doma20240621_prer14a.htm

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


 

SCHEDULE 14A

(Amendment No. 1)

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934


 

Filed by the Registrant ☒ ‎

 

Filed by a Party other than the Registrant ☐ ‎

 

Check the appropriate box:‎

 

‎☒

Preliminary Proxy Statement

 

‎☐

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

‎☐

‎ Definitive Proxy Statement

 

‎☐

Definitive Additional Materials

 

‎☐

Soliciting Material Pursuant to § 240.14a-12‎

 

Doma Holdings, Inc.


 

(Name of Registrant as Specified in Its Charter)


‎(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

 

 

Payment of Filing Fee (Check the appropriate box):‎

 

‎☐

No fee required.‎

 

‎☒

Fee paid previously with preliminary materials.‎

 

‎☐

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.‎

 

 

PRELIMINARY PROXY STATEMENTSUBJECT TO COMPLETION

 

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Doma Holdings, Inc.
101 Mission Street, Suite 1050
San Francisco, California 94105

 

‎, 2024‎

 

Dear Stockholders:‎

 

You are cordially invited to attend a special meeting (such meeting, including any adjournments or ‎postponements thereof, the “Special Meeting”) of the stockholders of Doma Holdings, Inc. (the ‎‎“Company”), to be held online at www.virtualshareholdermeeting.com/DOMA2024SM on                       , 2024, at 11:00 a.m. Eastern time. We believe a virtual meeting provides expanded access, improves communication, enables increased stockholder attendance and participation and provides cost savings for our stockholders and the Company. Details ‎regarding the business to be conducted at the Special Meeting are described in the accompanying proxy ‎statement and the accompanying notice of Special Meeting (the “Notice of Special Meeting”).‎ For purposes of attendance at the Special Meeting, all references in the accompanying proxy statement to “present in person” or “in person” shall mean virtually present at the Special Meeting.

 

At the Special Meeting you will be asked to consider and vote upon a proposal to approve and adopt the ‎Agreement and Plan of Merger, dated as of March 28, 2024 (as amended from time to time, the “Merger ‎Agreement”), by and among the Company, RE Closing Buyer Corp., a Delaware corporation (“Parent”), and RE Closing Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and becoming a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of Closing Parent Holdco, L.P., a Cayman Islands exempted limited partnership (“Topco”), the indirect parent company of Parent. Topco, Parent and Merger Sub are affiliates of CB RE Closing Aggregator, L.P., a Cayman Islands exempted limited partnership and an affiliate of Centerbridge Partners, L.P. (“Centerbridge”), a private investment management firm.

 

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), and as a result of the Merger, each share of common stock, par value $0.0001 per share, of the Company (“Common Stock”) outstanding immediately prior to the Effective Time (subject to certain exceptions, including for shares of Common Stock owned by stockholders of the Company who have not voted in favor of the adoption of the Merger Agreement and have properly exercised appraisal rights in accordance with Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”)) will, at the Effective Time, be cancelled and extinguished and automatically converted into the right to receive $6.29 in cash (the “Merger Consideration”), less any applicable withholding taxes, payable to the holder thereof, without interest, subject to and in ‎accordance with the terms and conditions of the Merger Agreement. Upon completion of the transaction, ‎the Company will become a private company and will no longer be required to file periodic and ‎other reports with the ‎Securities and Exchange Commission (the “SEC”) with respect to the Company’s securities. After the completion of the ‎Merger, you will no longer have an equity interest in the Company and will not participate in any potential ‎future earnings of the Company. The Merger Agreement and the transactions contemplated thereby, including ‎the Merger, are described further in the accompanying proxy statement.‎

 

Your vote is very important. Whether or not you plan to attend the Special Meeting, you are urged to submit ‎a proxy to vote your shares as promptly as possible to ensure your representation at the Special Meeting. ‎Please review the instructions in the accompanying Notice of Special Meeting and proxy statement regarding ‎the submission of proxies and voting.‎

 

 

The proposed transactions constitute a “going private transaction” under the rules of the SEC. LENX ST Investor, LLC and Len FW Investor, LLC (“Lennar,” and together with LENX ST Investor, LLC, the “Lennar Stockholders”), hold, collectively, approximately 25% of the voting power of the Common Stock. Stuart Miller, a member of the Company’s Board of Directors (the “Company Board”), is Executive Chairman and a significant stockholder of Lennar Corp., an affiliate of the Lennar Stockholders. Concurrently with the execution of the Merger Agreement, Lennar and Topco, which, following the Effective Time, will be an indirect parent of the Company, entered into a subscription agreement, pursuant to which, concurrently with the closing of the Merger (the “Closing”) and upon the terms and subject to the conditions set forth therein, Lennar shall invest the cash it receives in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully diluted basis.

 

The Company Board formed a special committee (the “Special Committee”) consisting solely of independent and disinterested directors of the Company to, among other things, review, evaluate and negotiate the Merger Agreement and the transactions contemplated thereby, including the Merger, and other alternatives available to the Company. After careful consideration, the Special Committee, pursuant to resolutions adopted at a meeting of the Special Committee held on March 28, 2024, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger are fair, advisable and in the best interests of the Company and the Disinterested Stockholders (as defined below) and (ii) recommended that the Company Board approve, adopt and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, and subject to the terms and conditions thereof, submit and recommend the Merger Agreement to the Company’s stockholders for approval and adoption. In addition, the Special Committee believes that the Merger is fair to the Company’s “unaffiliated security holders,” as such term is defined in Rule 13e-3 (the “unaffiliated security holders”). As part of its evaluation of the Merger, the Special Committee received advice from the Special Committee’s independent legal and financial advisors, consulted with the Company’s management and considered various material factors, including those summarized in the accompanying proxy statement.

 

The Company Board, acting on the unanimous recommendation of the Special Committee, pursuant to resolutions adopted at a meeting of the Company Board held on March 28, 2024, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger are fair, advisable and in the best interests of the Company and the Disinterested Stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger and (iii) subject to the terms and conditions thereof, resolved to submit and recommend the Merger Agreement to the Company’s stockholders for approval and adoption thereby. In addition, the Company Board believes that the Merger is fair to the Company’s unaffiliated security holders.

 

The Company Board recommends that you vote FOR the proposal to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger.

 

Your vote is very important, regardless of the number of shares of Common Stock you own. ‎The approval of the proposal to adopt the Merger Agreement requires the affirmative vote of the holders of (i) ‎at least a majority of the voting power of the outstanding shares of Common Stock entitled to vote ‎in accordance with the DGCL and (ii) at least a majority of the voting power of the outstanding shares of ‎Common Stock held by the Disinterested Stockholders. Each record holder of Common Stock is entitled one (1) vote for each share of Common Stock owned of record on ‎the record date for the Special Meeting. If you fail to vote on the proposal to adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, the effect will be the same as a vote against the proposal.

 

Pursuant to rules of the SEC, you will also be asked to vote at the Special Meeting on one or more proposals to adjourn the Special Meeting, if ‎necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at ‎the time of the Special Meeting to adopt the Merger Agreement, which requires the affirmative vote of the ‎holders of a majority of the votes cast by the Company’s stockholders present or represented by proxy at the virtual Special Meeting, assuming that a quorum is present.‎ Each record holder of Common Stock is ‎entitled to one (1) vote for each outstanding share of Common Stock owned of record on the record ‎date for the Special Meeting.

 

 

The Company Board recommends that you vote FOR the proposal to adjourn the Special Meeting, if necessary or appropriate.

 

In considering the recommendations of the Company Board, the Company’s stockholders should be aware ‎that the executive officers and directors have certain interests in the Merger that may be different from, or in ‎addition to, the interests of the Company’s stockholders generally. Those interests are more fully described in ‎the accompanying proxy statement. The Special Committee and the Company Board were aware of these ‎interests and considered them, among other matters, in making their recommendations.‎

 

Concurrently with the execution of the Merger Agreement, the Lennar Stockholders, which hold, collectively, approximately 25% of the voting power of the Common Stock, the Company and Parent entered into a Voting and Support Agreement (the “Voting and Support Agreement”), pursuant to which the Lennar Stockholders have agreed to, among other things and subject to the terms and conditions of the Voting and Support Agreement, (a) vote the Voting Agreement Shares in favor of the Merger, the adoption of the Merger Agreement and the transactions contemplated thereby and (b) vote against any Alternative Acquisition Agreement and any other action or agreement (including, without limitation, any amendment of any agreement), amendment of the Company’s organizational documents or other action that is intended or would reasonably be expected to materially prevent or delay the consummation of the transactions contemplated by the Merger Agreement, including the Merger. The Voting and Support Agreement will automatically terminate upon the earliest of (i) written agreement of the parties thereto to terminate the Voting and Support Agreement, (ii) the valid termination of the Merger Agreement in accordance with its terms and (iii) the Effective Time, and each Lennar Stockholder may terminate the Voting and Support Agreement as to itself upon the entry by the Company and Parent without the prior written consent of such Lennar Stockholder into any amendment, waiver or modification to the Merger Agreement that results in (x) a change to the form of consideration to be paid thereunder, (y) a decrease in the amount of Merger Consideration payable to the stockholders of the Company pursuant to the terms of the Merger Agreement as in effect on the date of the Voting and Support Agreement, or (z) an imposition of any material restrictions or additional constraints on the payment of the consideration thereunder. A copy of the Voting and Support Agreement is attached as Annex B to the accompanying proxy ‎statement.‎

 

Completion of the Merger is subject to the satisfaction or waiver of certain conditions set forth in the Merger ‎Agreement. The accompanying proxy statement provides you with more detailed information about the ‎Special Meeting, the Merger Agreement and the transactions contemplated thereby, including the Merger. A ‎copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement. We encourage ‎you to carefully read the entire proxy statement and its annexes, including the Merger Agreement and the ‎documents referred to in the accompanying proxy statement in their entirety. ‎You may also obtain additional information about the Company from other documents we have filed with the SEC. In particular, you should read the Risk Factors section beginning on page 20 in our annual report on Form 10-K for the fiscal year ended December 31, 2023 and other risk factors detailed from time to time in the Companys reports filed with the SEC and incorporated by reference in the accompanying proxy statement in their entirety, for risks relating to our business and for a discussion of the risks you should consider in evaluating the proposed transactions and how they may affect you.

 

If you have any questions or need assistance voting your shares of Common Stock, please ‎contact the Company’s proxy solicitor in connection with the Special Meeting:‎

 

Innisfree M&A Incorporated
‎501 Madison Avenue, 20th Floor

New York, NY 10022

 

Stockholders may call toll free:  877-687-1875

Banks and Brokers may call collect:  212-750-5833 

 

 

Thank you in advance for your cooperation and continued support.‎

 

  Sincerely,‎


Max Simkoff
Chief Executive Officer and Director

 

The accompanying proxy statement is dated May , 2024, and is first being mailed to the Company’s ‎stockholders on or about May , 2024. Capitalized terms used, but not defined, in this letter to stockholders ‎have the meanings given to such terms in the accompanying proxy statement.‎

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT OR THE ACCOMPANYING PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

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Doma Holdings, Inc.
101 Mission Street, Suite 1050
San Francisco, California 94105

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

Dear Stockholders:‎

 

You are cordially invited to attend a special meeting (such meeting, including any adjournments or ‎postponements thereof, the “Special Meeting”) of the stockholders of Doma Holdings, Inc., which ‎we refer to as the Company or Doma, to be held via a virtual meeting on               , 2024, at 11:00 a.m. Eastern time. The Special Meeting will be held entirely online. You will be able to attend the Special Meeting, submit your questions and vote online during the meeting by visiting www.virtualshareholdermeeting.com/DOMA2024SM. For purposes of attendance at the Special Meeting, all references in the accompanying proxy statement to “present in person” or “in person” shall mean virtually present at the Special Meeting. The accompanying proxy statement, including the summary of the Merger Agreement (as defined below) in the proxy statement and the copy of the Merger Agreement attached thereto as Annex A, is incorporated by reference into this Notice of Special Meeting.

 

The Special Meeting is being held to consider and vote on the following proposals:

 

 

‎1.‎

a proposal to approve and adopt the ‎Agreement and Plan of Merger, dated as of March 28, 2024 (as amended from time to time, the “Merger ‎Agreement”), by and among the Company, RE Closing Buyer Corp., a Delaware corporation (“Parent”), and RE Closing Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and becoming a wholly owned subsidiary of Parent, and approve the transactions contemplated thereby, ‎including the Merger (the “Merger Agreement Proposal”) (a copy of the Merger Agreement is ‎attached as Annex A to the accompanying proxy statement);‎ and

 

 

‎2.‎

a proposal to approve one or more proposals to adjourn the Special Meeting, if necessary or ‎appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the ‎time of the Special Meeting to approve the Merger Agreement Proposal (the “Adjournment ‎Proposal”).‎

 

Parent and Merger Sub are affiliates of Closing Parent Holdco, L.P., a Cayman Islands exempted limited partnership (“Topco”), the indirect parent company of Parent. Topco, Parent and Merger Sub are affiliates of CB RE Closing Aggregator, L.P., a Cayman Islands exempted limited partnership and an affiliate of Centerbridge Partners, L.P. (“Centerbridge”), a private investment management firm.

 

These items of business are more fully described in the proxy statement accompanying this Notice of Special ‎Meeting.‎

 

The record date for the Special Meeting is                      , 2024 (the “Record Date”). Only stockholders of record at the close ‎of business on that date are entitled to notice of, and to attend and vote at, the Special Meeting or any ‎adjournment or postponement thereof. Any stockholder entitled to attend and vote at the Special Meeting is ‎entitled to appoint a proxy to attend and act on such stockholder’s behalf. Such proxy need not be a ‎stockholder of the Company. You may submit a proxy to vote your shares on the Internet, by telephone or by ‎mail or you may attend the Special Meeting and vote in person (virtually).‎ The Special Meeting will be held solely by means of a live webcast on the Internet at www.virtualshareholdermeeting.com/DOMA2024SM.

 

The Companys Board of Directors (the Company Board) has approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that you vote FOR the Merger Agreement Proposal and FOR the Adjournment Proposal.

 

 

The proposed transactions constitute a “going private transaction” under the rules of the Securities and Exchange Commission (the “SEC”). LENX ST Investor, LLC and Len FW Investor, LLC (“Lennar,” and together with LENX ST Investor, LLC, the “Lennar Stockholders”), hold, collectively, approximately 25% of the voting power of the Common Stock. Stuart Miller, a member of the Company’s Board of Directors (the “Company Board”), is Executive Chairman and a significant stockholder of Lennar Corp., an affiliate of the Lennar Stockholders. Concurrently with the execution of the Merger Agreement, Lennar and Topco, which, following the Effective Time, will be an indirect parent of the Company, entered into a subscription agreement, pursuant to which, concurrently with the closing of the Merger (the “Closing”) and upon the terms and subject to the conditions set forth therein, Lennar shall invest the cash it receives in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully diluted basis.

 

Your vote is very important, regardless of the number of shares of Common Stock you own. The approval of the Merger Agreement Proposal requires the affirmative vote of the holders of (i) at ‎least a majority of the voting power of the outstanding shares of Common Stock entitled to vote ‎in accordance with the DGCL and (ii) at least a majority of the voting power of the outstanding shares of ‎ Common Stock held by the Disinterested Stockholders, as described in the accompanying proxy ‎statement. If you fail to vote on the Merger Agreement Proposal, the effect will be the same as a vote against the Merger Agreement Proposal.

 

The approval of the Adjournment Proposal requires the affirmative vote of the ‎holders of a majority of the votes cast by the Company’s stockholders present or represented by proxy at the Special Meeting, assuming that a quorum is present.‎

 

Each record holder of Common Stock is entitled to one (1) vote for each outstanding ‎share of Common Stock owned of record on the Record Date.

 

Your vote is very important. To ensure your representation at the Special Meeting, it is important that you submit a proxy for your shares of Common Stock promptly, whether or not you plan to attend the Special Meeting in person (virtually). As promptly as possible, please complete, date, sign and return the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy over the Internet or by telephone by following the instructions set forth on the enclosed proxy card. Stockholders who attend the Special Meeting may revoke their proxies and vote in person (virtually).

 

  By Order of the Doma Board of Directors,‎


Max Simkoff
Chief Executive Officer and Director

 

‎101 Mission Street, Suite 1050
San Francisco, California 94105 ‎

 

Dated: May           , 2024‎

 

 

TABLE OF CONTENTS

 

Page

 

Defined Terms

iv

Summary Term Sheet

1

Questions and Answers about the Proposals and the Special Meeting

9

Special Factors

19

Background of the Merger

19

Purpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger

41

Opinion of Houlihan Lokey

49

Position of the Parent Entities as to the Fairness of the Merger

56

Position of the Lennar Entities as to the Fairness of the Merger

58

Purpose and Reasons of the Parent Entities for the Merger

59

Purpose and Reasons of the Lennar Entities for the Merger

60

Plans for the Company after the Merger

60

Certain Effects of the Merger

61

Certain Effects on the Company if the Merger Is Not Completed

64

Certain Unaudited Prospective Financial Information

64

Interests of Certain Persons in the Merger

66

Special Committee Compensation

69

Intent of the Directors and Executive Officers to Vote in Favor of the Merger

69

Intent of the Parent Entities and Lennar Entities to Vote in Favor of the Merger

69

Material U.S. Federal Income Tax Consequences of the Merger

70

Financing of the Merger

72

Voting and Support Agreement

73

Lennar Investment

73

Doma Technologies Reorganization

73

Company Loan Agreement

74

Topco Term Facility

75

Other Contacts, Transactions, Negotiations and Agreements with Parent Entities and Lennar Entities

76

Fees and Expenses

76

Accounting Treatment

76

Regulatory Approvals

77

Provisions for Unaffiliated Stockholders

78

Litigation Relating to the Merger

78

Appraisal Rights

78

Effective Time of the Merger

79

Payment of Merger Consideration

79

The Merger Agreement

81

The Merger Agreement

81

The Merger

81

The Merger Consideration

82

Impact of Stock Splits, Etc.

82

Treatment of Company Equity Awards

82

Exchange Procedures and Payment Procedures

83

Withholding

84

Dissenters’ or Appraisal Rights

84

Organizational Documents, Directors and Officers of the Surviving Corporation

85

Closing of the Merger

85

Effective Time of the Merger

85

Delisting

85

Representations and Warranties

86

Covenants Related to the Company’s Conduct of Business

87

Employee Matters

90

 

 

Doma Technology Reorganization

91

No Solicitation by the Company

91

Financing Cooperation

96

Termination of Liens and Indebtedness

99

Company Stockholder Approval

99

Regulatory Approvals; Third-Party Consents

100

Takeover Laws

102

Indemnification; Directors’ and Officers’ Insurance

102

Stockholder Litigation

103

Other Covenants

104

Conditions to the Completion of the Merger

104

Termination

106

Termination Fees

108

Expenses

109

Specific Performance

109

Amendment and Waiver

110

Governing Law

110

Cautionary Statement Concerning Forward-Looking Information

111

Parties to the Transactions

112

The Company

112

The Parent Entities

112

Lennar Entities:

112

The Special Meeting

114

Date, Time and Place

114

Purpose of the Special Meeting

114

Recommendation of Company Board

114

Record Date and Quorum

114

Vote Required

115

Voting Intentions of the Company’s Directors and Executive Officers

115

Voting

116

Abstentions

117

How to Vote

117

Proxies and Revocation

118

Technical Support

119

Questions

119

Adjournments and Postponements

119

Anticipated Date of Completion of the Merger

119

Appraisal Rights

119

Solicitation of Proxies; Payment of Solicitation Expenses

125

Questions and Additional Information

125

The Merger (The Merger Agreement Proposal-Proposal 1)

126

The Proposal

126

General

126

Vote Required

126

Appraisal Rights

126

Vote Recommendation

127

Adjournment of the Special Meeting  (The Adjournment Proposal—Proposal 2)

128

The Proposal

128

General

128

Vote Required

128

Vote Recommendation

128

Other Important Information Regarding the Company

129

Directors and Executive Officers of the Company

129

Book Value per Share

131

Market Price of Shares of Common Stock and Dividends

131

Security Ownership of Certain Beneficial Owners and Management

132

 

 

Prior Public Offerings

134

Certain Transactions in the Shares of Common Stock

132

Other Important Information Regarding the Parent Entities

135

Delisting and Deregistration of Common Stock and Company Warrants

139

Stockholder Proposals and Nominations

140

Stockholder Proposals for Inclusion in Proxy Statement for 2025 Annual Meeting

140

Other Stockholder Proposals for Presentation at Next Year’s Annual Meeting

140

Requirements for Stockholder Nominations for the Company’s Board of Directors

140

Where You Can Find More Information

141

 

ANNEX A – AGREEMENT AND PLAN OF MERGER

ANNEX B – VOTING AND SUPPORT AGREEMENT

ANNEX C – OPINION OF HOULIHAN LOKEY

ANNEX D – DEBT COMMITMENT LETTER

ANNEX E – FOURTH AMENDMENT TO THE LOAN AND SECURITY AGREEMENT

ANNEX F – FIFTH AMENDMENT TO THE LOAN AND SECURITY AGREEMENT

ANNEX G – TOPCO LOAN AGREEMENT

ANNEX H – SUBORDINATION AGREEMENT

ANNEX I – SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

ANNEX J – SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

ANNEX K – ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023

ANNEX L – QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2024

 

 

DEFINED TERMS

 

Unless stated otherwise, whenever used in this proxy statement, the following terms have the meanings set ‎forth below:‎

 

2021 Merger Agreement” means that certain Agreement and Plan of Merger, dated as of March 2, 2021, by and among Capitol Investment Corp. V., Capitol V Merger Sub, Inc., and Doma Holdings, Inc. (f/k/a States Title Holding, Inc.).

 

401(k) Plans” means any Plan that contains a cash or deferred arrangement intended to qualify under Section 401(k) of the Code.

 

Acquired Companies” means, collectively, the Company and each of its Subsidiaries.

 

Acquisition Proposal” means, other than the Transactions, any other proposal or offer from Parent or any of its Subsidiaries or the Doma Technology Reorganization, ‎any proposal or offer from a Third Party relating to: (a) any direct or indirect purchase, license or other acquisition, in a single ‎transaction or series of related transactions, by any Person or Group constituting a Third Party, whether from the Company or any other Person(s), ‎of assets that constitute or account for twenty percent (20%) or more of the consolidated net revenues, net income ‎or net assets of the Acquired Companies, taken as a whole (measured by the fair market value thereof as determined in good faith by the Company Board); (b) any direct or indirect purchase or other acquisition, ‎in a single transaction or series of related transactions, by any Person or Group constituting a Third Party, of beneficial ownership (or right to ‎acquire beneficial ownership) of securities representing twenty percent (20%) or more of the outstanding voting ‎power or twenty percent (20%) or more of the Common Stock, including pursuant to a tender ‎offer or exchange offer that, if consummated, would result in any Person or Group other than Parent acquiring beneficial ‎ownership of twenty percent (20%) or more of the combined voting power or twenty percent (20%) or more of the Common Stock; or (c) any merger, consolidation, business combination, recapitalization, ‎liquidation, amalgamation, dividend, dissolution, share exchange or other transaction involving ‎the Company or any of its Subsidiaries in which a Person or Group constituting a Third Party, if consummated, would acquire, directly or indirectly, ‎twenty percent (20%) or more of the equity interests or the combined voting power of the Company or the surviving entity.‎

 

Adjournment Proposal” means the proposal to approve one or more proposals to adjourn the Special ‎Meeting, if necessary or appropriate, including adjournments to solicit additional proxies if there are ‎insufficient votes at the time of the Special Meeting to adopt the Merger Agreement Proposal.‎

 

Adverse Recommendation Change” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Affiliate” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this proxy ‎statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Affiliated Holders” means holders of Common Stock who are (i) members of the Company Board, (ii) any Person that the Company has determined to be an “officer” of the Company within the meaning of Rule 16a-1(f) of the Exchange Act, (iii) the Foundation Investors, (iv) the Lennar Stockholders and (v) HSCM.

 

Alternative Acquisition Agreement” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Alternative Debt Financing” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Applicable Law” means, with respect to any Person, any Law or Governmental Order, in each case, of any Governmental Authority that is binding upon or applicable to such Person, as amended, unless expressly specified otherwise.

 

Apollo Term Loan Facility” means the senior secured term loan facility in an amount equal to $125 million obtained by Parent from Apollo Capital Management, L.P. (including its affiliates) pursuant to the Debt Commitment Letter, which will be available to Parent to cover a substantial portion of the Merger Consideration.

 

 

Black-Scholes Warrant Value” has the meaning set forth in the Warrant Agreement.

 

Book-Entry Share” means a non-certificated share of Common Stock represented by book-entry.

 

Burdensome Condition” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Business Day” means any day that is not a Saturday, a Sunday or other day on which banking institutions located either in California or New York are closed.

 

Cancelled Shares” means, at the Effective Time, all shares of Common Stock that are held in treasury of the Company.

 

Centerbridge” means Centerbridge Partners, L.P.

 

Centerbridge Group” means Centerbridge, or one or more security holders, affiliates and/or portfolio companies of investment funds affiliated or associated with Centerbridge.

 

Certain Transactions Condition” means the condition of Closing in the Merger Agreement that certain transactions must be completed in a manner reasonably satisfactory to Parent, as described in the section of this proxy statement titled “The Merger AgreementConditions to the Completion of the MergerAdditional Parent Closing Conditions.

 

Certificate” means a stock certificate evidencing ownership of shares of Common Stock.

 

Certificate of Merger” means a certificate of merger in such form as required by and in accordance with the ‎applicable provisions of the DGCL.‎

 

Closing means closing of the Merger, subject to and in accordance with the terms and conditions of the ‎Merger Agreement.‎

 

Closing Date” means date on which the Closing actually occurs.‎

 

Code” means the Internal Revenue Code of 1986, as amended, or any successor statute, rules or regulations thereto.

 

Common Stock” means the common stock, par value $0.0001 per share, of the Company.‎

 

Company means Doma Holdings, Inc. (which also includes references to “Doma,” “our,” ‎‎“us” and “we”).‎

 

Company Board” means the board of directors of Doma Holdings, Inc.‎

 

Company Board Recommendation” means the recommendation of the Company Board that the Company’s stockholders adopt the ‎Merger Agreement.

 

Company Disclosure Letter” means the disclosure letter delivered by the Company to Parent and Merger Sub in connection with the execution of the Merger Agreement.‎

 

Company Equity Award Consideration” means the Option Consideration, the RS Award Consideration, the RSU Award Consideration and the PRSU Award Consideration.

 

Company Equity Awards” means each Company Option, Company RS Award, Company RSU Award and Company PRSU Award.

 

Company Loan Agreement” means the Loan and Security Agreement, dated as of December 31, 2020 (as amended) by and among States Title, the guarantors party thereto, the lenders party thereto and HSCM.

 

Company Material Adverse Effect” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

 

Company Material Contract” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Company Option” means each option to purchase Common Stock.

 

Company PRSU Award” means each award of performance-based or market-based restricted stock units of the Company.

 

Company RS Award” means each award of restricted shares of the Common Stock.

 

Company RSU Award” means each award of restricted stock units of the Company, other than Company PRSU Awards.

 

Company Service Provider” means each individual who is a current director, officer, employee, independent contractor or other service provider of any of the Acquired Companies.

 

Company Termination Fee” means an amount in cash equal to (a) $1,822,134 in the event that the Merger Agreement is terminated by the Company pursuant to Section 8.01(h) thereof prior to the Go-Shop End Date or pursuant to Section 8.01(h) thereof in connection with a Superior Proposal by and entry into an Alternative Acquisition Agreement with an Exempted Person, and (b) $3,188,734 in all other cases which require payment of this Company Termination Fee pursuant to Section 8.03(b) of the Merger Agreement.

 

Company Warrant” means, prior to the Effective Time, each warrant to purchase shares of Common Stock and, after the Effective Time, each warrant to purchase Merger Consideration.

 

Confidentiality Agreement” has the meaning set forth in the Merger Agreement.

 

Continuation Period” means with respect to each Continuing Employee, the period between the Effective Time to December 31, 2024 (or, if earlier, until the date of termination of the relevant ‎Continuing Employee).

 

Continuing Employee” means a Company Service Provider who is an employee of the Acquired Companies immediately prior to the Effective Time and continues to be an employee of Parent or one of its Subsidiaries (including the Surviving Corporation) immediately following the Effective Time.

 

Covered Persons” means each person who was at the date of the Merger Agreement, was previously, or during the period from the date of the Merger Agreement through the Effective Time will be, serving as a director or officer of the Acquired Companies.

 

Davis Polk” means Davis Polk & Wardwell LLP.

 

December 15 Proposal” means the proposal for a potential transaction involving the Company sent by Centerbridge to Houlihan Lokey on December 15, 2023.

 

Debt Commitment Letter” means (i) the debt commitment letter, dated as of the date of the Merger Agreement, between Parent and the lenders and arrangers party thereto (including all exhibits, annexes, schedules and term sheets related or attached thereto), a copy of which is attached as Annex D to this proxy statement and is incorporated by reference in this proxy statement in its entirety, and (ii) the executed fee letters dated as of the date of the Merger Agreement, as each of the same may be amended, supplemented or replaced in compliance with the Merger Agreement or as required by Section 6.14 of the Merger Agreement following a Debt Financing Failure Event, pursuant to which the financial institutions party thereto have agreed, subject only to the applicable conditions thereof, to provide or cause to be provided the debt financing set forth therein for the purposes of financing the Transactions.

 

Debt Financing” means the debt financing incurred or intended to be incurred pursuant to the Debt Commitment Letter or any Alternative Debt Financing.

 

Debt Financing Documents” means the agreements, documents, certificates, and instruments to be entered into or delivered in connection with the Debt Financing.

 

Debt Financing Failure Event” means any of the following: (i) the commitments with respect to all or any portion of the Debt Financing expiring or being terminated, or (ii) for any reason, all or any portion of the Debt Financing becoming unavailable.

 

 

Debt Financing Sources” means the Persons that are party to, and have committed to provide or arrange all or any part of the Debt Financing pursuant to, the Debt Commitment Letter or any additional or replacement lender, arranger, bookrunner, syndication agent or other entity acting in a similar capacity for the Debt Financing (but excluding, for the avoidance of doubt, Parent and Merger Sub) (including the parties to any joinder agreements, credit agreements or other definitive agreements relating thereto).

 

Demotech Rating” means the financial stability rating issued by Demotech, Inc. to Doma Title Insurance as of the date of the Merger Agreement.

 

DGCL means the General Corporation Law of the State of Delaware.‎

 

Disinterested Stockholders” means the holders of Common Stock, other than, as applicable, (i) any member of the board of directors of the Company, (ii) any Person that the Company has determined to be an “officer” of the Company within the meaning of Rule 16a-1(f) of the Exchange Act, (iii) the Foundation Investors, (iv) the Lennar Stockholders, (v) HSCM, and (vi) in the case of the Foundation Investors, the Lennar Stockholders and HSCM, any other Person having any direct equity interest in, or any right to acquire any direct equity interest in, any of the Foundation Investors or the Lennar Stockholders or any Person of which any of the Foundation Investors or the Lennar Stockholders is a direct or indirect Subsidiary or any “immediate family member” (as defined in Item 404 of Regulation S-K) or “affiliate” or “associate” (as defined in Section 12b-2 of the Exchange Act) of any of the Foundation Investors or the Lennar Stockholders or any direct equityholder or subsidiary (excluding the Company and its Subsidiaries) of any of the Foundation Investors or the Lennar Stockholders. For the avoidance of doubt, any Person who agrees to have any direct equity interest in, or any right to acquire any direct equity interest in, any Person of which any of the Foundation Investors or Lennar Stockholders is a direct or indirect Subsidiary following the execution of the Merger Agreement shall be deemed not to be a Disinterested Stockholder.

 

Disinterested Stockholder Vote” means the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Common Stock held by the Disinterested Stockholders and entitled to vote on the Merger Agreement Proposal.

 

Dissenting Shares” means each share of Common Stock held by a holder who has not voted in favor of adoption of the Merger Agreement or consented thereto in writing with respect to such share and who is entitled to demand and has properly demanded appraisal of such share in accordance with Section 262 of the DGCL and has not effectively withdrawn or lost its rights to appraisal with respect to such share.

 

Doma Technology” means the Company’s technology division, to be held by Doma Technology LLC following the Doma Technology Reorganization.

 

Doma Technology Business” means the applicable assets and related liabilities of the Company’s and its applicable subsidiaries’ (i) enterprise business segment providing technology-enabled title and escrow services to lenders, mortgage originators and mortgage technology providers for, but not limited to, refinance, home equity, mortgage modification transactions, title alternatives, and other prospective products, and (ii) the Company’s technology support functions to the extent primarily relating to maintenance and research and development of enterprise business products and services.

 

Doma Technology Reorganization” means a restructuring and reorganization of the Company that the Company will effect prior to the Closing such that, as of the Closing, Doma Technology, a subsidiary of the Company, will hold the Doma Technology Business and, following the Closing, Doma Technology will be owned by HSCM and Parent, subject to, as contemplated by the Preferred Purchase Agreement, common units or profits interests representing approximately 19.2% of Doma Technology’s equity securities on a fully-diluted basis that will be reserved for issuance to management employees of Doma Technology, which may include the Company’s current executive officers.

 

Doma Title Insurance” means the Company’s title insurer domiciled in South Carolina, Doma Title Insurance, Inc.

 

DTC” means the Depository Trust Company.

 

DTC Payment” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

 

Effect” means any effect, change, condition, fact, development, occurrence or event.‎

 

Effective Time” means the time at which the Merger becomes effective, being the time at which the Certificate ‎of Merger is filed with the Office of the Secretary of State of the State of Delaware, or at such later time and ‎date as may be agreed upon in writing by the Company and Parent and stated in the Certificate of Merger, as ‎described in “Special FactorsEffective Time of the Merger” and “The Merger AgreementEffective Time of the Merger.”‎

 

End Date” means September 28, 2024, or such later date(s) as may be agreed to in writing from time to time between Parent and the Company, each acting in their sole discretion; provided that the End Date will be automatically extended under the circumstances set forth in the Merger Agreement.

 

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

 

Estimated NOL Tax Savings” means the Company’s ability to utilize its NOLs to achieve future tax savings.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations ‎promulgated thereunder, or any successor statute, rules or regulations thereto.‎

 

Exchange Fund” means the amount deposited or caused to be deposited with the Paying Agent by Parent, at or prior to Closing, which amount shall be in cash sufficient to pay the aggregate Merger Consideration (other than the Company Equity Award Consideration) required to be paid by the ‎Paying Agent in accordance with the Merger Agreement.

 

Excluded Information” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this proxy ‎statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Exclusivity Agreement” means the agreement providing for exclusive negotiations through February 29, 2024 between the Company and Topco, entered into on January 29, 2024.

 

Executive Severance Plan” means the Company’s executive severance plan.

 

Exempted Person” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

FHFA” means the Federal Housing Finance Agency.

 

FHFA Pilot” means the Federal Housing Finance Agency “title acceptance” pilot.

 

First Extension Date” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Foundation Capital” means Foundation Capital, LLC.

 

Foundation Investors” means Foundation Capital VIII, L.P., a Delaware limited liability company, Foundation Capital Leadership Fund II LP, a Delaware limited partnership, and Foundation Capital VIII Principals Fund LLC, a Delaware limited liability company.

 

GAAP” means U.S. generally accepted accounting principles, consistently applied.

 

Go-Shop End Date” means 11:59 p.m. Eastern time on May 17, 2024.

 

Go-Shop Period” means the period beginning on March 28, 2024 and continuing until the Go-Shop End Date.

 

Governing Documents” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Governmental Authority” means any federal, state, territory, commonwealth, provincial, municipal, local or foreign government, governmental authority, regulatory, tax or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, arbitral body (public or private) or tribunal or any self-regulatory organization (including NYSE).

 

Governmental Order” means any order, settlement, stipulation, judgment, injunction, decree, compliance agreement or writ, in each case, issued, promulgated, made, rendered or entered by or with any Governmental Authority (in each case, whether temporary, preliminary or permanent).

 

Group” has the meaning as used in Section 13(d) of the Exchange Act.

 

 

Houlihan Lokey” means Houlihan Lokey Capital, Inc., financial advisor to the Company.

 

HSCM” means Hudson Structured Capital Management Ltd., together with its Affiliates.

 

HSCM Agreements” means the HSCM Fifth Amendment and the Preferred Purchase Agreement.

 

HSCM Fifth Amendment” means the Fifth Amendment to the Company Loan Agreement, dated March 28, 2024, by and among certain of the Company’s subsidiaries, the lenders party thereto, HSCM, as agent for such lenders, and Parent.

 

HSCM Fourth Amendment” means the Fourth Amendment to the Company Loan Agreement, dated March 28, 2024, by and among certain of the Company’s subsidiaries, the lenders party thereto and HSCM, as agent for such lenders.

 

HSCM Insolvency Action” means any proceeding under any debtor relief Law which HSCM has either instituted or consented to the institution of.

 

HSCM Lenders” means the lenders from time to time party to the Company Loan Agreement.

 

HSCM Payoff” means the consideration (as set forth in the HSCM Fifth Amendment) HSCM would receive at the Closing pursuant to the HSCM Fifth Amendment in full satisfaction of all indebtedness under the Company Loan Agreement.

 

HSCM Proposal” means the proposal regarding the Company Loan Agreement shared by HSCM with the Company and Houlihan Lokey on January 3, 2024.

 

HSCM Sixth Amendment” means the Sixth Amendment to the Company Loan Agreement, dated April 30, 2024 by and among certain of the Company’s subsidiaries, the lenders party thereto and HSCM, as agent for such lenders.

 

HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations ‎promulgated thereunder, or any successor statute, rules or regulations thereto.

 

Indemnification Agreements” means the Company’s indemnification agreements as in effect on the date of the Merger Agreement with the Covered Persons.‎

 

Innisfree” means Innisfree M&A Incorporated, the proxy solicitor engaged by the Company in connection with the Special Meeting.

 

Insurance Regulatory Approvals” means the consents, approvals or authorizations of the Governmental Authorities described in “Special FactorsRegulatory ApprovalsInsurance Regulatory Approvals.”

 

Intervening Event” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

IRS” means the Internal Revenue Service.

 

January 11 Proposal” means the proposal for a take-private of the Company verbally by TRG Group to Houlihan Lokey on January 11, 2024.

 

Latham” means Latham & Watkins LLP.

 

Laws” means any and all domestic (federal, state, territory, commonwealth or local) or national, supranational or foreign laws (whether statutory, common law or otherwise), statutes, rules, regulations, orders, injunctions, rulings, writs, acts, codes, ordinances, judgments, decrees or similar requirements promulgated, issued, entered into or applied by any Governmental Authority.

 

Lennar” means Len FW Investor, LLC.

 

Lennar Corp.” means Lennar Corp., a corporation organized under the laws of the State of Delaware.

 

Lennar Entities” means the Lennar Stockholders and Lennar Corp.

 

Lennar Investment” means the investment by Lennar of the cash it receives in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully diluted basis.

 

Lennar Investment Agreement” means the subscription agreement dated March 28, 2024 between Lennar and Topco, as it may be amended from time to time, pursuant to which Lennar shall make the Lennar Investment.

 

 

Lennar Stockholders” means, collectively, Lennar and LENX ST Investor, LLC.

 

LenX” means Len X, LLC.

 

Letter of Intent” means the formal nonbinding letter of intent to acquire all outstanding capital stock of the Company executed and delivered by TRG Group to the Special Committee on January 29, 2024.

 

Lien” means any mortgage, deed of trust, charge, pledge, hypothecation, encumbrance, or other security interest or lien.

 

LoT Holder” means each holder of Unexchanged Shares, to the extent such holder remains entitled to proceeds under the 2021 Merger Agreement in accordance with its terms and Applicable Law.

 

Merger means the proposed merger of Merger Sub with and into the Company pursuant to the Merger ‎Agreement in accordance with the applicable provisions of the DGCL, with the Company surviving the Merger ‎as the Surviving Corporation and a direct, wholly owned subsidiary of Parent.‎

 

Merger Agreement means the Agreement and Plan of Merger, dated as of March 28, 2024, by and among the Company, Parent, and Merger Sub, as it may be amended from time to time.‎ A copy of the Merger Agreement is attached as ‎Annex A to this proxy statement and is incorporated by reference in this proxy statement in its entirety.‎

 

Merger Agreement Proposal” means the proposal to approve and adopt the Merger Agreement, and the ‎transactions contemplated thereby, including the Merger. A copy of the Merger Agreement is attached as ‎Annex A to this proxy statement and is incorporated by reference in this proxy statement in its entirety.‎

 

Merger Consideration” means $6.29 per share of Common Stock in cash, without interest, less ‎any applicable withholding taxes, subject to and in accordance with the terms and conditions of the Merger ‎Agreement.‎

 

Merger Litigation” means any stockholder litigation ‎or similar Proceeding against the Company or its directors or officers relating to the Transactions.

 

Merger Sub means RE Closing Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent.

 

Morrison Foerster” means Morrison & Foerster LLP.

 

New Plans” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

NOLs”‎ means net operating loss tax carryforwards.

 

Non-U.S. Holder” means a beneficial owner of Common Stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.

 

Notice of Adverse Recommendation Change” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Notice of Intervening Event” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

November 15 Proposal” means the proposal to acquire the Company’s underwriting division sent by TRG Group to Houlihan Lokey and the Company on November 15, 2023.

 

November 17 Counterproposal” means the counterproposal conveyed by representatives of the Company and Houlihan Lokey to representatives of TRG Group on November 17, 2023.

 

NYSE” means the New York Stock Exchange or any successor exchange.

 

Old Plans” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Option Consideration” means the consideration payable to holders of Company Options in the Merger, as described in “The Merger Agreement—Treatment of Company Equity Awards.”‎

 

Parent” means RE Closing Buyer Corp., a Delaware corporation.‎

 

Parent Entities” means Parent, Merger Sub, Topco and Topco GP.

 

 

Party A” means the strategic investor who verbally indicated interest in a potential take-private transaction involving the Company.

 

Party B” means the strategic investor who shared the Party B Proposal with Houlihan Lokey.

 

Party B Proposal” means the illustrative acquisition proposal for a take-private transaction involving the Company sent by a strategic investor to Houlihan Lokey on January 10, 2024.

 

PATRIOT Act means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended, and the rules and regulations ‎promulgated thereunder, or any successor statute, rules or regulations thereto.

 

Paying Agent” means a nationally recognized financial institution (the identity and terms of appointment of which shall be reasonably acceptable to the Company) to act as Paying Agent for the payment of the Merger Consideration in respect of shares of Common Stock outstanding immediately prior to the Effective Time.

 

Person” means any individual, group (within the meaning of Section 13(d)(3) of the Exchange Act), firm, corporation, partnership (limited or general), limited liability company, incorporated or unincorporated association, joint venture, joint stock company, association, trust, Governmental Authority or instrumentality or other entity of any kind.

 

Plan” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Potential Transaction means one or more strategic transactions involving the Company which were to be reviewed, evaluated and negotiated by the Special Committee.

 

Preferred Purchase Agreement” means the preferred unit purchase agreement, dated March 28, 2024, by and among Parent, HSCM and the Company, pursuant to which, among other things, at the Closing, Doma Technology would issue preferred units and profits interests to HSCM representing approximately 27.5% of Doma Technology’s equity securities on a fully diluted basis, provided that HSCM may transfer a portion of such preferred units to a third-party investor.

 

Proceeding” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

Projections” means the financial projections prepared by the management of the Company relating to the Company provided by the Company to Houlihan Lokey, as described in “Special FactorsCertain Unaudited Prospective Financial Information.”

 

PRSU Award Consideration” means the consideration payable to holders of Company PRSU Awards in the Merger, as described in “The Merger Agreement—Treatment of Company Equity Awards.”‎

 

Real Property Lease” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

Record Date” means                 , 2024, being the record date for the Special Meeting.‎

 

Regulation S-K” means Regulation S-K prescribed under the Securities Act.

 

Representative” means, with respect to any Person, (a) such Person’s Affiliates and (b) such Person’s and each such Affiliate’s respective officers, directors, employees, agents, attorneys, accountants, advisors, consultants and other authorized representatives.

 

Required Stockholder Approval” means the affirmative vote to adopt the Merger Agreement of the holders of (a) at least a majority of the voting power of the outstanding shares of Common Stock entitled to vote on the Merger Agreement Proposal in accordance with the DGCL and (b) at least a majority of the voting power of the outstanding shares of Common Stock held by the Disinterested Stockholders entitled to vote on this Agreement.

 

RS Award Consideration” means the consideration payable to holders of Company RS Awards in the Merger, as described in “The Merger Agreement—Treatment of Company Equity Awards.”‎

 

RSU Award Consideration” means the consideration payable to holders of Company RSU Awards in the Merger, as described in “The Merger Agreement—Treatment of Company Equity Awards.”‎

 

Rule 13e-3” means Rule 13e-3 under the Securities Exchange Act.

 

SC DOI” means the South Carolina Department of Insurance.

 

SEC” means the U.S. Securities and Exchange Commission.

 

 

Second Extension Date” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated ‎thereunder, or any successor statute, rules or regulations thereto.‎

 

Special Committee” means a committee established by the Company Board comprising only of independent ‎and disinterested members of the Company Board.‎

 

Special Meeting” means the special meeting of the stockholders of the Company to be held on                , 2024, at 11:00 ‎a.m. Eastern time in a virtual meeting format via live webcast, including any adjournment or postponement thereof.‎

 

Standstill Period” means the period during which States Title’s obligation to make cash interest payments under the Company Loan Agreement shall be suspended and HSCM and the lenders to the Company Loan Agreement have agreed not to exercise remedies with respect to certain matters that would otherwise constitute events of default under the Company Loan Agreement. See “Special FactorsCompany Loan AgreementAgreement and Fifth Amendment to the Loan and Security Agreement.”

 

States Title” means States Title Holding, Inc., a Delaware corporation and a wholly owned subsidiary of the Company.

 

Subordination Agreement” means the intercreditor and subordination agreement which sets forth the terms of the subordination of the Company Loan Agreement in favor of the Topco Term Facility, dated April 30, 2024, by and among Alter Domus (US) LLC, as the senior agent and HSCM, as the subordinated agent and acknowledged by certain of the Company’s subsidiaries.

 

Subsidiary” of a Person means any other Person with respect to which the first Person (a) has the right to elect a majority of the board of directors or other Persons performing similar functions or (b) beneficially owns more than fifty percent (50%) of the voting stock (or of any other form of voting or controlling equity interest in the case of a Person that is not a corporation), in each case, directly or indirectly, through one or more other Persons.

 

Superior Proposal” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Surviving Corporation” means the surviving corporation in the Merger in accordance with the Merger ‎Agreement, as described in “The Merger Agreement—The Merger.”‎

 

Takeover Statutes” means any “business combination,” “control share acquisition,” “fair price,” “moratorium” or other takeover or anti-takeover statute or similar Law.

 

Tax” means any and all U.S. federal, state, territory, commonwealth or local or non-U.S. taxes, assessments, levies, duties and other similar charges and fees in the nature of a tax, whether disputed or not, including any net income, alternative or add-on minimum, gross income, gross receipts, volume of business, municipal license, sales, use, ad valorem, value added, transfer, franchise, profits, license, registration, recording, documentary, gains, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit, custom duty, estimated or other tax or government charge, together with any interest, penalty, surcharge or addition thereto.

 

Terminating Company Breach” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Terminating Parent Breach” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Term Loan” means the senior secured term loan under the Company Loan Agreement.

 

Third Party” means any Person other than the Company, Parent, Merger Sub and their respective Affiliates.

 

 

Topco” means Closing Parent Holdco, L.P., a Cayman Islands exempted limited partnership, the indirect parent company of Parent.

 

Topco Commitment Letter” means the commitment letter entered into concurrently with the execution of the Merger Agreement by States Title and Topco, pursuant to which Topco committed to provide a $35 million senior secured delayed draw term loan facility to States Title.

 

Topco GP” means RE Closing GP, LLC, a Cayman Islands limited liability company, the sole general partner of Topco.

 

Topco Loan Agreement” means the Loan and Security Agreement, dated April 30, 2024, by and among States Title, Topco, as lender, and Alter Domus (US) LLC, as administrative agent and collateral agent, for the Topco Term Facility.

 

Topco Term Facility” means the senior secured delayed draw term loan facility contemplated by the Topco Commitment Letter and provided to States Title pursuant to the Topco Loan Agreement.

 

Transactions” means the Merger and the other transactions contemplated by the Merger Agreement, including the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements.

 

Transfer Taxes” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

TRG Group” means Parent, Topco and Title Resources Guaranty Company.

 

TRG Person” means (a) any direct or indirect equity holder, partner, member or manager of Parent, (b) each of the respective Affiliates of the foregoing from time to time other than Parent and its Subsidiaries and (c) any portfolio company invested in by the Person described in clauses (a) and (b) other than Parent and its Subsidiaries.

 

unaffiliated security holders” has the meaning ascribed thereto in Rule 13e-3.

 

Underwriter Dividend” means the $40 million underwriter dividend from Doma Title Insurance to the Company for which the Company applied for approval on February 15, 2024.

 

Unexchanged Shares” means any shares of stock or other equity of the predecessor company to the Company (Doma Holdings, Inc. f/k/a States Title Holding, Inc.) that were not properly and fully exchanged into the applicable merger consideration under the 2021 Merger Agreement.

 

U.S. Holder” means a beneficial owner of Common Stock that is: (1) A citizen or individual resident of the United States, (2) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (3) an estate, the income of which is subject to U.S. federal income tax regardless of its source; or (4) a trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) that has elected to be treated as a U.S. person under applicable U.S. Treasury regulations.

 

Voting Agreement Shares” means all shares of Common Stock beneficially owned by the Lennar Stockholders, which are subject to the Voting and Support Agreement.

 

Voting and Support Agreement” means the voting and support agreement dated March 28, 2024, by and among ‎the Company, the Lennar Stockholders, and Parent, as it may be amended from time to time. A copy of the Voting and Support ‎Agreement is attached as Annex B to this proxy statement and is incorporated by reference in this proxy ‎statement in its entirety.‎

 

WARN” means the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2109 et seq., or the regulations promulgated thereunder.

 

Warrant Agreement” means the Warrant Agreement, dated as of December 1, 2020, by and between the Company and Continental Stock Transfer & Trust Company, relating to the Company Warrants.

 

Warrant Price” has the meaning set forth in the Warrant Agreement.

 

 

Willful Breach” has the meaning set forth in the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety.

 

Willkie” means Willkie Farr & Gallagher LLP.

 

 

SUMMARY TERM SHEET

 

The following summary term sheet highlights selected information in this proxy statement and may not ‎contain all of the information that may be important to you. Accordingly, we encourage you to read carefully ‎this entire proxy statement, its annexes and the documents referred to in this ‎proxy statement in their entirety. Each item in this summary term sheet includes a page reference directing you ‎to a more complete description of that topic. See “Where You Can Find More Information.”‎

 

We are asking our stockholders to consider and vote on the approval and adoption of the Merger Agreement ‎and the transactions contemplated thereby, including the Merger. Pursuant to the Merger Agreement, subject ‎to the satisfaction or waiver of certain conditions and on the terms set forth therein, Merger Sub will ‎merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent. At the Effective Time, each share of ‎Common Stock issued and outstanding immediately prior to the Effective Time (excluding any Cancelled Shares and any Dissenting Shares) shall be cancelled and extinguished and automatically converted into the right to receive an amount in cash equal to $6.29 per share of Common Stock, without interest.‎

 

Since the transactions contemplated by the Merger Agreement, including the Merger, constitute a “going ‎private” transaction under SEC rules, the Company, the Parent Entities, the Lennar Entities and their affiliates have filed with the ‎SEC a Transaction Statement on Schedule 13E-3 with respect to the transactions contemplated by the Merger ‎Agreement, including the Merger. You may obtain any additional information about the Schedule 13E-3 ‎under the caption “Where You Can Find Additional Information.”‎

 

Special Factors (page 19)

 

 

‎Certain Effects of the MergerTreatment of Common Stock. At the Effective Time, each ‎share of Common Stock issued and outstanding immediately prior to the Effective Time (excluding any Cancelled Shares and any Dissenting Shares) shall be cancelled and extinguished and automatically converted into the right to receive an amount in cash equal to $6.29 per share of Common Stock, payable to the holder thereof, without interest. For a further description of ‎certain effects of the Merger, see “Special FactorsCertain Effects of the Merger and The Merger AgreementThe Merger Consideration.”‎

 

 

Certain Effects of the MergerTreatment of Company Warrants. Pursuant to the Merger Agreement, at the Effective Time, and as a result of the Merger, each Company Warrant that is outstanding immediately prior to the Effective Time will, in accordance with its terms, automatically and without any required action on the part of the holder thereof, cease to represent a warrant to purchase shares of Common Stock and become a warrant exercisable for Merger Consideration. For a further description of the treatment of Company Warrants, See “Special Factors—‎Certain Effects of the Merger,” and “The Merger AgreementThe Merger Consideration.

 

 

Background of the Merger. For a description of the background of the Merger see “Special Factors—‎Background of the Merger.”‎

 

 

Purpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger. After careful consideration, the Special Committee, pursuant to resolutions adopted at a meeting of the Special Committee held on March 28, 2024, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair, advisable and in the best interests of the Company and the Disinterested Stockholders and (ii) recommended that the Company Board approve, adopt and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, and subject to the terms and conditions thereof, recommended that the Company Board recommend the Merger Agreement to the Company’s stockholders for approval and adoption. In addition, the Special Committee believes that the Merger is fair to the Company’s unaffiliated security holders. As part of its evaluation of the Merger, the Special Committee ‎received advice from the Special Committee’s independent legal and financial advisors, consulted with ‎the Company’s management and considered various material factors, including those summarized in the ‎accompanying proxy statement.‎

 

 

The Company Board, acting on the unanimous recommendation of the Special Committee, pursuant to resolutions adopted at a meeting of the Special Committee held on March 28, 2024, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger are fair, advisable and in the best interests of the Company and the Disinterested Stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger and (iii) subject to the terms and conditions thereof, resolved to submit and recommend the Merger Agreement to the Company’s stockholders for approval and adoption thereby. ‎In addition, the Company Board believes that the Merger is fair to the Company’s unaffiliated security holders.

 

Accordingly, the Company Board recommends that you vote FOR the Merger Agreement Proposal and FOR the Adjournment Proposal.

 

For a description of the material factors considered by the Special Committee and the Company ‎Board in evaluating the Merger Agreement and the transactions contemplated thereby, including the ‎Merger, and making the decisions, determinations and recommendations above, see “Special FactorsPurpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger.”‎

 

 

‎Opinion of Houlihan Lokey Capital, Inc. The Special Committee retained Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) to act as its financial advisor in connection with the Merger based on Houlihan Lokey’s qualifications, expertise and reputation, and its knowledge of the business and affairs of the Company. On March 28, 2024, Houlihan Lokey orally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Special Committee dated March 28, 2024), to the effect that, based upon and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, as of such date, the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the Disinterested Stockholders.

 

Houlihan Lokey’s opinion was directed to the Special Committee (in its capacity as such) and only addressed whether the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the Disinterested Stockholders and did not address any other aspect or implication of the Merger or any other agreement, arrangement or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex C to this proxy statement and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Company Board, any security holder or any other person as to how to act or vote with respect to any matter relating to the Merger or otherwise.

 

For more information, see the section of this proxy statement titled “Special FactorsOpinion of Houlihan Lokey.”‎

 

 

‎Position of the Parent Entities as to the Fairness of the Merger. The Parent Entities have engaged in a “going private” transaction and, therefore are required to express ‎their beliefs as to the fairness of the Merger to the Disinterested Stockholders. For a description of the ‎Parent Entities’ beliefs as to the fairness of the Merger to the Disinterested Stockholders, see “Special FactorsPosition of the Parent Entities as to the Fairness of the Merger.”‎

 

 

Position of the Lennar Entities as to the Fairness of the Merger. The Lennar Entities have engaged in a “going private” transaction and, therefore are required to express ‎their beliefs as to the fairness of the Merger to the Disinterested Stockholders. For a description of the ‎Lennar Entities’ beliefs as to the fairness of the Merger to the Disinterested Stockholders, see “Special FactorsPosition of the Lennar Entities as to the Fairness of the Merger.”

 

 

 

‎Purpose and Reasons of the Parent Entities for the Merger. The Parent Entities have engaged in a “going private” transaction and therefore, are required to express their reasons for the Merger to the Disinterested ‎Stockholders. For a description of the Parent Entities’ purposes and reasons for the Merger, see ‎‎“Special FactorsPurpose and Reasons of the Parent Entities for the Merger.”‎

 

 

‎Purpose and Reasons of the Lennar Entities for the Merger. The Lennar Entities have engaged in a “going private” transaction and therefore, are required to express their reasons for the Merger to the Disinterested ‎Stockholders. For a description of the Lennar Entities’ purposes and reasons for the Merger, see ‎‎“Special FactorsPurpose and Reasons of the Lennar Entities for the Merger.”‎

 

 

Interests of Certain Persons in the Merger. In considering the ‎recommendations of the Special Committee and the Company Board with respect to the Merger, the Company’s stockholders ‎should be aware that the executive officers and directors and the Parent Entities and Lennar Entities have certain interests in the Merger, the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements that may ‎be different from, or in addition to, the interests of the Company’s stockholders generally. The Special ‎Committee, consisting entirely of independent directors, and the Company Board were aware of these ‎interests and considered them, among other matters, in evaluating the Merger Agreement and the transactions contemplated thereby, including the Merger and in making their ‎recommendations.

 

For a more detailed description of the interests of executive officers and directors of the Company in the ‎Merger, see “Special FactorsInterests of Certain Persons in the Merger.”‎

 

 

‎Intent of the Directors and Executive Officers to Vote in Favor of the Merger. The Company understands that, as of the date of this proxy statement, our directors and ‎executive officers intend to vote all ‎of the shares of Common Stock owned directly by them in favor of the approval of the ‎Merger Agreement Proposal and the Adjournment Proposal. As of the Record Date, our directors and ‎executive officers directly owned, in the aggregate,‎         outstanding shares of Common Stock entitled to vote at the Special Meeting, or collectively approximately       % of the total voting power entitled to vote at the Special ‎Meeting. For a further description of the voting intentions of the Company’s directors and executive ‎officers, see “Special FactorsIntent of the Directors and Executive Officers to Vote in Favor of the Merger.”‎

 

 

‎Intent of the Parent Entities and Lennar Entities to Vote in Favor of the Merger. The Lennar Stockholders, which hold, collectively, approximately 25% of the voting power of the Common Stock, the Company and Parent entered into the Voting and Support Agreement, pursuant to which, subject to the terms and conditions thereof, the Lennar Stockholders have agreed, among other things and subject to the terms and conditions set forth therein, to vote or cause to be voted all the Voting Agreement Shares in favor of adopting the Merger Agreement and the transactions contemplated thereby, including the Merger. A copy of the Voting and Support Agreement is ‎attached as Annex B to this proxy statement and is incorporated by reference in this proxy statement in ‎its entirety. As of the date of the filing of this proxy statement, none of Parent, Merger Sub, Topco or any of ‎their respective affiliates (as defined under Rule 405 of the Securities Act) own ‎any shares of Common Stock. For more information about the Voting and Support Agreement and the voting intentions of ‎the Parent Entities and Lennar Entities, see the sections of this proxy statement titled “Special FactorsIntent of the Parent Entities and Lennar Entities to Vote in Favor of the Merger” and ‎‎“Special FactorsVoting and Support Agreement.”

 

 

‎‎Financing of the Merger. The Merger Agreement does not contain any financing-related contingencies ‎or financing conditions to consummation of the Merger. For further information about the financing of the Merger, see “Special Factors—‎Financing of the Merger.”‎

 

 

 

Other Transactions. In connection with the Merger Agreement, the Company, certain of its subsidiaries and the Parent Entities and Lennar Entities agreed to enter into certain other transactions, including the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements. For further information about these transactions, see “Special FactorsLennar Investment,” “Special FactorsDoma Technologies Reorganization,” “Special FactorsCompany Loan Agreement” and “Special FactorsTopco Term Facility.”

 

 

‎‎Regulatory Approvals. The Merger may not be completed until certain Insurance Regulatory Approvals have been obtained and are in full force and effect. For a further ‎description of the regulatory approvals required for the Merger, see “Special FactorsRegulatory Approvals” and “The Merger Agreement—Regulatory Approvals; Third-Party Consents.”‎

 

 

‎Litigation Relating to the Merger. As of the date of this proxy statement, there are no pending lawsuits ‎challenging the Merger. However, potential plaintiffs may file lawsuits challenging the Merger and the ‎outcome of any future litigation is uncertain.‎

 

The Company has received six (6) demand letters from purported stockholders alleging that this proxy statement omits material information in violation of applicable laws and demanding that the Company issue supplemental corrective disclosure. The Company believes the allegations asserted in the demand letters are without merit. The Company has received no books and records demands from purported stockholders. For a further description of litigation relating to the Merger, see “Special FactorsLitigation Relating to the Merger.”

 

The Merger Agreement (page 81)

 

 

‎A summary of the material provisions of the Merger Agreement, which is attached as Annex A to this ‎proxy statement and which is incorporated by reference in this proxy statement in its entirety, is ‎included in “The Merger Agreement.”‎

 

 

‎The Merger. The Merger Agreement provides that, at the Effective Time, ‎subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company as the surviving corporation, in accordance with the DGCL.

 

 

Conditions to the Completion of the Mergers. The Closing of the Merger depends on a number of conditions being satisfied or waived. These conditions, which are described more fully in “The Merger AgreementConditions to the Completion of the Merger,” include, among other things:

 

 

the adoption of the Merger Agreement by affirmative vote to adopt the Merger Agreement of the holders of (a) at least a majority of the voting power of the outstanding shares of Common Stock entitled to vote on the Merger Agreement Proposal in accordance with the DGCL and (b) at least a majority of the voting power of the outstanding shares of Common Stock held by the Disinterested Stockholders entitled to vote on the Agreement;‎

 

 

the consents, approvals, or authorizations of certain specified Governmental Authorities will have been obtained and be in full force and effect, and all waiting periods required thereunder will have been expired or been terminated, in each case without the imposition of a Burdensome Condition;‎

 

 

the Lennar Investment Agreements described in the section of this proxy statement titled “Special FactorsLennar Investment” will be in full force and effect, and will not have been rescinded or terminated or amended or otherwise modified, except in accordance with their terms, and the transactions contemplated by the Lennar Investment Agreements to be consummated prior to, at or substantially concurrently with the Closing will have occurred or be occurring at the Closing, in each case, in accordance with the terms of such Lennar Investment Agreement;

 

 

 

prior to the Closing Date, in no event will (i) HSCM have instituted or consented to the institution of any HSCM Insolvency Action and (ii) as a result of such HSCM Insolvency Action, the applicable court pursuant to any debtor relief Law have rescinded, stayed, or terminated the HSCM Fifth Amendment or the Preferred Purchase Agreement; provided, that upon any such rescission, stay or termination, for the sixty (60) calendar day period commencing with the date of such rescission, stay or termination, as applicable, Parent, Merger Sub and the Company each agreed to use commercially reasonable efforts to (A) overturn such recission, stay or termination, (B) negotiate and enter into an alternative arrangement with HSCM (or the applicable trustee or other legal authority pursuant to applicable debtor relief Law) pursuant to which the Closing can occur on terms reasonably acceptable to Parent and the Company in each of their sole discretion, (C) obtain replacement financing to satisfy the outstanding obligations to HSCM on terms acceptable to Parent and the Company in each of their sole discretion or (D) negotiate such other terms satisfactory to Parent and the Company in each of their sole discretion to facilitate the consummation of the Merger contemplated by the Merger Agreement, and if any such alternative arrangement contemplated by clauses (A) through (D) above is entered into within such sixty (60) calendar day period, the conditions set forth in clause 7.02(f) of the Merger Agreement will be deemed satisfied; and

 

 

the transactions contemplated by Schedule II of the Merger Agreement will have been completed in a manner reasonably satisfactory to Parent.

 

On May 12, 2024 and May 29, 2024, the Company and certain of the Company's subsidiaries, as applicable, entered into amendments to the applicable agreements, which amendments provide for the completion of the transactions contemplated by Schedule II of the Merger Agreement prior to or substantially concurrently with the Closing, subject to the terms and conditions contained therein.

 

 

Solicitation of Acquisition Proposals. During the period beginning on March 28, 2024 and continuing until the Go-Shop End Date, the Company, its ‎Subsidiaries, and their respective directors, officers, employees, and other Representatives will have the right to, ‎directly or indirectly: (i) solicit, initiate, propose, induce, encourage or facilitate any Acquisition Proposals or the ‎making, submission or announcement thereof, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, could constitute or is reasonably expected to lead to, an Acquisition Proposal, including by way of furnishing non-public information and other access to any Person pursuant to ‎‎(but only pursuant to) one or more acceptable confidentiality agreements as provided in the Merger Agreement; provided, that, subject to Applicable Law and in accordance with customary “clean room” or other similar procedures, the Company will promptly provide ‎Parent, or provide Parent access to, any such material nonpublic information ‎with respect to the Company or its Subsidiaries furnished to such other Person and/or its respective Representatives which was not previously furnished ‎to Parent, or its Representatives and (ii) enter into, continue or otherwise participate in any ‎discussions or negotiations with respect to any Acquisition Proposal (or any proposal or inquiry that could constitute or is reasonably expected to lead to an Acquisition Proposal) or otherwise cooperate with or assist or ‎participate in or facilitate any such discussions or negotiations or any effort or attempt to make any Acquisition ‎Proposal (or any proposal or inquiry that could constitute or is reasonably expected to lead to an Acquisition Proposal).

 

The Company has agreed that, from and after the Go-Shop End Date until the earlier of the date on which the Required Stockholder ‎Approval has been obtained or the date, if any, on which the Merger Agreement is validly terminated, and ‎subject to certain exceptions, the Company will not, and will cause its Subsidiaries and each of its and their ‎respective directors, officers and employees not to, and will instruct and direct and use its reasonable best ‎efforts to cause its other Representatives not to, directly or indirectly, (A) solicit, initiate, propose, induce, encourage or facilitate any Acquisition Proposals or the ‎making, submission or announcement thereof, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, could constitute or is reasonably expected to lead to, an Acquisition Proposal, (B) enter into, continue, initiate or otherwise participate in ‎any discussions or negotiations with, or furnish any nonpublic information or data relating to the Acquired ‎Companies to, or afford access to the properties, books, records, officers or personnel of the Acquired ‎Companies to, any Person or its Representatives (other than the parties to the Merger Agreement and their respective Representatives) with respect to an Acquisition Proposal or any inquiry, ‎discussion, offer, announcement or request that would reasonably be expected to lead to an Acquisition ‎Proposal (provided that the Company will be permitted to grant a waiver of or terminate any “standstill” or similar bona fide agreement or obligation of any Person with respect to the Acquired Companies to allow such Person to submit an Acquisition Proposal if the Special Committee has determined that failure to so waive or terminate would be inconsistent with the Company’s directors’ fiduciary duties under Applicable Law), (C) approve, endorse, recommend or enter into, or publicly propose to approve, endorse, ‎recommend or execute or enter into any letter of intent, memorandum of understanding, agreement in ‎principle, acquisition agreement, merger agreement or other definitive agreement or contract with respect to ‎or relating to any Acquisition Proposal (other than a confidentiality agreement as provided in the Merger Agreement) or require ‎the Company to abandon, terminate, breach or fail to consummate the transactions contemplated by the ‎Merger Agreement or (D) resolve, commit or agree to do any of the foregoing.

 

 

Subject to compliance with the provisions of the Merger Agreement, if the Company receives a bona fide Acquisition Proposal after the Go-Shop End Date and before the receipt of the Required Stockholder Approval (which Acquisition Proposal did not result from a breach of the Company’s non-solicitation obligations under the Merger‎ Agreement), and the Company Board (upon recommendation of the Special Committee) or the Special Committee determines in good faith, after consultation with its financial and outside legal advisors (including Houlihan Lokey), that (i) such Acquisition Proposal constitutes, or would reasonably be expected to lead to, a Superior Proposal and (ii) the Special Committee determines in good faith, after consultation with outside counsel, that failure to (A) furnish nonpublic information, and afford access to the books or records or officers of the Acquired Companies, to such Third Party and/or its Representatives and (B) engage in discussions and negotiations with such Third Party and/or its Representatives with respect to the Acquisition Proposal, in each case, would be inconsistent with the directors’ fiduciary duties under applicable law, then the Company and its Representatives may furnish certain nonpublic information to and engage in discussions and negotiations with such Third Party and/or its Representatives in respect of the Acquisition Proposal as set forth in the Merger Agreement.

 

For more information about the restrictions on the Company’s solicitation of Acquisition Proposals and Adverse Recommendation Changes, see “The Merger AgreementNo Solicitation by the Company.

 

 

Termination. The Merger Agreement contains certain termination rights, including, but not limited to, the right of (i) the Company to terminate the Merger Agreement to accept a Superior Proposal or (ii) Parent to terminate the Merger Agreement upon an Adverse Recommendation Change, in each case, subject to and in accordance with the terms and conditions of the Merger Agreement, and provides that, upon termination of the Merger Agreement by the Company or Parent as set forth above, the Company will be required to pay Parent a Company Termination Fee of $3,188,734 in cash; provided, that, if the Company terminates the Merger Agreement to (i) enter into an Alternative Acquisition Agreement with respect to a ‎Superior Proposal prior to the Go-Shop End Date or (ii) enter into an Alternative Acquisition Agreement in connection with a Superior Proposal by an Exempted Person pursuant to provisions described in the section of this proxy statement titled “—No Solicitation by the Company”, in each case, subject to and in accordance with the terms and conditions of the Merger Agreement, then the Termination Fee will be $1,822,134 in cash. In addition, subject to specified exceptions and limitations, either the Company or Parent may terminate the Merger Agreement if the Merger is not consummated by, as applicable, the End Date, the First Extension Date or the Second Extension Date. For more information about the termination rights and terminations fees payable under the Merger Agreement, see “The Merger AgreementTermination” and “The Merger AgreementTermination Fees.

 

Parties to the Transactions (page 112)

 

 

‎Doma Holdings, Inc. The Company was founded in 2016 to focus top-tier data scientists, product managers, and engineers on building game-changing technology to completely reimagine the residential real estate closing process. The Company’s approach to the title process is driven by its innovative platform, Doma Intelligence. It provides a revolutionary new real estate closing platform that seeks to eliminate laborious, manual tasks involved in underwriting title insurance, performing core escrow functions, generating closing documentation and getting documents signed and recorded. The platform harnesses the power of data analytics, machine learning and natural language processing, which enables us to deliver a more affordable and faster transaction. The Company’s machine intelligence algorithms are being trained and optimized on 30 years of historical anonymized transaction data allowing us to make underwriting decisions in less than a minute and significantly reduce the time, effort and cost of facilitating the entire closing process.

 

 

The Company’s Common Stock is listed and traded on the NYSE under the symbol “DOMA” and the publicly held Company Warrants are traded on the OTC Pink Marketplace under the symbol “DOMAW.”

 

The principal executive office is located at 101 Mission Street, Suite 1050, San Francisco, California 94105 and the telephone number of our principal executive office is (650) 419-3827.‎

 

For more information about the Company, see the section of this proxy statement titled “Parties to the Transactions—Doma Holdings, Inc.”‎

 

 

‎Parent Entities:

 

 

RE Closing GP, LLC. Topco GP is the sole general partner of Topco. Topco GP is a Cayman Island limited liability company, formed on September 30, 2021 in connection with the acquisition of shares of Title Resources Guaranty Company, a title insurance underwriter, by Parent, an indirect subsidiary of Topco, which acquisition was consummated on March 29, 2022. CB RE Closing Aggregator, L.P. is the sole member of Topco GP. Topco GP is managed by its board of managers. The principal office address of Topco GP is 375 Park Avenue, 11th Floor New York, NY 10152 and the telephone number of the principal executive office is (212) 672-5000.

 

For more ‎information about Topco GP, see “Parties to the TransactionsThe Parent Entities.”‎

 

 

Closing Parent Holdco, L.P. Topco is a Cayman Island exempted limited partnership, formed on September 30, 2021 in connection with the acquisition of shares of Title Resources Guaranty Company, a title insurance underwriter, by Parent, an indirect subsidiary of Topco, which acquisition was consummated on March 29, 2022. Topco GP is the sole general partner of Topco. The principal office address of Topco is 8111 LBJ Freeway, Suite 1200, Dallas, TX 75251 and the telephone number of the principal executive office is (800) 526-8018.

 

For more information about Topco, see “Parties to the TransactionsThe Parent Entities.”‎

 

 

RE Closing Buyer Corp. Parent is a corporation organized under the laws of the State of Delaware and is a holding company formed on October 4, 2021, solely for the purpose of acquiring shares of Title Resources Guaranty Company, a title insurance underwriter, which acquisition was consummated on March 29, 2022. Parent is an indirect wholly owned subsidiary of Topco. The principal office address of Parent is 8111 LBJ Freeway, Suite 1200, Dallas, TX 75251 and the telephone number of the principal executive office is (800) 526-8018.

 

For more information about Parent see “Parties to the TransactionsThe Parent Entities.”

 

 

RE Closing Merger Sub Inc. Merger Sub is a corporation organized under the laws of the State of Delaware, formed on March 18, 2024, solely for the purpose of completing the Merger and has conducted no business activities other than those related to the structuring and negotiation of the Merger. Merger Sub is a direct, wholly owned subsidiary of Parent and has not engaged in any business except as contemplated by the Merger Agreement. The principal office address of Merger Sub is 8111 LBJ Freeway, Suite 1200, Dallas, TX 75251 and the telephone number of the principal executive office is (800) 526-8018.

 

For more information about Merger Sub see “Parties to the TransactionsThe Parent Entities.”

 

 

 

Lennar Entities:

 

 

LENX ST Investor, LLC. LENX ST Investor, LLC is a limited liability company organized under the laws of the State of Delaware, The sole member of LENX ST Investor, LLC is Len X, LLC, a limited liability company organized under the laws of the State of Florida (“LenX”). LenX is wholly owned by Lennar Corp., a corporation organized under the laws of the State of Delaware. The principal business of LENX ST Investor, LLC is to hold interests in companies acquired by Lennar Corp. and LenX, including the securities of the Company. The principal business address is 5505 Waterford District Drive, Miami, FL 33126 and the telephone number of the person authorized to receive notice and communications is (305) 559-4000.

 

For more ‎information about LENX ST Investor, LLC, see “Parties to the TransactionsThe Lennar Entities.”‎

 

 

 

 

Len FW Investor, LLC. Lennar is a limited liability company organized under the laws of the State of Delaware. The sole member of Lennar is LenX, which is wholly owned by Lennar Corp. The principal business of Lennar is to hold interests in companies acquired by Lennar Corp. and LenX, including the securities of the Company. The principal business address is 5505 Waterford District Drive, Miami, FL 33126 and the telephone number of the person authorized to receive notice and communications is (305) 559-4000.

 

For more ‎information about Len FW Investor, LLC, see “Parties to the TransactionsThe Lennar Entities.”‎

 

 

Lennar Corp. is a corporation organized under the laws of the State of Delaware. Lennar Corp. is one of the nation’s leading builders of quality homes for all generations. Lennar Corp. is the indirect parent of each of Len FW Investor, LLC and LENX ST Investor, LLC. The principal business address is 5505 Waterford District Drive, Miami, FL 33126 and the telephone number of the person authorized to receive notice and communications is (305) 559-4000.

 

For more ‎information about Lennar Corp., see “Parties to the TransactionsThe Lennar Entities.”‎

 

The Special Meeting (page 114)

 

 

‎Date, Time, Place and Purpose of the Special Meeting. The Special Meeting of the Company’s ‎stockholders will be held virtually on                    , at 11:00 a.m. Eastern time. You may attend the Special Meeting solely via a live interactive webcast on the Internet at www.virtualshareholdermeeting.com/DOMA2024SM. You will need the control number found on your proxy card or voting instruction form in order to participate in the Special Meeting (including voting your shares). We elected to use a virtual meeting due to our positive experiences with virtual meetings in the past. At the Special ‎Meeting, Company stockholders will be asked to consider and vote upon:‎

 

 

‎the Merger Agreement Proposal;‎ and

 

 

‎the Adjournment Proposal.‎

 

For more information about the Special Meeting, see the section of this proxy statement titled “The Special MeetingDate, Time, Place and The Special Meeting—‎Purpose of the Special Meeting.”‎‎

 

Other Important Information Regarding the Company (page 129)

 

 

‎Market Price of Shares of Common Stock and Dividends. On              , 2024, the most recent practicable date ‎before this proxy statement was distributed to our stockholders, the closing price for the shares of Common Stock on the NYSE was $         per share of Common Stock. You are encouraged to ‎obtain current market quotations for the shares of Common Stock in connection with ‎voting your shares of Common Stock. For more information about the market price of ‎shares of Common Stock and dividends, see the section of this proxy statement titled “Other Important Information Regarding the CompanyMarket Price of Shares of Common Stock and Dividends.”‎ 

 

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS AND THE SPECIAL MEETING

 

The following questions and answers are intended to address briefly some commonly asked questions ‎regarding the Special Meeting, the Merger Agreement and the transactions contemplated thereby, including the ‎Merger. These questions and answers may not address all questions that may be important to you as a ‎stockholder of the Company. Please refer to the “Summary Term Sheet” and the more detailed information ‎contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred ‎to in this proxy statement, all of which you should read carefully in their ‎entirety. See “Where You Can Find More Information.”‎

 

Q.

Why am I receiving this document?

 

A.

You are receiving this proxy statement because ‎you own shares of Common Stock and the Company is soliciting proxies for the Special Meeting. The Company is holding the Special Meeting so that our stockholders may vote to approve the Merger ‎Agreement Proposal and the Adjournment Proposal.‎

 

This proxy statement contains important information ‎about the Merger and the Special Meeting, and you should read it carefully. The enclosed proxy card ‎allows you to submit a proxy to vote your shares of Common Stock without attending the ‎Special Meeting in person (virtually).‎

 

Your vote is extremely important, and we encourage you to submit your proxy as soon as possible. ‎For more information on how to vote your shares of Common Stock, please see the section ‎of this proxy statement entitled “The Special Meeting.”‎

 

Q.

What is the proposed transaction and what effects will it have on the Company?

 

A.

On March 28, 2024, the Company entered into the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and is incorporated herein by reference in its entirety. Pursuant to the Merger Agreement, subject to the satisfaction or waiver of certain conditions, Merger ‎Sub will merge with and into the Company, with the Company surviving the Merger as a wholly owned ‎subsidiary of Parent. If the Merger is completed, ‎the holders of shares of Common Stock as of immediately prior to the Merger (excluding any Cancelled Shares and any Dissenting Shares) will have the right to receive the Merger Consideration of $6.29 per share of Common Stock in cash, without interest, less any applicable withholding taxes, subject to ‎and in accordance with the terms and conditions set forth in the Merger Agreement.‎

 

In addition, following completion of the Merger, there will be no further market for the shares of Common Stock or Company Warrants and, as promptly as practicable following the Effective Time and in ‎compliance with Applicable Law, the Common Stock will be delisted from the NYSE and the Common Stock and Company Warrants will be deregistered under the Exchange Act, upon application to the SEC. As a result of the Merger, the Company will no ‎longer be an independent public company, the shares of Common Stock will no longer be ‎listed on any exchange or quotation system, the Company Warrants will no longer trade on the OTC Pink Marketplace, price quotations will no longer be available for the Company’s securities and ‎the Company’s registration and reporting obligation under the Exchange Act will cease.‎

 

Following completion of the Merger, your shares of Common Stock will represent only the ‎right to receive the Merger Consideration and the right to receive dividends and other distributions, in ‎each case, subject to and in accordance with the terms and conditions of the Merger Agreement, and you ‎will no longer have any interest in the Company’s future earnings, growth or value.‎

 

For more information about the Merger Agreement and the transactions contemplated thereby, including ‎the Merger, see the section of this proxy statement titled “The Merger Agreement.”‎

 

 

Q.

What happens if the Merger is not completed?

 

A.

If the Merger Agreement Proposal is not approved by the Company’s stockholders or if the Merger is not ‎completed for any other reason, the Company’s stockholders will not receive any payment for their shares ‎of Common Stock in connection with the Merger. Instead, unless the Company is sold to a ‎third party, the Company will remain an independent public company, and shares of Common ‎Stock will continue to be listed and traded on the NYSE, so long as the Company continues to meet the ‎applicable listing requirements, and the Company Warrants will continue to trade on the OTC Pink Marketplace. In addition, if the Merger is not completed, the Company expects that ‎management will operate the Company’s business in a manner similar to that in which it is being operated ‎today and that the Company’s stockholders will continue to be subject to the same risks and opportunities ‎to which they are currently subject. There is no assurance as to the effect of these risks and opportunities ‎on the future value of your shares of Common Stock, including the risk that the market price ‎of the Common Stock may decline to the extent that the current market price of the ‎Common Stock reflects a market assumption that the Merger will be completed. For more information ‎about what happens if the Merger is not completed, see the section of this proxy statement titled “Special FactorsCertain Effects on the Company if the Merger is Not Completed.”‎

 

Under certain circumstances, if the Merger is not completed, the Company would be required to pay ‎Parent a Company Termination Fee of $3,188,734 (or, in certain circumstances, $1,822,134) in cash. For more ‎information about termination fees, see “The Merger AgreementTermination Fees.”‎

 

Q.

Why are you having a virtual Special Meeting?

 

A.

We elected to use a virtual meeting due to our past positive experiences with virtual meetings. We believe a virtual meeting provides expanded access, improves communication, enables increased stockholder attendance and participation and provides cost savings for our stockholders and the Company.

 

Q

How can I attend the virtual Special Meeting?

 

A.

The Special Meeting will be held on        , 2024, starting at 11:00 a.m. Eastern time via live webcast on the Internet at www.virtualshareholdermeeting.com/DOMA2024SM. Only stockholders of record of shares of our Common Stock as of the close of business on the Record Date, may participate in the Special Meeting, including voting and asking questions during the virtual meeting. You will not be able to attend the Special Meeting physically in person.

 

Only stockholders of record are entitled to participate in, vote at and examine the stockholders list during the Special Meeting. All stockholders with a 16-digit control number have the ability to vote, participate in Q&A and view the stockholders list. Beneficial stockholders who did not receive a 16-digit control number from their bank or brokerage firm who wish to attend the meeting should follow the instructions from their bank or brokerage firm, including any requirement to obtain a legal proxy. Most brokerage firms or banks allow a stockholder to obtain a legal proxy either online or by mail.

 

Even if you plan to attend the Special Meeting virtually, to ensure that your shares will be represented and voted at the Special Meeting we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone. If you attend the Special Meeting and vote virtually by ballot, your vote will revoke any proxy previously submitted by you with respect to the shares so voted at the Special Meeting.

 

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions. If you hold your shares in “street name,” you may not vote your shares at the Special Meeting unless you obtain a “legal proxy” from your bank, broker or other nominee and submit it to the Company in the manner described above.

 

For more information about the Special Meeting, see the section of this proxy statement titled “The Special Meeting.”‎

 

Q.

Who can vote at the Special Meeting?

 

A.

All record holders of the shares of Common Stock as of the close of business on         , 2024, the ‎Record Date for the Special Meeting, are entitled to notice of, and to attend and vote at, the Special ‎Meeting or any adjournment or postponement thereof. You are entitled to receive notice of, and to attend ‎and vote at, the Special Meeting if you are a record holder of the shares of Common Stock at ‎the close of business on the Record Date.‎

 

 

Each record holder of Common Stock is entitled to one (1) vote for ‎each outstanding share of Common Stock owned of record on the Record Date.‎

 

For more information about who can vote at the Special Meeting, see the section of this proxy statement titled “The Special MeetingVoting.”‎

 

Q.

What is the difference between being a stockholder of record and a beneficial owner of shares of Common Stock held in street name?

 

A.

If your shares of Common Stock are registered directly in your name with our transfer agent, ‎Continental Stock Transfer & Trust Company, you are considered, with respect to those shares of Common Stock, the stockholder of record or record holder. This proxy statement and proxy ‎card have been sent directly to you by the Company. As the stockholder of record, you have the right to ‎grant your voting proxy directly to us or to another proxyholder to vote in person (virtually) at the Special Meeting.‎

 

If your shares of Common Stock are held through a broker, bank or other nominee, you are ‎considered the beneficial owner of those shares of Common Stock held in “street name.” In ‎that case, this proxy statement has been forwarded to you by your broker, bank or other nominee who is ‎considered, with respect to those shares of Common Stock, the stockholder of record. As the ‎beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your ‎shares of Common Stock by following their instructions for voting. You are also invited to ‎attend the Special Meeting. However, since you are not the stockholder of record, you may not vote these ‎shares of Common Stock in person (virtually) at the Special Meeting unless you provide a legal proxy ‎from your broker, bank or other nominee.‎

 

For more information about the stockholders of record and beneficial owners of shares held “in street ‎name,” see the section of this proxy statement titled “The Special MeetingVoting.”‎

 

Q.

What am I being asked to vote on at the Special Meeting?

 

A.

You are being asked to consider and vote on the following:‎

 

 

‎Merger Agreement Proposal: A proposal to approve and adopt the Merger Agreement, and the ‎transactions contemplated thereby, including the Merger. A copy of the Merger Agreement is attached ‎as Annex A to this proxy statement and is incorporated by reference in this proxy statement in its ‎entirety;‎ and

 

 

‎‎Adjournment Proposal: One or more proposals to adjourn the Special Meeting, if necessary or ‎appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the ‎time of the Special Meeting to adopt the Merger Agreement Proposal.‎

 

For more information about each of these proposals, see the sections of this proxy statement titled “The Merger (The Merger Agreement Proposal—‎Proposal 1)” and “Adjournment of the Special Meeting (The Adjournment ProposalProposal 2).”‎

 

Q.

What is a quorum?

 

A.

The representation of the holders of a majority of the voting power of outstanding shares of ‎Common Stock as of the Record Date must be present, in person (virtually) or represented by proxy, at the Special ‎Meeting in order to constitute a quorum, for the purposes of holding the Special Meeting and conducting business. For more information about the quorum of the Special Meeting, see ‎‎the section of this proxy statement titled “The Special MeetingRecord Date and Quorum.”‎

 

Q.

What vote is required for the Companys stockholders to approve the Merger Agreement Proposal?

 

A.

The approval of the Merger Agreement Proposal requires the affirmative vote of the holders of (i) at least a ‎majority of the voting power of the outstanding shares of Common Stock entitled to vote in ‎accordance with the DGCL and (ii) at least a majority of the voting power of the outstanding shares of ‎Common Stock held by the Disinterested Stockholders. Each record ‎holder of Common Stock is entitled to one (1) vote for each outstanding share of Common Stock owned of record on the Record Date.‎

 

 

As of the close of business on                  , 2024, which is the Record Date, there were            shares of Common Stock outstanding.‎

 

As of the date of the filing of this proxy statement, none of Parent, Merger Sub, Topco or any of ‎their respective affiliates (as defined under Rule 405 of the Securities Act) own ‎any shares of Common Stock.

 

Concurrently with the execution of the Merger Agreement, the Lennar Stockholders, which hold, collectively, approximately 25% of the voting power of the Common Stock, the Company and Parent entered into the Voting and Support Agreement, pursuant to which the Lennar Stockholders have agreed to, among other things, (a) vote the Voting Agreement Shares in favor of the Merger, the adoption of the Merger Agreement and the transactions contemplated thereby and (b) vote against any Alternative Acquisition Agreement and any other action or agreement (including, without limitation, any amendment of any agreement), amendment of the Company’s organizational documents or other action that is intended or would reasonably be expected to materially prevent or delay the consummation of the transactions contemplated by the Merger Agreement, including the Merger. The Voting and Support Agreement will automatically terminate upon the earliest of (i) written agreement of the parties thereto to terminate the Voting and Support Agreement, (ii) the valid termination of the Merger Agreement in accordance with its terms and (iii) the Effective Time, and each Lennar Stockholder may terminate the Voting and Support Agreement as to itself upon the entry by the Company and Parent without the prior written consent of such Lennar Stockholder into any amendment, waiver or modification to the Merger Agreement that results in (x) a change to the form of consideration to be paid thereunder, (y) a decrease in the amount of Merger Consideration payable to the stockholders of the Company pursuant to the terms of the Merger Agreement as in effect on the date of the Voting and Support Agreement, or (z) an imposition of any material restrictions or additional constraints on the payment of the consideration thereunder. A copy of the Voting and Support Agreement is attached as Annex B to this proxy ‎statement and is ‎incorporated by reference in this proxy statement in its entirety.‎

 

For more information, see the section of this proxy statement titled “The Merger (The Merger Agreement ProposalProposal 1).”‎

 

Q.

What vote is required for the Companys stockholders to approve the Adjournment Proposal?

 

A.

Approval of one or more proposals to adjourn the Special Meeting, if necessary or appropriate, including ‎adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting ‎to adopt the Merger Agreement Proposal, requires the affirmative vote of the ‎holders of a majority of the votes cast by the Company’s stockholders present or represented by proxy at the Special Meeting, assuming that a quorum is present.‎ Each record holder of Common Stock is entitled to one (1) vote for each outstanding ‎share of Common Stock owned of record on the Record.‎

 

For more information about the Adjournment Proposal, see the section of this proxy statement titled “Adjournment of the Special meeting (The Adjournment ProposalProposal 2).”‎

 

Q.

How are the votes counted?

 

A.

For each of the Merger Agreement Proposal and the Adjournment Proposal, ‎you may vote “FOR,” “AGAINST” or “ABSTAIN.” If a Company stockholder abstains from voting, that abstention will have the same effect as if such Company stockholder voted “AGAINST” the Merger Agreement Proposal, but will have no effect on the Adjournment Proposal. Abstentions will count for purposes of determining if a quorum is present ‎at the Special Meeting.

 

For more information, see the section of this proxy statement titled “The Special Meeting.”‎

 

Q.

How does the Company Board recommend that I vote?

 

A.

Based in part on the unanimous recommendation of the Special Committee, the Company Board ‎recommends that you vote:‎

 

 

‎‎“FOR” the Merger Agreement Proposal;‎ and

 

 

‎‎“FOR” the Adjournment Proposal.‎

 

 

For more information, you should read the section of this proxy statement titled “Special FactorsPurpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger” ‎for a discussion of the factors that the Special Committee and the Company Board considered in ‎deciding to recommend the approval of the Merger Agreement. See also “Special FactorsInterests of Certain Persons in the Merger.”‎

 

Q.

Have a majority of directors who are not employees of the Company retained an unaffiliated representative to act solely on behalf of unaffiliated Company stockholders for purposes of negotiating the terms of the Merger or preparing a report concerning the fairness of the Merger?

 

A.

As described more fully in the section entitled “Special FactorsBackground of the Merger,” the Special Committee, which consists entirely of independent and disinterested directors who are not employees of the Company, was formed for the purpose of reviewing and potentially negotiating the potential transaction and, ultimately, recommending in favor or against any such transaction. The Special Committee retained Houlihan Lokey as its financial advisor. On March 28, 2024, Houlihan Lokey orally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Special Committee dated March 28, 2024), to the effect that, based upon and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, as of such date, the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the Disinterested Stockholders. For a description of Houlihan Lokey’s fairness opinion, see “Special FactorsOpinion of Houlihan Lokey.”

 

Q.

How will the Parent Entities and Lennar Entities vote on the Merger Agreement Proposal?

 

A.

Concurrently with the execution of the Merger Agreement, the Lennar Stockholders, which hold, collectively, approximately 25% of the voting power of the Common Stock, the Company and Parent entered into the Voting and Support Agreement, pursuant to which the Lennar Stockholders have agreed to, among other things, and subject to the terms and conditions of the Voting and Support Agreement (a) vote the Voting Agreement Shares in favor of the Merger, the adoption of the Merger Agreement and the transactions contemplated thereby and (b) vote against any Alternative Acquisition Agreement and any other action or agreement (including, without limitation, any amendment of any agreement), amendment of the Company’s organizational documents or other action that is intended or would reasonably be expected to materially prevent or delay the consummation of the transactions contemplated by the Merger Agreement, including the Merger. The Voting and Support Agreement will automatically terminate upon the earliest of (i) written agreement of the parties thereto to terminate the Voting and Support Agreement, (ii) the valid termination of the Merger Agreement in accordance with its terms and (iii) the Effective Time, and each Lennar Stockholder may terminate the Voting and Support Agreement as to itself upon the entry by the Company and Parent without the prior written consent of such Lennar Stockholder into any amendment, waiver or modification to the Merger Agreement that results in (x) a change to the form of consideration to be paid thereunder, (y) a decrease in the amount of Merger Consideration payable to the stockholders of the Company pursuant to the terms of the Merger Agreement as in effect on the date of the Voting and Support Agreement, or (z) an imposition of any material restrictions or additional constraints on the payment of the consideration thereunder.

 

A copy of the Voting and Support Agreement is attached as Annex B to this proxy statement and is ‎incorporated by reference in this proxy statement in its entirety. For more information about the voting ‎intentions of the Lennar Stockholders, see the section of this proxy statement titled “Special FactorsIntent of the Parent Entities and Lennar Entities to Vote in Favor of the Merger” and “Special FactorsVoting and Support Agreement.”‎

 

As of the date of the filing of this proxy statement, Parent, Merger Sub, Topco and their respective affiliates do not own any shares of the Company’s capital stock.

 

Q.

How do I vote?

 

A.

If you are a stockholder of record as of the Record Date, you may vote your shares of ‎Common Stock on matters presented at the Special Meeting in any of the following ways:‎

 

 

‎in person (virtually), by attending the virtual Special Meeting, you may vote your shares at www.virtualshareholdermeeting.com/DOMA2024SM. You will be asked to provide the 16-digit control number from your proxy card;‎

 

 

 

‎by proxy (stockholders of record have a choice of voting by proxy):‎

 

 

‎on the Internet, by following the Internet proxy instructions printed on the enclosed proxy card;‎

 

 

‎by telephone, using the telephone number printed on the enclosed proxy card; or

 

 

‎by mail, by marking the enclosed proxy card, dating and signing it, and returning it in the ‎accompanying prepaid reply envelope.‎

 

If, as of the Record Date, you are the beneficial owner of shares of Common Stock held in ‎‎“street name” by your broker, bank or other nominee, you will receive instructions from your broker, ‎bank or other nominee that you must follow in order to have your shares of Common Stock ‎voted. Those instructions will identify which of the above choices are available to you in order to have ‎your shares of Common Stock voted. Please note that if you are a beneficial owner and wish ‎to vote in person (virtually) at the Special Meeting, you must have a legal proxy from your broker, bank or other ‎nominee naming you as the proxy. You should allow yourself enough time prior to the Special Meeting to ‎obtain this proxy from the holder of record.‎

 

The control number located on your proxy card is designed to verify your identity and allow you to ‎submit a proxy for your shares of Common Stock, and to confirm that your voting ‎instructions have been properly recorded when submitting a proxy over the Internet or by telephone.‎

 

Please refer to the instructions on your proxy card or voting instruction form to determine the deadlines ‎for submitting a proxy over the Internet or by telephone. If you choose to submit your proxy by mailing ‎a proxy card, your proxy card must be received by our Corporate Secretary by the time the Special ‎Meeting begins.‎

 

For more information about voting, see the section of this proxy statement titled “The Special MeetingHow to Vote.”‎

 

Q.

What is a proxy?

 

A.

A proxy is your legal designation of another person to vote your shares of Common Stock. ‎This written document describing the matters to be considered and voted on at the Special Meeting is ‎called a proxy statement. The document used to designate a proxy to vote your shares of ‎Common Stock is called a proxy card. For more information about voting by proxy, see the section of this proxy statement titled “The Special MeetingHow to Vote.”‎

 

Q.

If I am a stockholder of record, what happens if I do not vote or submit a proxy card?

 

A.

If you do not attend the Special Meeting and fail to vote, either in person (virtually) or by proxy, your shares of ‎ Common Stock will not be voted at the Special Meeting and will not be counted for purposes ‎of determining whether a quorum exists.‎

 

Additionally, if you do not attend the Special Meeting and fail to vote, either in person (virtually) or by proxy, your ‎failure to vote will (a) have the effect of counting “AGAINST” the Merger Agreement Proposal with ‎respect to the approval threshold requiring the affirmative vote of the holders of (i) at least a majority of ‎the voting power of the outstanding shares of Common Stock entitled to vote in accordance ‎with the DGCL and (ii) at least a majority of the voting power of the outstanding shares of ‎Common Stock held by the Disinterested Stockholders and (b) have no effect on the Adjournment Proposal (so long as a quorum is present). For more information, see the section of this proxy statement titled “The Special Meeting.”‎

 

Q.

If my shares of Common Stock are held in street name by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares of Common Stock for me?

 

A.

No. Your broker, bank or other nominee will only be permitted to vote your shares of Common ‎Stock if you instruct your broker, bank or other nominee as to how to vote. As a result, ‎absent specific instructions from the beneficial owner of such shares of Common Stock, ‎your broker, bank or other nominee is not empowered to vote such shares of Common ‎Stock.‎

 

 

If you instruct your broker, bank or other nominee how to vote on at least one, but not all of the ‎proposals to be considered at the Special Meeting, your shares of Common Stock will be ‎voted according to your instructions on those proposals for which you have provided instructions and ‎will be counted as present for purposes of determining whether a quorum is present at the Special ‎Meeting. In this scenario, a “broker non-vote” will occur with respect to each proposal for which you did ‎not provide voting instructions to your broker, bank or other nominee.‎

 

A failure to provide instructions with respect to any of the proposals, and a broker non-vote with respect ‎to the following proposals, will have (a) the effect of a vote “AGAINST” the Merger Agreement Proposal ‎with respect to the approval threshold requiring the affirmative vote of the holders of (i) at least a ‎majority of the voting power of the outstanding shares of Common Stock entitled to vote in ‎accordance with the DGCL and (ii) at least a majority of the voting power of the outstanding shares of ‎Common Stock held by the Disinterested Stockholders, and (b) no effect on the Adjournment Proposal (so long as a quorum is present). For more information, ‎see the section of this proxy statement titled “The Special MeetingVoting.”‎

 

Q.

If a stockholder gives a proxy, how are the shares of Common Stock voted?

 

A.

If you vote by proxy, regardless of the method you choose to submit a proxy, the individuals named on the ‎enclosed proxy card, and each of them, with full power of substitution will vote your shares of‎ Common Stock in the way that you indicate. When completing the Internet or telephone ‎proxy processes or the proxy card, you may specify whether your shares of Common Stock ‎should be voted “FOR” or “AGAINST,” or to “ABSTAIN” from voting on, all, some or none of the ‎specific items of business to come before the Special Meeting.‎

 

If you properly execute your proxy card but do not mark the boxes indicating how your shares of ‎Common Stock should be voted on a matter, the shares of Common Stock ‎represented by your properly executed proxy will be voted “FOR” the Merger Agreement Proposal and “FOR” the Adjournment Proposal. For more information, see‎‎ the section of this proxy statement titled “The Special MeetingHow to Vote.”‎

 

Q.

Can I change or revoke my vote?

 

A.

Yes. You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at ‎any time before it is exercised, by (1) submitting another proxy, including a proxy card, at a later date by ‎telephone or on the Internet or by timely delivery of a validly executed, later-dated proxy, (2) giving ‎written notice of revocation to our Corporate Secretary, which must be filed with our Corporate Secretary ‎before the Special Meeting begins or (3) attending the Special Meeting and voting in person (virtually). If, as of the ‎Record Date, you are the beneficial owner of shares of Common Stock held in “street name” ‎by your broker, bank or other nominee, please refer to the information forwarded by your broker, bank ‎or other nominee for procedures on revoking your proxy.‎

 

Only your last submitted proxy with respect to any shares will be considered. Please cast your vote ‎‎“FOR” each of the proposals, following the instructions set forth on your enclosed proxy card or voting ‎instruction form provided by your broker, bank or other nominee, as promptly as possible. For more ‎information, see “The Special MeetingProxies and Revocation.”‎

 

Q.

What do I do if I receive more than one proxy or set of voting instructions?

 

A.

If, as of the Record Date, you hold shares of Common Stock as the beneficial owner of shares ‎of Common Stock held in “street name,” or through more than one broker, bank or other ‎nominee, and also directly as the stockholder of record or otherwise, you may receive more than one ‎proxy card or voting instruction forms relating to the Special Meeting. These should each be executed and ‎returned separately in accordance with the instructions provided in this proxy statement in order to ‎ensure that all of your shares of Common Stock are voted.‎

 

 

Q.

Should I send in my stock certificates or other evidence of ownership now?

 

A.

No. After the Merger is completed, you will be sent a letter of transmittal with detailed written ‎instructions for exchanging your shares of Common Stock for the Merger Consideration. If ‎you are the beneficial owner of shares of Common Stock held in “street name” by your ‎broker, bank or other nominee immediately prior to the Merger, you may receive instructions from your ‎broker, bank or other Nominee as to what action, if any, you need to take to effect the surrender of your ‎shares of Common Stock in exchange for the Merger Consideration. Please do not send in ‎your certificates now.‎

 

Q.

What happens if I sell my shares of Common Stock before the Special Meeting?

 

A.

The Record Date for stockholders entitled to vote at the Special Meeting is prior to both the date of the ‎Special Meeting and the consummation of the Merger. If you transfer your shares of ‎Common Stock before the Record Date, you will not be entitled to vote at the Special Meeting and will not ‎be entitled to receive the Merger Consideration. If you transfer your shares of Common ‎Stock after the Record Date but before the Special Meeting, you will, unless special arrangements are ‎made, retain your right to vote at the Special Meeting, but will transfer the right to receive the Merger ‎Consideration to the person to whom you transfer your shares of Common Stock. Unless ‎special arrangements are made, the person to whom you transfer your shares of Common ‎Stock after the Record Date will not have a right to vote those shares of Common Stock at the ‎Special Meeting. For more information, see the section of this proxy statement titled “The Special MeetingHow to Vote.” If you demand ‎appraisal for any of your shares of Common Stock in connection with the Merger and ‎subsequently transfer any such shares, you will lose your right to appraisal with respect to the shares that ‎you have so transferred. For more information about appraisal rights, see the section of this proxy statement titled “The Special Meeting—‎Appraisal Rights” and Annex J to this proxy statement.‎

 

Q.

Who will solicit and pay the cost of soliciting proxies?

 

A.

The Company has engaged Innisfree M&A Incorporated (“Innisfree”) to assist in the solicitation of proxies ‎for the Special Meeting. The Company has agreed to pay Innisfree a fee of approximately $25,000, and to ‎reimburse Innisfree for certain out-of-pocket fees, charges and expenses. The Company will indemnify Innisfree and its affiliates against certain claims, liabilities, losses, damages and expenses. The Company ‎also will reimburse brokers, banks, other nominees, custodians and fiduciaries representing beneficial owners of the shares of Common Stock for their expenses in forwarding soliciting ‎materials to beneficial owners of our shares of Common Stock and in obtaining voting ‎instructions from those owners. Our directors, officers and employees may also solicit proxies by ‎telephone, by facsimile, by mail, over the Internet or in person. Our directors, officers and employees ‎will not be paid any additional amounts for soliciting proxies. For more information, see the section of this proxy statement titled “The Special MeetingSolicitation of Proxies; Payment of Solicitation Expenses.”‎

 

Q.

What is householding and how does it affect me?

 

A.

The SEC rules permit companies and intermediaries such as brokers, banks and other nominees to satisfy ‎delivery requirements with respect to two or more stockholders sharing the same address by delivering a ‎single proxy statement. This process is commonly referred to as “householding” and can result in ‎significant cost savings for the Company. To take advantage of this opportunity, the Company, brokers, ‎banks and other nominees who hold your shares of Common Stock may deliver only one ‎proxy statement to multiple stockholders who share an address unless one or more of the stockholders ‎has provided contrary instructions. The Company will deliver promptly, upon written or oral request, a ‎separate copy of the proxy statement to a stockholder at a shared address to which a single copy of the ‎documents was delivered. For more information, see the section of this proxy statement titled “The Special MeetingQuestions and Additional Information” or “Where You Can Find More Information.”‎

 

Q.

What rights do I have to seek an appraisal of my shares of Common Stock?

 

A.

Each holder of shares of Common Stock will have the right to seek appraisal of the fair value ‎of such holder’s shares of Common Stock as determined by the Delaware Chancery Court if ‎the Merger is completed, but only if such holder does not vote such shares of Common ‎Stock in favor of the Merger Agreement Proposal and otherwise complies with the statutory requirements ‎and procedures for demanding and perfecting appraisal rights set forth in Section 262 of the DGCL, ‎which is the appraisal rights statute applicable to Delaware corporations. Failure to follow precisely any ‎of the statutory requirements and procedures may result in the loss of appraisal rights. A copy of Section ‎‎262 of the DGCL is included as Annex J to this proxy statement and is incorporated by reference in its ‎entirety. The requirements and procedures are also summarized in this proxy statement. For more ‎information about appraisal rights, see “The Special MeetingAppraisal Rights” and Annex J to this ‎proxy statement.‎

 

 

Q.

Will the merger be taxable to stockholders?

 

A.

The receipt of cash in exchange for Common Stock pursuant to the Merger generally will be a taxable transaction for U.S. federal income tax purposes. U.S. Holders, as defined below in the section of this proxy statement titled “Special FactorsMaterial U.S. Federal Income Tax Consequences of the MergerU.S. Holders,” generally will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any between (a) the amount of cash received and (b) the U.S. Holder’s adjusted tax basis in the Common Stock surrendered in exchange.

 

Except in certain specific circumstances described below and in the section of this proxy statement titled “Special FactorsMaterial U.S. Federal Income Tax Consequences of the MergerNon-U.S. Holders,” Non-U.S. Holders, as defined in the section of this proxy statement titled “Special FactorsMaterial U.S. Federal Income Tax Consequences of the MergerNon-U.S. Holders,” generally will not be subject to U.S. federal income tax unless such Non-U.S. Holder has certain connections with the United States.

 

The U.S. federal income tax consequences described above may not apply to all holders of Common Stock. You should read the section titled “Special FactorsMaterial U.S. Federal Income Tax Consequences of the Merger” for a more complete discussion of the U.S. federal income tax consequences of the Merger. Tax matters can be complicated and the tax consequences of the Merger to you will depend on your particular tax situation. You should consult your tax advisor to determine the applicable U.S. federal, state, local and non-U.S. tax consequences of the Merger to you.‎

 

Q.

What do I need to do now?

 

A.

We urge you to read this proxy statement carefully, including its annexes and the documents referred to in this proxy statement, as well as the related Schedule 13E-3, including the ‎exhibits thereto, filed with the SEC, and to consider how the Merger affects you. For more information, ‎see the section of this proxy statement titled “Where You Can Find More Information.”‎

 

Even if you plan to attend the Special Meeting, after carefully reading and considering the information ‎contained in this proxy statement, please submit your proxy promptly to ensure that your shares of ‎Common Stock are represented at the Special Meeting.‎

 

If you are a stockholder of record, please submit your proxy for your shares of Common ‎Stock:‎

 

 

‎on the Internet, by following the Internet proxy instructions printed on the enclosed proxy card;‎

 

 

‎by telephone, using the telephone number printed on the enclosed proxy card; or

 

 

‎by mail, by marking the enclosed proxy card, dating and signing it, and returning it in the ‎accompanying prepaid reply envelope.‎

 

If you decide to attend the Special Meeting and vote in person (virtually), your vote in person (virtually) at the Special Meeting ‎will revoke any proxy previously submitted.‎

 

If, as of the Record Date, you are the beneficial owner of shares of Common Stock held in ‎‎“street name” by your broker, bank or other nominee, please refer to the instructions provided by your ‎broker, bank or other nominee to see which of the above choices are available to you in order to have ‎your shares of Common Stock voted.‎

 

For more information, see the sections of this proxy statement titled “The Special Meeting” and “Where You Can Find More Information.”‎

 

 

Q.

Who can help answer my other questions?

 

A.

If you have additional questions about the Special Meeting, the Merger or this proxy statement, need ‎assistance in submitting your proxy or voting your shares of Common Stock, or need ‎additional copies of the proxy statement or the enclosed proxy card or voting instructions, please contact ‎the Company’s proxy solicitor in connection with the Special Meeting:‎

 

Innisfree M&A Incorporated
‎501 Madison Avenue, 20th Floor

New York, NY 10022

 

Stockholders may call toll free:  877-687-1875

Banks and Brokers may call collect:  212-750-5833

 

 

SPECIAL FACTORS

 

The following, together with the summary of the Merger Agreement set forth under the section titled “The Merger Agreement,” is a description of the material aspects of the Merger. While we believe that the following ‎description covers the material aspects of the Merger, the description may not contain all of the information ‎that is important to you. We encourage you to read carefully this entire document, including the Merger ‎Agreement attached to this proxy statement as Annex A, for a more complete understanding of the Merger. ‎The following description is subject to, and is qualified in its entirety by reference to, the Merger Agreement. ‎You may obtain additional information without charge as described in the section titled “Where You Can Find More Information.”‎

 

We are asking our stockholders to consider and vote on the approval and adoption of the Merger Agreement ‎and the transactions contemplated thereby, including the Merger. Pursuant to the Merger Agreement, subject ‎to the satisfaction or waiver of certain conditions, Merger Sub will merge with and into the Company, with the Company surviving the Merger and becoming a wholly owned subsidiary of Parent. If the Merger is completed, the holders of shares of Common Stock ‎immediately prior to the Merger (excluding any Cancelled Shares and any Dissenting Shares) shall be cancelled and extinguished and automatically converted into the right to receive an amount in cash equal to $6.29 per share of Common Stock, without interest, subject to and in ‎accordance with the terms and conditions set forth in the Merger Agreement.‎

 

Background of the Merger

 

As part of the Company’s ongoing consideration and evaluation of its long-term strategic goals and plans, the Company Board and the Company’s senior management periodically review, consider, and assess the Company’s operations and financial performance, as well as overall industry, macroeconomic and geopolitical conditions, as they may affect those strategic goals and plans, with the goal of enhancing stockholder value. This review at times includes, among other things, the consideration of potential opportunities for business combinations, acquisitions, capital raises and other financial and strategic alternatives.

 

The Company issues residential and commercial title insurance on purchase and refinance transactions through two primary business divisions: an enterprise business division, which offers a proprietary technology platform, and an insurance underwriting division, which issues title insurance policies for consumers and lenders. Consequently, the success of the Company’s business is highly dependent on a high volume of real estate transactions, including mortgage refinancings and property purchases. The Company went public in July 2021 in the middle of a very active real estate market fueled in large part by historically low interest rates. At that time, the Company experienced strong demand for its services and was positioned favorably for future growth.

 

Beginning in 2022, the Company encountered significant macroeconomic headwinds as the Federal Reserve pivoted United States economic policy to address high inflation. Beginning on March 17, 2022, the Federal Reserve announced a series of interest rate hikes, ultimately raising the Federal prime interest rate from near zero to 5.50% within a 16-month period. The last hike occurred in July 2023, with interest rates maintained at 5.50% since then. During this period, the average jumbo 30-year fixed interest mortgage loan rate went from 4.10% to 7.34%, labor markets were disrupted and there was an increase in geopolitical uncertainty. Rising rates have led to a shortage in the supply of homes for sale, increasing home prices and significantly reduced demand for refinancings. These factors have led to a marked decline in the volume of transactions that drive the Company’s business, and the Company has faced major challenges in producing revenue growth and finding a path to profitability.

 

On the last trading day of 2021, the Company’s stock price closed at $127.00 per share. On March 17, 2022, the day of the Federal Reserve’s first rate hike, the Company’s stock price closed at $52.50 per share. On July 26, 2023, the day of the Federal Reserve’s final rate hike to date, the Company’s stock price closed at $8.20 per share.

 

The Company has generated significant operating losses each quarter since it went public in 2021. The Company has been experiencing decreasing revenues since 2022, and total revenues for fiscal year 2023 decreased by 22% compared to the previous year. In an effort to offset its decreasing revenues, the Company was forced to implement significant cost reduction measures, including a 40% workforce reduction in December 2022. Despite these cost reduction measures, in the third and fourth quarters of 2023, the Company recorded net losses of $22 million and $18 million, respectively. For the year ended December 31, 2023, the Company recorded a net loss of $95 million.

 

In the fourth quarter of 2022, the Company Board began to consider strategic alternatives for the Company, including raising capital or exploring a take-private process. The Company had been working on an ambitious value creation plan, but the Company Board wanted to ensure that it considered all viable options for maximizing stockholder value. Following meetings and discussion, the Company Board concluded that such strategic alternatives were not promising in light of then-current economic conditions, and that the best path forward for the time being would be for management to continue executing on the Company’s business plan.

 

 

In the first and second quarters of 2023, the Company encountered certain unforeseen challenges in executing on its business plan. As a result, in the second quarter of 2023, the Company Board revisited whether strategic alternatives, including a take-private, could be a desirable path forward for the Company. Following meetings and discussion, the Company Board concluded that pursuing strategic alternatives could be beneficial if the Company could find the right partner and secure favorable terms. However, the Company Board still had doubts about the feasibility of pursuing a strategic transaction given the then-current macroeconomic environment. The Company Board directed management to continue executing on the Company’s business plan, but the Company Board agreed that it would be open to evaluating potential strategic opportunities should such opportunities emerge.

 

On July 29, 2023, representatives of Lennar Corp. corresponded with representatives of Centerbridge to set up a time to connect on various potential strategic investment opportunities.

 

On August 11, 2023, representatives of Lennar Corp. and Centerbridge had a meeting and discussed potential strategic investment opportunities.

 

On August 14, 2023, a representative of Lennar Corp. introduced Mr. Max Simkoff, the Company’s Founder and Chief Executive Officer, to a representative of Centerbridge for a strategic discussion regarding the Company.

 

On August 15, 2023, representatives of the Company and Centerbridge met for introductions and a general discussion about the Company’s business. During this initial conversation, the Centerbridge representative suggested that TRG Group might share strategic interests with the Company that warranted further conversation.

 

On August 16, 2023, representatives of Lennar Corp. and Centerbridge met to discuss the introductory call from the day prior between representatives of the Company and Centerbridge.

 

On August 21, 2023, a Centerbridge representative sent an electronic correspondence to Mr. Simkoff requesting another meeting to continue the conversation regarding the Company’s and TRG Group’s respective strategies and goals.

 

On August 24, 2023, representatives of the Company, TRG Group and Lennar Corp. met for a strategic conversation. The parties discussed areas for conceptual alignment between TRG Group and the Company and the Company’s vision for the future of its underwriting and technology divisions. The parties agreed to continue the conversation the next day.

 

On August 25, 2023, representatives of the Company, TRG Group and Lennar Corp. reconvened to continue the strategic conversation that had started the day prior. The parties agreed that there was the possibility for a strategic transaction or arrangement among their businesses, and indicated that Lennar Corp. would step away from the discussions and allow the representatives of the Company and representatives of TRG Group to continue their business discussions directly.

 

On September 1, 2023, the Company Board met, with members of the Company’s senior management present, in order to consider initiatives to maximize stockholder value and explore potential strategic options to execute on the Company’s long-term strategy. The Company Board discussed recent outreach by TRG Group but also potential opportunities to raise capital in light of the then-current macroeconomic environment. The Company Board decided to reconvene with management on these topics at a later date and directed management to conduct outreach to potential advisors to consider such possible avenues for a capital raise or strategic alternatives. 

 

 

On September 6, 2023, a representative from Lennar Corp. and Mr. Simkoff met and discussed certain strategies Mr. Simkoff was exploring to improve the operations and performance of the Company’s business. The parties also discussed that status of the Company’s discussions with TRG Group.

 

On September 8, 2023, the Company Board met, with members of the Company’s senior management, representatives of Houlihan Lokey and Davis Polk & Wardwell LLP, the Company’s outside counsel (“Davis Polk”) present, in order to discuss in depth the Company’s strategic goals and potential strategic alternatives, in light of the Company’s continued operating losses and concerns that the Company’s cash balances may be insufficient to fund the Company’s long-term business plan. The Company Board discussed that the Company needed to access additional capital in the near future in order to effectively pursue its near-term goals and opportunities. At the request of the Company Board, representatives of Houlihan Lokey briefly presented an assessment of the market opportunities and potential strategic transactions the Company could undertake to improve stockholder value. The Company Board then authorized senior management to engage Houlihan Lokey to act as the Company’s financial advisor in connection with a capital raise or potential strategic transaction, based on Houlihan Lokey’s expertise and experience in similar transactions and absence of conflicts.

 

On September 8, 2023, representatives of Centerbridge and Lennar Corp. met to discuss, among other topics, various opportunities that Centerbridge had identified in the fintech industry where Lennar Corp. and Centerbridge could potentially collaborate, including potentially participating in a transaction involving the Company.

 

On September 15, 2023, representatives of the Company sent a draft mutual nondisclosure agreement to representatives of Centerbridge. The parties engaged in negotiations regarding the terms of the mutual nondisclosure agreement over the following days.

 

Also on September 15, 2023, representatives of the Company met with a representative of HSCM to discuss potential partial restructuring of the Company Loan Agreement if the Company pursued a capital raise or strategic transaction, in order to facilitate discussions with potential investors or other strategic partners.

 

On September 18, 2023, the Company and Centerbridge executed a mutual nondisclosure agreement in connection with exploring a potential acquisition or merger involving the Company, including potentially an acquisition of the Company’s underwriter/underwriting division. Representatives of the Company then provided initial data about the Company’s business operations to representatives of Centerbridge.

 

On September 21, 2023, representatives of Centerbridge sent a data request list to Mr. Simkoff for further information on the Company’s underwriting division. Over the following days, members of the Company’s senior management provided responsive materials.

 

On October 4, 2023, representatives of Centerbridge requested further information on the Company’s underwriting division. Over the following days, members of the Company’s senior management provided responsive materials.

 

On October 5, 2023, a representative of the Company met with a representative of HSCM to continue discussions regarding potential restructuring of the Company’s debt facility with HSCM if the Company pursued a capital raise or strategic transaction.

 

 

On October 6, 2023, representatives of Centerbridge and TRG Group sent a proposed agenda for a business diligence call to be held with members of the Company’s senior management to aid their consideration of an acquisition of the Company’s underwriting division.

 

On October 9, 2023, members of the Company’s senior management met with representatives of TRG Group for a business diligence call.

 

On October 10, 2023, the Company entered into an engagement letter with Houlihan Lokey as its financial advisor in connection with a potential strategic transaction, capital raise or recapitalization, which potentially could include, but could also provide an alternative to, a transaction with TRG Group. The Company Board determined that a capital raise, if available, could prove to be a more beneficial option that would allow the Company to continue to operate on a standalone basis to independently execute its business plan while gaining valuable perspective from outside investors. Moreover, exploring a capital raise would, in any event, increase the Company’s leverage in future negotiations with potential counterparties.

 

On October 12, 2023, a representative of the Company met with a representative of HSCM to continue discussions regarding potential restructuring of the Company’s debt facility with HSCM if the Company pursued a capital raise or strategic transaction.

 

On October 15, 2023, a representative of TRG Group called Mr. Simkoff to discuss ongoing diligence regarding TRG Group’s interest in purchasing the Company’s underwriting division. On the call, Mr. Simkoff informed the TRG Group representative that the Company had retained Houlihan Lokey as its financial advisor for a potential capital raise. Following the call, Mr. Simkoff introduced the representative of TRG Group to representatives of Houlihan Lokey over email.

 

On October 20, 2023, Mr. Simkoff met with a representative of TRG Group to catch up on strategic discussions among the Company and TRG Group about their interest in purchasing the Company’s underwriting division. Mr. Simkoff and the TRG Group representative discussed the challenges of separating the Company’s underwriting division, Doma Title Insurance, from its enterprise business segment, which would leave the remaining enterprise business segment, Doma Technology, operating as a public company. Mr. Simkoff also emphasized the importance of the Company’s technology to the underwriting division and suggested they have a more detailed conversation about the Company’s technology capabilities and the value of its enterprise business segment.

 

On October 26, 2023, at the request of the Company Board, representatives of the Company and Houlihan Lokey began outreach to potential investors for the capital raise, consisting of a total of fifty-four (54) financial sponsors and strategic partners. Of the fifty-four (54) parties contacted, thirty-five (35) parties indicated interest in receiving further information about the Company for consideration of a capital raise. Over the coming days, the Company, with the assistance of Houlihan Lokey, coordinated and executed nondisclosure agreements with twenty-eight (28) of the thirty-five (35) potential investors that indicated interest.

 

On November 1, 2023, a representative of the Company met with a representative of HSCM to continue discussions regarding potential restructuring of the Company’s debt facility with HSCM if the Company pursued a capital raise or strategic transaction.

 

On November 5, 2023, at the direction of the Company Board, representatives of Houlihan Lokey sent a confidential information memorandum and provided initial access to the Company’s virtual data room to the twenty-eight (28) potential investors who had indicated interest in receiving further information about the Company for consideration of the capital raise. Following receipt of the confidential information memorandum and an initial set of data room materials, select parties began to request meetings with the Company’s senior management to discuss the capital raise and other strategic arrangements. Between November 5, 2023 and January 4, 2024, seventeen (17) parties requested business diligence meetings with the Company’s senior management.

 

 

On November 8, 2023, representatives of the Company met with representatives of HSCM to continue discussions regarding potential restructuring of the Company’s debt facility with HSCM if the Company pursued a capital raise or strategic transaction.

 

On November 9, 2023, Mr. Simkoff and a representative of Lennar Corp. had a meeting and discussed the status of the Company’s discussions with the TRG Group.

 

On November 10, 2023, representatives of Houlihan Lokey met with representatives of HSCM to continue discussions regarding potential restructuring of the Company’s debt facility with HSCM if the Company pursued a capital raise or strategic transaction.

 

On November 15, 2023, representatives of TRG Group sent an initial proposal to Houlihan Lokey and the Company for TRG Group to acquire the Company’s underwriting division (the “November 15 Proposal”). In addition to cash consideration, the November 15 Proposal contemplated that TRG Group would assume a substantial portion of the Company’s debt facility with HSCM and Lennar would roll its equity stake in the Company into, or otherwise invest in, TRG Group in an amount equivalent to approximately a 10% equity interest in TRG Group. The November 15 Proposal also provided for the possibility that TRG Group may work with Doma Technology to support its Upfront Title product.

 

On November 16, 2023, representatives of TRG Group and Lennar Corp. met to discuss the status of TRG Group’s strategic discussions with the Company.

 

On November 16, 2023, Mr. Simkoff spoke with a representative of TRG Group regarding components of the proposed structure set forth in the November 15 Proposal. Mr. Simkoff asked a few clarifying questions. Mr. Simkoff then indicated that Houlihan Lokey would be in touch to work through potential next steps.

 

On November 17, 2023, representatives of the Company and Houlihan Lokey verbally conveyed a counterproposal to representatives of TRG Group, which generally sought (1) more favorable economic terms for a potential sale of Doma Title Insurance and (2) commercial or revenue share arrangements between Doma Technology and TRG Group going forward (the “November 17 Counterproposal”).

 

On November 20, 2023, members of the Company’s senior management and representatives of Lennar Corp. met to discuss the status of the operations of the Company and whether the Company was considering any strategic transactions.

 

Also on November 20, 2023, representatives of Houlihan Lokey met with representatives of HSCM to discuss potential restructuring of the Company’s debt facility with HSCM, including the potential impact of an acquisition of the Company’s underwriting segment.

 

In connection with evaluating this potential transaction, the Company Board sought advice from internal and outside counsel regarding fiduciary duties of directors and appropriate approaches to identify and manage potential conflicts of interest, including the circumstances in which it may be prudent to form a special committee of independent and disinterested directors. On November 21, 2023, the Company Board met, with representatives of the Company’s senior management, Houlihan Lokey and Davis Polk present, to discuss updates on the capital raise process, the ongoing negotiations with TRG Group and potential conflicts of interest, given that the November 15 Proposal contemplated participation by Lennar Corp. and the Lennar Stockholders, the Company’s largest stockholder which has a representative on the Company Board. Following discussion with its advisors at the meeting, the Company Board established the Special Committee, comprised of independent and disinterested directors Lawrence Summers, Maxine Williams and Matthew E. Zames, to, among other things, review, evaluate and negotiate one or more strategic transactions involving the Company (each, a “Potential Transaction”), including a Potential Transaction with TRG Group. The resolutions provided that the Company Board would not authorize, approve or proceed with a Potential Transaction, or recommend for approval by the Company’s stockholders, a Potential Transaction without a prior favorable recommendation by the Special Committee. The resolutions further provided that the Special Committee was authorized to review, evaluate and negotiate the terms and conditions of a Potential Transaction, that the Special Committee had the authority to select and engage its own advisors and that the Special Committee could select a chair from among the members appointed to serve on the Special Committee. Following approval of the resolutions, Mr. Stuart Miller and Ms. Serena Wolfe recused themselves from the balance of the Company Board meeting.

 

 

Representatives of Houlihan Lokey then provided the Special Committee with an overview of Houlihan Lokey’s qualifications, experience and expertise, including with respect to serving as a financial advisor to real estate and technology companies, advising companies on M&A transactions and serving as a financial advisor to special committees of boards of directors. Following Houlihan Lokey’s departure from the meeting, the Special Committee discussed Houlihan Lokey’s qualifications, experience and expertise, Houlihan Lokey’s prior experience in serving as financial advisor to the Company and its earlier discussions with Houlihan Lokey at the meeting. Following such discussion, the Special Committee determined to engage Houlihan Lokey, subject to (1) receipt from Houlihan Lokey of a letter setting forth information regarding Houlihan Lokey’s relationships with the Company, Centerbridge, TRG Group, Lennar, Foundation Capital and HSCM (which was subsequently updated and provided to the Special Committee on March 9, 2024) and the Special Committee’s satisfaction with the ability of Houlihan Lokey to provide objective financial advice; and (2) the negotiation of a mutually acceptable engagement letter. Given Houlihan Lokey’s experience, expertise and qualifications and familiarity with the Company through the capital raise process, the Special Committee determined not to interview other potential financial advisors. The Company, the Special Committee and Houlihan Lokey subsequently entered into a formal engagement letter on March 11, 2024, amending and restating the engagement letter entered into between the Company and Houlihan Lokey as of October 10, 2023.

 

The Company Board then discussed the November 15 Proposal and the November 17 Counterproposal in detail. Following the discussion, the Company Board determined that a sale of Doma Title Insurance could be attractive and merited further consideration. The Company Board then instructed representatives of Houlihan Lokey and members of the Company’s senior management to continue discussions with TRG Group and any other potential strategic partners identified as part of the capital raise process.

 

On November 27, 2023, members of the Company’s senior management met with representatives of Lennar Corp. to discuss whether Lennar Corp. would be interested in participating in a potential transaction involving the Company.

 

On December 1, 2023, Mr. Simkoff met with representatives of TRG Group to discuss the Potential Transaction between the Company and TRG Group. Mr. Simkoff explained in more detail the Company’s enterprise business segment, the Company’s technology for instant underwriting, the Company’s strategy generally and potential new opportunities for the Company’s Upfront Title product.

 

On December 7, 2023, representatives of the Company and TRG Group met with the Company so the Company could provide additional diligence information and to discuss potential structures for intercompany partnership agreements and necessary transition services upon a sale of the Company’s underwriting division to TRG Group.

 

 

On December 14, 2023, in connection with the capital raise process, representatives of a strategic investor (“Party A”) verbally indicated potential interest in a take-private transaction involving the Company to representatives of Houlihan Lokey. Representatives of Houlihan Lokey subsequently informed the Company of Party A’s interest. 

 

On December 15, 2023, in response to the Company Board’s counterproposal, representatives of TRG Group sent a revised proposal to Houlihan Lokey for the acquisition of the Company’s underwriting division (the “December 15 Proposal”). The December 15 Proposal included improved economic terms, including a preferred investment by Parent in Doma Technology and deferred earnout consideration, an equity rollover or reinvestment by Lennar, and a representative for Lennar on TRG Group’s board of directors.

 

On December 19, 2023, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey and Davis Polk present, to discuss the capital raise process and the December 15 Proposal. The Special Committee had a detailed discussion of the terms and structure set forth in the December 15 Proposal, the potential alternative transaction structures, the Company Loan Agreement and the viability of Doma Technology as a publicly traded company. The Special Committee noted that a take-private would likely be the best transaction structure for the Company and its stockholders given the factors affecting the ability of Doma Technology to operate as a standalone company in the event of a sale of Doma Title Insurance. Representatives of Houlihan Lokey provided an update on discussions with other potential investors for the capital raise, noting that certain potential investors had verbally expressed interest in either a take-private of the Company or an investment in the Company’s preferred stock, but that nothing more certain had materialized as a result of those discussions. Representatives of Davis Polk reviewed the Special Committee’s fiduciary duties in connection with the December 15 Proposal, in addition to the capital raise outreach that was underway. Given the contemplated participation of Lennar Corp. in the December 15 Proposal, and potentially other large stockholders affiliated with the Company Board or the Company’s senior management, representatives of Davis Polk advised the Special Committee to consider engaging its own independent legal counsel to advise on the discussions with Centerbridge and TRG Group and other potential alternative transactions. Following an executive session, the Special Committee directed representatives of Houlihan Lokey and members of the Company’s senior management to continue discussions with TRG Group, HSCM and potential investors for a capital raise.

 

On December 20, 2023, a representative of Lennar Corp. and Mr. Simkoff had a telephonic meeting and discussed whether Lennar would participate in any potential transaction involving the Company, including whether Lennar would be willing to invest additional cash consideration into the acquiring entity as part of the transaction. The representative of Lennar Corp. expressed skepticism that Lennar would be willing to invest additional capital into the Company or any of its affiliates (including any acquiring entity) in connection with a proposed transaction.

 

On December 22, 2023, representatives of Houlihan Lokey met with representatives of TRG Group to discuss the December 15 Proposal. At the direction of the Special Committee, representatives of Houlihan Lokey informed the representatives of Centerbridge that the Company was willing to engage on a deal involving only the Company’s underwriting division, but that the Special Committee and Company Board had developed a stronger preference to explore a full take-private of the Company. The representatives of TRG Group said they would consider it further.

 

 

On December 23, 2023, members of the Company’s senior management and representatives of Houlihan Lokey contacted representatives of HSCM to discuss debt modifications that would be required in connection with the December 15 Proposal and pursuing a Potential Transaction.

 

Between December 26, 2023 and January 3, 2024, members of the Company’s senior management and representatives of Houlihan Lokey engaged in negotiations with representatives of HSCM regarding how to address the Company Loan Agreement in connection with the December 15 Proposal.

 

On December 27, 2023, members of the Company’s senior management met with representatives of Lennar Corp. to discuss the potential structure of a transaction involving the Company and the participation of Lennar Corp. in such transaction, including by investing additional capital into the acquiring entity. Representatives of Lennar Corp. said they would consider the possibility further and get back to the Company.

 

On December 28, 2023, Mr. Simkoff had a discussion with a representative of TRG Group to reinforce the Special Committee’s and the Company Board’s respective preferences that discussions continue toward an acquisition of the whole Company rather than a sale of Doma Title Insurance. The TRG Group representative indicated that this was a possibility and that TRG Group would work on a model for the new transaction structure.

 

Also on December 28, 2023 and on December 30, 2023, representatives of the Company and Houlihan Lokey met with representatives of HSCM to continue discussions regarding debt modifications that would be required in connection with a Potential Transaction with TRG Group.

 

On January 2, 2024, Mr. Zames of the Special Committee met with representatives of Latham & Watkins LLP (“Latham”) to interview Latham to serve as the Special Committee’s legal advisor and to discuss the Special Committee’s process. Representatives of Latham provided the Special Committee with an overview of a number of process-related matters, including discussing the scope of the Special Committee’s expected mandate and the engagement of an independent financial advisor to advise the Special Committee. Representatives of Latham also reviewed Latham’s independence and conflicts, qualifications, experience and expertise. Representatives of Latham reviewed with the Special Committee that Latham represents Centerbridge and Lennar Corp. from time to time and had previously been engaged as counsel to Centerbridge and Lennar with respect to unrelated transactions, but the total amount of revenues generated by such matters were not material relative to the firm’s total revenues. Following this meeting, the Special Committee determined to engage Latham as its independent legal advisor and an engagement letter with Latham was executed on January 8, 2024.

 

Also on January 2, 2024, members of the Company’s senior management and representatives of Houlihan Lokey met with representatives of TRG Group to discuss financial projections prepared by the Company in relation to a potential take-private transaction. For additional details regarding the Company’s financial projections, see the section of this proxy statement titled “Special FactorsCertain Unaudited Prospective Financial Information.

 

On January 3, 2024, members of the Company’s senior management met with representatives of Lennar Corp. to continue the discussion from December 27, 2023. The representatives of Lennar Corp. provided feedback and indicated that they were open to continuing discussions related to a potential transaction involving the Company.

 

Also on January 3, 2024, representatives of HSCM shared a proposal with representatives of the Company and Houlihan Lokey for restructuring the Company Loan Agreement in connection with a potential acquisition by TRG Group (the “HSCM Proposal”). Among other things, the HSCM Proposal contemplated retiring all of the Company’s debt under the Company Loan Agreement at a discount to the then-outstanding amount, a portion of the proceeds of which would be applied to a preferred equity investment in Doma Technology.

 

 

On January 4, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey, Latham and Davis Polk present, to discuss the capital raise process, ongoing discussions with TRG Group and the HSCM Proposal. Representatives of Houlihan Lokey led a discussion regarding the latest conversations with potential investors for the capital raise, noting that no party had expressed an interest in being the lead investor. Representatives of Latham reviewed the Special Committee’s fiduciary duties in connection with a Potential Transaction. The Special Committee then discussed the HSCM Proposal and following such discussion, directed members of the Company’s senior management and representatives of Houlihan Lokey to continue discussions with representatives of TRG Group and HSCM.

 

Between January 4, 2024 and January 12, 2024, members of the Company’s senior management met with representatives of Lennar Corp. to discuss the proposed transaction presented to Lennar Corp. by the representatives of the Company on December 27, 2023.

 

By the end of January 4, 2024, the Company’s senior management had held seventeen (17) initial management meeting sessions with potential investors for a capital raise, and several follow-up diligence sessions to address specific areas of diligence. Members of the Company’s senior management and representatives of Houlihan Lokey continuously gauged interest and solicited feedback from these potential investors. No potential investor was interested in being the lead investor for the Company’s capital raise, but a few parties indicated potential interest in smaller tag-along investments in Doma Technology, only if a lead investor were to materialize, or as part of a larger take-private transaction.

 

On January 10, 2024, in connection with the capital raise process, representatives of a strategic investor (“Party B”) shared an illustrative acquisition structure for a take-private transaction of the Company (the “Party B Proposal”) with representatives of Houlihan Lokey, indicating that its proposal was contingent on certain plans for the go-forward company, including a reduction in force and reductions of outstanding principal and cash interest under the Company Loan Agreement. The Party B Proposal did not include an implied valuation or a per share price for the Common Stock. In a follow up call on January 23, 2024, Party B indicated a preliminary valuation which would equate to an approximately 20% premium on a per share basis for the Common Stock as of January 10, 2024. The Company’s stock price closed at $4.38 per share on January 10, 2024. Despite this preliminary indication, Party B never sent a formal offer for the Company's consideration.

 

On January 11, 2024, representatives of TRG Group verbally conveyed a proposal for a take-private transaction to representatives of Houlihan Lokey (the “January 11 Proposal”). The proposal contemplated, among other things, a price in the range of $5.50–6.00 per share, a complete payoff of the Company’s obligations under the Company Loan Agreement assuming a certain minimum amount of debt write off and contingent notes to HSCM, and an investment in Topco by Lennar through a combination of reinvestment of proceeds Lennar were to receive in consideration for its Common Stock and new cash investment. As part of the proposal, TRG Group also noted interest in the Company raising financing for Doma Technology on a separately capitalized basis.

 

On January 12, 2024, representatives of the Company and Houlihan Lokey had a discussion with representatives of TRG Group to negotiate terms for a potential strategic transaction, including the per share price. Representatives of TRG Group said they would consider their valuation model further.

 

 

Also on January 12, 2024, representatives of Party A indicated to Houlihan Lokey that it was no longer interested in a take-private transaction because the Company’s valuation expectations were too high, and Party A saw no path to deliver a premium to the Company’s stockholders in a take-private transaction.

 

On January 16, 2024, Mr. Simkoff and representatives of Houlihan Lokey had a discussion with representatives of TRG Group to discuss the parties’ latest thinking on a potential strategic transaction and share initial views on potential price per share and transaction structure and discuss business diligence, administrative items and a hypothetical timeline for further transaction negotiations. Representatives of TRG Group indicated to Mr. Simkoff and representatives of Houlihan Lokey that they would require Lennar to invest in Topco as a condition to closing.

 

By January 16, 2024, representatives of Houlihan Lokey had received verbal indications of interest or reaffirmations of interest from smaller potential investors identified during the capital raise process in investing in Doma Technology in connection with a larger take-private transaction involving the Company.

 

On January 17, 2024, representatives of Houlihan Lokey conveyed the details of the January 11 Proposal to representatives of HSCM. Representatives of HSCM verbally indicated interest in the debt restructuring contemplated by the January 11 Proposal, including making a preferred equity investment in Doma Technology. Furthermore, representatives of HSCM communicated that they were no longer willing to fund an investment in Doma Technology in a scenario involving the sale of only Doma Title Insurance.

 

On January 18, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey, Latham and Davis Polk present, to discuss the recent verbal take-private proposal from TRG Group. As part of the discussion, Houlihan Lokey updated the Special Committee regarding discussions with Party B and HSCM, and the Special Committee evaluated the sufficiency the outreach being made in connection with the capital raise. The Special Committee highlighted the importance of ensuring that the Company secure the best price in a take-private scenario and determined that a go-shop provision would be essential to reach an agreement with TRG Group for a Potential Transaction. The Special Committee then discussed the possibility that certain of the Company’s stockholders, including the Lennar Stockholders, might be willing to or interested in reinvesting all or a portion of their equity as part of the Potential Transaction if such were an option from an acquiror. The Special Committee also discussed the Company’s financial position and the growing risk that the Company could become insolvent as a result of its decreasing cash balances and diminishing financing prospects. Following this discussion, the Special Committee instructed members of the Company’s senior management to seek a formal proposal from TRG Group for a take-private of the Company.

 

Also on January 18, 2024, Mr. Simkoff met with representatives of TRG Group to discuss diligence efforts, ongoing discussions with HSCM and next steps in evaluating the Potential Transaction between the Company and TRG Group.

 

Also on January 18, 2024, a representative of the Company sent an electronic correspondence to a representative of Lennar Corp. to identify TRG Group as the potential counterparty in a transaction involving the Company and to provide Lennar Corp. with a summary of TRG Group’s proposal, including that Lennar would be required to invest in TRG Group as a condition to closing. The representative of the Company asked Lennar Corp. to hold off on engaging in any discussions directly with TRG Group as the material terms of the transactions were still being negotiated.

 

On January 19, 2024, members of the Company’s senior management met with representatives of Lennar Corp. to discuss the material terms of the proposed transaction and Lennar Corp.’s reaction to the structure. The representatives of Lennar Corp. conveyed that they were open to considering the proposed transaction but expressed reservations that Lennar Corp. would be willing to invest additional cash in TRG Group as a condition to closing. 

 

 

On January 19, 2024, a representative of TRG Group sent an electronic correspondence to a representative of Lennar Corp. to communicate that the Special Committee had given TRG Group permission to contact representatives of Lennar Corp. directly to discuss the transaction, and representatives of TRG Group sent an electronic correspondence to representatives of Lennar Corp. containing certain preliminary financial information and other due diligence materials related to TRG Group.

 

On January 21, 2024, a representative of Lennar Corp. and Mr. Simkoff had a meeting to confirm that representatives from Lennar Corp. had engaged in a preliminary communication with representatives from TRG Group related to TRG Group’s proposal to acquire the Company.

 

On January 22, 2024, representatives of TRG Group and Lennar Corp. discussed the status of TRG Group’s proposal to acquire the Company and the material terms of the proposed transaction, including the requirement that Lennar invest in TRG Group.

 

On January 24, 2024, representatives of TRG Group reached out to representatives of Lennar Corp. to propose a meeting to discuss TRG Group’s proposal to acquire the Company. In response, the representatives of Lennar Corp. requested additional financial information on TRG Group to evaluate TRG Group’s business and the potential investment opportunity.

 

On January 24, 2024, a representative of TRG Group sent a draft of a nonbinding letter of intent addressed to the Special Committee for TRG Group to acquire the Company to representatives of Houlihan Lokey. The draft letter of intent contemplated total consideration and debt repayment of $185 million in cash, consisting of approximately $80–90 million of equity value and approximately $95–100 million repayment of the Company’s obligations under the Company Loan Agreement, contingent notes to HSCM, a requirement for a preferred equity investment by HSCM in Doma Technology, and a requirement that Lennar invest a certain amount in Topco. The representative of TRG Group also sent a draft exclusivity agreement to the Special Committee providing for exclusive negotiations between the Company and TRG Group through February 26, 2024.

 

On January 25, 2024, members of the Company’s senior management met with representatives of Lennar Corp. to discuss the proposal from TRG Group. Later that day, representatives of TRG Group sent a draft nondisclosure agreement to representatives of Lennar Corp. to permit receipt by representatives of Lennar Corp. of diligence information regarding TRG Group. Between January 25, 2024 and January 29, 2024, representatives of Lennar Corp. and TRG Group negotiated and signed the nondisclosure agreement. Following execution of the nondisclosure agreement, representatives of TRG Group sent representatives of Lennar Corp. a presentation providing an overview of TRG Group and the proposed investment by Lennar into TRG Group.

 

Also on January 25, 2024, representatives of Latham exchanged comments with representatives of Willkie Farr & Gallagher LLP (“Willkie”), counsel to TRG Group, on the drafts of the nonbinding letter of intent and the exclusivity agreement on behalf of the Special Committee. The Special Committee pushed for a longer go-shop period and bifurcated termination fees, with the lower termination fee to be paid during the go-shop period or in the case of an alternative transaction with certain exempted persons who submitted proposals during the go-shop period.

 

On January 26, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey, Latham and Davis Polk present, to discuss the draft nonbinding letter of intent received from TRG Group. The Special Committee determined that the proposal from TRG Group was compelling and had the potential to lead to a transaction that would be attractive to the stockholders of the Company. Following the discussion, the Special Committee approved the Company’s entry into the nonbinding letter of intent and exclusivity agreement with TRG Group.

 

 

On January 29, 2024, TRG Group executed and delivered to the Special Committee a formal nonbinding letter of intent to acquire all outstanding capital stock of the Company (the “Letter of Intent”), reflecting certain updates to the draft nonbinding letter of intent delivered by TRG Group on January 24, 2024. In the Letter of Intent, TRG Group offered to acquire all outstanding shares of Common Stock at a price of $6.00–6.75 per share, reflecting total consideration and debt repayment of approximately $185 million in cash consisting of approximately $80–90 million of equity value and $95–100 million in upfront cash to pay down the Company’s debt with HSCM. The Letter of Intent further contemplated, among other things, a 40-day go-shop period, a condition that Lennar would invest a total of approximately $40–45 million in TRG Group, inclusive of its proceeds from the potential acquisition of the Company and that the Potential Transaction between the Company and TRG Group would not be subject to any financing contingency. TRG Group also executed and delivered an exclusivity agreement providing for exclusive negotiations between the Company and Topco through February 29, 2024 (the “Exclusivity Agreement”). A representative of the Company executed and returned the Exclusivity Agreement to TRG Group. Upon entry into the Exclusivity Agreement, the Company’s capital raise process ended.

 

Later on January 29, 2024, Mr. Simkoff met with representatives of TRG Group to discuss ongoing diligence efforts, and business strategy for the Company and TRG Group assuming a transaction were to be completed.

 

On January 30, 2024, Mr. Simkoff met with representatives of TRG Group to discuss the Company’s plan to request approval from the South Carolina Department of Insurance (“SC DOI”) to issue a $40 million underwriter dividend from Doma Title Insurance to its operating subsidiary, subject to receipt of such approval by SC DOI, in March or April 2024 for purposes of providing necessary liquidity to the Company for its operations. Given the Company’s sustained operating losses and current cash balances, the $40 million underwriter dividend would provide critical runway for the Company to find a financing partner, or negotiate another strategic arrangement, and avoid the increasing risk of insolvency. Representatives of TRG Group were generally supportive of the Company’s plan with respect to the dividend. Following the meeting, Mr. Simkoff also shared a framework for HSCM’s investment in Doma Technology with representatives of TRG Group. TRG Group representatives provided comments on the framework.

 

On February 6, 2024, Mr. Simkoff met with a representative of TRG Group to discuss a potential financing structure for Doma Technology. Mr. Simkoff mentioned that Foundation Capital might have interest in investing in Doma Technology, and the TRG Group representative requested an introduction. Following the meeting, Mr. Simkoff introduced representatives of Foundation Capital to representatives of TRG Group via email to discuss Foundation Capital potentially investing in Doma Technology in connection with the Potential Transaction between the Company and TRG Group.

 

Also on February 6, 2024, representatives of Lennar Corp. and TRG Group met for TRG Group to provide certain information regarding TRG Group’s business operations. Representatives from TRG Group answered diligence questions related to TRG Group from the representatives from Lennar Corp.. Following that call and again on February 8, 2024, a representative from TRG Group delivered to Lennar Corp. certain pro forma financial information and forecasts for the proposed combined business.

 

 

On February 9, 2024, Mr. Simkoff met with representatives of TRG Group to discuss progress on business due diligence, the Lennar Investment and other process items with respect to the Potential Transaction between the Company and TRG Group.

 

Also on February 9, 2024, representatives of Lennar Corp. and TRG Group met for TRG Group to provide certain information regarding TRG Group’s financial model and to address additional diligence questions the representatives of Lennar Corp. had related to the business of TRG Group.

 

On February 12, 2024, the Company and TRG Group executed a confidentiality and common interest agreement setting forth the terms under which certain common interest materials could be exchanged among the parties’ legal advisors in connection with assessing and negotiating the Potential Transaction between the Company and TRG Group.

 

On February 13, 2024, representatives of Lennar Corp. and TRG Group met for TRG Group to provide further information regarding TRG Group’s financial model.

 

On February 14, 2024, representatives of Lennar Corp. provided TRG Group initial feedback regarding a potential investment by Lennar in TRG Group, including that Lennar Corp. was enthusiastic about the proposed combined business but that Lennar Corp. was uncertain it could commit to investing cash into TRG Group in addition to Lennar’s proceeds from the Potential Transaction.

 

On February 15, 2024, the Company applied for approval by the SC DOI of the $40 million underwriter dividend from Doma Title Insurance to the Company (the “Underwriter Dividend”). This money would be used to provide necessary liquidity to the Company’s operations, including continuing to fund the Company’s enterprise segment, as the Company searched for a financing partner or another strategic arrangement that would help it avoid the increasing risk of insolvency.

 

On February 16, 2024, representatives of Lennar Corp. and TRG Group had a call to further discuss the structure of the proposed transaction, including the amount of the proposed investment by Lennar in TRG Group as part of such proposed transaction.

 

On February 18, 2024, representatives of Willkie sent an initial draft of the Merger Agreement on behalf of TRG Group to representatives of Latham.

 

Also on February 18, 2024, representatives of TRG Group sent a short presentation with proposed investment terms to representatives of Lennar Corp. for its preliminary consideration.

 

On February 19, 2024, Mr. Simkoff met with representatives of TRG Group to discuss their respective expectations on offer price, updates on discussions regarding the potential Lennar Investment, terms for the Doma Technology financing, diligence items and a potential timeline for signing the Merger Agreement and other transaction documents.

 

On February 21, 2024, a representative from Lennar Corp. and Mr. Zames met and discussed the structure of the Potential Transaction and the representative from Lennar Corp. expressed skepticism that Lennar would be willing to invest additional cash in TRG Group in addition to Lennar’s proceeds from the Potential Transaction.

 

On February 23, 2024, Mr. Simkoff met with representatives of TRG Group to discuss updates on discussions regarding the Lennar Investment, terms for the Doma Technology financing, the HSCM debt restructuring and an updated timeline for signing the Merger Agreement and other transaction documents in light of the approaching expiry of the exclusivity period on February 29, 2024.

 

 

Also on February 23, 2024, a representative of Foundation Capital sent a draft term sheet for Foundation Capital to invest in Doma Technology to Company management, TRG Group and HSCM. The parties clarified certain terms contained therein over email. Following further discussion over the following days, the parties agreed that the terms of the proposed term sheet and Foundation Capital’s potential investment were not workable at that time. However, representatives of Foundation Capital noted potential interest in investing in Doma Technology at a later date, but that any such investment and any discussion, negotiation or consideration thereof should only be addressed following the signing of a Merger Agreement by the Company and TRG Group and potentially consummation of the transactions contemplated thereby. As a result, discussions with Foundation Capital ceased.

 

On February 24, 2024, representatives of Latham sent comments on the Merger Agreement on behalf of the Special Committee and the Company to representatives of Willkie.

 

On February 27, 2024, representatives of TRG Group and HSCM met to discuss and negotiate a term sheet related to the potential payoff of the Company’s debt by means of partial cash payment and investment in, or receipt of equity in an entity comprising the Doma Technology Business, in connection with the Potential Transaction between TRG Group and the Company.

 

On February 28, 2024, the SC DOI denied the Company’s application for the Underwriter Dividend, without providing a reason for the denial. This denial heightened the Company’s financial stress and, consequently, the need for the Company to seek and receive funding on timely basis to help it avoid insolvency. Members of the Company’s senior management team reached out to representatives of the SC DOI to arrange a meeting to discuss the denial of the Company’s application.

 

On February 29, 2024, the exclusivity period between the Company and TRG Group expired, but negotiations between TRG Group and the Company continued.

 

Also on February 29, 2024, representatives of TRG Group and HSCM met to further discuss and negotiate the terms related to addressing the Company’s debt.

 

On March 1, 2024, representatives of HSCM shared a revised proposal with TRG Group and the Company for addressing the Company’s debt, including repayment terms and terms for a potential investment in Doma Technology, including potential receipt of equity as part of the payoff of Company debt, in connection with the Potential Transaction.

 

On March 2, 2024, representatives of the Company, TRG Group and HSCM met to negotiate HSCM’s investment in Doma Technology, including potential receipt of equity as part of the payoff of Company debt and terms relating to ongoing ownership in Doma Technology.

 

Also on March 2, 2024, representatives of Willkie sent initial drafts of the agreements related to Lennar’s potential investment in Topco on behalf of TRG Group to representatives of Morrison & Foerster LLP (“Morrison Foerster”), legal counsel to Lennar Corp..

 

On March 3, 2024, representatives of TRG Group verbally indicated to representatives of Houlihan Lokey that TRG Group would be lowering its offer price to potentially as low as $5.26 per share due to its diligence findings.

 

 

On March 4, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey, Latham and Davis Polk present, to discuss the anticipated offer price reduction from TRG Group. Representatives of Houlihan Lokey provided an update on the discussions with representatives of TRG Group. Representatives of Latham reviewed legal considerations for the Potential Transaction between the Company and TRG Group for the Special Committee, including the importance of getting the best price per share for Company stockholders and maximizing closing certainty. The Special Committee then discussed the SC DOI’s denial of the Underwriter Dividend and updates to the Company’s financial position in light thereof. Following the discussion, the Special Committee directed representatives of Houlihan Lokey and members of the Company’s senior management to continue negotiating with TRG Group, including for a better offer price.

 

Later on March 4, 2024, members of the Company’s senior management met with representatives of the SC DOI to discuss its denial of the Company’s application for the Underwriter Dividend. Representatives of the SC DOI indicated that the requested dividend was too large given the surplus ratio Doma Title Insurance is required to maintain, but that it would consider an application for a lower dividend. Representatives of the SC DOI also requested additional information from Company management regarding the purpose of the Underwriter Dividend and certain financial projections.

 

On March 5, 2024, representatives of the Company sent an initial draft of an amendment to the Company Loan Agreement memorializing the terms upon which the Company’s debt facility with HSCM would be repaid at the Closing, which amendment later became the HSCM Fifth Amendment, to representatives of TRG Group and HSCM.

 

Also on March 5, 2024, in response to the request for a better offer price from members of the Company’s senior management and representatives of Houlihan Lokey, a representative of TRG Group verbally indicated to representatives of Houlihan Lokey that their new offer price would likely be in the range of $6.04 to $6.39 per share, pending confirmation of the Company’s fully diluted share count.

 

Also on March 5, 2024, Mr. Simkoff met with a representative of TRG Group to discuss certain negotiation points regarding the transaction between the Company and TRG Group, including the Doma Technology Reorganization, including financing arrangements and go-forward appropriate staffing for Doma Technology. Between March 5, 2024 and March 12, 2024, Mr. Simkoff maintained daily contact with the TRG Group representative in order to facilitate transaction discussions.

 

At the close of market on March 5, 2024, the Company’s stock price was $4.60 per share.

 

On March 6, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey and Latham present, to discuss the range of offer prices per share received from TRG Group the day prior. Members of the Company’s senior management shared an update on the Company’s stressed financial position. The Special Committee also discussed process timing and a potential target signing and announcement date in conjunction with the Company’s fourth quarter and fiscal year 2023 earnings call on March 12, 2024. Following the discussion, the Special Committee instructed Houlihan Lokey to continue negotiating for the highest possible price per share from TRG Group.

 

Later on March 6, 2024, representatives of Davis Polk sent an initial draft of the Company Disclosure Letter to representatives of Willkie on behalf of the Company.

 

By close of market on March 6, 2024, the Company’s stock price had increased to $5.43 per share, representing approximately an 18% gain day-over-day. There was no news identified that day that would have accounted for the large gain in the Company’s stock price, including no known leaks of a potential transaction or take-private of the Company.

 

 

On March 7, 2024, the Federal Housing Finance Agency (the “FHFA”) announced a new plan to lower housing costs including a pilot program that waives the requirement for lender’s title insurance on certain refinance mortgage transactions. That evening, U.S. President Joe Biden announced his plan to lower housing costs for millions of Americans, specifically mentioning a focus on reducing title insurance costs. Company management believes it is well positioned with its technology and underwriting capabilities to participate in the FHFA “title acceptance” pilot (the “FHFA Pilot”).

 

Also on March 7, 2024, representatives of TRG Group verbally indicated to representatives of Houlihan Lokey that its new offer price was $6.10 per share.

 

Also on March 7, 2024, the Company reapplied to the SC DOI for a $35 million underwriter dividend from Doma Title Insurance to the Company. As requested by the SC DOI, the Company also submitted a comprehensive presentation to the SC DOI in support of its application, detailing the intended use of the Underwriter Dividend to fund the Company’s enterprise segment and certain financial projections.

 

Also on March 7, 2024, Mr. Simkoff and a representative of Lennar Corp. had multiple meetings in which they discussed the status of Lennar Corp.’s ongoing discussions with TRG Group, the timing of the Company’s earnings release and the expected timing for signing the definitive documents related to the Potential Transaction. Mr. Simkoff maintained daily contact with the Lennar Corp. representative in order to facilitate transaction discussions.

 

Later on March 7, 2024, representatives of Lennar Corp. and TRG Group met and discussed the material terms of Lennar’s investment in Topco, the timing of the transaction, the valuation TRG Group is giving the Company in the transaction and the role TRG Group was envisioning for Mr. Simkoff following completion of the Potential Transaction. Between March 7, 2024 and March 11, 2024, representatives of Lennar Corp. and TRG Group had several phone calls to discuss and negotiate investment terms without reaching alignment.

 

Late on March 7, 2024, representatives of Willkie sent an initial draft of the Voting and Support Agreement on behalf of TRG Group to representatives of Latham and Morrison Foerster.

 

On March 8, 2024, representatives of Morrison Foerster sent revised drafts of the draft agreements related to the potential Lennar Investment on behalf of Lennar Corp. to representatives of Willkie.

 

On March 9, 2024, at the request of the Special Committee, Houlihan Lokey provided the Special Committee with a letter dated March 7, 2024, updating its February 21, 2024 letter regarding Houlihan Lokey’s relationships with the Company, Centerbridge, TRG Group, Lennar, Foundation Capital and HSCM.

 

Also on March 9, 2024, representatives of Morrison Foerster sent a revised draft of the Voting and Support Agreement on behalf of Lennar Corp. to representatives of Willkie.

 

On March 10, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey, Latham and Davis Polk present, to discuss ongoing transaction negotiations with TRG Group. Representatives of Latham reviewed legal considerations for the Potential Transaction, including the Special Committee’s fiduciary duties. Members of the Company’s senior management then explained that the FHFA Pilot had the potential to be a significantly positive development for the Company’s business. In light of this discussion, the Special Committee determined it would be prudent for the Company to proceed with its scheduled earnings call on March 12, 2024, whether or not an agreement between the Company and TRG Group was reached, in order to give the Company the chance to highlight the significance of the FHFA Pilot and potentially attract greater interest from other potential strategic partners during a go-shop period if a deal was reached with TRG Group, or independently if the deal fell through. In addition, the Special Committee determined that Mr. Zames, as Chairman of the Company Board and a member of the Special Committee, would take over all negotiations with representatives of TRG Group directly, or through members of the Company’s management team at his direction. Following the discussion, the Special Committee settled on a framework for a counterproposal to TRG Group that the Company would proceed with its earnings call, that the Company would require a 75 day go-shop period and requesting TRG Group’s best and final offer price per share.

 

 

Later on March 10, 2024, the Company Board met, with members of the Company’s senior management and representatives of Davis Polk present, to discuss ongoing transaction negotiations with TRG Group. At the request of the Special Committee, Representatives of Houlihan Lokey and Latham were also present. The Special Committee outlined its proposed framework for going back to TRG Group and seeking an earnings call, a go-shop period of 75 days and a best and final price per share. Following the discussion, the Company Board indicated agreement and support for the Special Committee’s plan. After the meeting, Mr. Zames called representatives of TRG Group to deliver the message.

 

Later on March 10, 2024, Mr. Zames and a representative of Lennar Corp. had a meeting in which they discussed the proposed valuation of the transaction, the timing of the execution of the transaction’s definitive documents and the potential role of Mr. Simkoff at the Company or Doma Technology following the consummation of the Potential Transaction. Mr. Zames maintained daily contact with the Lennar Corp. representative in order to facilitate transaction discussions.

 

Also on March 10, 2024, representatives of Willkie sent representatives of Morrison Foerster revised drafts of the agreements related to the potential Lennar Investment on behalf of Lennar Corp..

 

On March 11, 2024, representatives of TRG Group verbally indicated to Mr. Zames that they would increase their offer price to $6.50 per share, accept a 50-day go-shop period and acknowledged that the Company would conduct its earnings call as scheduled on March 12, 2024 whether or not any transaction with TRG Group was entered into. Mr. Zames conveyed the updated offer to the Special Committee and the Company Board. Following Mr. Zames’ update, the Special Committee considered that the proposal from TRG Group was compelling and directed representatives of Latham and Davis Polk to push towards finalizing drafts of the Merger Agreement, the Voting and Support Agreement, the HSCM Fifth Amendment and the other transaction documents before the earnings call the next day.

 

On March 12, 2024, the Special Committee met, with members of the Company’s senior management, representatives of Houlihan Lokey and Latham present, to discuss the updated non-binding proposal received from TRG Group, including the updated proposed price per share of Common Stock and other proposed terms and conditions set forth in TRG Group’s latest draft of the Merger Agreement, and decide whether to recommend the transaction to the Company Board. Representatives of Latham reviewed the fiduciary duties of the Special Committee and updates to the Merger Agreement and other transaction documents since the last meeting of the Special Committee. Thereafter, at the request of the Special Committee, representatives of Houlihan Lokey reviewed with the Special Committee Houlihan Lokey’s financial analyses with respect to the Company and the Potential Transaction and Houlihan Lokey’s oral opinion that the Merger Consideration to be received by the Disinterested Stockholders (excluding any Cancelled Shares and any Dissenting Shares) was fair, from a financial point of view, to such holders of shares of the Common Stock. The Special Committee then discussed plans for the go-shop period if a transaction were to be signed with TRG Group later in the day. The Special Committee reviewed the latest drafts of the Merger Agreement, the Voting and Support Agreement, the HSCM Fifth Amendment, the Debt Commitment Letter in connection with debt financing TRG Group intended to pursue in connection with the proposed transaction, which would not be a condition to the transaction, and the other transaction documents. Following the discussion, the Special Committee approved the Merger Agreement and transaction documents and resolved to recommend the transaction to the Company Board later that day.

 

 

In the hours immediately following the Special Committee meeting, TRG Group informed the Company of a new issue brought to TRG Group’s attention, concerning whether certain restrictive covenants in certain agreements to which certain of the Company’s Subsidiaries are parties could be read as being applicable to members of the TRG Group and their affiliates upon closing of a Potential Transaction. TRG Group indicated that it would only be able to enter into the Potential Transaction if the Company agreed that the closing of the Potential Transaction would be conditioned on the Company procuring amendments to these restrictive covenants clarifying that the restrictive covenants would not be binding on the TRG Group and their affiliates following the closing, other than the Company and its subsidiaries. This discussion resulted in the Company and TRG Group being unable to reach agreement on the final transaction documents.

 

Later on March 12, 2024, the Company Board met, with members of the Company’s senior management and representatives of Davis Polk present, to discuss the issue flagged by TRG Group and determine appropriate next steps. Representatives of Houlihan Lokey and Latham were also present at the request of the Special Committee. Mr. Zames relayed to the Special Committee his latest conversations with representatives of TRG Group, including which negotiation points needed to be resolved before the Company and TRG Group could reach an agreement. Representatives of Latham noted that finalizing and signing a definitive agreement in the coming days could pose difficulties given the close proximity to the Company’s ordinary earnings release earlier that day. Following the discussion, the Company Board instructed Latham and Davis Polk to cease work on the Potential Transaction with TRG Group. The Company Board further directed Mr. Zames to continue discussions directly with representatives of TRG Group to scope the remaining open items and determine if there would be a potential path forward for a transaction.

 

Post-market on March 12, 2024, the Company proceeded with releasing its fourth quarter and fiscal year 2023 earnings report and held its earnings call as scheduled. The Company again fell short of reaching adjusted EBITDA profitability, one of its key publicly stated goals, primarily due to continued degradation of the interest rate environment. 

 

Late on March 12, 2024, representatives from the SC DOI informed the Company’s senior management that there was a possibility of a second denial or further deferral of the application for the Underwriter Dividend. The SC DOI suggested that, should approval be forthcoming, it would likely not be granted until mid-April 2024 at the earliest and may not be granted for the requested amount. This likely delay and reduction in the expected amount of the Underwriter Dividend raised additional concerns regarding the Company’s near-term liquidity and risk of insolvency.

 

On March 13, 2024, Mr. Simkoff and a representative of Lennar Corp. had multiple meetings in which they discussed the status of the Potential Transaction and certain discussions representatives of the Company had had with the Company’s auditing firm regarding the Company’s financial performance.

 

From March 13, 2024 until March 19, 2024, representatives of Lennar Corp. and TRG Group also had multiple meetings in which they discussed the transaction documents, including the new issue raised by the TRG Group on March 12, 2024 related to restrictive covenants in certain agreements to which certain of the Company’s Subsidiaries are parties and proposed solutions.

 

From March 14, 2024 until March 19, 2024, Mr. Simkoff and a representative of Lennar Corp. had multiple meetings to discuss, among other things, the cash position of the Company, the Company’s ongoing discussions with its auditing firm, potential debt financing options, the progress in addressing the issue related to restrictive covenants in certain agreements to which certain of the Company’s Subsidiaries are parties, and the timing of execution of the Potential Transaction.

 

 

On March 19, 2024, the Company’s stock price closed at $4.41 per share, down approximately 19% since the Company released its fourth quarter and fiscal year 2023 earnings report and held its earnings call a week earlier.

 

On March 20, 2024, members of the Company’s senior management met with representatives of the SC DOI to discuss the expected timeline for approval of the Underwriter Dividend and amount thereof.

 

Also on March 20, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey and Latham present, to discuss updates on negotiations with TRG Group and the Company’s liquidity position and the lack, as a result of the Company’s outreach regarding potential financings and other strategic alternatives, of available alternative strategic possibilities. The Special Committee discussed options for mitigating the Company’s liquidity concerns both with and without a Potential Transaction with TRG Group. The Special Committee noted that the transaction with TRG Group may be the Company’s best available option, in particular when considered in light of its liquidity concerns. Mr. Zames then updated the Special Committee on recent discussions with TRG Group regarding the final open issues subject to negotiation and potential solutions (including potentially agreeing to condition the Potential Transaction on the Company procuring amendments to certain restrictive covenants in certain agreements to which certain of the Company’s Subsidiaries are parties to resolve the issue raised by TRG Group on March 12, 2024 relating to these restrictive covenants). Following the discussion, the Special Committee agreed that the Company should continue working with TRG Group toward a resolution on these final issues.

 

Later on March 20, 2024, the Company Board met, with members of the Company’s senior management and representatives of Davis Polk present, to discuss next steps in the Potential Transaction with TRG Group. Representatives of Houlihan Lokey and Latham were also present at the request of the Special Committee. Mr. Zames relayed the discussion from the Special Committee meeting earlier to the Company Board. At the request of the Special Committee, representatives of Houlihan Lokey reviewed information provided by Company management regarding the Company’s liquidity position. Forecasting the Company’s overall burn rate, upcoming interest payments to HSCM, and not receiving approval for the Underwriter Dividend for the relevant period, the information provided by Company management indicated that the Company could run out of cash by mid- to late April. As a result, the Company Board recognized the need for the Company to reach an alternative arrangement with HSCM or otherwise secure financing in order to bridge the period until the SC DOI approved the Underwriter Dividend. Following the discussion, Mr. Zames directed Mr. Simkoff and representatives of Houlihan Lokey to work with representatives of TRG Group to update TRG Group regarding the Company’s liquidity position and to find a resolution on the final open points.

 

Following the Company Board meeting, Mr. Simkoff and representatives of Houlihan Lokey called representatives of TRG Group and Lennar Corp. to negotiate remaining open issues. In addition, they updated representatives of TRG Group and Lennar Corp. regarding the Company’s liquidity position in light of the status of the approval process for the Underwriter Dividend with the SC DOI.

 

On March 22, 2024, Mr. Simkoff and representatives of Houlihan Lokey met with representatives of TRG Group to continue negotiating remaining open issues. Representatives of TRG Group proposed potential solutions, and Mr. Simkoff and representatives of Houlihan Lokey indicated they were close to reaching an agreement. Furthermore, in light of the Company’s liquidity concerns, representatives of TRG Group indicated that TRG Group could enter into a commitment letter (i.e., the Topco Commitment Letter) to offer an amount of financing to the Company to help bridge the period until the approval of the Underwriter Dividend and, if necessary, the period between signing and closing the transaction.

 

In addition, on March 22, 2024, members of the Company’s senior management met with representatives of HSCM to discuss the HSCM Fourth Amendment, which was intended, among other things, to ease the Company’s liquidity position in light of upcoming cash requirements by deferring cash interest and certain other required cash payments under the Company Loan Agreement, and permit a bridge financing between the Company and TRG Group. It was further discussed that this amendment would be a standalone amendment to the Company Loan Agreement that would survive termination of the Merger Agreement, and that the amendment documenting the payoff of the HSCM debt facility at the closing of the Merger would be documented separately as the HSCM Fifth Amendment.

 

 

On March 23, 2024, Mr. Simkoff met with representatives of Centerbridge to further discuss the details of the proposed bridge financing arrangement between the Company and TRG Group.

 

Later on March 23, 2024, a representative of Lennar Corp. and Mr. Simkoff had multiple meetings, in which they discussed the proposed Topco Commitment Letter. Mr. Simkoff maintained daily contact with the Lennar Corp. representative in order to facilitate transaction discussions.

 

On March 25, 2024, Mr. Simkoff met with representatives of TRG Group to continue negotiating remaining open issues. However, Representatives of TRG Group noted they would need to agree on a new offer price to account for recent developments, including as reflected by movement in the Company’s stock price since March 12, 2024, but that the offer price would not decrease significantly. Mr. Simkoff relayed the outcome of the negotiations to Mr. Zames.

 

On March 25, 2024, the Special Committee met, with members of the Company’s senior management and representatives of Houlihan Lokey and Latham present, to discuss updates with respect to the Potential Transaction with TRG Group. Mr. Zames and representatives of Houlihan Lokey updated the Special Committee on the latest negotiations with TRG Group, including the latest proposals for resolving remaining open issues (including agreeing to conditioning the Potential Transaction on the Company procuring amendments to certain restrictive covenants in certain agreements to which certain of the Company’s Subsidiaries are parties to resolve the issue raised by TRG Group on March 12, 2024 relating to these restrictive covenants). Mr. Simkoff also provided an update on the Company’s liquidity position, noting that the Company would owe a large interest payment to HSCM pursuant to the Company Loan Agreement on March 29, 2024. Following the discussion, the Special Committee determined that the proposed transaction with TRG Group was compelling for the Company and its stockholders.

 

Later on March 25, 2024, the Company Board met, with members of the Company’s senior management and representatives of Davis Polk present, to discuss next steps in the Potential Transaction with TRG Group. Mr. Zames relayed the discussion from the Special Committee’s meeting earlier to the Company Board. Representatives of Houlihan Lokey and Latham were also present at the request of the Special Committee. Following the discussion, the Company Board agreed that the Potential Transaction with TRG Group was compelling. The Company Board then instructed representatives of Latham and Davis Polk to update and finalize the Merger Agreement, the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter and the other transaction documents based on the latest negotiations. Later in the day, Mr. Simkoff sent the representative of Lennar Corp. a copy of the Topco Commitment Letter.

 

Late on March 25, 2024, representatives of Latham sent comments to the Merger Agreement on behalf of the Company to representatives of Willkie.

 

On March 26, 2024, representatives of Davis Polk sent an initial draft of the HSCM Fourth Amendment and an updated draft of the HSCM Fifth Amendment on behalf of the Company to representatives of HSCM, and Willkie, on behalf of TRG Group, sent a draft of the Topco Commitment Letter to Davis Polk.

 

On March 26, 2024, representatives of Centerbridge verbally indicated to Mr. Zames and Mr. Simkoff that TRG Group’s new offer price would be $6.29 per share.

 

 

Between March 26, 2024 and March 28, 2024, representatives of Latham, Davis Polk, Willkie and HSCM negotiated and exchanged drafts of the Merger Agreement, the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter, the Debt Commitment Letter and the other transaction documents. To resolve the issue raised by TRG Group on March 12, 2024 relating to restrictive covenants in certain agreements to which certain of the Company’s Subsidiaries are parties, the revised draft of the Merger Agreement included as a condition to the closing of the Merger that the Company shall have completed the transactions set forth on Schedule II of the Merger Agreement, which Schedule II provided that the Company would procure amendments to these restrictive covenants and that such amendments would be completed in a manner reasonably satisfactory to Parent.

 

On March 27, 2024, representatives of Willkie and Morrison Foerster finalized drafts of the agreements related to the Lennar Investment.

 

Also on March 27, 2024, at the request of the Special Committee, Houlihan Lokey provided the Special Committee with an updated version of its March 7, 2024 letter to the Special Committee regarding Houlihan Lokey’s relationships with the Company, Centerbridge, TRG Group, Lennar, Foundation Capital and HSCM.

 

On March 28, 2024, the Special Committee met, with representatives of Houlihan Lokey and Latham present. Representatives of Latham reported on the latest updates to the Merger Agreement and transaction documents which were finalized and circulated to the Special Committee prior to its meeting. At the request of the Special Committee, representatives of Houlihan Lokey reviewed with the Special Committee Houlihan Lokey’s financial analyses with respect to the Company and the Potential Transaction. Thereafter, at the request of the Special Committee, representatives of Houlihan Lokey rendered Houlihan Lokey’s oral opinion, which was subsequently confirmed by delivery of a written opinion, dated March 28, 2024, to the Special Committee, to the effect that, as of the date of such opinion and based upon and subject to the various assumptions, limitations, qualifications and other matters set forth in the opinion, the Merger Consideration to be received by the Disinterested Stockholders (excluding any Cancelled Shares and any Dissenting Shares) was fair, from a financial point of view, to such holders of shares of the Common Stock. Representatives of Houlihan Lokey also reviewed with the Special Committee its updated letter to the Special Committee regarding Houlihan Lokey’s relationships with the Company, Centerbridge, TRG Group, Lennar Corp., the Lennar Stockholders, Foundation Capital and HSCM. Representatives of Latham reviewed the form of Special Committee resolutions that had been previously circulated to the Special Committee, and, after discussion at the meeting, the Special Committee unanimously (1) determined that the Merger Agreement, the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter, the Preferred Purchase Agreement and the transactions contemplated thereby, including the Merger, are fair, advisable and in the best interests of the Company and its Disinterested Stockholders, (2) recommended that that the Company Board approve, adopt and declare advisable the Merger Agreement, the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter, the Preferred Purchase Agreement and the transactions contemplated thereby, including the Merger, and recommend the Merger Agreement and Merger to the Company’s stockholders for approval and adoption and (3) recommended that the Company Board approve the Merger Agreement, the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter, the Preferred Purchase Agreement and the proposed transaction, including the Merger, including for purposes of Section 203 of the Delaware General Corporation Law.

 

On the same day, the Company Board met, with members of the Company’s senior management and representatives of Davis Polk present. At the request of the Special Committee, representatives of Houlihan Lokey and Latham were also present. The Special Committee conveyed its recommendation that the Company Board approve the execution by the Company of the definitive transaction documents and recommend that the Company’s stockholders vote to adopt the Merger Agreement. Representatives of Latham provided an overview of the final outcome of negotiations regarding the transaction documents. Representatives of Houlihan Lokey confirmed that Houlihan Lokey had rendered its oral opinion to the Special Committee that the Merger Consideration to be received by the holders of the Common Stock (excluding any Cancelled Shares and any Dissenting Shares) in the transaction pursuant to the Merger Agreement was fair, from a financial point of view, to such holders of Common Stock. Representatives of Latham also provided a review of the Company Board’s fiduciary duties. Following discussion, the Company Board unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair, advisable and in the best interests of the Company and its Disinterested Stockholders, (2) authorized, approved, confirmed and adopted in all respects (i) the Merger Agreement, and the form, terms and provisions thereof and the schedules and exhibits attached thereto, and (ii) the Company’s execution, delivery and performance of the Merger Agreement, (3) approved, adopted and declared advisable the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter, the Preferred Purchase Agreement and the transactions contemplated thereby and (4) recommended the adoption of the Merger Agreement by the Company’s stockholders pursuant to the Delaware General Corporate Law.

 

 

Later on March 28, 2024, the parties executed and delivered the Merger Agreement, the Voting and Support Agreement, the HSCM Fourth Amendment, the HSCM Fifth Amendment, the Topco Commitment Letter and the Debt Commitment Letter, TRG Group and HSCM executed and delivered the Preferred Purchase Agreement, and TRG Group and the Lennar Stockholders delivered the Lennar Investment agreements. Shortly after the closing of trading on the New York Stock Exchange, the parties then issued a joint press release announcing the execution of the Merger Agreement.

 

The “Go-Shop” Period

 

Beginning on March 29, 2024, at the direction of the Special Committee, representatives of Houlihan Lokey reached out to 153 parties to invite such parties to participate in the Company’s go-shop process. Such parties were identified as those most likely to have a strategic interest in acquiring the Company and the financial capability to complete an acquisition. Fifty-seven (57) of the contacted parties were potential strategic counterparties, and the remaining ninety-six (96) were private equity sponsors. Forty-eight (48) of the contacted parties were ones that representatives of Houlihan Lokey had previously reached out to in connection with the capital raise process in November 2023. These parties included Party A and Party B. Of the 153 parties contacted, nineteen (19) parties (which did not include Party A or Party B) indicated interest in evaluating preliminary diligence information. Following execution of NDAs by each such party, at the request of the Special Committee, representatives of Houlihan Lokey provided representatives of fourteen (14) parties with a targeted set of documents under NDA for due diligence review.

 

On April 23, 2024, representatives of the Company met with the SC DOI to discuss the pending application for the Underwriter Dividend and the Company requested approval from the SC DOI for a $31 million underwriter dividend from Doma Title Insurance to the Company. On April 26, 2024, the SC DOI denied the Company’s request for a $31 million dividend from Doma Title Insurance to the Company and on the same date, the Company received a letter from the SC DOI approving a $17.5 million dividend from Doma Title Insurance to the Company, which was issued on April 29, 2024.

 

During the go-shop process, thirteen (13) of the invited parties indicated that they were not interested in pursuing an acquisition of the Company, without any request to do further due diligence. One of the invited parties indicated increased engagement and interest, and was granted access to a more fulsome data room. Of these parties, none entered into clean team agreements to access documents identified as containing potentially competitively sensitive information.

 

Over the course of fifty (50) days from March 28, 2024 through May 17, 2024, Company management attended eight (8) diligence calls with three (3) counterparties to provide more information on the business.

 

At 11:59 p.m., Pacific time, on May 17, 2024, the “go-shop” period ended with the Company not having received any alternative acquisition proposals.

 

 

Purpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger

 

Recommendation of the Special Committee

 

In evaluating the Merger Agreement, the Voting and Support Agreement and the other transactions contemplated by the Merger Agreement, including the Merger, the Special Committee consulted with its independent financial advisor, Houlihan Lokey, and its independent legal advisor, Latham & Watkins LLP, and, where appropriate, with members of Company management and Davis Polk & Wardwell LLP, in its capacity as the Company’s outside legal advisor. The Special Committee unanimously determined that the Merger Agreement, the Voting and Support Agreement and the other transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to, and in the best interests of the Company and the Disinterested Stockholders, all of which are unaffiliated security holders.

 

The Special Committee also unanimously recommended that the Company Board:

 

 

approve, adopt and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger;

 

 

approve the Merger Agreement and the transactions contemplated thereby, including the Merger, including for purposes of Section 203 of DGCL; and

 

 

determine that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair, advisable and in the best interests of the Company and the Disinterested Stockholders.

 

In the course of reaching its determination and making its recommendations, the Special Committee considered the following non-exhaustive list of material factors, which are not presented in any relative order of importance and each of which the Special Committee viewed as being generally supportive of its determination and recommendations to the Company Board:

 

 

Potential Strategic Alternatives. The assessment of the Special Committee that none of the possible alternatives to the Merger (including continuing to operate the Company as an independent company or pursuing a different transaction in order to meet the Company’s immediate and long term financing needs, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to the Company’s stockholders of those alternatives and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for the Company to create greater value for the Company’s stockholders. In making this assessment, the Special Committee engaged in discussions with various institutional investors and financial sponsors to gauge potential interest in an investment in the Company’s securities or an acquisition of the Company and concluded that the alternatives were less favorable to the Company and its stockholders than the Merger, taking into account execution risks as well as business, financial, industry, competitive and regulatory risks.

 

 

 

Certainty of Value. The consideration to be received by the Company’s stockholders in the Merger consists entirely of cash, which provides certainty of value and immediate liquidity at an attractive price measured against the ongoing business and financial execution risks of the Company’s business plan and its continued operations as an independent company in light of the circumstances, including the lack of any actionable strategic alternatives and lack of liquidity, and allows the Company’s stockholders to realize that value immediately upon the consummation of the Merger. In that regard, the Special Committee noted that the amount of cash to be received for each outstanding share of Common Stock is fixed and will not be reduced if the share price of Common Stock declines prior to the effective time of the Merger.

 

 

Best Value Reasonably Obtainable. The belief of the Special Committee that the Merger Consideration represented TRG Group’s best and final offer and the best value that the Company could reasonably obtain from TRG Group for the shares of Common Stock, taking into account (1) TRG Group’s statements and reputation; and (2) the Special Committee’s familiarity with the business, operations, prospects, business strategy, assets, liabilities and general financial condition of the Company on a historical and prospective basis and its assessment of associated risks, including execution risks with respect to the Company’s business plan. In forming this belief, the Special Committee also considered that (1) since October 2023, Houlihan Lokey, at the Company’s and the Special Committee’s direction, communicated with thirty-five (35) potential counterparties with respect to third party financing, including six (6) potential counterparties regarding a potential sale transaction and that the Company had not received any actionable financing proposal or other proposal for a sale transaction; and (2) the Special Committee was informed by Houlihan Lokey that feedback from other potential investors indicated a significantly lower premium on a per share basis. The Special Committee believed that, after negotiations at the direction of the Special Committee and with the assistance of experienced independent legal and financial advisors, the Special Committee obtained the best terms and highest price that TRG Group was willing to pay for the Company, pursuant to a thorough process and that further negotiations would have created a risk of causing TRG Group to abandon the Merger altogether or materially delay the entry into definitive transaction agreements with respect to the Merger. In addition, the Special Committee believed that, measured against the longer-term execution risks described below, the Merger Consideration reflects a fair and favorable price for the shares of Common Stock. The Special Committee also considered that the per share price constitutes (1) a premium of approximately 43.0% over the Company’s closing stock price of $4.40 on March 27, 2024, which was the day prior to the public announcement of the Merger; and (2) a premium of approximately 33.9% over the Company’s 30-day volume weighted average closing stock price ending on March 27, 2024.

 

 

Financial Condition, Results of Operations and Prospects of the Company; Risks of Execution. The current, historical and projected financial condition, results of operations and business of the Company, as well as the Company’s prospects and risks if it were to remain an independent company. In particular, the Special Committee considered the Company’s then-current business plan, including management’s then-current estimated projections of the Company’s financial prospects, as reflected in the section of this proxy statement titled “Special FactorsCertain Unaudited Prospective Financial Information.” As part of this, the Special Committee considered the Company’s current business plan and the potential opportunities and risks that it presented against, among other things, various execution, operational and other risks to achieving the business plan and related uncertainties, including: the impact of changing economic conditions, particularly mortgage interest rates, credit availability, real estate prices and consumer confidence; the likelihood that the business plan could be achieved in the face of operational and execution risks; and general risks and uncertainties related to market conditions that could negatively impact the Company’s valuation or reduce the price of Common Stock. In particular, the Special Committee considered the likelihood and timing of, and risks to, achieving the operational improvements and objectives underlying the business plan, including with respect to implementation of the Company’s machine intelligence technology, which may be impacted by technology adoption delays by Company partners, availability of title and property data in certain areas and inability to hire adequate service personnel, as well as the funding required to achieve such objectives and the estimated projections of the Company’s financial prospects, all as reflected in the section of this proxy statement titled “Special FactorsCertain Unaudited Prospective Financial Information.” Among the potential risks identified by the Special Committee were: the Company’s competitive positioning and prospects as an independent company, brand recognition in the face of widely known incumbents, the Company’s financial resources relative to those of its competitors, the need for cash to execute on the Company’s plans as compared to the Company’s current cash balances and financing prospects, the risk that the Company could become insolvent, new and evolving competitive threats, and changes in the industry in which the Company operates such as rising mortgage interest rates, increasing home prices, and a shortage in the supply of homes for sale. The Special Committee also considered the challenges of a public company in making investments, operational changes, and improvements (including meaningful cost reductions) to achieve long-term growth and profitability. The Special Committee was aware that such investments, changes and improvements could lead to disruption in the Company’s performance and expose us to scrutiny based on the Company’s quarter-over-quarter operational and financial metrics and results. The Special Committee was also aware that the price of Common Stock could be negatively impacted if we failed to meet investor expectations, including if we failed to meet the Company’s growth and profitability objectives.

 

 

 

Opinion of Houlihan Lokey. The oral opinion of Houlihan Lokey rendered to the Special Committee, subsequently confirmed by delivery of its written opinion, dated March 28, 2024, which opinion and financial analyses the Special Committee adopted as its own, that, as of such date, and based upon and subject to the various matters, limitations, qualifications and assumptions set forth therein, the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders of Common Stock. The opinion is more fully described in the section of this proxy statement titled “Special FactorsOpinion of Houlihan Lokey” and the full text of the opinion is attached as Annex C to this proxy statement.

 

 

Negotiations with Parent and Terms of the Merger Agreement. The terms of the Merger Agreement, which was the product of arm’s-length negotiations, and the belief of the Special Committee that the Merger Agreement contained terms and conditions that provided the Special Committee with a high level of closing certainty. The factors considered included:

 

 

The Company’s ability, pursuant to a 50-day “go-shop” period, under certain circumstances, to solicit Acquisition Proposals from, furnish information to, and participate in discussions and negotiations with, third parties regarding any Acquisition Proposal.

 

 

The Special Committee’s belief that the terms of the Merger Agreement would be unlikely to deter third parties from making a Superior Proposal.

 

 

The ability of the Company Board, acting upon the recommendation of the Special Committee, and the Special Committee’s ability, in each case under certain circumstances, to change, withdraw or modify the recommendation that the Company’s stockholders vote in favor of the adoption of the Merger Agreement.

 

 

The fact that the Voting and Support Agreement terminates in the event the Company Board withdraws its recommendation in favor of the Merger under certain circumstances.

 

 

The Company Board’s ability, acting upon the recommendation of the Special Committee, under certain circumstances, to terminate the Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal, subject to the applicable procedures, terms and conditions set forth in the Merger Agreement and paying Parent a termination fee of (i) $1,822,134 if the Company terminates the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal (x) during the period beginning on March 28, 2024 and continuing until the Go-Shop End Date (the “Go-Shop Period”), or (y) by an Exempted Person or (ii) $3,188,734 under any other circumstances. In that regard, the Special Committee believed that the potential termination fee payable by the Company was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers.

 

 

 

The absence of a financing condition in the Merger Agreement.

 

 

The End Date of September 28, 2024 and applicable extension dates as provided in the Merger Agreement allowing for sufficient time to complete the Merger.

 

 

The condition to closing contained in the Merger Agreement related to the accuracy of the Company’s representations and warranties, which is generally subject to a Company Material Adverse Effect qualification.

 

 

The terms of the Merger Agreement provide the Company with sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement.

 

 

Reasonable Likelihood of Consummation. The belief of the Special Committee that an acquisition by Parent has a reasonable likelihood of closing, including that there were no anticipated substantive issues expected in connection with the required regulatory approvals. In that regard, the Special Committee considered TRG Group’s business reputation and financial resources, as well as those of Parent’s debt financing sources, all of which the Special Committee believed increased the likelihood that the required debt financing for the Merger would be available.

 

 

Debt Financing. The fact that Parent has obtained committed debt financing for the transaction from a reputable financial institution that will provide funding of an amount sufficient to cover a substantial portion of the Merger Consideration and that the Company has the right to seek specific performance of Parent and Merger Sub’s obligations to effect the Closing regardless of the availability of debt financing if all applicable requirements to such right to seek specific performance set forth in the Merger Agreement have been satisfied.

 

 

Appraisal Rights. The Company’s stockholders have the right to exercise their statutory appraisal rights under Section 262 of the DGCL and receive payment of the fair value of their shares of Common Stock in lieu of the Merger Consideration, subject to and in accordance with the terms and conditions of the Merger Agreement and the DGCL, unless and until any such Company stockholder fails to perfect or effectively withdraws or loses such holder’s rights to appraisal and payment under the DGCL.

 

 

Current and Historical Market Prices. The current and historical market prices of Common Stock, including as set forth in the section of this proxy statement titled “Other Important Information Regarding the CompanyMarket Price of Shares of Common Stock and Dividends” and “Special FactorsOpinion of Houlihan Lokey” taking into account the market performance of the Common Stock relative to the capital stock of other participants in the industries in which the Company operates and general market indices.

 

 

Debt Restructuring. The agreements with HSCM entered into concurrently with the execution of the Merger Agreement as an inducement to Parent’s and the Company’s willingness to enter into the Merger Agreement, pursuant to which at Closing, HSCM will (a) accept the HSCM Payoff in full satisfaction of all indebtedness under the Company Loan Agreement and (b) release all liens securing the Company Loan Agreement. For additional detail, see the section of this proxy statement titled “Special FactorsCompany Loan AgreementAgreement and Fifth Amendment to the Loan and Security Agreement.”

 

 

Stockholder Support. The fact that Lennar (together with certain of its affiliates), was supportive of the transaction and was prepared to execute and deliver the Voting and Support Agreement.

 

The Special Committee also considered a number of factors relating to the procedural safeguards that it believes were and are present to ensure the fairness of the Merger and to permit the Special Committee to represent effectively the interests of the Disinterested Stockholders, all of which are unaffiliated security holders of the Company. The Special Committee believes these factors support its determinations and recommendations and provide assurance of the procedural fairness of the Merger to the Disinterested Stockholders, all of which are unaffiliated security holders of the Company:

 

 

 

Independence. The Special Committee, since its formation, has consisted solely of independent (for purposes of serving on the Special Committee) and disinterested directors that are not affiliated with, and are independent of, any of the potential counterparties to a potential acquisition of the Company (including a potential acquisition of the Company that has a transaction or series of transactions in which one or more significant stockholders of the Company have an interest that is in addition to and/or different from, the interests of the Company stockholders as a whole) and were otherwise disinterested and independent with respect to a potential acquisition of the Company (including a potential acquisition of the Company that has a transaction or series of transactions in which one or more significant stockholders of the Company have an interest that is in addition to and/or different from, the interests of the Company stockholders as a whole), other than as discussed in the section of this proxy statement titled “Special FactorsInterests of Certain Persons in the Merger”;

 

 

Negotiating Authority. The authority granted to the Special Committee by the Company Board to, among other things, (1) review, evaluate and negotiate the structure, form, terms and conditions of a potential acquisition of the Company (including a potential acquisition of the Company that has a transaction or series of transactions in which one or more significant stockholders of the Company have an interest that is in addition to and/or different from, the interests of Company stockholders as a whole) and the terms and conditions of any definitive agreements or documents in connection therewith, (2) to determine not to proceed with any such process, procedures, review or evaluation, and (3) to consider and evaluate any alternative transactions.

 

 

Active Involvement and Oversight. The numerous meetings held by the Special Committee to discuss and evaluate, among other things, the proposals from TRG Group and the Special Committee’s active oversight of the negotiation process. The Special Committee was actively engaged in this process on a regular basis and was provided with full access to Company management and its advisors in connection with the evaluation process.

 

 

Independent Advice. The Special Committee selected and engaged its own independent legal and financial advisors and received the advice of such advisors throughout its review, evaluation and negotiation of a potential acquisition of the Company.

 

 

Full Knowledge. The Special Committee made its evaluation of a potential acquisition of the Company by Parent based upon the factors discussed in this proxy statement and with the full knowledge of the interests of the Lennar Stockholders, the Foundation Investors and HSCM and a complete understanding of the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements. See the section of this proxy statement titled “Special FactorsInterests of Certain Persons in the Merger” for additional information.

 

 

No Obligation to Recommend. The recognition by the Special Committee that it had no obligation to recommend to the Company Board the approval of the Merger or any other transaction and had the authority to reject any proposals made.

 

 

Procedural Safeguards. The Company Board, in its authorizing resolutions for the Special Committee, determined that the Company would not authorize, approve or proceed with a potential transaction, or recommend a potential transaction, or any modification, variation, or supplement thereto, without a prior favorable recommendation by the Special Committee.

 

 

Majority of the Minority Approval. The consummation of the Merger requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Common Stock held by the Disinterested Stockholders and entitled to vote on the Merger Agreement Proposal (the “Disinterested Stockholder Vote”).

 

In the course of reaching its determinations and making its recommendations, the Special Committee also considered the following non-exhaustive list of countervailing factors concerning the Merger Agreement and the Merger, which are not presented in any relative order of importance:

 

 

No Stockholder Participation in Future Growth or Earnings. The nature of the Merger as a cash transaction means that the Company’s stockholders (other than the Lennar Stockholders, Lennar Corp. and potentially employees who continue on with the Surviving Corporation and are granted equity in connection with their employment) will not participate in the Company’s future earnings or growth and will not benefit from any appreciation in value of the Surviving Corporation.

 

 

 

Risk Associated with Failure to Consummate the Merger. The possibility that the Merger might not be consummated, and if it is not consummated, that: (1) the Company’s directors, management team and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of the Company during the pendency of the Merger; (2) the Company will have incurred significant transaction and other costs; (3) the Company’s continuing business relationships and relationships with its regulators, including insurance regulatory authorities, may be adversely affected; (4) the trading price of Common Stock could be adversely affected; (5) the contractual and legal remedies available to the Company in the event of the breach or termination of the Merger Agreement may be insufficient, costly to pursue, or both; (6) the failure of the Merger to be consummated could result in an adverse perception among the Company’s customers, potential customers, employees and investors about the Company’s prospects; (7) disruptions from the proposed transaction could harm the Company’s business, including current plans and operations; and (8) the Company may need to secure additional financing, which may not be available on favorable terms, if at all.

 

 

Regulatory Risks. The fact that the completion of the Merger requires certain regulatory clearances and consents, the possibility that regulatory agencies, including certain state insurance departments, may delay, object to, challenge or seek to enjoin the Merger, or may seek to impose terms and conditions on their approvals that are not acceptable to Parent or which may result in the Parent terminating the Merger Agreement.

 

 

Impact of Interim Restrictions on the Companys Business Pending the Completion of the Merger. The restrictions on the conduct of the Company’s business prior to the consummation of the Merger, which may delay or prevent us from pursuing certain business opportunities or strategic initiatives before the completion of the Merger that, absent the Merger Agreement, we might have pursued, or from taking certain actions aimed at incentivizing and retaining the Company’s employees.

 

 

Effects of the Merger Announcement. The effects of the public announcement of the Merger, including the: (1) effects on the Company’s employees, customers, operating results, and stock price; (2) impact on the Company’s ability to retain and hire key personnel; and (3) potential for litigation in connection with the Merger.

 

 

Termination Fee Payable by the Company. The requirement that the Company pay Parent a termination fee of (i) $1,822,134 if the Company terminates the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal (x) during the Go-Shop Period or (y) by an Exempted Person and (ii) $3,188,734 if the Company terminates the Merger Agreement under any other circumstances which would trigger payment of a termination fee to Parent. The Special Committee considered the potentially discouraging impact that this termination fee could have on a third party’s interest in making Acquisition Proposals.

 

 

Taxable Consideration. The receipt of cash in exchange for shares of Common Stock in the Merger will be a taxable transaction for U.S. federal income tax purposes for many of the Company’s stockholders.

 

 

Interests of the Companys Directors and Executive Officers. The interests that the Company’s directors and executive officers may have in the Merger and the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements, which may be different from, or in addition to, those of our other stockholders. See the section of this proxy statement titled “Special FactorsInterests of Certain Persons in the Merger” for additional information.

 

 

Interests of Certain Persons in the Merger.

 

 

A significant stockholder, Lennar, was offered the opportunity to, and elected to, invest the proceeds it receives in consideration for its existing shares of Common Stock plus an additional $17 million in an affiliate and indirect parent company of Parent and by doing so, will indirectly be able to participate in the future growth or earnings of the post-closing company.

 

 

 

As of the Closing, Doma Technology, a subsidiary of the Company, will hold the applicable assets and related liabilities of the Doma Technology Business. Concurrently with the execution and delivery of the Merger Agreement, Parent, HSCM and the Company entered into the Preferred Purchase Agreement, pursuant to which, at the Closing, Doma Technology would issue preferred units and profits interests to HSCM representing approximately 27.5% of Doma Technology’s equity securities on a fully diluted basis, provided that HSCM may transfer a portion of such preferred units to a third-party investor, with the majority of Doma Technology’s equity securities being owned, as of the Closing, by Parent. In addition, the Preferred Purchase Agreement provides that common units or profits interests representing approximately 19.2% of Doma Technology’s equity securities on a fully diluted basis will be reserved for issuance to management employees of Doma Technology, which may include the Company’s current executive officers.

 

 

Liquidity Risks. The possibility that the Company will incur losses substantially in excess of established reserves during the interim period which could negatively impact the Company’s liquidity and financial rating.

 

 

Voting Obligations of Certain Significant Stockholders. The Lennar Stockholders, significant stockholders of the Company, are party to that certain Voting and Support Agreement with the Company and Parent, which, under certain circumstances, obligates the Lennar Stockholders to vote in favor of the adoption of the Merger Agreement.

 

Recommendation of the Company Board

 

Based on the unanimous recommendation of the Special Committee and on the basis of the other factors described above, the Company Board unanimously:

 

 

determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are fair, advisable and in the best interests of the Company and the Disinterested Stockholders;

 

 

authorized, approved, confirmed and adopted in all respects the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger;

 

 

determined that the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, were approved, adopted, confirmed and ratified in all respects by the Company Board for purposes of rendering inapplicable thereto (to the fullest extent permitted by Applicable Law) the restrictions applicable to business combinations contained in Section 203 of the DGCL and any and all other state takeover laws or similar legal requirements that might otherwise apply by reason of the Merger Agreement, the Merger or any other agreements or transactions contemplated by the Merger Agreement, including any and all “moratorium,” “control share acquisition,” “fair price,” “interested shareholder,” “affiliate transaction,” “business combination” or other antitakeover laws;

 

 

directed that the Merger Agreement be submitted to the Company’s stockholders for their consideration and adoption at a meeting of the Company’s stockholders; and

 

 

recommended the adoption of the Merger Agreement by the Company’s stockholders and that the Company’s stockholders vote to approve all other actions or matters necessary, appropriate, advisable or desirable in order to give effect to the foregoing pursuant to the DGCL.

 

In the course of reaching its determination and making its recommendations, the Company Board considered the following non-exhaustive list of material factors and countervailing factors, which are not presented in any relative order of importance: 

 

 

Determinations of the Special Committee. The Special Committee’s analysis (as to both substantive and procedural aspects of the Merger), conclusions and unanimous determination, which the Company Board adopted as its own (including with respect to the adoption of the opinion and financial analyses presented by Houlihan Lokey), that the Merger Agreement, the Voting and Support Agreement and the other transactions contemplated by the Merger Agreement, including the Merger, are fair, advisable and in the best interests of the Company and the Disinterested Stockholders all of which are unaffiliated security holders. The Company Board also considered the Special Committee’s unanimous recommendation that the Company Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger and, subject to Company Board approval, that the Company Board submit the Merger Agreement to the stockholders of the Company for their approval and adoption.

 

 

 

Procedural Protections. The procedural fairness of the Merger, including that (1) it was negotiated by the Special Committee consisting solely of independent (for purposes of serving on the Special Committee) and disinterested directors that are not affiliated with, and are independent of, any of the potential counterparties to a potential acquisition of the Company (including a potential acquisition of the Company that has a transaction or series of transactions in which one or more significant stockholders of the Company have an interest that is in addition to and/or different from, the interests of Company stockholders as a whole) and were otherwise disinterested and independent with respect to a potential acquisition of the Company (including a potential acquisition of the Company that has a transaction or series of transactions in which one or more significant stockholders of the Company have an interest that is in addition to and/or different from, the interests of Company stockholders as a whole), other than as discussed in the section of this proxy statement titled “Special FactorsInterests of Certain Persons in the Merger”; and (2) the Special Committee had the authority to select and engage, and was advised by, its own independent legal and financial advisors;

 

 

Disinterested Stockholder Vote. Although consummation of the Merger does not specifically require that the Merger Agreement be adopted by the Company’s unaffiliated security holders, the Merger Agreement provides that consummation of the Merger is conditioned upon the Company obtaining the Disinterested Stockholder Vote. Disinterested Stockholders are all holders of Common Stock except for (i) members of the Company Board, (ii) any Person that the Company has determined to be an “officer” of the Company within the meaning of Rule 16a-1(f) of the Exchange Act, (iii) the Foundation Investors, (iv) the Lennar Stockholders, and (v) HSCM (the “Affiliated Holders”). The Affiliated Holders are not deemed to be Disinterested Stockholders and accordingly, any shares they beneficially own will be excluded from the Disinterested Stockholder Vote.

 

 

Other Factors Considered by the Special Committee. The other material factors and countervailing factors considered by the Special Committee and listed above.

 

The foregoing discussion of the information and factors considered by the Special Committee and by the Company Board is not intended to be exhaustive and includes only the material factors considered. In the light of the variety of factors considered by the Special Committee and by the Company Board and the complexity of these factors, neither the Special Committee nor the Company Board found it practicable to, and did not, quantify or otherwise assign relative weights, ranks or values to the foregoing factors in reaching their respective determinations and recommendations. Moreover, each member of the Special Committee and of the Company Board applied his or her own personal business judgment to the process and may have assigned different relative weights, ranks or values to the different factors, and the recommendations, determinations and approvals, where applicable, by the Special Committee and the Company Board were based upon the totality of the information presented to, and considered by, the Special Committee and the Company Board, respectively.

 

The Special Committee and the Company Board did not specifically consider the liquidation value or the net book value of the Company in its evaluation of the Merger, because of its belief that neither liquidation value nor net book value presents a meaningful valuation for the Company and its business, as the Company’s value is derived from the cash flows to be generated from its continuing operations rather than from the value of assets that might be realized in a liquidation or from net book value which is significantly influenced by historical costs. In addition, the Special Committee and the Company Board did not consider the prices paid by the Company, the Parent Entities or the Lennar Entities for past purchases of the Common Stock because the Company has not repurchased, and the Parent Entities and the Lennar Entities have not purchased, any shares of Common Stock in the past two years. Other than as described in this proxy statement, the Company is not aware of any firm offer by any other person during the prior two years for (i) a merger or consolidation of the Company with another company; (ii) the sale or transfer of all or substantially all of the Company’s assets; or (iii) a purchase of the Company’s securities that would enable such person to exercise control of the Company.

 

 

Opinion of Houlihan Lokey

 

The Special Committee retained Houlihan Lokey to act as its financial advisor in connection with the Merger based on Houlihan Lokey’s qualifications, experience and reputation, and its knowledge of the business and affairs of the Company. On March 28, 2024, Houlihan Lokey orally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Special Committee dated March 28, 2024), to the effect that, based upon and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, as of such date, the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the Disinterested Stockholders.

 

Houlihan Lokeys opinion was directed to the Special Committee (in its capacity as such) and only addressed whether the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the Disinterested Stockholders and did not address any other aspect or implication of the Merger or any other agreement, arrangement or understanding. The summary of Houlihan Lokeys opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex C to this proxy statement and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokeys opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Company Board, any security holder or any other person as to how to act or vote with respect to any matter relating to the Merger or otherwise.

 

In connection with its opinion, Houlihan Lokey made such reviews, analyses and inquiries as Houlihan Lokey deemed necessary and appropriate under the circumstances. Among other things, Houlihan Lokey:

 

 

1.

reviewed a draft, dated March 26, 2024, of the Merger Agreement;

 

 

2.

reviewed certain publicly available business and financial information relating to the Company that Houlihan Lokey deemed to be relevant;

 

 

3.

reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to Houlihan Lokey by the Company, including (a) financial projections prepared by the management of the Company relating to the Company (the “Projections”) and (b) estimates prepared by the management of the Company of the Company’s net operating loss tax carryforwards (“NOLs”) and the Company’s ability to utilize those NOLs to achieve future tax savings (the “Estimated NOL Tax Savings”);

 

 

4.

spoke with certain members of the management of the Company and certain of the Company’s and the Special Committee’s representatives and advisors regarding the business, operations, financial condition and prospects of the Company, the Merger and related matters;

 

 

5.

compared the financial and operating performance of the Company with that of other companies with publicly traded equity securities that Houlihan Lokey deemed to be relevant;

 

 

6.

reviewed the current and historical market prices and trading volume for certain of the Company’s publicly traded securities, and the current and historical market prices of the publicly traded securities of certain other companies that Houlihan Lokey deemed to be relevant; and

 

 

7.

conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.

 

 

Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and did not assume any responsibility with respect to such data, material and other information. In addition, management of the Company advised Houlihan Lokey and, at the Special Committee’s direction, Houlihan Lokey relied upon and assumed that (i) the Projections were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the future financial results and condition of the Company, (ii) the NOLs were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the amount of such NOLs, and (iii) the Estimated NOL Tax Savings were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the Company’s ability to utilize those NOLs to achieve future tax savings. At the Special Committee’s direction, Houlihan Lokey assumed that the Projections, the NOLs and the Estimated NOL Tax Savings provided a reasonable basis on which to evaluate the Company and the Merger and Houlihan Lokey, at the Company’s direction, used and relied upon the Projections, the NOLs and the Estimated NOL Tax Savings for purposes of Houlihan Lokey’s analyses and opinion. Houlihan Lokey expressed no view or opinion with respect to the Projections, the NOLs, the Estimated NOL Tax Savings or the respective assumptions on which they were based. In reaching Houlihan Lokey’s conclusions under the opinion, with the Company’s consent, Houlihan Lokey did not rely upon a review of the publicly available financial terms of other transactions, because Houlihan Lokey did not identify a sufficient number of relevant transactions in which Houlihan Lokey deemed the acquired companies to be sufficiently similar to the Company. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to its analyses or opinion, and that there was no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading.

 

Houlihan Lokey relied upon and assumed, without independent verification, that, except as would not be material to its analyses or opinion, (a) the representations and warranties of all parties to the Merger Agreement and all other related documents and instruments referred to therein were true and correct, (b) each party to the Merger Agreement and such other related documents and instruments would fully and timely perform all of the covenants and agreements required to be performed by such party, (c) all conditions to the consummation of the Merger would be satisfied without waiver thereof, and (d) the Merger would be consummated in a timely manner in accordance with the terms described in the Merger Agreement and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey relied upon and assumed, without independent verification, that (i) the Merger would be consummated in a manner that complies in all respects with all applicable foreign, federal, state and local statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Merger would be obtained and that no delay, limitations, restrictions or conditions would be imposed or amendments, modifications or waivers made that would have an effect on the Company or the Merger that would be material to Houlihan Lokey’s analyses or opinion. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the Merger Agreement would not differ in any material respect from the draft of the Merger Agreement identified above.

 

Furthermore, in connection with its opinion, Houlihan Lokey was not requested to, and did not, make any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Company or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation. Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey did not undertake any independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company was or may have been a party or was or may have been subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company was or may have been a party or was or may have been subject.

 

Houlihan Lokey’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of its opinion. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to its attention after the date of its opinion. Houlihan Lokey did not express any view or opinion as to the price or range of prices at which shares of Common Stock could be purchased or sold, or otherwise be transferable, at any time.

 

Houlihan Lokey’s opinion was furnished for the use of the Special Committee (in its capacity as such) in connection with its evaluation of the Merger and may not be used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion was not intended to be, and does not constitute, a recommendation to the Special Committee, the Company Board, the Company, any security holder or any other party as to how to act or vote with respect to any matter relating to the Merger or otherwise.

 

 

Houlihan Lokey was not requested to opine as to, and its opinion did not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the Special Committee, the Company Board, the Company, its security holders or any other party to proceed with or effect the Merger, (ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Merger or otherwise (other than the Merger Consideration to the extent expressly specified in the opinion), including, without limitation, any terms, aspects or implications of (a) the investment agreements to be entered into by Lennar, (b) the voting and support agreement to be entered into by the Lennar Stockholders, Parent and the Company, (c) the HSCM Fourth Amendment to be entered into by certain of the Company’s subsidiaries, Parent, Hudson and certain affiliates of Hudson or any other agreements related thereto, (d) the restructuring and reorganization of the Company related to its business referred to as the “TechCo Business,” and (e) the bridge financing to be provided to the Company by an affiliate of Parent, (iii) the fairness of any portion or aspect of the Merger to the holders of any class of securities, creditors or other constituencies of the Company, or to any other party, except if and only to the extent expressly set forth in the last sentence of the opinion, (iv) the relative merits of the Merger as compared to any alternative business strategies or transactions that might have been available for the Company or any other party, (v) the fairness of any portion or aspect of the Merger to any one class or group of the Company’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration amongst or within such classes or groups of security holders or other constituents), (vi) whether or not the Company, Parent, their respective security holders or any other party is receiving or paying reasonably equivalent value in the Merger, (vii) the solvency, creditworthiness or fair value of the Company, Parent or any other participant in the Merger, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (viii) the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation to or consideration payable to or received by any officers, directors or employees of any party to the Merger, any class of such persons or any other party, relative to the Merger Consideration or otherwise. Houlihan Lokey did not express any opinion, counsel or interpretation regarding matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. Houlihan Lokey assumed that such opinions, counsel or interpretations had been or would be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Special Committee, on the assessments by the Special Committee, the Company Board, the Company, Parent and their respective advisors, as to all legal, regulatory, accounting, insurance, tax and other similar matters with respect to the Company, the Merger or otherwise.

 

In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company used in Houlihan Lokey’s analyses for comparative purposes is identical to the Company and an evaluation of the results of those analyses is not entirely mathematical. As a consequence, mathematical derivations (such as the high, low, mean and median) of financial data are not by themselves meaningful and in selecting the ranges of multiples to be applied were considered in conjunction with experience and the exercise of judgment. The estimates contained in the Projections and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of the Company. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.

 

Houlihan Lokey’s opinion was only one of many factors considered by the Special Committee in evaluating the proposed Merger. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the Merger Consideration or of the views of the Special Committee or management with respect to the Merger or the Merger Consideration. Under the terms of its engagement by the Special Committee, neither Houlihan Lokey’s opinion nor any other advice or services rendered by it in connection with the proposed Merger or otherwise, should be construed as creating, and Houlihan Lokey should not be deemed to have, any fiduciary duty to, or agency relationships with, the Company Board, the Company, Parent, any security holder or creditor of the Company or Parent any other person, regardless of any prior or ongoing advice or relationships. The type and amount of consideration payable in the Merger were determined through negotiation between the Special Committee and Parent, and the decision to enter into the Merger Agreement was solely that of the Company Board upon the recommendation of the Special Committee.

 

 

Financial Analyses

 

In preparing its opinion to the Special Committee, Houlihan Lokey performed a variety of analyses, including those described below. This summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither Houlihan Lokey’s opinion nor its underlying analyses is readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching Houlihan Lokey’s overall conclusion with respect to fairness, Houlihan Lokey did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion.

 

The following is a summary of the material financial analyses performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the Special Committee on March 28, 2024. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey’s analyses. For purposes of its analyses, Houlihan Lokey reviewed a number of financial metrics, including:

 

 

Adjusted Net Income — generally, the amount of the relevant company’s net income for a specified period, as adjusted for certain non-recurring items.

 

 

Enterprise Value — generally, the value as of a specified date of the relevant company’s outstanding equity securities (taking into account outstanding options and other securities convertible, exercisable or exchangeable into or for equity securities of the company) plus the amount of its net debt (the amount of its outstanding indebtedness, non-convertible preferred stock, capital lease obligations and non-controlling interests less the amount of cash and cash equivalents on its balance sheet).

 

Unless the context indicates otherwise, enterprise values and equity values used in the selected companies analysis described below were calculated using the closing prices of the common stock of the selected companies listed below as of March 27, 2024. The estimates of the future financial performance of the Company relied upon for the financial analyses described below were based on the Projections. The estimates of the future financial performance of the selected companies listed below were based on certain publicly available research analyst estimates for those companies.

 

For purposes of the discounted cash flow and selected companies analyses summarized below, Houlihan Lokey evaluated the Company on a sum-of-the-parts basis, by separately evaluating the Company’s underwriting segment, enterprise segment, corporate-level expenses and NOLs and then aggregating the results of those evaluations to arrive at implied value reference ranges for the Company.

 

Discounted Cash Flow Analysis. Houlihan Lokey performed a discounted cash flow analysis of the Company on a sum-of-the-parts basis based on the Projections, the Estimated NOL Tax Savings and certain other corporate-level assets and liabilities of the Company based on financial data provided by Company management. With respect to the Company’s underwriting segment, Houlihan Lokey applied a range of terminal value multiples of 11.0x to 12.0x to the underwriting segment’s estimated adjusted net income for the fiscal year ending December 31, 2026 and discount rates ranging from 16.0% to 17.0%. With respect to the Company’s enterprise segment, Houlihan Lokey applied a range of terminal value multiples of 2.50x to 3.00x to the enterprise segment’s estimated revenue for the fiscal year ending December 31, 2026 and discount rates ranging from 16.5% to 17.5%. With respect to the Company’s corporate-level expenses, Houlihan Lokey applied perpetuity growth rates ranging from 1.0% to 2.0% and discount rates ranging from 15.0% to 16.0%. With respect to the NOLs, Houlihan Lokey applied discount rates ranging from 16.5% to 17.5% to the Estimated NOL Tax Savings, which indicated an implied value reference range for the NOLs of $4.5 million to $4.9 million. The discounted cash flow analysis indicated an implied value reference range of $3.84 to $5.61 per share of Common Stock, as compared to the Merger Consideration of $6.29 per share of Common Stock in the Merger pursuant to the Merger Agreement.

 

 

Selected Companies Analysis. Houlihan Lokey performed a selected companies analysis of the Company on a sum-of-the-parts basis, by reviewing certain data for selected companies with publicly traded equity securities that Houlihan Lokey deemed relevant, taking into account its experience and professional judgment, for each of the Company’s underwriting segment and enterprise segment. With respect to the underwriting segment, the financial data reviewed included equity value as a multiple of estimated fiscal year 2025 adjusted net income, or “FY 2025E Adjusted Net Income,” and the selected companies, and corresponding financial data, included the following:

 

   

Equity Value /

FY 2025E Adj.

Net Income

 

Fidelity National Financial, Inc.

 

8.9x

 

First American Financial Corporation

 

10.8x

 

Investors Title Company

 

NA

 

Old Republic International Corporation

    11.4  

Stewart Information Services Corporation

    12.7  
         

Low

 

8.9x

 

High

 

12.7x

 

Median

 

11.1x

 

Mean

 

11.0x

 

 


NA refers to not available.

 

With respect to the enterprise segment, the financial data reviewed included enterprise value as a multiple of estimated fiscal year 2025 revenue, or “FY 2025E Revenue,” and the selected companies, and corresponding financial data, included the following:

 

 

   

Enterprise Value /

FY 2025E Revenue

 
       

Digital Insurance Carriers

     
       

Hippo Holdings Inc.

 

0.77x

 

Lemonade, Inc.

 

1.37x

 

Root, Inc.

 

0.58x

 
       

Property Software, Data & Services

     
       

Agilysys, Inc.

 

6.91x

 

Altus Group Limited

 

2.86x

 

AppFolio, Inc.

 

9.80x

 

Blend Labs, Inc.

 

4.05x

 

MeridianLink, Inc.

 

5.31x

 

Open Lending Corporation

 

4.45x

 

Porch Group, Inc.

 

1.16x

 

Radian Group Inc.

 

4.96x

 

Real Matters Inc.

 

1.14x

 

Redfin Corporation

 

1.30x

 

SmartRent, Inc.

 

1.07x

 

Voxtur Analytics Corp.

 

NA

 

Zillow Group, Inc.

 

4.54x

 
       

Low

 

0.58x

 

High

 

9.80x

 

Median

 

2.86x

 

Mean

 

3.35x

 

 


NA refers to not available.

 

Taking into account the results of the selected companies analysis of the Company’s underwriting segment, Houlihan Lokey applied a range of selected multiples of 10.0x to 11.0x to the underwriting segment’s estimated adjusted net income for the fiscal year ending December 31, 2025. Taking into account the results of the selected companies analysis of the Company’s enterprise segment, Houlihan Lokey applied a range of selected multiples of 2.00x to 2.50x to the enterprise segment’s estimated total revenue for the fiscal year ending December 31, 2025. Houlihan Lokey then calculated implied per share value reference ranges on a sum-of-the-parts basis, taking into account the implied value reference ranges of the Company’s corporate-level expenses and the NOLs (each as described above under the heading, “Discounted Cash Flow Analysis”) and certain other corporate-level assets and liabilities of the Company based on financial data provided by Company management. The selected companies analysis indicated an implied value reference range of $3.27 to $4.79 per share of Common Stock, as compared to the Merger Consideration of $6.29 per share of Common Stock in the Merger pursuant to the Merger Agreement.

 

Miscellaneous

 

Houlihan Lokey was engaged by the Special Committee to act as its financial advisor in connection with a possible merger, consolidation, business combination, sale, financing, recapitalization or other similar transaction. The Special Committee engaged Houlihan Lokey based on Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to provide financial advisory services in connection with mergers, acquisitions, divestitures, leveraged buyouts, financings and financial restructurings. Pursuant to its engagement by the Special Committee, Houlihan Lokey is entitled to an aggregate fee of $7,437,500 for its services, $1,000,000 of which became payable upon the delivery of Houlihan Lokey’s opinion to the Special Committee and the remainder of which is payable upon the successful completion of the Merger. Houlihan Lokey also was authorized in accordance with the Merger Agreement to solicit indications of interest from certain third parties in acquiring all or part of the Company for a prescribed period following the execution of the Merger Agreement, subject to the terms, conditions and procedures set forth in the Merger Agreement. The Company has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses, including certain liabilities under the federal securities laws, arising out of or related to Houlihan Lokey’s engagement.

 

In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, Parent or any other party that may be involved in the Merger and their respective affiliates or security holders or any currency or commodity that may be involved in the Merger.

 

Houlihan Lokey and certain of its affiliates have in the past provided financial advisory services to the Company and have in the past provided and are currently providing investment banking, financial advisory and/or other financial or consulting services to Centerbridge, or one or more security holders, affiliates and/or portfolio companies of investment funds affiliated or associated with Centerbridge (collectively, with Centerbridge, the “Centerbridge Group”) on matters unrelated to the Merger or the related transactions, for which Houlihan Lokey and its affiliates have received, and may receive, compensation, including, among other things, (i) with respect to the Company, having acted as a financial advisor in connection with the Company’s sale of certain branches of its West Coast local retail title operations, which transaction closed in May 2023, for which Houlihan Lokey and its affiliates have received aggregate compensation of approximately $3 million during the past two years, and, (ii) with respect to the Centerbridge Group, having provided financial advisory services to certain members of the Centerbridge Group, including a portfolio company affiliate of Centerbridge and a lender group including one or more members of the Centerbridge Group, for which Houlihan Lokey and its affiliates have received compensation of approximately $25 to $35 million in the aggregate during the past two years. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to the Company, Parent, members of the Centerbridge Group, other participants in the Merger or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation.

 

 

In addition, Houlihan Lokey and certain of its affiliates and certain of Houlihan Lokey and their respective employees may have committed to invest in private equity or other investment funds managed or advised by Centerbridge, other participants in the Merger or certain of their respective affiliates or security holders, and in portfolio companies of such funds, and may have co-invested with members of the Centerbridge Group, other participants in the Merger or certain of their respective affiliates or security holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates have in the past acted, currently are acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, Parent, members of the Centerbridge Group, other participants in the Merger or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.

 

Other Presentations by Houlihan Lokey

 

In addition to the discussion materials reviewed with the Special Committee on March 28, 2024 described above, which will be filed with the SEC as an exhibit to the Schedule 13E-3 being filed in connection with the transaction, Houlihan Lokey provided the following, each of which will be attached as an exhibit to such Schedule 13E-3: (i) discussion materials for the Special Committee dated December 2023 (reviewed with the Special Committee on December 19, 2023), January 2024 (reviewed with the Special Committee on January 4, 2024), January 2024 (reviewed with the Special Committee on January 18, 2024), January 2024 (reviewed with the Special Committee on January 26, 2024), January 2024 (sent to the Special Committee on January 31, 2024), March 10, 2024 (and additional discussion materials dated the same date), March 12, 2024 (and additional discussion materials dated the same date) and March 28, 2024 (in addition to those summarized above); and (ii) discussion materials for the Company Board dated November 2023 (reviewed with the Company Board on November 21, 2023), March 10, 2024, March 12, 2024, March 19, 2024, and March 28, 2024. Summaries of these materials are provided below. The following summaries, however, do not purport to be a complete description of the materials.  These discussion materials and the written opinion will be available for any interested stockholder of the Company to inspect and copy at the Company’s executive offices during regular business hours.

 

 

The discussion materials, dated December 2023 (reviewed with the Special Committee on December 19, 2023), provided to the Special Committee included (i) a summary of Centerbridge’s proposals for a transaction involving the Company, (ii) a review of potential impacts of such a transaction and Company management perspectives on Centerbridge and TRG Group, (iii) a review of illustrative scenarios involving the sale of the underwriting segment of the Company, (iv) an overview of interests from potential investors and acquirors, (v) an overview of potential alternatives to a transaction with Centerbridge, (vi) a review of management’s views with respect to a potential transaction with Centerbridge/TRG Group, a potential financing by HSCM and potential alternatives, and (vii) an illustrative proposed timeline for completing a capital raise or sale transaction.

 

The discussion materials, dated January 2024 (reviewed with the Special Committee on January 4, 2024), provided to the Special Committee included (i) a summary of proposals for a transaction with Centerbridge, (ii) a summary of a financing proposal from HSCM, (iii) a review of illustrative scenarios involving the sale of the underwriting segment of the Company, and (iv) additional considerations, including an illustrative timeline of a sale of the Company.

 

The discussion materials, dated January 2024 (reviewed with the Special Committee on January 18, 2024), provided to the Special Committee included (i) a summary of Centerbridge’s most recent proposal for an acquisition of the Company, (ii) a summary of a debt restructuring proposal from HSCM, (iii) a review of management’s views with respect to a potential transaction, and (iv) an illustrative proposed timeline for completing a sale transaction.

 

The discussion materials, dated January 2024 (reviewed with the Special Committee on January 26, 2024), provided to the Special Committee included (i) a summary of Centerbridge’s most recent proposal for an acquisition of the Company, and (ii) a summary of HSCM’s debt restructuring proposal.

 

The discussion materials, dated January 2024 (sent to the Special Committee on January 31, 2024), provided to the Special Committee included an estimated (i) pre-transaction fees shareholder cash per share calculation and (ii) post-transaction fees shareholder cash per share calculation.

 

 

 

The discussion materials, dated March 10, 2024, provided to the Special Committee included information that was materially and substantially the same as the analysis described under “Special FactorsOpinion of Houlihan Lokey—Financial Analyses” of this proxy statement.

 

The additional discussion materials, dated March 10, 2024, provided to the Special Committee included (i) background and a summary of proposals with Centerbridge for a transaction, and (ii) a summary of the then-proposed transaction terms.  

 

The discussion materials, dated March 12, 2024, provided to the Special Committee included information that was materially and substantially the same as the analysis described under “Special FactorsOpinion of Houlihan Lokey—Financial Analyses” of this proxy statement. In addition, following its review of the March 12, 2024 discussion materials, Houlihan Lokey rendered an oral opinion to the Special Committee to the effect that, based upon and subject to the assumptions, limitations, qualifications and other matters considered in connection with the preparation of such opinion, as of such date, the Merger Consideration to be received by the Disinterested Stockholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the Disinterested Stockholders.  Such opinion was not subsequently confirmed in writing.  Such opinion was, however, substantially the same as the opinion described under “Special Factors—Opinion of Houlihan Lokey” of this proxy statement, except it was made as of March 12, 2024 and was based on market, economic and other conditions as they existed as of March 12, 2024, as well as draft transaction documents and transaction terms available at such time, including Merger Consideration of $6.50 per share of Common Stock (rather than $6.29 per share of Common Stock).

 

The additional discussion materials, dated March 12, 2024, provided to the Special Committee included (i) background and a summary of proposals with Centerbridge for a transaction, and (ii) a summary of the then-proposed transaction terms.  

 

The additional discussion materials, dated March 28, 2024, provided to the Special Committee included (i) background to and a summary of the discussions with Centerbridge, (ii) a review of the terms of proposals from Centerbridge/TRG Group from January 29, 2024, through the then most recent proposal, and (iii) a summary of the then-proposed transaction terms.

 

The discussion materials, dated November 2023 (reviewed with the Company Board on November 21, 2023), provided to the Company Board included (i) an overview of the outreach made to potential investors, and (ii) an illustrative proposed timeline for a capital raise transaction.  

 

The discussion materials, dated March 10, 2024, provided to the Company Board included (i) background and a summary of proposals with Centerbridge, and (ii) a summary of the then-proposed transaction terms.  

 

The discussion materials, dated March 12, 2024, provided to the Company Board included (i) background to and a summary of the discussions with Centerbridge, (ii) a review of the terms of proposals from Centerbridge/TRG Group from January 29, 2024, through the then most recent proposal, and (iii) a summary of the then-proposed transaction terms.  

 

The discussion materials, dated March 19, 2024, provided to the Company Board included a review of developments from March 12, 2024 through March 19, 2024, relating to the transaction, potential financing sources for a potential transaction and potential bridge financing considerations for the Company.  

 

The discussion materials, dated March 28, 2024, provided to the Company Board included (i) background and a summary of the discussions with Centerbridge, (ii) a review of the terms of proposals from Centerbridge/TRG Group from January 29, 2024, through the then most recent proposal, and (iii) a summary of the proposed transaction terms.

 

Position of the Parent Entities as to the Fairness of the Merger

 

Under the SEC rules governing “going private” transactions, the Parent Entities ‎are required to disclose among other things its purpose for the Merger, its reasons for structuring the transaction as proposed and any alternative structure that it considered, and its reasons for pursuing the Merger at this time. ‎The Parent Entities are making the statements included in this section solely for purposes of complying with ‎the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. However, none of the Parent Entities are making any recommendation to any Company stockholder as to how that stockholder should vote on the Merger Agreement Proposal or any other proposal or any other matter, and the Parent Entities’ views as described in this part of this proxy statement should not be so construed as such a recommendation.

 

The Parent Entities believe that the interests of the Disinterested Stockholders of the Company were represented by the Special Committee, which negotiated ‎the terms and conditions of the Merger Agreement on their behalf, with the assistance of the Special ‎Committee’s independent legal and financial advisors. The Parent Entities attempted to negotiate a transaction that would be most favorable to them, and not to the Disinterested Stockholders or any other Company stockholder, and, accordingly, did not negotiate the Merger Agreement with a goal of obtaining terms that were substantively or procedurally fair to the Disinterested Stockholders or any other Company stockholder. The Parent Entities did not participate in the ‎deliberations of the Special Committee or Company Board regarding, nor did they receive advice from the ‎respective legal or other advisors to the Special Committee or the Company Board as to, the fairness of the ‎Merger or any other transactions contemplated by the Merger Agreement, including the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements. The Parent Entities have not performed, or engaged a financial advisor to perform, any valuation or ‎other analysis for the purposes of assessing the fairness of the Merger or any other transactions contemplated by the Merger Agreement to the Disinterested ‎Stockholders or any other Company stockholder.

 

However, based on their knowledge and analysis of available information regarding the Company, as well as discussions with the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Company Board and the Special Committee discussed in “Purpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger”, which analysis and resulting conclusions the Parent Entities adopt, and the following factors, which are considered material and not listed in any relative order of importance, the Parent Entities believe that the Merger is both substantively and procedurally fair to the Disinterested Stockholders:‎

 

 

the fact that the Special Committee and the Company Board unanimously determined that the Merger ‎Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and ‎in the best interests of, the Company and Company’s stockholders;‎

 

 

‎the fact that the Merger Consideration is all cash, thus allowing Company stockholders to immediately realize a certain and fair value for their Common Stock, ‎which value represents a premium over the closing price of the ‎Common Stock on the last trading day before the Company publicly announced the Merger;

 

 

the fact that the Merger will provide liquidity for the Disinterested Stockholders without the ‎delays that would otherwise be necessary in order to liquidate the positions of holders, and ‎without incurring brokerage and other costs typically associated with market sales;

 

 

‎the fact that the Merger is not conditioned on any financing being obtained by Parent, increasing the ‎likelihood that the Merger will be consummated and that the consideration to be paid to the ‎Disinterested Stockholders in the Merger will be received;

 

 

the fact that the Special Committee, consisting solely of independent and disinterested directors of the ‎Company Board who are not officers or employees of the Company and who are not affiliated with ‎the Parent Entities, and who have no financial interest in the Merger different from, or in addition to, ‎the Disinterested Stockholders generally, was given exclusive authority to, among other things, review, evaluate and negotiate the terms of the Merger, to determine the advisability of the ‎Merger, to decide not to engage in the Merger, and to consider alternatives to the Merger;‎

 

 

 

‎the fact that the Special Committee was formed at the outset of the Company’s consideration of a ‎potential transaction and prior to any consideration of the Merger Agreement and the transactions ‎contemplated thereby, including the Merger, or any negotiations with respect thereto;‎ 

 

 

‎the fact that the Special Committee was fully informed about the extent to which the interests of the Lennar Stockholders, Company management and HSCM, as well as the Foundation Investors to the extent relevant, in ‎the Transactions differed from those of the Disinterested Stockholders;‎

 

 

The fact that the Special Committee conducted an extensive process, including extensive ‎deliberations and negotiations, and retained and was advised by independent, nationally recognized ‎financial and legal advisors;‎

 

 

‎the fact that the Special Committee was deliberate in its process and negotiated for a “go-shop” period ‎during which the Company could actively solicit bids from potential financial and strategic acquirors;‎

 

 

‎the fact that the Merger Consideration was the result of the Special Committee’s extensive arm’s-‎length negotiations with Parent;‎

 

 

‎the fact that the closing of the Merger is conditioned on the Company’s receipt of the Required ‎Stockholder Approval, including the approval of at least a majority of the voting power of the outstanding shares of Common Stock held by the Disinterested Stockholders entitled to vote on this Agreement;‎

 

 

‎the Company’s ability, under certain circumstances as set out in the Merger Agreement, to provide ‎information to, or participate in discussions or negotiations with, third parties regarding Acquisition ‎Proposals, including during the “go-shop” period mentioned above;‎

 

 

‎the Company’s ability, under certain circumstances as set out in the Merger Agreement, to terminate the ‎Merger Agreement to enter into a definitive agreement related to a Superior Proposal, subject to the requirement that the Company pay Parent a termination fee of (i) $1,822,134 if the Company terminates the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal (x) during the Go-Shop Period or (y) by an Exempted Person and (ii) $3,188,734 if the Company terminates the Merger Agreement under any other circumstances which would trigger payment of a termination fee to Parent; and

 

 

the availability of appraisal rights to the Company’s stockholders who comply with all ‎of the required procedures under Delaware law for exercising appraisal rights, which allow such ‎holders to seek appraisal of the fair value of their shares of Common Stock.‎‎

 

The foregoing discussion of the information and factors considered and given weight by the Parent Entities in ‎connection with the fairness of the Merger is not intended to be exhaustive but is believed to include all ‎material factors considered by them. The Parent Entities did not find it practicable to, and did not, quantify or ‎otherwise attach relative weights to the foregoing factors in reaching their conclusion as to the fairness of the ‎Merger. Rather, the Parent Entities reached their position as to the fairness of the Merger after considering all ‎of the foregoing as a whole. The Parent Entities believe these factors provide a reasonable basis upon which to ‎form their position regarding the fairness of the Merger to the Disinterested Stockholders. This ‎position should not, however, be construed as a recommendation to any Company stockholder to approve the ‎Merger Agreement or the Merger or any other proposal or to otherwise vote on any other matter. ‎ The Parent Entities make no recommendation as to how stockholders of the Company ‎should vote their shares of Common Stock relating to the Merger, any other proposal or any other matter.

 

 

Position of the Lennar Entities as to the Fairness of the Merger

 

Under the SEC rules governing “going private” transactions, the Lennar Entities are required to disclose among other things their purpose for the Merger, their reasons for structuring the transaction as proposed and any alternative structure that they considered, and their reasons for pursuing the Merger at this time. ‎The Lennar Entities are making the statements included in this section solely for purposes of complying with ‎the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. The Lennar Entities have agreed to vote in favor of the Merger proposal. However, none of the Lennar Entities are making any recommendation to any Disinterested Stockholder as to how that stockholder should vote on the Merger Agreement Proposal or any other proposal or any other matter, and the Lennar Entities’ views as described in this part of this proxy statement should not be so construed as such a recommendation.‎

 

The Lennar Entities believe that the interests of the Disinterested Stockholders of the Company were represented by the Special Committee, which negotiated ‎the terms and conditions of the Merger Agreement on their behalf, with the assistance of the Special ‎Committee’s independent legal and financial advisors. The Lennar Entities did not participate in the ‎negotiations of the Merger Agreement or deliberations of the Special Committee, nor did they receive advice from the ‎respective legal or other advisors to the Special Committee as to, the fairness of the ‎Merger or any other transactions contemplated by the Merger Agreement, including the Doma Technology Reorganization, the Lennar Investment and the transactions contemplated by the HSCM Agreements. The Lennar Entities have not performed, or engaged a financial advisor to perform, any valuation or ‎other analysis for the purposes of assessing the fairness of the Merger or any other transactions contemplated by the Merger Agreement to the Disinterested ‎Stockholders.

 

Other than to the extent known to the Lennar Entities as disclosed in the section of this proxy statement captioned “Special FactorsBackground of the Merger,” the Lennar Entities were not aware of, and thus did not consider, any other firm offers made by any unaffiliated person during the past two years for (i) a merger or consolidation of the Company with another company, (ii) the sale or transfer of all or substantially all of the Company’s assets or (iii) the purchase of all or a substantial portion of the shares that would enable such person to exercise control of or significant influence over the Company.

 

However, based on their knowledge and analysis of available information regarding the Company, as well as discussions with the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Company Board and the Special Committee discussed in “Special Factors Purpose and Reasons of the Company for the Merger; Recommendation of the Company Board and the Special Committee; Fairness of the Merger,” which analysis and resulting conclusions the Lennar Entities adopt, and the following factors, which are considered material and not listed in any relative order of importance, the Lennar Entities believe that the Merger is both substantively and procedurally fair to the Disinterested Stockholders:‎

 

 

the fact that the Special Committee and the Company Board unanimously determined that the Merger ‎Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and ‎in the best interests of, the Company and Company’s stockholders;‎

 

 

‎the fact that the Merger Consideration is all cash, thus allowing Disinterested Stockholders to immediately realize a certain and fair value for their Common Stock, ‎which value represents a premium over the closing price of the ‎Common Stock on the last trading day before the Company publicly announced the Merger;

 

 

the fact that the Merger will provide liquidity for the Disinterested Stockholders without the ‎delays that would otherwise be necessary in order to liquidate the positions of holders, and ‎without incurring brokerage and other costs typically associated with market sales;

 

 

‎the fact that the Special Committee, consisting solely of independent and disinterested directors of the ‎Company Board who are not officers or employees of the Company and who are not affiliated with ‎the Lennar Entities, and who have no financial interest in the Merger different from, or in addition to, ‎the Disinterested Stockholders generally, was given exclusive authority to, among other things, review, evaluate and negotiate the terms of the Merger, to determine the advisability of the ‎Merger, to decide not to engage in the Merger, and to consider alternatives to the Merger;‎

 

 

 

‎the fact that the Special Committee was formed at the outset of the Company’s consideration of a ‎potential transaction and prior to any consideration of the Merger Agreement and the transactions ‎contemplated thereby, including the Merger, or any negotiations with respect thereto;‎ 

 

 

‎the fact that the Special Committee was fully informed about the extent to which the interests of the Lennar Stockholders, Company management and HSCM, as well as the Foundation Investors to the extent relevant, in ‎the Transactions differed from those of the Disinterested Stockholders;‎

 

 

The fact that the Special Committee conducted an extensive process, including extensive ‎deliberations and negotiations, and retained and was advised by independent, nationally recognized ‎financial and legal advisors;‎

 

 

‎the fact that the Special Committee was deliberate in its process and negotiated for a “go-shop” period ‎during whi ch the Company could actively solicit bids from potential financial and strategic acquirors;‎

 

 

‎the fact that the Merger Consideration was the result of the Special Committee’s extensive arm’s-‎length negotiations with TRG Group;‎

 

 

‎the fact that the closing of the Merger is conditioned on the Company’s receipt of the Required Stockholder Approval, including the approval of at least a majority of the voting power of the outstanding shares of Common Stock held by the Disinterested Stockholders entitled to vote on this Agreement;‎

 

 

‎the Company’s ability, under certain circumstances as set out in the Merger Agreement, to provide ‎information to, or participate in discussions or negotiations with, third parties regarding Acquisition ‎Proposals, including during the “go-shop” period mentioned above;‎

 

 

‎the Company’s ability, under certain circumstances as set out in the Merger Agreement, to terminate the ‎Merger Agreement to enter into a definitive agreement related to a Superior Proposal, subject to the requirement that the Company pay Parent a termination fee of (i) $1,822,134 if the Company terminates the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal (x) during the Go-Shop Period or (y) by an Exempted Person and (ii) $3,188,734 if the Company terminates the Merger Agreement under any other circumstances which would trigger payment of a termination fee to Parent; and

 

 

the availability of appraisal rights to the Company’s stockholders who comply with all ‎of the required procedures under Delaware law for exercising appraisal rights, which allow such ‎holders to seek appraisal of the fair value of their shares of Common Stock.‎‎

 

The foregoing discussion of the information and factors considered and given weight by the Lennar Entities in ‎connection with the fairness of the Merger is not intended to be exhaustive but is believed to include all ‎material factors considered by them. The Lennar Entities did not find it practicable to, and did not, quantify or ‎otherwise attach relative weights to the foregoing factors in reaching their conclusion as to the fairness of the ‎Merger. Rather, the Lennar Entities reached their position as to the fairness of the Merger after considering all of the foregoing as whole. The Lennar Entities believe these factors provide a reasonable basis upon which to ‎form their position regarding the fairness of the Merger to the Disinterested Stockholders. This position should not, however, be construed as a recommendation to any Disinterested Stockholder to approve the ‎Merger Agreement or the Merger or any other proposal or to otherwise vote on any other matter. ‎ The Lennar Entities make no recommendation as to how Disinterested Stockholders ‎should vote their shares of Common Stock relating to the Merger, any other proposal or any other matter.

 

Purpose and Reasons of the Parent Entities for the Merger

 

Under the SEC rules governing “going private” transactions, the Parent Entities are required to disclose among other things its purpose for the Merger, its reasons for structuring the transaction as proposed and any alternative structure that it considered, and its reasons for pursuing the Merger at this time. ‎The Parent Entities are making the statements included in this section solely for purposes of complying with ‎the requirements of Rule 13e-3 and related rules and  regulations under the Exchange Act. However, none of the Parent Entities are making any recommendation to any Company stockholder as to how that stockholder should vote on the Merger Agreement Proposal, any other proposal or any other matter, and the Parent Entities’ views as described in this part of this proxy statement should not be so construed as such a recommendation.‎

 

 

For the Parent Entities, the primary purpose of the Merger is to allow Topco to indirectly own equity interests in ‎the Company and to bear the rewards and risks of such ownership after the Merger is completed and the ‎shares of Common Stock cease to be publicly traded. The Parent Entities believe that structuring ‎the transaction in such manner is preferable to other transaction structures because it (i) will enable Parent to ‎acquire all of the shares of Common Stock at the same time, (ii) will allow the Company to cease tobe a publicly registered and reporting company, and (iii) represents an opportunity for the ‎Company’s stockholders (other than the holders of Cancelled Shares and Dissenting Shares) to receive the Merger Consideration of $6.29 per share of Common Stock in cash, ‎without interest and less any applicable withholding taxes, subject to and in accordance with the terms and ‎conditions of the Merger Agreement. As part of the relevant conversations and negotiations resulting in the Transactions, the Parent Entities did not consider any other alternative transaction ‎structures or other alternative means to accomplish the foregoing purposes.

 

Although the Parent Entities believe that there will be certain opportunities associated with their investment in the Company if the Merger is completed, the Parent Entities realize that there are also substantial risks (including the risks and uncertainties relating to the prospects of the Company) and that such opportunities may never be fully realized.

 

Purpose and Reasons of the Lennar Entities for the Merger

 

Under the SEC rules governing “going private” transactions, the Lennar Entities ‎are required to disclose among other things their purpose for the Merger, their reasons for structuring the transaction as proposed and any alternative structure that they considered, and their reasons for pursuing the Merger at this time. ‎The Lennar Entities are making the statements included in this section solely for purposes of complying with ‎the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. However  , none of the Lennar Entities are making any recommendation to any Disinterested Stockholder as to how that stockholder should vote on the Merger Agreement Proposal, any other proposal or any other matter, and the Lennar Entities’ views as described in this part of this proxy statement should not be so construed as such a recommendation.‎

 

For the Lennar Entities, the Parent Entities required that the Lennar Entities reinvest their proceeds from the Merger (such proceeds equal to the same amount per share as the Disinterested Stockholders) and invest an additional $17 million in Topco as a condition to the Merger.  As a result, the Lennar Entities primary purpose of the Merger is to enable all Company stockholders to gain an opportunity to receive the Merger Consideration of $6.29 per share of Common Stock in cash, ‎without interest and less any applicable withholding taxes, subject to and in accordance with the terms and ‎conditions of the Merger Agreement.  In addition, the Lennar Entities will be able to continue as minority investors in the Company through their minority interests in Topco. The Lennar Entities will also have certain rights to partial liquidity at the same effective price as the price per share of the Merger available to the Disinterested Stockholders. Although the Lennar Entities believe that there will be certain opportunities associated with their investment in the Company if the Merger is completed, the Lennar Entities realize that there are also substantial risks (including the risks and uncertainties relating to the prospects of the Company) and that such opportunities may never be fully realized.  As part of the relevant conversations and negotiations resulting in the Transactions, the Lennar Entities did not consider any other alternative transaction structures or other alternative means to accomplish the foregoing purposes.

 

Plans for the Company after the Merger

 

Following completion of the Merger, Merger Sub will have been merged with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Parent. The Common Stock is currently listed on the NYSE and registered under the Exchange Act. The Company’s publicly held Company Warrants are traded on the OTC Pink Marketplace and registered under the Exchange Act. Following completion of the Merger, there will be no further market for the Common Stock or Company Warrants and, as promptly as practicable following the Effective Time and in compliance with Applicable Law, the Company’s securities will be delisted from the NYSE and deregistered under the Exchange Act.

 

 

Concurrently with the execution of the Merger Agreement, Lennar and Topco, which, in the case of Topco, following the Effective Time, will be an indirect parent of the Company, entered into certain agreements, pursuant to which, concurrently with the Closing and upon the terms and subject to the conditions set forth therein, Lennar shall invest the cash it receives in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully diluted basis (the “Lennar Investment”).

 

Prior to the Closing, the Company will effect a restructuring and reorganization of the Company (the “Doma Technology Reorganization”) such that, as of the Closing, Doma Technology, a subsidiary of the Company, will hold the applicable assets and related liabilities of the Company’s and its applicable subsidiaries’ Doma Technology Business and Doma Technology will be majority owned by Parent with HSCM owning preferred units and profits interests to HSCM representing approximately 27.5% of Doma Technology’s equity securities on a fully diluted basis.

 

The Parent Entities and Lennar Entities currently anticipate that the Company’s operations following completion of the Merger will initially be conducted substantially as they are currently being conducted, except that the Company will cease to be a public company and will instead be a wholly owned subsidiary of Parent, other than Doma Technology LLC which will be a majority owned subsidiary of Parent, and the Company’s title underwriting division, Doma Title Insurance, and its technology division, Doma Technology, are expected to operate as subsidiaries of Parent with Doma Technology operating on a separately capitalized basis. Concurrently with the execution and delivery of the Merger Agreement, Parent, HSCM and the Company entered into a preferred unit purchase agreement (the “Preferred Purchase Agreement”), pursuant to which, at the Closing, Doma Technology would issue preferred units and profits interests to HSCM representing approximately 27.5% of Doma Technology’s equity securities on a fully diluted basis, provided that HSCM may transfer a portion of such preferred units to a third-party investor. In addition, the Preferred Purchase Agreement provides that common units or profits interests representing approximately 19.2% of Doma Technology’s equity securities on a fully diluted basis will be reserved for issuance to management employees of Doma Technology, which may include the Company’s current executive officers, from time to time following the Closing pursuant to terms and conditions to be approved by the board of managers of Doma Technology. At the Closing, Doma Technology, Parent and HSCM (and any third-party transferee of HSCM’s preferred units) would enter into a limited liability company operating agreement governing the rights and obligations of the parties in Doma Technology.

 

From and after the Effective Time, the officers of Merger Sub immediately prior to the Effective Time will be the officers of the Surviving Corporation and, unless otherwise determined by Parent prior to the Effective Time, the directors of Merger Sub immediately prior to the Effective Time will be the directors of the Surviving Corporation, in each case to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their death, resignation or removal or until their respective successors are duly elected and qualified in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, as the case may be.

 

Certain Effects of the Merger

 

If the Merger Agreement is approved and adopted by the requisite votes of the Company’s stockholders and all ‎other conditions to the Closing of the Merger are either satisfied or waived, Merger Sub will merge with ‎and into the Company, with the Company surviving as a wholly owned subsidiary of Parent.‎

 

Treatment of the Shares of Common Stock

 

At the Effective Time, each share of Common Stock issued and outstanding immediately prior to ‎the Effective Time (excluding any Cancelled Shares and any Dissenting Shares) shall be cancelled and extinguished and automatically converted into the right to receive an amount in cash equal to $6.29 per share of Common Stock, without interest, in accordance with and subject to the terms and conditions set forth in the ‎Merger Agreement, whereupon all such shares of Common Stock will cease to be outstanding and ‎shall cease to exist, and the holders of such shares of Common Stock will cease to have any ‎rights with respect thereto, other than the right to receive the Merger Consideration and the right to receive ‎dividends and other distributions, in each case, subject to and in accordance with the terms and conditions of ‎the Merger Agreement.‎

 

 

Treatment of Company Warrants

 

At the Effective Time, each outstanding Company Warrant shall, in accordance with its terms under the Warrant Agreement, dated as of December 1, 2020, by and between the Company and Continental Stock Transfer & Trust Company (the “Warrant Agreement”), automatically and without any required action on the part of the holder thereof, cease to represent a Company Warrant in respect of Common Stock and shall become a Company Warrant exercisable for Merger Consideration. If a holder properly exercises a Company Warrant within thirty (30) days following the public disclosure of the consummation of the Merger pursuant to a Current Report on Form 8-K filed with the SEC, the Warrant Price, as defined in the Warrant Agreement, with respect to such exercise shall be reduced by an amount (in dollars and in no event less than zero) equal to the difference of (a) the Warrant Price in effect prior to such reduction minus (b) (i) Merger Consideration minus (ii) the Black-Scholes Warrant Value (as defined in the Warrant Agreement).

 

Treatment of Company Equity Awards

 

Company Options. Pursuant to the Merger Agreement, as a result of the Merger, each Company Option that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, will automatically, without any action on the part of the Company or the holder thereof, be cancelled and terminated as of immediately prior to the Effective Time and converted into the right to receive an amount in cash as soon as practicable following the Closing, less any applicable withholding taxes, equal to the product obtained by multiplying (i) the aggregate number of shares of Common Stock subject to such Company Option by (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Option (the “Option Consideration”), provided, that any Company Option with an exercise price per share that is equal to or greater than the Merger Consideration will ‎automatically terminate and be cancelled at the Effective Time without payment of any consideration.‎

 

Company RS Awards. Pursuant to the Merger Agreement, as a result of the Merger, each unvested Company RS Award that is outstanding immediately prior to the Effective Time will automatically, without any action on the part of the Company or the holder thereof, be cancelled and terminated as of immediately prior to the Effective Time and converted into the right to receive an amount in cash as soon as practicable following the Closing, less any applicable withholding taxes, equal to the product obtained by multiplying (i) the aggregate number of shares subject to such Company RS Award by (ii) the Merger Consideration (the “RS Award Consideration”).

 

Company RSU Awards. Pursuant to the Merger Agreement, as a result of the Merger, each Company RSU Award that is outstanding immediately prior to the Effective Time, whether vested or unvested, will automatically, without any action on the part of the Company or the holder thereof, be cancelled and terminated as of immediately prior to the Effective Time and converted into the right to receive an amount in cash as soon as practicable following the Closing, less any applicable withholding taxes, equal to the product obtained by multiplying (i) the aggregate number of shares subject to such Company RSU Award by (ii) the Merger Consideration (the “RSU Award Consideration”).

 

Company PRSU Awards. Pursuant to the Merger Agreement, as a result of the Merger, each Company PRSU Award that is outstanding immediately prior to the Effective Time, whether vested or unvested, will automatically, without any action on the part of the Company or the holder thereof, be cancelled and terminated as of immediately prior to the Effective Time and converted into the right to receive, an amount in cash as soon as practicable following the Closing, less any applicable withholding taxes, equal to the product obtained by multiplying (i) the aggregate number of shares subject to such Company PRSU Award (if any) that would satisfy the performance conditions applicable to such Company PRSU Award measured as of immediately prior to the Effective Time (in accordance with the applicable award agreement governing such Company PRSU Award) by (ii) the Merger Consideration (the “PRSU Award Consideration”).

 

Benefits of the Merger for the Companys Disinterested Stockholders

 

The primary benefit of the Merger to the Disinterested Stockholders (excluding any Cancelled Shares and any Dissenting Shares) will be ‎their right to receive the Merger Consideration of $6.29 per share of Common Stock in cash, ‎without interest, in accordance with and subject to the terms and conditions set forth in the Merger Agreement, ‎representing a premium of approximately 43.0% over the Company’s closing share price on March 27, 2024, the last ‎trading day prior to announcement of the transactions contemplated by the Merger Agreement, and a premium of approximately 33.9% over the Company’s 30-day volume-weighted average closing price for the period ending March 27, 2024. Additionally, such security holders ‎will avoid the risk after the Merger of any possible decrease in our future earnings, growth or value.‎

 

 

Detriments of the Merger to Companys Disinterested Stockholders

 

The primary detriments of the Merger to our Disinterested Stockholders include the lack of an interest of ‎such security holders in the potential future earnings, growth or value realized by the Company, including Doma Title Insurance and Doma Technology, after the ‎Merger.‎

 

Certain Effects of the Merger for the Parent Entities, Lennar Entities and HSCM

 

If the Merger is completed, the Parent Entities and Lennar Entities and their other equity investors, as well as, solely in the case of Doma Technology LLC, HSCM and, potentially, certain members of management, will be the sole beneficiaries of our future earnings and growth, if any, and they will be the only ones entitled to vote on corporate matters affecting the Company following the Merger.

 

Following the Merger, all of the equity interests in the Company will be beneficially owned, indirectly through Topco. Pursuant to the Lennar Investment, Lennar would own approximately 8.36% of the outstanding equity of Topco on a fully diluted basis. Pursuant to the Preferred Purchase Agreement, Doma Technology would be an indirect subsidiary of Topco, with HSCM (and/or its third-party transferee) owning approximately 27.5% of Doma Technology’s equity securities on a fully diluted basis, and approximately 19.2% of Doma Technology’s equity securities on a fully diluted basis will be reserved for issuance to management employees of Doma Technology, which may include the Company’s current executive officers. The board of managers of Doma Technology would initially consist of four representatives designated by Parent, three representatives designated by HSCM and the then-current chief executive officer of Doma Technology.

 

The table below sets forth the direct and indirect interests in the Company’s net book value and net earnings immediately before the Merger and immediately after the Merger based on the net book value at December 31, 2023 and March 31, 2024 and net income attributable to stockholders for the fiscal year ended December 31, 2023 and net income attributable to stockholders for the three months ended March 31, 2024.

 

   

Prior to the Merger

 

   

After the Merger

 
   

(in thousands, except percentages)

   

(in thousands, except percentages)

 
   

%

Interest

   

Net book

value at

March 31,

2024

   

Net book

value at

December 31,

2023

   

Net

income

(loss) for

the 3

months

ended

March 31,

2024

   

Net income

(loss) for

the fiscal

year ended

December

31, 2023

   

%

Interest

   

Net book

value at

March 31,

2024

   

Net book

value at

December 31,

2023

   

Net income

(loss) for

the 3

months

ended

March 31,

2024

   

Net income

(loss) for the

fiscal year

ended

December

31, 2023

 

Parent Entities

    0.0 %   $ -     $ -     $ -     $ -       100 %   $ (41,681.0 )   $ (25,911.0 )   $ (20,551.0 )   $ (124,414.0 )

Lennar Entities(4)

    23.8 %   $ (9,920.1 )   $ (6,166.8 )   $ (4,891.1 )   $ (29,610.5 )     8.4 %   $ (3,484.5 )   $ (2,166.2 )   $ (1,718.1 )   $ (10,401.0 )

 


(1)

Based on 13,524,203 shares of Common Stock outstanding as of December 31, 2023 and 13,887,772 shares of Common Stock outstanding as of March 31, 2024.

(2)

Based on total stockholders’ deficit of $25.9 million as of December 31, 2023 and $41.7 million as of March 31, 2024.

(3)

Based on net loss attributable to the Company of $124.4 million for the year ended December 31, 2023 and $20.6 million for the three months ended March 31, 2024.

(4)

Amounts in “After the Merger” columns reflect the Lennar Entities’ indirect holdings in the Company through Lennar’s holdings of Topco. After the Merger, the Lennar Entities will not hold any shares of Doma Holdings, Inc. directly; however, concurrently with the execution of the Merger Agreement, Lennar and Topco, which, following the Effective Time, will be an indirect parent of the Company, entered into certain agreements, pursuant to which, concurrently with the Closing, and upon the terms and subject to the conditions set forth therein, Lennar shall invest the cash it receives pursuant to the Merger Agreement in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully-diluted basis.

 

 

If the Merger is completed, HSCM will (a) accept certain consideration (including the equity interests in Doma Technology referred to above) in full satisfaction of all indebtedness under the Company Loan Agreement and (b) subject to receipt of the specified consideration, release all liens securing the Company Loan Agreement. See “Special FactorsCompany Loan AgreementAgreement and Fifth Amendment to the Loan and Security Agreement.”

 

Certain Effects on the Company if the Merger Is Not Completed

 

If the Merger Agreement Proposal is not approved by the Company’s stockholders or if the Merger is not ‎completed for any other reason, the Company’s stockholders will not receive any payment for their shares of ‎ Common Stock in connection with the Merger. Instead, unless the Company is sold to a third ‎party, the Company will remain an independent public company, and the shares of Common Stock ‎will continue to be listed and traded on the NYSE, so long as the Company continues to meet the applicable listing ‎requirements, and the Company Warrants will continue to trade on the OTC Pink Marketplace. In addition, if the Merger is not completed, the Company expects that management will operate ‎the Company’s business in a manner similar to that in which it is being operated today and that the Company ‎stockholders will continue to be subject to the same risks and opportunities to which they are currently ‎subject. There is no assurance as to the effect of these risks and opportunities on the future value of your ‎shares of Common Stock, including the risk that the market price of shares of ‎Common Stock may decline to the extent that the current market price of shares of Common ‎Stock reflects a market assumption that the Merger will be completed.‎

 

Under certain circumstances, as set forth in the Merger Agreement if the Merger is not completed, the Company would be required to pay ‎Parent a Company Termination Fee of $3,188,734 (or, in certain circumstances, $1,822,134) in cash. For more ‎information about termination fees, see “The Merger Agreement Termination Fees.”‎

 

In addition, if the Merger is not completed, the HSCM Fifth Amendment (including the Standstill Period) would terminate, and the Company Loan Agreement (under the HSCM Fourth Amendment) and the Topco Term Facility would remain in effect. See “Special FactorsCompany Loan Agreement” for a further discussion of the HSCM Fourth Amendment, the HSCM Fifth Amendment and the Standstill Period, and “Special FactorsTopco Term Facility” for a further discussion of the Topco Term Facility.

 

Certain Unaudited Prospective Financial Information

 

The Company does not, as a matter of course, publicly disclose ‎forecasts or projections as to future performance, earnings or other results due to the inherent uncertainty, ‎unpredictability and subjectivity of the underlying assumptions, estimates and projections. In connection with ‎its consideration of the Company’s stand-alone prospects and potential strategic transactions available to ‎the Company, management of the Company prepared and provided financial forecasts (the “Projections”) to the Special Committee and Houlihan Lokey. The Company’s management and the Special Committee ‎subsequently directed Houlihan Lokey to use the Projections in connection with rendering their fairness opinion to the Special Committee and performing their related financial analysis, as ‎described above under the heading “Special FactorsOpinion of Houlihan Lokey.” The Projections are included in this proxy statement solely to give the Company’s ‎stockholders access to certain financial projections that were made available to the Special Committee and Houlihan Lokey. The Projections may not be appropriate for other purposes and are not being ‎included in this proxy statement to influence a Company stockholder’s decision whether to vote to adopt ‎the Merger Agreement and approve the Merger.

 

The Projections were prepared by our management for internal use. The Projections were not prepared with a view toward public disclosure or with a view toward complying with GAAP (as detailed below), the published guidelines of the SEC regarding projections, the use of non-GAAP financial measures or the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the Company’s management, were prepared on a reasonable basis in connection with the Merger, reflected the best available estimates and judgments at the time of preparation and presented as of the time of preparation, to the best of the Company management’s knowledge and belief, the reasonable projections of the future financial performance of the Company.

 

Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

 

The Projections, while presented with numerical specificity, necessarily were based on numerous variables and assumptions that are inherently uncertain and many of which are beyond the control of the Company’s management. Because the Projections cover multiple years, by their nature, they also become subject to greater uncertainty with each successive year. The Projections do not take into account any circumstances or events occurring after the date they were prepared. As a result, there can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than projected. A number of important factors with respect to the Company’s business and the industry in which it participates may affect actual results and result in the Projections not being achieved. For a description of some of these factors, the Company’s stockholders are urged to review the Company’s most recent SEC filings as well as the discussion entitled “Cautionary Note Regarding Forward-Looking Statements” and other risk factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. In addition, the Projections may be affected by the Company’s inability to achieve strategic goals, objectives and targets over the applicable period. Accordingly, there can be no assurance that the prospective results are indicative of the future performance of the Company or that actual results will not differ materially from those presented in the prospective financial information.

 

 

In light of the foregoing factors and the uncertainties inherent in the projections, the Companys stockholders are cautioned not to place undue, if any, reliance on the projections.

 

The following table presents the Projections for the Company’s underwriting business segment (unaudited):

 

($ in millions)

2024E

2025E

2026E

Net premiums written

$325.0

$414.2

$476.8

Escrow, other title-related fees and other

2.3

6.2

15.3

Investment, dividend and other income

4.6

4.7

5.5

Total revenue

$331.9

$425.1

$497.6

Premiums retained by agents

264.7

337.0

387.8

Retained premiums & fees (1)

$67.2

$88.1

$109.8

Direct labor

10.3

11.7

13.7

Other direct costs

10.1

14.1

19.4

Provision for claims

15.6

16.7

20.1

Adjusted gross profit (2)

$31.2

$45.6

$56.6

Other indirect expenses

14.0

14.9

15.4

Adjusted EBITDA (3)

$17.2

$30.7

$41.2

Income tax expense

3.6

6.4

8.6

Adjusted net income (4)

$13.6

$24.3

$32.6

 


(1) Retained premiums and fees is defined as total revenue less premiums retained by agents.

(2) Adjusted gross profit is defined as gross profit (loss), adjusted to exclude the impact of depreciation and amortization.

(3) Adjusted EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization, and further adjusted to exclude the impact of net loss from discontinued operations, stock-based compensation, severance and interim salary costs, accelerated contract expense, change in fair value of Local sales deferred earnout, and the change in fair value of warrant and sponsor covered shares liabilities.

(4) Adjusted Net Income is defined as Adjusted EBITDA less interest, taxes, unrealized gains/(losses) on investments and realized gains/(losses).

 

The following table presents the Projections for the Company’s enterprise business segment (unaudited):

 

($ in millions)

2024E

2025E

2026E

Revenue

$10.7

52.1

$77.0

Direct labor

3.3

11.3

15.1

Other direct costs

3.7

14.0

20.3

Provision for claims

0.2

0.9

1.5

Adjusted gross profit (1)

$3.5

$25.9

$40.1

Other indirect expenses

2.9

4.3

5.3

Adjusted EBITDA (2)

$0.6

$21.6

$34.8

Stock-based compensation

20.7

21.1

21.0

Income tax expense

0.0

0.0

1.1

Capital expenditures

4.1

4.7

5.3

Changes in net working capital

0.0

0.0

0.0

Unlevered free cash flow (3)

$(24.2)

$(4.2)

$7.4

 


(1) Adjusted gross profit is defined as gross profit (loss), adjusted to exclude the impact of depreciation and amortization.

(2) Adjusted EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization, and further adjusted to exclude the impact of net loss from discontinued operations, stock-based compensation, severance and interim salary costs, accelerated contract expense, change in fair value of Local sales deferred earnout, and the change in fair value of warrant and sponsor covered shares liabilities.

(3) Unlevered Free Cash Flow is defined as Adjusted EBITDA less stock-based compensation, taxes, capital expenditures and changes in net working capital.

 

The following table presents the Projections for the Company’s consolidated business (unaudited):

 

($ in millions)

2024E(1)

2025E(1)

2026E(1)

Net premiums written

$325.0

$414.2

$476.8

Escrow, other title-related fees and other

9.9

48.7

80.3

Investment, dividend and other income

6.1

5.1

5.9

Total revenue

$341.0

$468.0

$563.0

Premiums retained by agents

262.4

327.3

375.8

Retained premiums & fees (2)

$78.6

$140.7

$187.2

Direct labor

13.6

23.0

28.8

Other direct costs

13.8

28.1

39.7

Provision for claims

15.7

17.6

21.5

Adjusted gross profit (3)

$35.5

$72.0

$97.2

Other indirect expenses

45.0

51.5

58.5

Adjusted EBITDA (4)

$(9.5)

$20.5

$38.7

 


(1) Projections for the Company’s underwriting and enterprise business segments do not sum to the amounts for the Projections for the consolidated business due to certain revenues and expenses eliminated in consolidation and the exclusion from the business segment Projections of certain other indirect expenses not allocated to business segments , including corporate support function costs, such as legal, finance, human resources, technology support and certain other indirect operating expenses, such as sales and management payroll, and incentive related expenses.

(2) Retained premiums and fees is defined as total revenue less premiums retained by agents.

(3) Adjusted gross profit is defined as gross profit (loss), adjusted to exclude the impact of depreciation and amortization.

(4) Adjusted EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization, and further adjusted to exclude the impact of net loss from discontinued operations, stock-based compensation, severance and interim salary costs, accelerated contract expense, change in fair value of Local sales deferred earnout, and the change in fair value of warrant and sponsor covered shares liabilities.

 

 

Additional Information About the Projections

 

The inclusion of the projections in this proxy statement should not be regarded as an indication that the Company or any of its affiliates, advisors, officers, directors or representatives considered or considers the projections to be necessarily predictive of actual future events, and the projections should not be relied upon as such. Neither the Company nor any of its respective affiliates, advisors, officers, directors or representatives has made or makes any representation to any of the Company’s stockholders or any other person regarding the ultimate performance of the Company compared to the information contained in the projections or can give any assurance that actual results will not differ materially from the projections, and none of them undertakes any obligation to update or otherwise revise or reconcile the projections to reflect circumstances existing after the date the projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error. The Company does not intend to make publicly available any update or other revision to the projections, except as otherwise required by law.

 

The unaudited prospective financial information does not take into account the possible financial and other effects on the Company of the Merger and does not attempt to predict or suggest future results of the surviving corporation. The unaudited prospective financial information does not give effect to the Merger, including the impact of negotiating or executing the Merger Agreement, the expenses that may be incurred in connection with consummating the Merger, the potential synergies that may be achieved by the combined company as a result of the Merger or the effect of any business or strategic decisions or actions which would likely have been taken if the Merger Agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the Merger. Further, the unaudited prospective financial information does not take into account the effect on the Company of any possible failure of the Merger to occur. None of the Company, Houlihan Lokey or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Company stockholder or other person regarding the Company’s ultimate performance compared to the information contained in the unaudited prospective financial information or that the forecasted results will be achieved. The unaudited prospective financial information is being provided solely because it was made available to the Special Committee and Houlihan Lokey and not to influence your decision as to whether to vote for the Merger proposal.

 

The projections include non-GAAP financial measures, and they were presented because management believed they could be useful indicators of the Company’s projected future operating performance. The Company prepared the projections on a non-GAAP basis. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the Company may not be comparable to similarly titled amounts used by other companies.

 

All financial projections are forward looking statements and reflect numerous estimates and assumptions with respect to industry performance, general business, economic, market and financial conditions, changes to the business, financial condition or results of operations of the Company and other matters, including those described under “Cautionary Statement Concerning Forward-Looking Information,” many of which are difficult to predict, subject to significant economic and competitive uncertainties, are beyond the Company’s control and may cause the Projections or the underlying assumptions not to be realized. These and other forward looking statements are expressly qualified in their entirety by the risks and uncertainties identified above and the cautionary statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent quarterly and current reports on Form 10-Q and 8-K. Please consider carefully the discussion entitled “Cautionary Statement Concerning Forward Looking Information” elsewhere in the proxy statement.

 

Interests of Certain Persons in the Merger

 

In considering the recommendations of the Special Committee and the Company Board with respect to the Merger, the Company stockholders should be aware that the Company’s executive officers and directors or their associates have certain interests in the Merger that may be different from, or in addition to, the interests of the Company stockholders generally. The Special Committee, consisting entirely of independent and disinterested directors, and the Company Board, were aware of these interests and considered them, among other matters, in evaluating the Merger Agreement and the transactions contemplated thereby, including the Merger, and in making their recommendations. These interests are described below.

 

Treatment of Company Equity Awards

 

 

For the Company’s executive officers and directors, their Company Equity Awards will be treated as follows:

 

 

Shares of Common Stock subject to unvested Company RSU Awards will automatically, without any action on the part of the Company or the holder thereof, vest and be cancelled immediately prior to the Effective Time and converted into the right to receive a cash payment (without interest), as soon as practicable following the Closing, in the amount equal to the product obtained by multiplying (A) the aggregate number of shares subject to such Company RSU Award immediately prior to the Effective Time by (B) the Merger Consideration of $6.29 per share, less any applicable withholding Taxes. As of June 15, 2024, there were 999,391 Company RSU Awards outstanding, of which 189,830 were held in the aggregate by the Company’s executive officers and directors.

 

 

 

Shares of Common Stock subject to outstanding Company PRSU Awards will automatically, without any action on the part of the Company or the holder thereof, vest and be cancelled immediately prior to the Effective Time and converted into the right to receive a cash payment (without interest), as soon as practicable following the Closing, in the amount, if any, equal to the product obtained by multiplying (A) the aggregate number of shares subject to such Company PRSU Award (if any) that would satisfy the performance conditions applicable to such Company PRSU Award as of the Effective Time measured as of immediately prior to the Effective Time (in accordance with the applicable award agreement) by (B) the Merger Consideration of $6.29 per share, less any applicable withholding Taxes. As of June 15, 2024, Max Simkoff, the Company’s Chief Executive Officer, held 97,413 Company PRSU Awards; however, none of these Company PRSU Awards would satisfy the performance conditions applicable to such Company PRSU Award, and thus would be cancelled for no consideration at the Closing.

 

 

As of June 15, 2024, there are no Company Options or Company RS Awards outstanding held by the Company’s directors or executive officers.

 

For additional details regarding the treatment of Company Options, Company RSU Awards, Company RS Awards and Company PRSU Awards, see the section of this proxy statement captioned “Special FactorsCertain Effects of the MergerTreatment of Company Equity Awards.”

 

The table below sets forth, with respect to each of the Company’s executive officers and directors, the total number of ‎shares of Common Stock and Company Equity Awards, per individual, expected to be held by them at the ‎Closing, assuming (i) the Closing occurred on ‎‎June 15, 2024 (solely for the purposes of the table below), and (ii) the ‎number of outstanding shares of Common Stock and Company Equity Awards for each executive ‎officer and director on the Closing was equal to the number of shares of Common Stock and Company Equity Awards that were outstanding as of ‎‎June 15, 2024, the latest practicable date to determine such amounts ‎before the filing of this proxy statement. For ‎purposes of these estimates, the number of shares of Common Stock owned and shares of ‎Common Stock subject to equity compensation awards were multiplied by the Merger Consideration of $6.29 per share ‎of Common Stock (except in the case of Mr. Simkoff’s Company PRSU Awards, which would be cancelled at the Closing for no consideration). No new shares of Common Stock or equity awards were granted to any executive officer or non-employee director in contemplation of the Merger.

 

Name

 

Number of

Shares Held

Directly(1)

   

Aggregate

Value of Shares

Held Directly

($)

   

Number of

Shares Subject

to Company

RSU Awards

   

Aggregate

Value of

Company RSU

Awards ($)

   

Number of

Shares Subject

to Company

PRSU Awards

   

Aggregate Value

of Company

PRSU Awards

   

Total Value

($)

 

Stuart Miller

    (2)    $           $           $     $  

Charles Moldow

    (3)    $           $           $     $  

Lawrence Summers

    55,245     $ 347,491       429     $ 2,698           $     $ 350,189  

Maxine Williams

    6,044     $ 38,017       429     $ 2,698           $     $ 40,715  

Serena Wolfe

    6,044     $ 38,017       429     $ 2,698           $     $ 40,715  

Matthew E. Zames

    35,279     $ 221,905       663     $ 4,170           $     $ 226,075  

Max Simkoff

    1,947,335     $ 12,248,737       109,375     $ 687,969       97,413 (4)    $     $ 12,936,706  

Mike Smith

    49,656     $ 312,336       78,505     $ 493,796           $     $ 806,133  

 


(1)

Represents shares held directly, in trust or in a similar estate planning vehicle for the benefit of the holder or an immediate family member of the holder.

(2)

Excludes 3,326,213 shares held by entities affiliated with Lennar Corp., for which Mr. Miller acts as Executive Chairman, with a total value of $20,921,880.

(3)

Excludes 1,791,085 shares held by entities affiliated with Foundation Capital, for which Mr. Moldow is General Partner, with a total value of $11,265,925.

(4)

As of June 15, 2024, Max Simkoff, the Company’s Chief Executive Officer, held 97,413 Company PRSU Awards; however, none of these Company PRSU Awards would satisfy the performance conditions applicable to such Company PRSU Award, and thus would be cancelled for no consideration at the Closing.

 

 

Employment Agreements with Executive Officers

 

 

For Max Simkoff, the Company’s Chief Executive Officer, and Mike Smith, the Company’s Chief Financial Officer, the following severance and other separation benefits may become payable ‎under the executive officer’s employment agreement. Each such executive officer is entitled pursuant to their employment agreement with the Company to participate in the Company’s Executive Severance Plan, which, subject to certain limitations and subject to the executive executing a release of claims in favor of the Company, provides that if the Company terminates the executive’s employment without “cause” or he resigns for “good reason,” in ‎each case as set forth in the Executive Severance Plan, the executive shall receive: (1) a lump-sum cash payment equal to (a) their applicable severance multiplier (with such severance multiple being 150% in the case of Mr. Simkoff and 100% in the case of Mr. Smith), multiplied by the executive’s then-current base salary, plus (b) a pro rata portion of the executive’s target bonus for the year in which the termination occurs; (2) if the executive is eligible for and properly elects health care continuation coverage, payment of the premium costs for continuing health benefits for a period of time following termination (up to 18 months for Mr. Simkoff and up to 12 months for Mr. Smith); (3) any earned but unpaid annual bonus in respect of the fiscal year ending prior to the year in which termination occurs; and (4) $10,000 for outplacement services. On August 8, 2023, Messrs. Simkoff and Smith agreed to temporarily reduce their base salaries (effective as of August 3, 2023); however, in connection with their base salary decreases, and with the approval of the Compensation Committee of the Company Board, the Company agreed with Messrs. Simkoff and Smith that their base salaries prior to such base salary decreases would be used for purposes of the Company’s Executive Severance Plan.

 

The table below sets forth the anticipated severance payments which would be payable to each executive officer upon termination of employment by the Company without “cause” or resignation for “good reason,” assuming their employment terminates on September 30, 2024.

 

Name

 

Cash
($)(1)(2)

   

COBRA

Continuation
($)(3)

   

Unpaid Bonus
($)(4)

   

Outplacement

Services
($)

   

Total
($)

 
Max Simkoff                                        

Chief Executive Officer and Director

    1,688,014       70,952       0       10,000       1,768,966  
Mike Smith                                        

Chief Financial Officer

    586,130       47,301       0       10,000       643,431  

 


 

1.

The amounts set forth in this column were calculated using each executive officer’s current base salary before the base salary decreases effective August 3, 2023 described above.

 

2.

Pursuant to Mr. Simkoff’s employment agreement, his annual target bonus amount was 120% of his base salary, to be paid out based on achievement of performance criteria to be established by the Company Board or the compensation committee of the Company Board. On June 29, 2022, Mr. Simkoff entered into an agreement to amend his employment agreement such that his annual target bonus would be 100% of his base salary. Pursuant to Mr. Smith’s employment agreement, his annual target bonus amount is 75% of his base salary, to be paid out based on achievement of performance criteria to be established by the Company Board or the compensation committee of the Company Board. Upon termination without “cause” or resignation for “good reason,” each executive officer is entitled to a pro rata portion of such executive officer’s annual target bonus, calculated as though performance targets were achieved in full. This column shows the amount payable if each executive officer was entitled to their annual target bonus, based on a termination date of September 30, 2024, calculated using each executive officer’s current base salary before the base salary decreases effective August 3, 2023 described above.

 

3.

The amounts set forth in this column represent the value of the employer-paid premiums for medical and dental benefits to which the executive officers may become entitled upon a qualifying termination.

 

4.

No bonuses were payable to either of the executive officers for fiscal year 2023.

 

Continued Indemnification and Insurance Coverage

 

 

‎Each of the persons covered by the Acquired Companies’ directors’ and officers’ liability insurance policies, including each of the Company’s executive officers and directors are entitled to continued indemnification and insurance ‎coverage from the Surviving Corporation under the terms of the Merger Agreement.‎

 

Certain Transactions with Lennar

 

 

Stuart Miller is a member of the Company Board and is the Executive Chairman of Lennar Corp., an affiliate of the Lennar Stockholders. Concurrently with the execution of the Merger Agreement, Lennar and Topco, which, following the Effective Time, will be an indirect parent of the Company, entered into certain agreements, pursuant to which, concurrently with the Closing and upon the terms and subject to the conditions set forth therein, Lennar shall invest the cash it receives in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully diluted basis. 

 

Doma Technology Reorganization

 

 

Pursuant to the Merger Agreement, prior to the Closing, the Company will effect the Doma Technology Reorganization such that, as of the Closing, Doma Technology, a subsidiary of the Company, will hold the applicable assets and related liabilities of the Doma Technology Business. Concurrently with the execution and delivery of the Merger Agreement, Parent, HSCM and the Company entered into the Preferred Purchase Agreement, pursuant to which, at the Closing, Doma Technology would issue preferred units and profits interests to HSCM representing approximately 27.5% of Doma Technology’s equity securities on a fully-diluted basis, provided that HSCM may transfer a portion of such preferred units to a third-party investor. In addition, the Preferred Purchase Agreement provides that common units or profits interests representing approximately 19.2% of Doma Technology’s equity securities on a fully-diluted basis will be reserved for issuance to management employees of Doma Technology, which may include the Company’s current executive officers, from time to time following the Closing pursuant to terms and conditions to be approved by the board of managers of Doma Technology. As of the Closing, the remaining equity of Doma Technology, representing a majority of the preferred units and a majority of the equity on a fully diluted basis, will be owned by Parent. At the Closing, Doma Technology, Parent and HSCM (and any third-party transferee of HSCM’s preferred units) would enter into a limited liability company operating agreement governing the rights and obligations of the parties in Doma Technology. The board of managers of Doma Technology would initially consist of four representatives designated by Parent, two representatives designated by HSCM and the then-current chief executive officer of Doma Technology.

 

 

Special Committee Compensation

 

In consideration of the expected time and effort that would be required of the members of the Special Committee in evaluating the proposed Merger, including negotiating the terms and conditions of the Merger Agreement, the Special Committee determined that each member of the Special Committee would receive as compensation $2,000 in cash per meeting they attended. The Special Committee held a total of 11 meetings prior to the Merger Agreement being executed. The compensation was not, and is not, contingent upon the approval or the completion of the Merger or any other transaction. No other meeting fees or other compensation (other than reimbursement for reasonable out-of-pocket expenses incurred in connection with their service on the Special Committee) will be paid to the members of the Special Committee in connection with their service on the Special Committee.

 

Intent of the Directors and Executive Officers to Vote in Favor of the Merger

 

The Company understands that, as of the date of this proxy statement, our directors and ‎executive officers intend to vote all ‎of the shares of Common Stock owned directly by them in favor of the approval of the ‎Merger Agreement Proposal and the Adjournment Proposal. As of the Record Date, our directors and ‎executive officers directly owned, in the aggregate,‎         shares of Common Stock entitled to vote at the Special Meeting, or collectively approximately          % of the total voting power for shares of Common Stock entitled to vote at the Special ‎Meeting. For purposes of clarity, the shares of Common Stock directly held by the directors and ‎executive officers will be (i) included in determining whether the Merger Agreement has been approved by the ‎affirmative vote of the holders of at least a majority of the voting power of the outstanding shares of ‎Common Stock entitled to vote in accordance with the DGCL, but (ii) excluded from determining whether the ‎Merger Agreement has been approved by the affirmative vote of the holders of at least a majority of the voting ‎power of the outstanding shares of Common Stock held by the Disinterested Stockholders.‎

 

Intent of the Parent Entities and Lennar Entities to Vote in Favor of the Merger

 

Concurrently with the execution of the Merger Agreement, the Lennar Stockholders, which hold, collectively, approximately 25% of the voting power of the Common Stock, the Company and Parent entered into the Voting and Support Agreement. Under the Voting and Support Agreement, the Lennar Stockholders have agreed to, among other things and subject to the terms and conditions of the Voting and Support Agreement, (a) vote the Voting Agreement Shares in favor of the Merger, the adoption of the Merger Agreement and the transactions contemplated thereby and (b) vote against any Alternative Acquisition Agreement and any other action or agreement (including, without limitation, any amendment of any agreement), amendment of the Company’s organizational documents or other action that is intended or would reasonably be expected to materially prevent or delay the consummation of the transactions contemplated by the Merger Agreement, including the Merger. The Voting and Support Agreement will automatically terminate upon the earliest of (i) written agreement of the parties thereto to terminate the Voting and Support Agreement, (ii) the valid termination of the Merger Agreement in accordance with its terms and (iii) the Effective Time, and each Lennar Stockholder may terminate the Voting and Support Agreement as to itself upon the entry by the Company and Parent without the prior written consent of such Lennar Stockholder into any amendment, waiver or modification to the Merger Agreement that results in (x) a change to the form of consideration to be paid thereunder, (y) a decrease in the amount of Merger Consideration payable to the stockholders of the Company pursuant to the terms of the Merger Agreement as in effect on the date of the Voting and Support Agreement, or (z) an imposition of any material restrictions or additional constraints on the payment of the consideration thereunder. A copy of the Voting and Support Agreement is attached as Annex B to the proxy ‎statement and is incorporated by reference in this proxy statement in its entirety.‎ See “Special FactorsVoting and Support Agreement.”‎

 

 

As of the date of this proxy statement, Parent, Merger Sub, Topco and their respective affiliates do not own any shares of the Company’s capital stock.

 

Material U.S. Federal Income Tax Consequences of the Merger

 

The following discussion sets forth the material U.S. federal income tax consequences of the Merger to U.S. Holders and Non-U.S. Holders (as defined below) of Common Stock whose shares of Common Stock are converted into the right to receive cash pursuant to the Merger. This discussion does not address any tax consequences arising under the laws of any U.S. state or local or non-U.S. jurisdiction, or under any U.S. federal laws other than those pertaining to income tax. In addition, it does not address any alternative minimum tax consequences of the Merger, the potential application of the Medicare contribution tax on net investment income or any withholding considerations under the Foreign Account Tax Compliance Act of 2010 (including the Treasury regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith). This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the regulations promulgated under the Code and court and administrative rulings and decisions, all as in effect on the date of this proxy statement. These laws may change, possibly retroactively, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion.

 

This discussion addresses only consequences to those holders that hold their shares of Common Stock as a “capital asset” within the meaning of Section 1221 of the Code. Further, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular circumstances or that may be applicable to holders that are subject to special treatment under the U.S. federal income tax laws, such as:

 

 

financial institutions;

 

 

tax-exempt organizations or accounts;

 

 

S corporations or other pass-through entities (or investors in an S corporation or other pass-through entity);

 

 

insurance companies;

 

 

mutual funds;

 

 

dealers or brokers in stocks, securities or currencies;

 

 

traders in securities that elect mark-to-market method of tax accounting with respect to their Common Stock;

 

 

holders of Common Stock or equity awards that received Common Stock or equity awards through a tax-qualified retirement plan or otherwise as compensation;

 

 

persons that have a functional currency other than the U.S. dollar;

 

 

holders of Common Stock that hold Common Stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction;

 

 

except as discussed below under “Material U.S. Federal Income Tax Consequences of the MergerNon-U.S. Holders,” persons who actually or constructively own or have owned more than 5% of the Common Stock;

 

 

persons subject to special tax accounting rules (including rules requiring recognition of gross income based on a taxpayer’s applicable financial statement); or

 

 

United States expatriates.

 

The U.S. federal income tax consequences to a partner in an entity or arrangement treated as a partnership for U.S. federal income tax purposes and that holds Common Stock generally will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Partners in such a partnership holding Common Stock should consult their own tax advisors.

 

 

We have not sought, and do not expect to seek, a ruling from the Internal Revenue Service (the “IRS”) as to any U.S. federal income tax consequences described herein, and no assurance can be given that the IRS will not take a position contrary to the discussion below, or that a court will not sustain any challenge by the IRS in the event of litigation. Furthermore, no opinion of counsel has been or will be rendered with respect to any tax considerations applicable to the Merger, or any related transactions. If the tax consequences described below are successfully challenged, the tax consequences applicable to the Merger may differ from the tax consequences described below.

 

Holders should consult with their own tax advisors as to the tax consequences of the Merger in light of their particular circumstances, including the applicability and effect of the alternative minimum tax and any U.S. state or local, non-U.S. or other tax laws and of changes in those laws.

 

U.S. Holders

 

For purposes of this proxy statement, the term “U.S. Holder” means a beneficial owner of Common Stock that is:

 

 

A citizen or individual resident of the United States;

 

 

A corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

 

An estate, the income of which is subject to U.S. federal income tax regardless of its source; or

 

 

A trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) that has elected to be treated as a U.S. person under applicable U.S. Treasury regulations.

 

In general, a U.S. Holder receiving cash in exchange for Common Stock pursuant to the Merger will recognize capital gain or loss for U.S. federal income tax purposes on the exchange in an amount equal to the difference, if any, between (i) the amount of cash received and (ii) the U.S. Holder’s adjusted tax basis in the Common Stock surrendered in the exchange. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares of Common Stock.

 

Gain or loss generally will be treated as long-term capital gain or loss if the U.S. Holder’s holding period in the Common Stock is more than one year at the time of the completion of the Merger. Long-term capital gains of certain non-corporate U.S. Holders, including individuals, are currently subject to U.S. federal income tax at preferential rates of taxation. The deductibility of capital losses is subject to certain limitations.

 

If a U.S. Holder acquired different blocks of Common Stock at different times or at different prices, any gain or loss and the holding period with respect to the Common Stock exchanged must be determined separately with respect to each block of Common Stock that is exchanged.

 

Non-U.S. Holders

 

For purposes of this proxy statement, a beneficial owner of Common Stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes is referred to as a “Non-U.S. Holder.”

 

The receipt of cash by a Non-U.S. Holder in exchange for shares of Common Stock pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

 

 

The gain, if any, on such shares is effectively connected with a trade or business of the Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to the Non-U.S. Holder’s permanent establishment or fixed base in the United States);

 

 

The Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the exchange of shares of Common Stock pursuant to the Merger and certain other conditions are met; or

 

 

 

The Non-U.S. Holder owned, directly or under certain constructive ownership rules in the Code, more than 5% of the Common Stock at any time during the five-year period preceding the Merger, and the Company is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period preceding the Merger or the period that the Non-U.S. Holder held Common Stock.

 

Gain described in the first bullet point immediately above will be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates in the same manner as if the Non-U.S. Holder were a U.S. Holder, subject to an applicable income tax treaty providing otherwise. If such Non-U.S. Holder is a foreign corporation, it may also be subject to a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on its “effectively connected earnings and profits” for the taxable year, subject to certain adjustments. Non-U.S. Holders described in the second bullet point immediately above will be subject to tax on any gain realized on the exchange at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty), which may be offset by certain U.S.-source capital losses, if any, of the Non-U.S. Holder. With respect to the third bullet point immediately above, the Company believes that it has not been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the five-year period preceding the Merger.

 

Information Reporting and Backup Withholding

 

Payments of cash to a holder in the Merger may, under certain circumstances, be subject to information reporting and backup withholding (currently at a rate of 24%), unless the holder provides proof of an applicable exemption or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules (in the case of U.S. Holders, by furnishing a properly completed and executed IRS Form W-9 to the applicable withholding agent). Certain holders (such as corporations, with respect to certain types of payments) are exempt from information reporting and backup withholding.

 

Non-U.S. Holders may be required to comply with certification requirements and identification procedures in order to establish an exemption from information reporting and backup withholding. Non-U.S. Holders should consult their own tax advisors regarding compliance with such requirements and procedures.

 

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or credit against a holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.

 

This discussion of material U.S. federal income tax consequences is not tax advice. Holders of Common Stock are urged to consult their tax advisors with respect to the application of U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift tax rules or under the laws of any U.S. state or local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.

 

Financing of the Merger

 

Pursuant to the Debt Commitment Letter, a copy of which is attached asAnnex D to this proxy statement and which is incorporated by reference in this proxy statement in its entirety, Parent has obtained committed Debt Financing for the transaction from Apollo Capital Management, L.P. (including its affiliates) in the form of a senior secured term loan facility in an amount equal to $125 million, which will be available to Parent to cover a substantial portion of the Merger Consideration (the “Apollo Term Loan Facility”). The Apollo Term Loan Facility will accrue interest at a rate of Term SOFR (subject to a 1.0% floor) plus a pricing margin equal to 5.50% per annum, with the ability for the pricing margin to be decreased to 5.25% and 5.00% upon meeting certain deleveraging benchmarks. The Apollo Term Loan Facility will have a maturity of seven years and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Apollo Term Loan Facility, with the balance payable on the maturity date. Interest under the Apollo Term Loan Facility will be payable in arrears at the end of each interest period selected and, for interest periods of greater than three months, every three months, and on the maturity date.

 

The Debt Financing Documents will contain, among other things, customary representations and warranties, affirmative, negative and financial covenants, and events of default.  The Apollo Term Loan Facility will be secured by a first priority lien on substantially all of the assets of the Parent and certain guarantors (subject to customary exceptions), senior to all existing and future liens securing debt for borrowed money, in each case, subject to certain exceptions. As contemplated by the Debt Commitment Letter, the parties thereto anticipate that such guarantors under the definitive Debt Financing Documents will (a) include Parent’s sole stockholder, RE Closing Midco 2 Corp., Parent, and each of Parent’s direct or indirect wholly-owned U.S. organized subsidiaries, and (b) exclude Doma Technology LLC, any of its subsidiaries, and any such subsidiary of the Company that is a Regulated Insurance Entity (as defined in the Debt Commitment Letter) or any such subsidiary that is otherwise not permitted by Applicable Insurance Laws (as defined in the Debt Commitment Letter), or would require unaffiliated third-party consent, approval, license or authorization (including from any Governmental Authority or Insurance Regulator (as in the Debt Commitment Letter)) in order to (i) provide a guarantee of the obligations of Parent under the Apollo Term Loan Facility, or (ii) pledge a security interest in such subsidiary’s assets or equity, unless such restriction is removed or such consent, approval, license or authorization has been received (it being understood and agreed there is no obligation to seek such  consent, approval, license or authorization).

 

 

Voting and Support Agreement

 

Concurrently with the execution of the Merger Agreement, the Lennar Stockholders, which hold, collectively, approximately 25% of the voting power of the Common Stock, the Company and Parent entered into the Voting and Support Agreement.

 

Under the Voting and Support Agreement, the Lennar Stockholders have agreed to, among other things and subject to the terms and conditions of the Voting and Support Agreement, (a) vote the Voting Agreement Shares in favor of the Merger, the adoption of the Merger Agreement and the transactions contemplated thereby and (b) vote against any Alternative Acquisition Agreement and any other action or agreement (including, without limitation, any amendment of any agreement), amendment of the Company’s organizational documents or other action that is intended or would reasonably be expected to materially prevent or delay the consummation of the transactions contemplated by the Merger Agreement, including the Merger. The Voting and Support Agreement will automatically terminate upon the earliest of (i) written agreement of the parties thereto to terminate the Voting and Support Agreement, (ii) the valid termination of the Merger Agreement in accordance with its terms and (iii) the Effective Time, and each Lennar Stockholder may terminate the Voting and Support Agreement as to itself upon the entry by the Company and Parent without the prior written consent of such Lennar Stockholder into any amendment, waiver or modification to the Merger Agreement that results in (x) a change to the form of consideration to be paid thereunder, (y) a decrease in the amount of Merger Consideration payable to the stockholders of the Company pursuant to the terms of the Merger Agreement as in effect on the date of the Voting and Support Agreement, or (z) an imposition of any material restrictions or additional constraints on the payment of the consideration thereunder.

 

The foregoing description of the Voting and Support Agreement does not purport to be complete and is qualified in ‎its entirety by reference to the complete text of the Voting and Support Agreement, a copy of which is attached as ‎Annex B to this proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Lennar Investment

 

Concurrently with the execution of the Merger Agreement, Lennar and Topco, which, following the Effective Time, will be an indirect parent of the Company, entered into certain agreements (the “Lennar Investment Agreements”), pursuant to which, concurrently with the Closing and upon the terms and subject to the conditions set forth therein, Lennar shall invest the cash it receives in consideration for its existing shares of Common Stock at the Closing and an additional $17 million in Topco, resulting in Lennar owning approximately 8.36% of the outstanding equity of Topco on a fully diluted basis.

 

Doma Technologies Reorganization

 

Prior to the Closing, the Company will effect the Doma Technology Reorganization such that, as of the Closing, Doma Technology, a subsidiary of the Company, will hold the applicable assets and related liabilities of the Doma Technology Business. Concurrently with the execution and delivery of the Merger Agreement, Parent, HSCM and the Company entered into the Preferred Purchase Agreement, pursuant to which, at the Closing, Doma Technology would issue preferred units and profits interests to HSCM representing approximately 27.5% of Doma Technology’s equity securities on a fully diluted basis, provided that HSCM may transfer a portion of such preferred units to a third-party investor. In addition, the Preferred Purchase Agreement provides that common units or profits interests representing approximately 19.2% of Doma Technology’s equity securities on a fully diluted basis will be reserved for issuance to management employees of Doma Technology, which may include the Company’s current executive officers, from time to time following the Closing pursuant to terms and conditions to be approved by the board of managers of Doma Technology. As of the Closing, the remaining equity of Doma Technology, representing a majority of the preferred units and a majority of the equity on a fully diluted basis, will be owned by Parent. At the Closing, Doma Technology, Parent and HSCM (and any third-party transferee of HSCM’s preferred units) would enter into a limited liability company operating agreement governing the rights and obligations of the parties in Doma Technology. The board of managers of Doma Technology would initially consist of four representatives designated by Parent, two representatives designated by HSCM and the then-current chief executive officer of Doma Technology.

 

 

Company Loan Agreement

 

Agreement and Fourth Amendment to the Loan and Security Agreement

 

Concurrently with the execution of the Merger Agreement, certain of the Company’s subsidiaries, the lenders party thereto and HSCM, as agent for such lenders, entered into an Agreement and Fourth Amendment to the Loan and Security Agreement (the “HSCM Fourth Amendment”), pursuant to which that certain Loan and Security Agreement, dated as of December 31, 2020 (as amended, the “Company Loan Agreement”), by and among States Title, the guarantors party thereto, the lenders party thereto and HSCM was amended such that, among other things:

 

 

from the effective date of the HSCM Fourth Amendment through September 30, 2025, interest on the principal amount outstanding of the senior secured term loan under the Company Loan Agreement (the “Term Loan”) will accrue and capitalize and be added to the principal balance monthly at a per annum rate equal to 16.25%;

 

 

beginning October 1, 2025, interest on the Term Loan will accrue at a per annum rate equal to 16.25%, (i) 10% of which shall accrue and be payable in cash monthly and (ii) the remainder of such interest shall accrue and capitalize and be added to the principal balance monthly;

 

 

States Title will make prepayments on the principal of the Term Loan in an amount up to $16 million of net cash proceeds received from contingent payments earned by the Company pursuant to certain previous asset sales (but such payment shall be deferred until October 2025);

 

 

subject to certain conditions, States Title will make monthly pre-payments of the principal amount outstanding of the Term Loan under the Company Loan Agreement with cash on hand in excess of $7,500,000 in the event the Merger Agreement is terminated prior to the consummation of the Merger;

 

 

if reasonably requested by HSCM following a termination of the Merger Agreement prior to the consummation of the Merger, States Title would transfer all of its equity interests in Doma Title Insurance, Inc. to a newly formed bankruptcy-remote entity and cause such equity interests to be pledged as collateral under the Company Loan Agreement;

 

 

the financial covenants in the Company Loan Agreement were modified, including, without limitation, the reduction of the minimum consolidated GAAP revenue financial covenant from $130 million to $50 million; and

 

 

States Title is permitted to incur indebtedness under the Topco Term Facility which indebtedness shall be senior in respect of payment and liens to the obligations under the Company Loan Agreement.

 

In connection with the HSCM Fourth Amendment, HSCM became entitled to an amendment fee of $1,000,000, which fee became payable upon execution of the HSCM Fourth Amendment and was paid-in-kind and added to the principal of the Term Loan.

 

The foregoing description of the HSCM Fourth Amendment does not purport to be complete and is qualified in ‎its entirety by reference to the complete text of the HSCM Fourth Amendment, a copy of which is attached as ‎Annex E to this proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Agreement and Fifth Amendment to the Loan and Security Agreement

 

Immediately after the effectiveness of the HSCM Fourth Amendment, HSCM, as agent, certain of the Company’s subsidiaries, the lenders party thereto (the “HSCM Lenders”) and Parent entered into an Agreement and Fifth Amendment to Loan and Security Agreement (the “HSCM Fifth Amendment”) pursuant to which, at the Closing, the HSCM Lenders will (a) accept certain consideration (as further described below, the “HSCM Payoff”) in full satisfaction of all indebtedness under the Company Loan Agreement (which had a principal amount outstanding of $169.3 million (including capitalized interest of $19.3 million) as of March 31, 2024) and (b) release all liens securing the Company Loan Agreement.

 

 

Pursuant to the HSCM Fifth Amendment, on the Closing Date, for the HSCM Payoff, Parent would (a) make (or cause to be made) to HSCM (for the ratable benefit of the HSCM Lenders) a payment of up to $70.0 million in cash plus certain fees and expenses of HSCM and (b) contribute $25.0 million in cash to Doma Technology in accordance with the Preferred Purchase Agreement. In connection therewith, Doma Technology will issue preferred units to HSCM (or its designated affiliate or transferee) with an aggregate liquidation preference and an aggregate deemed original issuance price equal to $40.0 million (on a cashless basis), in accordance with, and subject to the conditions set forth in, the Preferred Purchase Agreement.

 

In addition, under the HSCM Fifth Amendment, HSCM would have the right to receive up to $25.0 million in contingent earnout payments based on Doma Technology’s achievement of certain specified revenue targets for Doma Technology in 2025 and 2026.

 

Pursuant to the HSCM Fifth Amendment, States Title’s obligation to make cash interest payments under the Company Loan Agreement shall be suspended until the earliest of (a) the termination of the Merger Agreement, (b) five business days after the End Date (as defined in the Merger Agreement), (c) the consummation of the Merger (without HSCM’s receipt of the HSCM Payoff) and (d) March 12, 2025 the (“Standstill Period”). In addition, during the Standstill Period, HSCM and the lenders have agreed not to exercise remedies with respect to certain matters that would otherwise constitute events of default under the Company Loan Agreement.

 

The foregoing description of the HSCM Fifth Amendment does not purport to be complete and is qualified in ‎its entirety by reference to the complete text of the HSCM Fifth Amendment, a copy of which is attached as ‎Annex F to this proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Sixth Amendment to the Loan and Security Agreement

 

Please see below under “—Topco Term Facility” for a description of the Sixth Amendment to the Company Loan Agreement.

 

Topco Term Facility

 

Concurrently with the execution of the Merger Agreement, States Title and Topco, the indirect parent company of Parent, entered into a commitment letter (the “Topco Commitment Letter”), pursuant to which Topco committed to provide a $35 million senior secured delayed draw term loan facility to States Title (with certain subsidiaries of States Title guaranteeing the obligations thereunder).

 

On April 30, 2024, States Title, Topco, as lender and Alter Domus (US) LLC, as administrative agent and collateral agent, entered into the Topco Loan Agreement for the Topco Term Facility. Pursuant to the Topco Loan Agreement, the lenders party thereto have committed, on a several basis, to provide States Title with a $22.5 million senior secured delayed draw term loan facility (the “Topco Term Facility”) (with certain subsidiaries of States Title guaranteeing the obligations thereunder).

 

The Topco Term Facility has two tranches: (a) up to $12.5 million is available to be drawn in up to three draws (each draw being for at least $5 million) between closing of the Topco Term Facility and December 31, 2024 and (b) up to $10 million is available to be drawn in a single draw between January 1, 2025 and June 30, 2025, each tranche being subject to commitment reductions as set forth in the Topco Loan Agreement. Each loan made under the Topco Term Facility will mature three years after it is drawn.

 

The Topco Term Facility will be secured by a first priority lien on substantially all of the assets of States Title and the guarantors (subject to customary exceptions), senior to all existing and future liens securing debt for borrowed money (including the liens securing the obligations under the Company Loan Agreement and is senior in right of payment to all existing and future debt for borrowed money (including the Company Loan Agreement), in each case, subject to certain exceptions. The terms of the subordination of the Company Loan Agreement are set forth in the Subordination Agreement and include certain prohibitions on the exercise of remedies by the lenders under the Company Loan Agreement.

 

Interest on each loan accrues at a rate of Term SOFR (subject to a 1.0% floor) plus 9.0% per annum and is payable in arrears in kind on the last day of each interest period. The Topco Term Facility includes an undrawn fee of 5.0% per annum on all undrawn commitments, payable quarterly in cash, and an upfront fee of 3.0% of the commitments in respect of the Topco Term Facility as of the date of the Topco Loan Agreement (which upfront fee is reduced to 2.0% for any commitments that are terminated within 30 days after the date of the Topco Loan Agreement), payable upon the funding or termination of such commitments. Prepayments of the Topco Term Facility (subject to certain exceptions) will be subject to customary prepayment premiums. The Topco Term Facility also includes certain information rights and other customary covenants (including affirmative, negative and financial covenants) and mandatory prepayment provisions.

 

 

Concurrently with the entry into the Topco Term Facility, States Title and certain of its subsidiaries, the lenders party thereto and HSCM entered into a Sixth Amendment to Loan and Security Agreement (the “HSCM Sixth Amendment”) to amend the Company Loan Agreement, pursuant to which, among other things, HSCM and the lenders party thereto consented to the terms of the Topco Loan Agreement and implemented certain other changes to align with the terms of the Subordination Agreement.

 

The foregoing description of the Topco Loan Agreement, the Subordination Agreement and the HSCM Sixth Amendment does not purport to be complete and is qualified in ‎its entirety by reference to the complete text of the Topco Loan Agreement, a copy of which is attached as ‎Annex G to this proxy statement and which is incorporated by reference in this proxy statement in its entirety, the Subordination Agreement, a copy of which is attached as ‎Annex H to this proxy statement and which is incorporated by reference in this proxy statement in its entirety and the HSCM Sixth Amendment, a copy of which is attached as ‎Annex I to this proxy statement and which is incorporated by reference in this proxy statement in its entirety.‎

 

Other Contacts, Transactions, Negotiations and Agreements with Parent Entities and Lennar Entities

 

Stuart Miller is a member of the Company Board and is the Executive Chairman of Lennar Corp., an affiliate of the Lennar Stockholders. Mr. Miller does not receive separate compensation for service on the Company Board.

 

Doma Title Insurance has underwriting arrangements with certain entities affiliated with the Lennar Stockholders. During the three months ended March 31, 2024 and the years ended December 31, 2023, 2022 and 2021, the Company recorded revenues of $34.1 million, $139.2 million, $134.9 million and $114.2 million, respectively, from these transactions. During the three months ended March 31, 2024 and the years ended December 31, 2023, 2022 and 2021, the Company recorded premiums retained by third-party agents of $27.5 million, $112.0 million, $108.4 million and $92.5 million, respectively, from these transactions. As of March 31, 2024 and December 31, 2023, 2022 and 2021, the Company had net receivables related to these transactions of $4.0 million, $7.2 million, $4.2 million and $3.9 million, respectively. Parent anticipates that these underwriting arrangements will continue following the Closing. In addition, the Company and Title Resource Guaranty Company, a wholly owned subsidiary of Parent, have engaged in certain nominal ordinary course of business matters unrelated to the Transactions.

 

Fees and Expenses

 

The estimated fees and expenses incurred or expected to be incurred by the Company in connection with the Merger ‎are as follows:‎

 

Description

 

Amount