances, claims, liens, pledges, charges, agreements, or
other restrictions whatsoever on the them:

	 	1)	 	That certain contract entitled “Producer Agreement” entered into by and between
Sellers and GIC, dated as of January 1, 2004;

 

 

	 	2)	 	That certain contract entitled “Managed Care Services Agreement” entered by and
between Sellers and GIC, dated as of January 1, 2004; and
	 
	 	3)	 	That certain contract entitled “Expense Reimbursement Agreement” entered into by
and between Sellers and GIC, dated as of January 1, 2004.

	B.	 	Sellers additionally acknowledge that all right, title and interest in and to, and benefits
to Sellers from, the above Assumed Contracts (collectively referred to herein as the “Contract
Rights”), including any and all goodwill generated therefrom, shall pass to Purchaser on and
as of the Closing Date.

II. CLOSING

     The Closing for the transactions contemplated by this Agreement shall be effective for all
purposes and shall take place at the offices of Sellers, 1061 521 Corporate Center Drive, Suite
140, Fort Mill, SC 29715 on January 1, 2006, or at such other time and place as shall be fixed by
agreement in writing among Sellers and Purchaser.

III. PURCHASE PRICE

	A.	 	On the Closing Date, in consideration of the conveyance, transfer and assignment of the
Assumed Contracts and the attendant Contract Rights to Purchaser and in full payment therefor,
Purchaser shall transfer, convey, assign and deliver to Sellers One Hundred Sixty-Nine
Thousand (169,000) shares of Purchaser’s Series A common stock, with a current value of $8.02
per share, equivalent to a total value of $1,355,380.00 (referred to herein as the “Purchase
Price”), which stock shall be, when issued and delivered, validly issued, fully paid and
non-assessable (referred to herein as the “Stock”). It shall be subject to the restrictions
set out in Section 15 below.

	B.	 	Sellers agree to execute and deliver on the Closing Date and thereafter all such and other
instruments, and to take or cause to be taken all such further actions, as may be necessary to
fully vest in and confirm to Purchaser all right, title and interest in and to the Assumed
Contracts and the attendant Contract Rights.

IV. ASSUMPTION OF LIABILITIES

	A.	 	Purchaser shall assume, and hereby agrees to perform, pay and discharge all obligations and
liabilities (collectively referred to herein as the “Assumed Liabilities”) arising under the
Assumed Contracts from and after the Closing Date.

	B.	 	Purchaser shall not assume nor agree to perform, pay or discharge, and Sellers shall remain
unconditionally liable for, all obligations, liabilities or commitments, fixed or contingent
of Sellers, whether arising before or after the Closing Date, for other than the Assumed
Liabilities.

Purchase & Sale Agreement

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V. CLOSING STEPS

	A.	 	At the Closing, each party shall deliver to the other party entitled to receipt thereof the
documents required to be delivered hereunder and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may be reasonably
required in order to effectuate the intent and provisions of this Agreement. All such
documents, instruments and materials shall be in form and substance satisfactory to counsel
for the receiving party.

	B.	 	The conveyance, transfer, assignment and delivery of the Assumed Contracts shall be effected
by Sellers’ execution of this Agreement and delivery to Purchaser of the Assumed Contracts
themselves on the Closing Date, plus such other instruments of conveyance, transfer,
assignment and delivery as Purchaser shall reasonably request to cause Sellers to transfer,
convey, assign and deliver the Assumed Contracts to Purchaser.

VI. MUTUAL RELEASES

	A.	 	Purchaser hereby waives, releases and forever discharges Sellers from any losses that
Purchaser had, has or may hereafter have related to any act or omission occurring on or before
the Closing Date related to any of the Assumed Contracts; provided, however, that Sellers did
not in any way act to diminish the relationship between them and GIC with regard to any of the
Assumed Contracts or the value thereof.

	B.	 	Sellers hereby waive, release and forever discharge Purchaser from any losses that Sellers
had, have or may hereafter have related to any act or omission occurring on or before the
Closing Date related to any of the Assumed Contracts or any action of Purchaser concerning
Purchaser’s commercial use or application in Purchaser’s business of the Assumed Contracts.

VII. REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers represent and warrant to Purchaser as follows:

	A.	 	Sellers are each corporations, each duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and authority to conduct
their business as presently conducted and as proposed to be conducted by them, to enter into
and perform this Agreement and all other agreements as may be required to be executed by
Sellers at or prior to Closing and pursuant to the other provisions of this Agreement, and to
carry out the transactions contemplated by this Agreement. Sellers are each duly qualified to
do business as a foreign corporation and are in good standing in every jurisdiction in which
the failure to so qualify would have a material adverse effect on the business, prospects,
assets or condition (financial or otherwise) of Sellers. Sellers have made available to
Purchaser true and complete copies of each of their

Purchase & Sale Agreement

Page 3

 

 

Certificates of Incorporation and By-Laws, each as amended to date and presently in effect.

	B.	 	The execution, delivery and performance by Sellers of this Agreement, and the consummation by
Sellers of the transactions contemplated hereby, have been duly authorized by all necessary
corporate action. This Agreement will, upon execution, have been duly executed and delivered
by Sellers and constitutes the valid and binding obligations of Sellers enforceable in
accordance with its terms on a joint and several basis, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors’ rights or by general principles of
equity. The execution and performance of the transactions contemplated by this Agreement and
compliance with its provisions by Sellers will not (i) conflict with or violate any provision
of their respective Certificates of Incorporation or By-Laws, as each may be amended to date;
(ii) conflict with, result in a breach of, constitute (without due notice or lapse of time or
both) a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any
material contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, document creating or
pertaining to an encumbrance or other arrangement to which the Sellers are a part or by which
the Sellers are bound; (iii) result in the imposition of any encumbrance upon any of the
Assumed Contracts; or (iv) violate any order writ, injunction, decree, statute, rule or
regulation applicable to the Sellers or to any of the Assumed Contracts.

	C.	 	No consent, approval, order or authorization of, or registration, qualification, designation,
declaration or filing with, any governmental or regulatory authority or agency is required on
the part of Sellers in connection with the execution and delivery of this Agreement or the
transactions to be consummated at the Closing.

	D.	 	Sellers, at the Closing, will have the right to sell and transfer to Purchaser the Assumed
Contracts, free and clear of all encumbrances or restrictions, if any, so as to allow
Purchaser to assume the obligations and benefits of Sellers thereunder. The delivery to
Purchaser of the instruments of transfer of ownership contemplated by this Agreement will
transfer to Purchaser right, title and interest in, and the benefits of, the Assumed
Contracts, including any and all goodwill generated therefrom, free and clear of any and all
encumbrances, obstructions or restrictions whatsoever.

	E.	 	Copies of all Assumed Contracts have been previously delivered or made available by Sellers
to Purchaser. Seller further states:

	 	1)	 	Sellers are not in material breach of or default under any Assumed Contract.

Purchase & Sale Agreement

Page 4

 

 

	 	2)	 	To the knowledge of Sellers, there is no existing breach or default by any other
party to any Assumed Contract.
	 
	 	3)	 	Sellers are not in material breach or material default under any of the Assumed
Contracts, and no event has occurred which, with the notice or lapse of time, would
constitute a material breach or material default by Sellers or permit termination,
modification, or acceleration thereunder.
	 
	 	4)	 	There are no disputes, oral agreements or forbearance in effect as to the Assumed
Contracts.

	F.	 	There is no action, suit or proceeding, or governmental inquiry or investigation, pending,
or, to Sellers’ knowledge, any basis therefor or threat thereof, against Sellers which
questions the validity of this Agreement or the right of Sellers to enter into it or perform
their obligations hereunder.

	G.	 	Neither this Agreement nor any Exhibit hereto, nor any report, certificate or instrument
furnished to Purchaser in connection with the transactions contemplated by this Agreement,
when read together, contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made, not misleading.

VIII. REPRESENTATIONS AND WARRANTIES OF PURCHASER

	A.	 	Purchaser is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.

	B.	 	Purchaser has full corporate power and authority to execute, deliver and perform this
Agreement and has taken all corporate action required by law, its certificate of
incorporation, by-laws or otherwise, to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby.

IX. ACCESS TO RECORDS, PUBLIC ANNOUNCEMENTS

	A.	 	Purchaser shall have a reasonable opportunity to make such inquiry of Sellers or Sellers’
agents, representatives, directors or employees as Purchaser shall reasonably need to make in
connection with this Agreement.

	B.	 	No information concerning the Assumed Contracts and the Assumed Liabilities thereunder not
previously disclosed to the public or generally known to persons engaged in the respective
businesses of Sellers which shall have been furnished by Sellers to Purchaser in connection
with the transactions contemplated hereby, or as provided pursuant to this Section 9, shall be
disclosed (i) to any person other than the respective employees, directors, attorneys,
accountants or financial advisors of the parties hereto who have been advised of the
provisions of this Agreement and only for purposes of evaluating and effectuating the
transactions

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contemplated hereby; or (ii) otherwise than as contemplated herein. In the event the
transactions contemplated by this Agreement shall not be consummated, all such information in
writing shall be returned to the party furnishing the same, including, to the extent
reasonably practicable, all copies or reproductions thereof which may have been prepared, and
neither party shall at any time thereafter disclose to third parties, or use, directly or
indirectly, for its own benefit, any such information, written or oral, about the business of
the other party hereto. Notwithstanding the above, to the extent required by law, either party
may disclose, to the extent reasonably advised by counsel as being required by applicable law,
any information regarding the Assumed Contracts, Sellers, Purchaser or the terms of this
Agreement. If either party intends to make any such disclosure, it shall provide a copy to the
other party prior to such disclosure and provide the other party with an opportunity to
comment on such disclosure if the other party wishes to do so.

	C.	 	Except as otherwise required by law, the parties agree not to make any public announcements
or other public communications concerning this Agreement and the purchase of the Assumed
Contracts by Purchaser without the prior written approval of Sellers; provided, however, that
a party making a public disclosure which it believes in good faith to be required by law shall
use its best efforts to advise the other party prior to making the disclosure and provide such
other party with an opportunity to comment on such public disclosure if it wishes to do so.

X. PRE-CLOSING COVENANTS — SELLERS

Without the prior written consent of Purchaser, Sellers shall not, until the Closing:

	A.	 	Sell, assign or transfer any of its assets, except in the ordinary course of business;
	 
	B.	 	Mortgage, pledge, hypothecate, or subject any of the Assumed Contracts to any lien, charge or
any other encumbrance or restriction;
	 
	C.	 	Merge or consolidate with any other corporation or other entity;
	 
	D.	 	Modify or amend the Assumed Contracts or Contract Rights; or
	 
	E.	 	Commit or agree to do any of the foregoing.

XI. PRE-CLOSING COVENANTS — PURCHASER

     The obligation of Purchaser to purchase the Assumed Contracts at the Closing is subject to the
fulfillment or waiver by Purchaser of each of the following conditions on or before Closing:

	A.	 	No legal proceeding shall be pending wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions

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contemplated by this Agreement to be rescinded following consummation; (iii) cause the value
of the Assumed Contracts to decline in value; or (iv) have a material adverse effect on the
Assumed Contracts, and no such judgment, order, decree, stipulation or injunction shall be in
effect.

	B.	 	The representations and warranties herein contained shall be true and correct in all material
respects as though made on and as of the Closing Date, except to the extent such
representations and warranties are made as of a particular date or as of the date of this
Agreement (in which case, such representations and warranties shall be and correct as of such
date).

	C.	 	Sellers shall have performed and complied in all material respects with its agreements and
covenants contained in this Agreement required to be performed or complied with by Sellers
prior to or at the Closing.

	D.	 	Sellers shall have delivered to Purchaser:

	 	1)	 	The Assumed Contracts;
	 
	 	2)	 	Such assignments and other instruments of covenants and transfer, if any, in form
and substance reasonably satisfactory to Purchaser and its counsel, as are appropriate to
convey, transfer and assign to, and vest in, Purchaser or its subsidiaries, good and
marketable title to the Assumed Contracts;
	 
	 	3)	 	Executed releases with respect to any encumbrances or restrictions, if any,
relating to the Assumed Contracts;
	 
	 	4)	 	Tax lien waivers from any governmental entities which may be required, if any;
	 
	 	5)	 	A certificate of the Secretary of State of the State of Delaware as to the legal
existence and good standing of both companies constituting Sellers in Delaware; and
	 
	 	6)	 	Resolutions of Sellers’ Board of Directors, authorizing and approving all matters
in connection with this Agreement and the transactions contemplated hereby, certified by
the Secretary or Assistant Secretary of Sellers as of the Closing Date.

XII. TRANSFER TAXES, GOVERNMENTAL FEES AND CHARGES, CERTAIN INCOME TAXES

	A.	 	Notwithstanding any provision of law imposing the burden of transfer taxes on Sellers or
Purchaser, as the case may be, any sales, use and other transfer taxes imposed in connection
with the consummation of the transactions contemplated by this Agreement shall be borne by
Sellers. Sellers and Purchaser agree to cooperate in good faith with each other, and to use
their commercially reasonable

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efforts, to minimize transfer taxes. Without limiting the generality of the foregoing, (i)
Purchaser shall promptly and properly complete, execute and deliver to Sellers resale,
exemption, and/or similar certificates or other documentation necessary or appropriate under
any applicable law to claim and/or evidence that all or any portion of the sale or transfer of
the Assumed Contracts is exempt from or otherwise not subject to transfer taxes imposed under
such applicable law; and (ii) the parties shall consult and cooperate in good faith on a
timely basis in order to effectively handle and contest any audit, examination, investigation
or administrative court, or other proceedings relative to transfer taxes.

	B.	 	Sellers shall pay and be responsible for all filing, recording, transfer or other
governmental fees or charges, in each case relating to the sale or transfer of any of the
Assumed Contracts.

XIII. BROKERS

	A.	 	Sellers represent and warrant to Purchaser that there are no brokerage or finders’ fees which
may be payable in connection with this Agreement or the transactions contemplated hereby based
in any way on agreements, arrangements, understandings or other actions claimed to have been
made or taken by Sellers with any third Party.

	B.	 	Purchaser represents and warrants that there are no brokerage or finders’ fees which may be
payable in connection with this Agreement or the transactions contemplated hereby based in any
way on agreements, arrangements, understandings or other actions claimed to have been made or
taken by Purchaser with any third party.

	C.	 	Sellers on the one hand and Purchaser on the other hand each agree to indemnify and hold
harmless the other from and against claim for brokerage or other commissions relative to this
Agreement, to the transactions contemplated hereby or the consummation thereof, based in any
way on agreements, arrangements, understandings or other action claimed to have been made or
taken by Sellers on the one hand or Purchaser on the other hand with any third party.

XIV. SURVIVAL AND BREACH OF REPRESENTATIONS AND

WARRANTIES

	A.	 	The representations, warranties, covenants and agreements (including, without limitation, the
covenants and agreements contained in this Section 14) of Sellers and Purchaser contained in
this Agreement, shall survive the making of this Agreement and any examinations made by or on
behalf of the parties hereto and the closing hereunder without any limitation as to time and
amount.

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	B.	 	Sellers agree to indemnify and hold Purchaser harmless from and against, and will pay to
Purchaser, the full amount of any loss, claim, damage, liability or expense resulting to
Purchaser either directly or indirectly, from any breach by Sellers of the representations,
warranties, covenants and agreements contained in this Agreement. Any amount payable under the
aforesaid indemnity shall be due and payable by Sellers on demand, subject to the provisions
of the following paragraph.
	 
	C.	 	Purchaser shall give Sellers written notice of, and the right to contest or participate in,
the defense of any action in respect of any such loss, claim, damage, liability or expense,
and no settlement relating to any such loss, claim, damage liability or expense shall be made
which affects Sellers’ liability under this Section 14(B) unless Sellers give their written
consent to such settlement, which consent shall not be unreasonably withheld. In the event
that Purchaser elects not to defend an action in respect of any such loss, claim, damage,
liability or expense, and either (i) the amount at issue in such actions is $1,000 or more, or
(ii) the aggregate of the amount at issue in such action and the sum of all losses, claims,
damages or liabilities resulting to Purchaser under this Agreement exceeds $1,000, then
Sellers may, at their own expense, defend the action.
	 
	D.	 	Purchaser agrees to indemnify and hold Sellers harmless from and against, and will pay to
Sellers the full amount of, any loss, claim, damage, liability or expense resulting to Sellers,
either directly or indirectly, from any breach of the representations, warranties, covenants
and agreements of Purchaser contained in this Agreement. Any amount due Sellers under the
aforesaid indemnity shall be due and payable by Purchaser on demand. Sellers shall give
Purchaser written notice of any action with respect to any such loss, claim, damage, liability
or expense, and no settlement relating to any such loss, claim, damage, liability or expense
shall be made which affects Purchaser’s liability under this Section 14(C) unless Purchaser
gives its written consent to such settlement.

XV. RESTRICTIONS ON STOCK TRANSFER

     Sellers and Purchaser acknowledge that the Stock is being transferred in a private placement
and that the Stock is not publicly traded. Sellers and Purchaser, in entering into this Agreement
and the transactions contemplated hereby, are each relying solely upon the representations and
warranties of the other contained in this Agreement. In this regard, Sellers hereby represent and
warrant to Purchaser as follows:

	A.	 	Sellers understand that the Shares have not been registered under the Securities Act of 1933,
as amended (referred to herein as the “Securities Act”). Sellers also understand that the
Shares are being offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon Sellers’ representations contained in this Agreement.
Sellers hereby represent and warrant as follows:

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	 	1)	 	Sellers have substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to Purchaser so that they are capable of
evaluating the merits and risks of their investment in Purchaser and have the capacity
to protect their own interests. Sellers must bear the economic risk of this investment
indefinitely unless the Shares are registered pursuant to the Securities Act, or an
exemption from registration is available. Sellers understand that Purchaser has no
present intention of registering the Shares or any shares of its capital stock. Sellers
also understand there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such exemption may not
allow Sellers to transfer all or any portion of the Shares under the circumstances, in
the amounts or at the times Sellers might propose.
	 
	 	2)	 	Sellers are acquiring the Shares for Sellers’ own account for investment only, and
not with a view to their distribution, though Sellers specifically reserve the right to
transfer or otherwise distribute the shares should they see fit.
	 
	 	3)	 	Sellers represent that by reason of their management, business and financial
experience, Sellers have the capacity to protect their own interests in connection with
the transactions contemplated in this Agreement. Further, Sellers are aware of no
publication or any advertisement in connection with the transactions contemplated in this
Agreement.
	 
	 	4)	 	Purchaser represents that it is an accredited investor within the meaning of
Regulation D under the Securities Act.
	 
	 	5)	 	Sellers have received and read all written information of Purchaser provided by
Purchaser, and have had an opportunity to discuss Purchaser’s business, management and
financial affairs with directors, officers and management of Purchaser, and have had the
opportunity to review Purchaser’s operations and facilities. Sellers have also had the
opportunity to ask questions of, and receive answers from, Purchaser and its management
regarding the terms and conditions of this investment.
	 
	 	6)	 	Sellers acknowledge and agree that the Shares must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act, which permits limited resale of shares
purchased in private placements subject to the satisfaction of certain conditions,
including, among other things, the availability of certain current public information
about Purchaser, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being through

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an unsolicited “broker’s transaction” or in transactions directly with a market maker
(as said term is defined under the Securities Exchange Act of 1934, as amended) and the
number of shares being sold during any three-month period not exceeding specified
limitations.

	 	7)	 	Sellers understand the Shares will bear the following legend until such time, if
any, as (a) the Shares are sold (i) in compliance with Rule 144 under the Securities Act
(or a comparable successor provision); or (ii) pursuant to an effective registration
statement under the Securities Act; or (b) Purchaser receives an opinion of Purchaser’s
counsel reasonably satisfactory to Purchaser to the effect that such legend may be
removed:

The securities evidenced hereby have not been registered under the United States
Securities Act of 1933, as amended (the “Securities Act”), and may not be offered,
sold, pledged or otherwise transferred except (a) (1) if registered under the
Securities Act; or (2) in a transaction exempt from, or not subject to such
registration, and (b) in accordance with all applicable securities laws of the
States of the United States.

	 	8)	 	The investment decision by Sellers was made at the address of Sellers set forth
below, and Sellers are domiciliaries (not temporary, or transient residents) of such
state and have no present intention of becoming a resident of any other state or
jurisdiction. Sellers intend that the state securities laws of such state alone shall
govern this transaction.
	 
	 	9)	 	In addition to the legend set forth in Section A(7) above, certificates
representing the shares shall bear the following legend:

The shares evidenced by this certificate are subject to a right of first refusal
option in favor of Purchaser and its other stockholders, as provided in the bylaws
of Purchaser.

The shares evidenced by this certificate are subject to agreements and restrictions
with regard to the voting of such shares and their transfer, as provided in the
bylaws of Purchaser, a copy of which is on file in the Office of Purchaser’s
Secretary.

XVI. FEES AND EXPENSES

     Each of the parties hereto shall pay their own expenses, including, but not limited to, legal
and accounting expenses, incident to the execution of this Agreement and the consummation of the
transactions contemplated hereby whether or not such transactions shall be consummated.

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XVII. NOTICES

     All notices, requests, demands and other communications hereunder must be made in writing and
shall be deemed to have been duly given if delivered by hand, recognized overnight mail delivery
service, or mailed by first-class, registered mail, return receipt requested, postage and registry
fees prepaid and addressed as follows:

	A.	 	If to Sellers:
	 
	 	 	The Tarheel Group, Inc.
	 
	 	 	Attn: Mr. Steven M. Mariano
	 
	 	 	1061 521 Corporate Center Drive, Suite 140
	 
	 	 	Fort Mill, SC 29715
	 
	 	 	AND
	 
	 	 	Tarheel Insurance Management Company
	 
	 	 	Attn: Mr. Steven M. Mariano
	 
	 	 	1061 521 Corporate Center Drive, Suite 140
	 
	 	 	Fort Mill, SC 29715
	 
	B.	 	If to Purchaser:
	 
	 	 	SunCoast Holdings, Inc.
	 
	 	 	401 E. Las Olas Boulevard, Suite 1540
	 
	 	 	Fort Lauderdale, FL 33301
	 
	 	 	Attn.: Marvin J. Cashion, Esq.
	 
	 	 	E.V.P., Chief Legal Officer & Secretary

Addresses may be changed by notice in writing signed by the addressee.

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XVIII. MISCELLANEOUS

	A.	 	This Agreement shall be construed and enforced in accordance with, and governed by, the laws
of the State of Florida, the Purchaser’s state of domicile, without regard to that State’s
laws on conflict of laws. Further, any legal action arising under this Agreement, or otherwise
concerning this Agreement in any fashion whatsoever, may only be brought in a competent court
of jurisdiction and proper venue in Florida.
	 
	B.	 	Neither this Agreement nor any terms hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which enforcement of
such change, waiver, discharge or termination is sought.
	 
	C.	 	This Agreement embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject matter hereof,
whether oral or in writing, and no party hereto has made any representation, warranty or
covenant in connection with the matters set forth herein except as expressly stated herein or
in any documents referred to herein.
	 
	D.	 	All the terms of this Agreement, whether so expressed or not, shall be binding upon the
respective personal representatives, successors and assigns of the parties hereto and shall
inure to the benefit of and be enforceable by the parties hereto, their respective
representatives, successors and assigns; provided, however, that this Agreement may not be
assigned by any party hereto without the prior written consent of the others; and provided,
further, that nothing in this Agreement shall be construed to limit or restrict the right of
Purchaser to merge, consolidate with or transfer substantially all of its assets to another
corporation and to assign this Agreement to an acquiring corporation in connection with any
such merger, consolidation or sale.
	 
	E.	 	The headings of this Agreement are for purpose of reference only and shall not limit or
otherwise affect the meaning thereof.
	 
	F.	 	This Agreement may be executed simultaneously in several counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.

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

	 	 	 	 	 
	SELLER

	 	PURCHASER	 	 
	 
	 	 	 	 
	The Tarheel Group

	 	SunCoast Holdings, Inc.
	 	 
	 
	 	 	 	 
	

	 		 	 
	 

	 	 	 	 
	Name: Steven M. Mariano

	 	Name: Steven M. Mariano	 	 
	Title:   President

	 	Title:   CEO and Chairman	 	 
	 
	 	 	 	 
	SELLER

	 	 	 	 
	 
	 	 	 	 
	Tarheel Insurance Management Company, Inc.

	 	 	 	 
	 
	 	 	 	 
	
 

	 	  	 	 
	Name: 
	 	 	 	 
	Title:   President
	 	 	 	 

Purchase & Sale Agreement

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