ICC Holdings Inc

Item 1A. Risk Factors

A description of the risks associated with our business, financial conditions and results of operations is set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Risks Related to the Proposed Merger

On June 8, 2024, we entere and into the Merger Agreement with Parent and Merger Sub. Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent.

The description of the Merger Agreement in these Risk Factors does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to our Current  Item 1A of our Quarterly Report on Form 8-K filed on June 10, 2024.

There is no assurance that the Merger and the other transactions contemplated by the Merger Agreement will occur on the terms and timeline currently contemplated or at all.

The Merger is subject to the satisfaction or waiver of stated conditions, including (i) t10-Q for the approval and adoption of the Merger Agreement by the holders of a majority of the voting power of the Company's Common Stock, (ii) the receipt of authorizations required to be obtained from applicable insurance regulators, and (iii) other customary conditions. For each of the Company and Parent, the obligation to complete the Merger is also subject to the accuracy of the representations and warranties of, and compliance with covenants by, the other party, in accordance with the materiality standards set forth in the Merger Agreement. A number of the conditions are beyond our control. Failure to satisfy the conditions to the Merger could prevent or delay the completion of the Merger. If the Merger is not completed on a timely basis, or at all, our ongoing business may be adversely affected.

Before the transactions contemplated by the Merger Agreement can be completed, various approvals must be obtained from applicable insurance regulators. In deciding whether to grant these approvals, the relevant governmental entities will consider a variety of factors, including the regulatory standing of each of the parties. An adverse development in either partys regulatory standing or other factors could result in an inability to obtain one or more of the required regulatory approvals or delay receipt of required approvals. Further, regulators may impose conditions, obligations or restrictions on the Merger that may have the effect of delaying or preventing its completion. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying or preventing the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or otherwise reducing the anticipated benefits of the Merger if the Merger was consummated successfully within the expected timeframe.

We may also become subject to lawsuits related to the Merger and adverse rulings in potential lawsuits may delay or prevent the Merger from being completed. Although we will evaluate and defend against any potential lawsuits, the time and costs of defending against litigation relating to the Merger may adversely affect our business.

If the proposed Merger is not completed or the Merger Agreement is terminated, the price of the Company's Common Stock may decline, including to the extent that the current market price the Company's Common Stock reflects an assumption that the Merger and the other transactions contemplated by the Merger Agreement will be consummated without delays.

period ended June 30, 2024.

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We are subject to various restrictions on the conduct of our business while the Merger is pending, which could have a material adverse effect on our business, results of operations and financial condition.

The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the proposed Merger and restricts us, without the Parent's consent, from taking certain specified actions until the Merger is completed. These restrictions may affect our ability to execute our business strategies and attain our financial and other goals and may adversely impact our financial condition, results of operations and cash flows.

The efforts and costs to satisfy the closing conditions of the Merger may place a significant burden on management and internal resources, and the Merger and related transactions, whether or not consummated, may result in a diversion of managements attention from day-to-day operations. Any significant diversion of managements attention away from ongoing business and difficulties encountered in the Merger process could negatively effect our business, results of operations and financial condition.

In addition, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the satisfaction of the various conditions to closing of the Merger, including seeking approval from our shareholders and from applicable insurance regulatory agencies. If there is any delay in the consummation of the Merger, these costs could increase significantly and many of these fees and costs are payable regardless of whether or not the Merger is consummated.

Uncertainties related to the consummation of the Merger may have an adverse effect on our business, results of operations and financial condition.

Uncertainty about the pendency of the Merger and the effect of the Merger on employees, clients, customers, vendors, communities and other third parties who deal with us may have a material adverse effect on our business, results of operations and financial condition. These uncertainties may impair our ability to attract, retain and motivate key personnel pending the consummation of the Merger, as such personnel may experience uncertainty about their future roles following the consummation of the Merger. Additionally, these uncertainties could cause clients, customers, vendors and other third parties who deal with us to seek to change existing business relationships with us or fail to extend an existing relationship with us, all of which could have a material adverse effect on our business, results of operations, financial condition and market price of our common stock.

Uncertainty regarding the completion of the Merger may also foster uncertainty among employees about their future roles. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or desire not to remain with the surviving corporation following the Merger. This may adversely affect our ability to attract and retain key management, sales, marketing, operational and technical personnel, which could have an adverse effect on our results of operations and financial condition prior to the completion of the Merger.

The Merger Agreement contains provisions that could discourage or deter a potential competing acquirer from making a favorable alternative transaction proposal.

Under the Merger Agreement, we are subject to no-shop restrictions and are not permitted to, subject to certain exceptions set forth in the Merger Agreement, (i) solicit, initiate or knowingly encourage inquiries or proposals relating to alternative takeover transactions or (ii) engage in discussions or negotiations regarding, or provide any non-public information in connection with, alternative takeover proposals. In addition, before our board of directors withdraws or modifies its recommendation of the proposed Merger with Parent or terminates the Merger Agreement to enter into an alternative acquisition proposal, Parent generally has an opportunity to offer to modify the terms of the Merger. These provisions of the Merger Agreement could discourage or deter a third party that may be willing to pay more than Parent for our outstanding Common Stock from considering or proposing such an acquisition of ICC Holdings.

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