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EXHIBIT 2.2
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ASSET PURCHASE AGREEMENT
between
INSpire INSURANCE SOLUTIONS, INC.
and
ARROWHEAD GENERAL INSURANCE AGENCY, INC.
regarding the sale of a certain business and the assets
related to such business
dated as of October 29, 1998
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SCHEDULES AND EXHIBITS
Schedule Description
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Schedule 1.2.......................................................................................Excluded Assets
Schedule 4.5(a)(1)...................................................................................Capitalization
Schedule 4.5(a)(2).....................................................................Exceptions to Capitalization
Schedule 4.5(b)........................................................................................Subsidiaries
Schedule 4.6(a).......................................................................Year-End Financial Statements
Schedule 4.6(b)........................................................................Interim Financial Statements
Schedule 4.8..........................................................................Exceptions to Certain Changes
Schedule 4.12(a)................................................................................Owned Real Property
Schedule 4.12(b)...............................................................................Leased Real Property
Schedule 4.13(a)............................................................................Owned Personal Property
Schedule 4.13(b)...........................................................................Leased Personal Property
Schedule 4.15.............................................................................................Insurance
Schedule 4.16....................................................................................Material Contracts
Schedule 4.17....................................................................................Litigation; Orders
Schedule 4.19...............................................................................................Permits
Schedule 4.20(a)............................................................................Owned Intangible Assets
Schedule 4.20(b).........................................................................Licensed Intangible Assets
Schedule 4.21(a)..........................................................................................Employees
Schedule 4.21(b).....................................................................Employment and Labor Contracts
Schedule 4.22(a)..............................................................................Welfare Benefit Plans
Schedule 4.22(b)..............................................................................Pension Benefit Plans
Schedule 4.22(c)..............................................................................Employee Arrangements
Schedule 4.24..................................................................Bank Accounts and Powers of Attorney
Schedule 4.26..................................................................Exceptions to Affiliate Transactions
Schedule 6.3(b)...............................................................Exceptions to Prohibited Transactions
Schedule 8.2(b)...................................................................................Required Consents
Schedule 8.3(b)....................................................................................Required Permits
Schedule 9.1(l).................................................................................Restricted Software
Schedule 11.1....................................................................................Retained Employees
Schedule 13.8....................................................................................Notice Information
Exhibit Description
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Exhibit 2.2(b).............................................................................Form of Option Agreement
Exhibit 3.2(g)..................................................................Form of Opinion of Seller's Counsel
Exhibit 3.2(h)................................................................Form of Registration Rights Agreement
Exhibit 3.3(d)...............................................................Form of Opinion of Purchaser's Counsel
Exhibit 9.1(k)(1)..................................................Form of Claims Administration Services Agreement
Exhibit 9.1(k)(2)..................................................Form of Policy Administration Services Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of October
29, 1998 (the "SIGNING DATE"), is made by and between Arrowhead General
Insurance Agency, Inc., a Minnesota corporation ("SELLER"), and INSpire
Insurance Solutions, Inc., a Texas corporation ("PURCHASER"). Seller and
Purchaser are sometimes collectively referred to as the "PARTIES," and
individually referred to as a "PARTY."
PRELIMINARY STATEMENTS
A. Seller is a general insurance agency that provides policy
administration services for property and casualty lines of insurance (such
policy administration services being herein referred to as the "BUSINESS," and
that portion of Seller which conducts the Business, the "DIVISION").
B. Seller desires to sell and assign to Purchaser, and Purchaser
desires to purchase and assume from Seller, all the Business and substantially
all of the assets of the Division, in each case on the terms and subject to the
conditions set forth in this Agreement.
C. Capitalized terms used in this Agreement are defined or indexed in
Appendix A for the convenience of the reader and in order to eliminate the need
for cross-references. Appendix A is incorporated herein by this reference.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
IDENTIFICATION OF ASSETS AND LIABILITIES
Section 1.1 Sale of Purchased Assets. Subject to the terms and
conditions and in reliance upon the representations and warranties of Seller
contained in this Agreement, at the Closing Seller will (or Seller will cause
its Affiliates to) sell and transfer to Purchaser, and Purchaser will purchase
and receive from Seller, all the assets of Seller (except for Excluded Assets)
which are presently being used in the conduct of, or are reasonably related to,
the Business as they exist on the Closing Date, free and clear of all
Encumbrances other than Permitted Encumbrances (the "PURCHASED ASSETS"). Without
limiting the generality of the preceding sentence, the Purchased Assets include
all of the following assets which are presently being used in the conduct of, or
are reasonably related to, the Business:
(a) the leasehold or subleasehold interests of Seller in the
Real Property Leases;
(b) the Intangible Assets of Seller, whether owned or
licensed, and all goodwill attendant thereto;
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(c) furniture and fixtures of Seller;
(d) computer and other equipment of Seller;
(e) automobiles and other vehicles owned, leased or used by
Seller;
(f) supplies and sundry items, including telephone numbers,
keys and lock combinations;
(g) contracts, agreements, leases, licenses, arrangements,
commitments, franchises, and understandings, whether written or oral, to which
Seller is a party;
(h) rights and claims under insurance policies for damage to
Purchased Assets to the extent that any damaged Purchased Assets have not been
repaired or replaced prior to Closing;
(i) Permits of Seller, including all Permits relating to
operation and ownership of the Purchased Assets;
(j) prepaid expenses, including monies held by third parties
and loans to employees;
(k) Books and Records;
(l) technical documentation owned by Seller, including
material and tooling specifications, purchasing specifications, invention
records, research records, inspection processes and equipment lists; and
(m) claims and causes of action of Seller relating to or
arising out of the Business, except to the extent that any claim or cause of
action against third parties can be used as a defense, counterclaim or offset
against any suit brought by third parties against Seller with respect to any
Excluded Liabilities.
Section 1.2 Excluded Assets. The term "EXCLUDED ASSETS" will mean the
assets of Seller specified on Schedule 1.2, and will not be construed to include
any assets of Seller not specifically listed on Schedule 1.2.
Section 1.3 Assumed Liabilities. Subject to the terms and conditions
and in reliance upon the representations and warranties of Seller contained in
this Agreement, at the Closing Seller will assign to Purchaser, and Purchaser
will assume from Seller, all the liabilities of Seller which (a) relate
exclusively to the ownership or conduct of the Business, and (b) are reflected
on the Year-End Balance Sheet or were incurred in the ordinary course of
business since the Balance Sheet Date, including obligations related to accrued
vacation, holiday and sick leave (collectively, the "ASSUMED LIABILITIES").
Section 1.4 Excluded Liabilities. Except for the Assumed Liabilities,
Purchaser has not agreed to pay, will not be required to assume and will have
no liability or obligation with respect to, any liability or obligation, direct
or indirect, absolute or contingent, of Seller or the
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Division, any subsidiary or affiliate of Seller or the Division or any other
Person (collectively, the "EXCLUDED LIABILITIES"), and Seller agrees that it
will take all actions and do all things necessary to ensure that Purchaser is
not liable for any Excluded Liabilities. Without limiting the generality of the
preceding sentence, the Excluded Liabilities include all of the following:
(a) liabilities related to Taxes and Environmental Laws for
all periods prior to the Closing Date;
(b) liabilities related to any Action arising out of or in
connection with the ownership or conduct of the Business by Seller or the
Division, whether asserted before or after the Closing Date and whether known
or unknown on the Closing Date;
(c) liabilities related to any former or current employee or
agent of Seller or the Division, including any liabilities under or associated
with any Employee Benefit Plan, any Actions asserted by or on behalf of any
former or current employee or agent of Seller or the Division, any claims for
wages, overtime pay, bonuses, commissions or other forms of compensation, and
any claims under any policies of Seller or the Division related to its
Employees; provided, however, that the Excluded Liabilities does not include
obligations related to accrued vacation, holiday and sick leave; and
(d) liabilities, costs and expenses incurred by Seller or the
Division in connection with the negotiation, execution or performance of this
Agreement and the transactions contemplated hereby.
ARTICLE II.
PURCHASE PRICE AND RELATED TERMS
Section 2.1 Base Purchase Price. In addition to the assumption by
Purchaser of the Assumed Liabilities, the total consideration for the Purchased
Assets will be the sum of $13,500,000 (the "BASE PURCHASE PRICE"), minus the
Adjustment Amount calculated pursuant to Section 2.4 (the Base Purchase Price
minus the Adjustment Amount, the "FINAL PURCHASE PRICE").
Section 2.2 Payment of Base Purchase Price. On the Signing Date,
Purchaser will cause a duly authorized officer of Purchaser to provide Seller
with written documentation of a deposit by Purchaser of the Base Purchase Price
into a segregated bank account that is under the exclusive control of Purchaser
(the "SEGREGATED ACCOUNT"). At the Closing, Purchaser will (a) pay to Seller
from the Segregated Account an amount equal to $6,500,000 (or $6,500,000 minus
the Adjustment Amount if the Adjustment Amount is deemed final in accordance
with Section 2.4(b)) (such amount, the "CLOSING CASH PAYMENT") by wire transfer
of immediately available funds to the bank account set forth on a notice given
by Seller to Purchaser not later than three business days prior to the Closing
Date and (b) deliver to Seller an Option Agreement substantially in the form
attached as Exhibit 2.2(b) (the "OPTION AGREEMENT").
Section 2.3 Allocation of the Purchase Price. As soon as practicable,
but not later than 120 days after the Closing Date, the Parties will agree upon
the allocation of the Base Purchase Price (and all other capitalizable costs)
among the Purchased Assets and Assumed Liabilities, and will set forth such
allocation on a statement (the "ALLOCATION STATEMENT"). The Allocation
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Statement will be revised to reflect any changes in the Direct Written Premiums
shown on the Final Closing Premium Statement from the Direct Written Premiums
shown on the Closing Premium Statement, whether or not such changes result in
an adjustment to the Base Purchase Price. If the Parties fail to agree on the
allocation of the Purchase Price within 120 days after the Closing Date, then
the disagreement will be resolved as soon as practicable thereafter, but not
later than 180 days after the Closing Date, by one of the largest four national
accounting firms, which accounting firm will be jointly selected by the
Parties. The Parties acknowledge that the scope of such accounting firm's work
will be limited to resolving only those items to which the Parties do not agree
regarding the allocation of the Base Purchase Price. The decision of the
accounting firm will be final and binding upon the Parties. The Parties will
share equally the fees, costs and expenses of the accounting firm selected to
resolve any disagreements regarding the Allocation Statement. Each Party will
file all Tax returns, and execute such other documents as may be required by
any taxing authority, in a manner consistent with the Allocation Statement.
Each Party will prepare Internal Revenue Service Form 8594 pursuant to Section
1060 of the Code relating to the transactions contemplated by this Agreement
based on the Allocation Statement, and will deliver such form to each other.
Each Party will file such form with all relevant taxing authorities.
Section 2.4 Purchase Price Adjustment.
(a) Closing Premium Statement. As soon as reasonably
practicable, but not later than the later to occur of the Signing Date or
November 13, 1998, Seller will delivery to Purchaser a statement detailing the
amount of Direct Written Premiums recognized by Seller in the calendar months
August 1998, September 1998 and October 1998 (such statement, together with the
supporting workpapers, the "CLOSING PREMIUM STATEMENT"). The amount set forth
on the Closing Premium Statement will be calculated in accordance with GAAP;
provided, however, that the Closing Premium Statement will not be required to
have any of the notes to the financial statements as required by GAAP. Seller
will give Purchaser and its Representatives reasonable access to Seller's
facilities and the Books and Records so as to enable Purchaser to verify the
amounts set forth on the Closing Premium Statement.
(b) Review of Closing Premium Statement. As soon as
practicable, but not later than 30 days after the delivery of the Closing
Premium Statement, Purchaser will inform Seller in writing of any objection to
the Closing Premium Statement, which objection, if any, will set forth in
reasonable detail Purchaser's objections and the basis for those objections
(the "OBJECTION NOTICE"). If Purchaser so objects and the Parties do not
resolve such objections on a mutually agreeable basis within 45 days after the
delivery of the Closing Premium Statement, then the disagreement will be
resolved as soon as practicable thereafter, but not later than 75 days after
the delivery of the Closing Premium Statement, by one of the largest four
national accounting firms, which accounting firm will be selected jointly by
the Parties. The Parties acknowledge that the scope of such accounting firm's
work will be limited to resolving the objections set forth in the Objection
Notice. The decision of such accounting firm will be final and binding upon the
Parties. The Closing Premium Statement (as adjusted, if applicable, by the
agreement of the Parties or the decision of the accounting firm, the "FINAL
CLOSING PREMIUM STATEMENT") and the amount of Direct Written Premiums
recognized by Seller in the calendar months August 1998, September 1998 and
October 1998 (the "WRITTEN PREMIUM AMOUNT") will
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be deemed final upon the earlier to occur of (i) the agreement of the Parties,
(ii) the decision of the accounting firm, or (iii) the failure of Purchaser to
deliver an Objection Notice to Seller within 30 days after the delivery of the
Closing Premium Statement. Each Party will bear the fees, costs and expenses of
its own accountants, will share equally the fees, costs and expenses of the
accounting firm selected by the Parties to resolve any disagreements regarding
the Objection Notice and will permit each other and each other's
Representatives reasonable access to the books and records necessary to perform
the analysis contemplated by this Section.
(c) Purchase Price Adjustment; Procedure. Upon the Final
Closing Premium Statement being deemed final in accordance with Section 2.4(b),
the Base Purchase Price will be adjusted, if at all, as follows: if the product
of the Written Premium Amount multiplied by four is less than $200,000,000,
then the Base Purchase Price will be reduced by an amount equal to the product
of (i) the Base Purchase Price multiplied by (ii) a fraction consisting of (A)
a numerator equal to the difference of $200,000,000 minus the product of the
Written Premium Amount multiplied by four and (B) a denominator equal to
$200,000,000 (such amount, together with interest thereon calculated at a rate
equal to eight percent (8.0%) compounded daily from the Closing Date to the
date the Final Closing Premium Statement is deemed final in accordance with
Section 2.4(b), the "ADJUSTMENT AMOUNT").
(d) Adjustment Procedure. Purchaser must first seek payment
of the Adjustment Amount from the Closing Cash Payment, thereafter pursuant to
the right of set-off under the Option Agreement and thereafter from Seller.
Such payment from Seller, if any, will be made within five business days after
the final determination of the number of Option Shares (as defined in the
Option Agreement) that vest pursuant to Section 2.4 of the Option Agreement.
Section 2.5 Delivery of Schedules. The Parties acknowledge that the
Schedules to be delivered pursuant to this Agreement will not be delivered on
the Signing Date. The Parties agree that all Schedules will be delivered no
later than November 6, 1998. If the Party to whom a particular Schedule is
delivered does not object in writing to the contents of such Schedule by
November 11, 1998, then that particular Schedule will be deemed final and the
disclosures made thereon will be deemed made as of the Signing Date. Any
Schedule to which a written objection is raised will be deemed final upon the
mutual agreement of the Parties as to the content of such Schedule and the
disclosures made thereon will be deemed made as of the Signing Date.
ARTICLE III.
CLOSING
Section 3.1 Closing. The consummation of the transactions contemplated
by this Agreement (the "CLOSING") will take place at the offices of Akin, Gump,
Strauss, Xxxxx and Xxxx, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000
on the first business day following the date on which all of the conditions
contained in Article IX, to the extent not waived, are satisfied. The Closing
may be postponed to such other date as the Parties may mutually agree. The date
on which the Closing actually occurs is hereinafter referred to as the "CLOSING
DATE." The Parties anticipate that the Closing will occur within 35 days of the
filing of the initial notification required under the HSR Act.
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Section 3.2 Deliveries by Seller. At the Closing, Seller will deliver,
or cause to be delivered, to Purchaser the following:
(a) a xxxx of sale in form and substance reasonably
acceptable to Purchaser;
(b) a lease assignment and estoppel certificate with respect
to each Real Property Lease, each in recordable form;
(c) instruments of assignment with respect to the Intangible
Assets, each in recordable form;
(d) documents evidencing the transfers of all motor vehicles
and registrations;
(e) such other instruments of conveyance and transfer as will
be necessary to vest in Purchaser good and valid title to the Purchased Assets,
free and clear of all Encumbrances other than Permitted Encumbrances;
(f) the officers' certificates referred to in Sections 9.1(d)
and 9.1(e);
(g) an opinion of counsel in substantially the form of
Exhibit 3.2(g) attached hereto;
(h) an executed Registration Rights Agreement in
substantially the form of Exhibit 3.2(h) attached hereto (the "REGISTRATION
RIGHTS AGREEMENT");
(i) executed counterparts of all Required Consents and
Required Permits;
(j) all Books and Records;
(k) a certificate dated within ten business days of the
Closing from the Secretary of State of Minnesota (or other proper state
official) certifying as to Seller's good standing in such state;
(l) a receipt for the payment of the Closing Cash Payment and
the delivery of the Option Agreement; and
(m) all other previously undelivered documents, instruments
and writings required to be delivered by Seller to Purchaser at or prior to the
Closing pursuant to this Agreement.
Section 3.3 Deliveries by Purchaser. At the Closing, Purchaser will
deliver to Seller the following:
(a) federal or other immediately available funds by wire
transfer to Seller in an amount of the Closing Cash Payment;
(b) the Option Agreement;
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(c) the officer's certificates referred to in Sections 9.2(c)
and 9.2(d);
(d) an opinion of counsel in substantially the form of
Exhibit 3.3(d) attached hereto;
(e) a certificate dated within ten business days of the
Closing from the Secretary of State of Texas (or other proper state official)
certifying as to Purchaser's good standing in such state;
(f) an instrument of assumption by Purchaser of the Assumed
Liabilities in form and substance reasonably acceptable to Seller;
(g) an executed Registration Rights Agreement; and
(h) all other previously undelivered documents, instruments
and writings required to be delivered by Purchaser to Seller at or prior to the
Closing pursuant to this Agreement.
Section 3.4 Simultaneous Deliveries. The delivery of the documents
required to be delivered at the Closing pursuant to this Agreement will be
deemed to occur simultaneously. No delivery will be effective until each Party
has received or waived receipt of all the documents that this Agreement entitles
such Party to receive.
Section 3.5 Bulk Sale; Sales and Transfer Taxes. The Parties agree not
to comply with the bulk transfer provisions of any jurisdiction in which any of
the Purchased Assets are located. Except for the Assumed Liabilities, Purchaser
will have no liability or obligation to Seller, to Seller's creditors or to
others, growing out of or arising from the sale by Seller of the Purchased
Assets to Purchaser under the provisions of this Agreement; nor will Purchaser
be liable for any Tax liabilities, including any sales tax or title transfer
fee attributable to the sale of the Purchased Assets. Any Taxes and any
transfer, recording or similar fees and charges arising out of or in connection
with the transfer of the Purchased Assets will be borne by Seller.
Section 3.6 Mail Received After Closing. On and after the Closing,
Purchaser may receive and open all mail addressed to Seller and deal with the
contents thereof in its discretion to the extent that such mail and the
contents thereof relate to the Business or any of the Purchased Assets or
Assumed Liabilities. Purchaser agrees to deliver or to cause to be delivered to
Seller all mail received by Purchaser which is addressed to Seller and does not
relate to the Business, the Purchased Assets or the Assumed Liabilities.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that the statements
made in this Article IV are true, correct and complete:
Section 4.1 Organization; Good Standing; Delivery of Charter
Documents. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota. Seller is duly qualified or
licensed as a foreign corporation in each jurisdiction in
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which the Purchased Assets are owned or leased by Seller, or the nature of the
Business makes such qualification or licensing necessary, except those
jurisdictions wherein the failure to so qualify could not have a Material
Adverse Effect on Seller. Prior to the Signing Date, Seller has delivered to
Purchaser true and complete copies of Seller's Charter Documents as in effect
on the Signing Date.
Section 4.2 Power and Authority. Seller has all requisite corporate
power and authority necessary to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, including the execution, delivery and performance of all documents and
instruments to be delivered by Seller pursuant to the terms hereof (such
documents and instruments, together with this Agreement, the "TRANSACTION
DOCUMENTS"). Seller has all requisite corporate power and authority necessary
to own, operate and lease the Purchased Assets and to carry on its Business as
and where conducted.
Section 4.3 Authorization; Execution and Validity. Each of the
Transaction Documents, when executed by Seller and delivered to Purchaser, will
be duly authorized, executed and delivered, and will constitute a valid, legal
and binding obligation of Seller, enforceable against Seller in accordance with
the terms of such Transaction Document, subject to any Law Affecting Creditors'
Rights.
Section 4.4 No Conflict; Seller Consents. The execution, delivery and
performance by Seller of each Transaction Document will not (a) violate any
Law, (b) violate any Charter Document of Seller, (c) violate any Order to which
Seller is a party or by which Seller or its assets is bound, (d) breach any
Material Contract, Real Property Lease or Personal Property Lease, (e) result
in the creation of any Encumbrance on any of the Purchased Assets, other than
Permitted Encumbrances, or require any Consent from any Person.
Section 4.5 Capitalization.
(a) Seller. Schedule 4.5(a)(1) lists the total number of
authorized, issued and outstanding shares of capital stock of Seller. All the
outstanding shares have been duly authorized and validly issued and are fully
paid and non-assessable. There are no issued and outstanding shares of capital
stock of Seller other than as listed on Schedule 4.5(a)(1). Except as listed on
Schedule 4.5(a)(2), there is no authorized or outstanding option, subscription,
warrant, call, right, commitment or other agreement ("SUBSCRIPTION RIGHT")
obligating Seller to issue or sell any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock.
None of the shares were issued in violation of any preemptive or preferential
rights of any Person. Other than the capital stock of the Subsidiaries, Seller
does not own any shares of capital stock, partnership interests or other
beneficial ownership interests in any other Person. None of the Business is
conducted in any Subsidiary.
(b) Subsidiaries. Schedule 4.5(b) lists the name of each
Person whose capital stock, equity securities or Subscription Right that Seller
owns, either beneficially or of record (collectively, the "SUBSIDIARIES"), and
the total number of authorized, issued and outstanding shares of such capital
stock, equity securities or Subscription Right of each Subsidiary. All the
shares of capital stock of each Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable. Seller owns all issued
and outstanding shares of capital stock of
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each Subsidiary. There is no authorized or outstanding Subscription Rights
obligating any Subsidiary to issue or sell any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock. None of the shares of any Subsidiary were issued or will be transferred
pursuant to this Agreement in violation of any preemptive or preferential
rights of any Person. No Subsidiary owns any shares of capital stock,
partnership interests or other beneficial ownership interests in any other
Person.
Section 4.6 Financial Statements--Division.
(a) Year-End Financial Statements. Attached hereto as
Schedule 4.6(a) are the balance sheets of the Division as of December 31, 1997
(the "YEAR-END BALANCE SHEET" and such date the "BALANCE SHEET DATE"), and
December 31, 1996, with the related statements of operations and cash flows for
the fiscal years ended on such dates and the accompanying notes (collectively,
the "YEAR-END FINANCIAL STATEMENTS"). The Year-End Financial Statements have
been prepared in accordance with GAAP (except as noted therein), and present
fairly, in all material respects, the financial position of the Division as of
the dates indicated and the results of its operations and cash flows for the
periods then ended.
(b) Interim Financial Statements. Attached hereto as Schedule
4.6(b) are the unaudited balance sheet of the Division as of September 30, 1998
(the "INTERIM BALANCE SHEET") and the related statement of operations and cash
flows for the nine month period ended on such date (collectively, the "INTERIM
FINANCIAL STATEMENTS"). The Interim Financial Statements have been prepared in
accordance with the Books and Records and with GAAP (except as noted therein
and the absence of detailed notes to such statements), and present fairly, in
all material respects, the financial position of the Division as of the date
indicated and the results of its operations and cash flows for the period then
ended, subject to normal year-end adjustments.
Section 4.7 No Undisclosed Liabilities. Except as described in the
Year-End Balance Sheet, the Purchased Assets and the Business are not subject
to any Claim of any nature, absolute or contingent, and no events have occurred
or circumstances exist that could give rise to any future Claim that could have
a Material Adverse Effect on the Purchased Assets or the Business, other than
Claims incurred since the Balance Sheet Date in the ordinary course of Seller's
business consistent with past practices.
Section 4.8 Absence of Certain Changes. Since the Balance Sheet Date,
Seller has conducted its business only in the ordinary course of business
consistent with past practices and, without limiting the generality of the
foregoing and except as listed on Schedule 4.8, there has been no (a) event or
occurrence that has caused or will cause a Material Adverse Change, (b)
amendment to the Charter Documents, (c) payment of any dividend or distribution
made with respect to Seller's capital stock, (d) redemption or purchase of any
of Seller's capital stock, (e) amendment, termination or receipt of notice of
termination of or entry into any contract, lease or license involving a total
commitment by or to Seller of $10,000, (f) incurrence or guarantee of any debt,
other than trade and accounts payable incurred in the ordinary course of
business consistent with past practices, (g) loan to or transaction with any
officer, director or shareholder, other than in the ordinary course of business
consistent with past practices, (h) waiver of any material right or release of
any debt or claim, other than waivers or releases given in the ordinary course
of business consistent with past practices, (i) amendment or termination of any
Permit,
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(j) destruction, damage or other loss to any of the Purchased Assets other than
destruction, damage or other loss that is fully covered by insurance, (k)
adoption of or increase in the payments to or benefits under any Employee
Benefit Plan, (l) sale, lease, or other disposition of any assets used in the
Business, other than the Excluded Assets and assets sold, leased or otherwise
disposed of in the ordinary course of business consistent with past practices,
(m) imposition of any Encumbrance on any of the Purchased Assets, other than
Permitted Encumbrances, (n) purchase or lease any assets used in the Business,
other than assets purchased or leased in the ordinary course of business
consistent with past practice, (o) payment of any bonus or an increase in the
salary, bonus or other compensation payable to any employee of Seller, other
than payments or increases consistent with past practice, (p) change in any
accounting method, (q) acceleration related to the collection of accounts
receivable or delay related to the payment of accounts payable, or (r)
agreement or commitment to take any action described in this Section.
Section 4.9 Sufficiency and Condition of and Title to the Purchased
Assets.
(a) Sufficiency of the Purchased Assets. The Purchased Assets
constitute all of the assets, properties, licenses and other arrangements which
are presently being used or are reasonably related to the Business, and are
sufficient to operate the Business in a manner consistent with past practice
and at Seller's historic capacity.
(b) Condition of the Purchased Assets Each of the Purchased
Assets complies with Law and is in good and normal operating condition and
repair, structurally sound with no known defects (ordinary wear and tear
excepted), and suitable for its intended use.
(c) Title to the Purchased Assets. At the Closing, Seller
will transfer to Purchaser good, valid and indefeasible title to, or a valid
leasehold interest in, each of the Purchased Assets, free and clear of all
Encumbrances, other than Permitted Encumbrances.
Section 4.10 Accounts Receivable. All accounts receivable of Seller
reflected on the Interim Balance Sheet (the "ACCOUNTS RECEIVABLE") represent or
will represent valid obligations arising from sales made, commissions earned or
services performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts Receivable are current and collectible net of the
respective reserves shown on the Interim Balance Sheet (which reserves are
adequate and calculated consistent with past practice). Subject to such
reserves, each of the Accounts Receivable either has been or will be collected
in full, without any set-off, within ninety days after the day on which it
first becomes due and payable. There is no contest, claim, or right of set-off
under any contract with any obligor of an Accounts Receivable relating to the
amount or validity of such Accounts Receivable.
Section 4.11 Intentionally Omitted.
Section 4.12 Real Property.
(a) Owned Real Property. Schedule 4.12(a) lists as of the
Signing Date each parcel of real property owned by Seller used in the Business,
including the street address of each property and a summary description of the
buildings and improvements thereon. Each parcel of real property listed on
Schedule 4.12(a) and any parcel of real property purchased after the
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Signing Date in accordance with Section 6.3 (collectively, the "OWNED REAL
PROPERTY") is (i) in compliance with all Laws, including the Americans with
Disabilities Act and any building, fire, land use, occupancy, safety, set-back,
or zoning Law, (ii) not burdened by any covenant, easement, encroachment,
restrictive covenant, right-of-way, or servitude, other than those specifically
referenced in the title insurance policies delivered pursuant to Section
3.2(b), and (iii) not subject to any condemnation, eminent domain or similar
Action.
(b) Leased Real Property. Schedule 4.12(b) lists all the
leases of real property to which Seller is a party and which are used in the
Business and in effect as of the Signing Date. All of the leases on Schedule
4.12(b) and any leases of real property entered into after the Signing Date in
accordance with Section 6.3 (collectively, the "REAL PROPERTY LEASES") are
valid, binding and in full force and effect. Neither Seller nor, to Seller's
Knowledge, any other Person is in default under any Real Property Lease, nor is
there any event which with notice or lapse of time, or both, would constitute a
default thereunder by Seller or any other Person. Seller has received a
nondisturbance agreement from any lessor's lender under each of the Real
Property Leases. True and complete copies of all the Real Property Leases, any
amendments thereto and the nondisturbance agreements have been provided to
Purchaser prior to the Signing Date.
Section 4.13 Personal Property.
(a) Owned Personal Property. Schedule 4.13(a) lists as of the
Signing Date all of the personal property (including all machinery, equipment,
vehicles, structures, fixtures and furniture) owned by Seller and used in the
Business, located on its premises or shown on the Interim Balance Sheet or
acquired after the date thereof (except for inventory subsequently sold in the
ordinary course of business and consistent with past practice).
(b) Leased Personal Property. Schedule 4.13(b) lists as of
the Signing Date all the leases of personal property used in the Business to
which Seller is a party. All of the leases on Schedule 4.13(b) and any leases
of personal property entered into after the Signing Date in accordance with
Section 6.3 (collectively, the "PERSONAL PROPERTY LEASES") are valid, binding
and in full force and effect. Neither Seller nor, to Seller's Knowledge, any
other Person is in default under any Personal Property Lease, nor is there any
event which with notice or lapse of time, or both, would constitute a default
thereunder by Seller or any other Person. True and complete copies of all the
Personal Property Leases and any amendments thereto have been provided to
Purchaser prior to the Signing Date.
Section 4.14 Compliance with Laws. To Seller's Knowledge, Seller is in
compliance with all Laws in the conduct of the Business. Seller has not received
any notice from any Governmental Authority or other Person asserting that Seller
has violated any Law.
Section 4.15 Insurance. Schedule 4.15 lists as of the Signing Date all
insurance policies to which Seller is a party or which insure the Business or
any of the Purchased Assets against loss (collectively, the "INSURANCE
POLICIES"), including each insurer's name, coverage deductible and limit,
expiration date and current premium. Each Insurance Policy is in full force and
effect, all premiums with respect thereto have been paid to the extent due, and
no notice of cancellation or termination has been received with respect to any
such policy, other than any policy that will be replaced or is intended to be
replaced prior to the expiration thereof by policies providing
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substantially the same coverage from an insurer that is financially sound and
reputable. The Insurance Policies provide Seller with adequate insurance
coverage against the risks involved in the conduct of the Business and
ownership of the Purchased Assets. The coverage provided by the Insurance
Policies is not less than the coverage customary in Seller's industry and will
not in any way be affected by or terminate or lapse by reason of the
consummation of the transactions contemplated by this Agreement. True and
complete copies of all Insurance Policies have been provided to Purchaser.
Section 4.16 Contracts. Schedule 4.16 lists as of the Signing Date all
the contracts relating to the Business, Purchased Assets or Assumed Liabilities
or by which any of the Purchased Assets is bound, pursuant to which the
obligations of any party thereto are, or are contemplated to be, in respect of
any such contract (a) in excess of $10,000 during any twelve month period the
term thereof, (b) not terminable prior to three month from the Signing Date, or
otherwise material to the Business. All of the contracts listed on Schedule
4.16 and any contracts entered into after the Signing Date in accordance with
Section 6.3 (collectively, the "MATERIAL CONTRACTS") are valid and binding and
in full force and effect, subject to Laws Affecting Creditors' Rights. Neither
Seller nor, to Seller's Knowledge, any other Person is in default under any
Material Contract, nor is there any event which with notice or lapse of time,
or both, would constitute a default thereunder by Seller or any other Person.
Other than the Material Contracts, Seller is not a party to any contract which
(x) requires the Consent of any Person in order to consummate the transactions
contemplated by this Agreement, (y) is in excess of the normal, ordinary and
usual requirements of the Business, or (z) is excessive in price or quantity.
True and complete copies of all the Material Contracts have been provided to
Purchaser.
Section 4.17 Litigation; Orders. Schedule 4.17 lists and describes all
Actions pending, or to Seller's Knowledge, threatened against or affecting
Seller, the Business or any of the Purchased Assets. There is no Action pending
or, to Seller's Knowledge, threatened in writing affecting Seller, the Business
or any of the Purchased Assets which, if adversely determined, would have,
individually or in the aggregate, a Material Adverse Effect. Seller is not
subject to any Order. True and complete copies of all material pleadings in the
Actions listed on Schedule 4.17 have been provided to Purchaser.
Section 4.18 Environmental Matters.
(a) Compliance with Environmental Laws. The Business has been
and is operated in compliance with all Environmental Laws and all Permits
related to Environmental Laws.
(b) Hazardous Materials. To Seller's Knowledge, Seller has
neither caused nor allowed the generation, treatment, manufacture, processing,
distribution, use, storage, discharge, release, disposal, transport or handling
of any Hazardous Materials at any of the properties or facilities used in
connection with the Business, including the Owned Real Property and the premise
subject to the Real Property Leases, except in compliance with all
Environmental Laws. To Seller's Knowledge, no generation, treatment,
manufacture, processing, distribution, use, storage, discharge, release,
disposal, transport or handling of any Hazardous Materials has occurred at any
of the properties or facilities used in connection with the Business, including
the Owned Real Property and the premises subject to the Real Property Leases,
except in compliance with all Environmental Laws.
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(c) Existence of an Action. Seller has not received any
notice from any Governmental Authority or other Person alleging or concerning
any Claim against Seller under any Environmental Law, whether for personal
injuries or property damages. There is no Action pending or, to Seller's
Knowledge, threatened affecting Seller with respect to the Business alleging or
concerning any Claim under any Environmental Law, whether for personal injuries
or property damages, nor does Seller have any knowledge of any fact or
condition that could give rise to such a Claim.
(d) Environmental Permits. To Seller's Knowledge, Seller is
in possession of and in compliance with all Permits required under the
Environmental Laws with respect to the operation of the Business. There are no
Actions pending or, to Seller's Knowledge, threatened which seek to modify,
revoke or deny renewal of any of such Permit. Seller has no knowledge of any
fact or condition that is reasonably likely to give rise to any Action to
modify, revoke or deny renewal of any of such Permit. No Consent from any
Person is necessary for the transfer of any such Permit, and the consummation
of the transactions contemplated by this Agreement will not violate, alter,
impair or invalidate, in any respect, any such Permit.
(e) Miscellaneous. Without in any way limiting the generality
of the foregoing, to Seller's Knowledge (i) none of the off-site locations
where Seller has transported, released, discharged, stored, disposed or
arranged for the disposal of Hazardous Materials has been identified as a
facility that is subject to an existing Claim under any Environmental Law or is
the subject of any threatened Claim by any Person, (ii) no underground
improvement regulated by any Environmental Law, including any storage or
treatment tank, is located on the Owned Real Property or the premises subject
to the Real Property Leases, (iii) there is no asbestos contained in or forming
part of any Purchased Assets, and no polychlorinated biphenyls or
polychlorinated biphenyls-containing items are used or stored at the Owned Real
Property or the premises subject to the Real Property Leases.
Section 4.19 Permits. Schedule 4.19 lists all the Permits related to
the Purchased Assets or operation of the Business, and indicates those Permits
for which the Consent of any Person is required to assign such Permit. Seller
has obtained, maintains in effect, and complies with the terms and conditions
of all Permits required by Law. There is no Action pending or, to Seller's
Knowledge, threatened in writing to revoke or limit any Permit listed on
Schedule 4.19.
Section 4.20 Intangible Assets.
(a) Owned Intangible Assets. Schedule 4.20(a) lists all the
Intangible Assets used in the Business and owned by Seller as of the Signing
Date. With respect to the Intangible Assets listed on Schedule 4.20(a) and all
the Intangible Assets obtained or developed prior to the Closing, (i) Seller
owns all right, title and interest in and to such Intangible Assets free and
clear of all Encumbrances, (ii) Seller has not sold, transferred, licensed,
sub-licensed or conveyed any interest in any of such Intangible Assets, and
(iii) no Person has infringed upon or misappropriated any of such Intangible
Assets.
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(b) Licensed Intangible Assets. Schedule 4.20(b) lists all
licenses and contracts related to any Intangible Asset used by Seller in the
Business as of the Signing Date. Each license or contract listed on Schedule
4.20(b) and each license or contract related to an Intangible Asset which is
entered into after the Signing Date in accordance with Section 6.3 is valid,
binding and in full force and effect. Seller has not infringed upon or
misappropriated any Intangible Asset owned by another Person.
Section 4.21 Employees.
(a) Employees. Schedule 4.21(a) lists the name, job title,
date of employment and current annual compensation (salary, bonus and all
amounts paid pursuant to an Employee Benefit Plan) for each employee of Seller
employed in the conduct of the Business as of the Signing Date (collectively,
the "EMPLOYEES"). All Employees are either United States citizens or resident
aliens specifically authorized to engage in employment in the United States in
accordance with all Laws. All sums due for employee compensation and benefits
and all vacation time owing to any employee of Seller (including all persons
whose employment by Seller terminated prior to the Signing Date) have been duly
and adequately accrued on the accounting Books and Records of Seller.
(b) Contracts. Schedule 4.21(b) lists each (i) contract
between Seller and an Employee, and (ii) collective bargaining agreement and
other contract to or with any labor union, employee representative or group of
employees. Other than the contracts listed on Schedule 4.21(b), Seller's
employment of each Employee is terminable at will without any penalty or
severance obligation of any kind on the part of Seller.
(c) Compliance with Labor Laws. Seller has complied and is
presently complying with all Laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and is not
engaged in any unfair labor practice or unlawful employment practice.
(d) Labor Actions and Relations. There is no unfair labor
practice charge or complaint against Seller pending or threatened before the
National Labor Relations Board nor is there any grievance nor any arbitration
proceeding arising out of or under any collective bargaining agreement pending
and, to Seller's Knowledge, no basis for any such charge, complaint or
grievance exists. There is no labor strike, slowdown or work stoppage pending
or threatened against Seller. Seller has neither experienced any significant
work stoppages nor been a party to any Action before the National Labor
Relations Board involving any issue for the past three years nor been a party
to any arbitration proceeding arising out of or under any collective bargaining
agreement for the past three years. There is no charge or complaint pending or
threatened against Seller before the Equal Employment Opportunity Commission or
the Department of Labor or any state or local agency of similar jurisdiction.
Section 4.22 Employee Benefits.
(a) Welfare Benefit Plan. Schedule 4.22(a) lists, as of the
Signing Date, each Welfare Benefit Plan maintained by Seller or to which Seller
contributes or is required to contribute with respect to any Person. True,
correct and complete copies of the plan documents for each of
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Seller's Welfare Benefit Plans and all related summary plan descriptions have
been provided to Purchaser. Except as provided for in the Year-End Balance
Sheet (or in the footnotes thereto), as of the Signing Date Seller has no
liability for contributions or payments more than 30 days past due with respect
to any of its Welfare Benefit Plans or for any retiree benefits under any such
Welfare Benefit Plan to current or retired employees of Seller (other than as
required by Section 601 of ERISA).
(b) Pension Benefit Plans. Schedule 4.22(b) lists, as of the
Signing Date, each Pension Benefit Plan maintained by Seller or to which Seller
contributes or is required to contribute with respect to any Person. True,
correct and complete copies of the plan and related trust documents for each of
Seller's Pension Benefit Plan and all related summary plan descriptions have
been provided to Purchaser. Seller does not presently maintain and has never
maintained, nor has had any obligation of any nature (whether contingent or
otherwise) to contribute to, a "defined benefit plan" (as defined in Section
414(j) of the Code), without regard to whether such defined benefit plan met
the requirements of Section 401(a) of the Code. Except as provided for in the
Year-End Balance Sheet (or in the footnotes thereto), as of the Signing Date
Seller has no liability for contributions due with respect to its Pension
Benefit Plans, including any "individual account plan" (as defined in Section
3(34) of ERISA).
(c) Employee Arrangements. Schedule 4.22(c) lists each
Employee Benefit Plan not otherwise disclosed in Schedules 4.22(a) or 4.22(b)
maintained by Seller with respect to any past or present employee of Seller.
(d) Benefit Plan Compliance. All of Seller's Employee Benefit
Plans and any related trust agreements or annuity contracts (or any other
funding instruments) currently comply in all respects, and have so complied in
the past, both as to form and operation, with all applicable Laws, including
ERISA and the Code.
(e) No Title IV Liability. No liability under Title IV of
ERISA has been or will be incurred by Seller on or prior to the Closing Date.
(f) Effect of Consummation. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of Seller or any other individual to a bonus, severance pay,
unemployment compensation or similar payment, or (ii) otherwise accelerate the
time of payment or vesting, or increase the amount of any compensation due to
any current or former employee of Seller.
(g) WARN Act. Neither Seller nor any Person with whom Seller
would be treated as an "employer" for purposes of the Worker Adjustment and
Retraining Notification Act or any similar state law has incurred any liability
or obligation under such laws.
Section 4.23 Taxes.
(a) Tax Returns. All Tax returns, reports, and declarations
of estimated Tax (collectively, "RETURNS") which were required to be filed by
Seller with any Governmental Authority have been timely filed. All Returns are
true and correct and accurately reflect the Tax liabilities of Seller. All
Taxes shown to be due pursuant to such Returns, other than Taxes being
contested in good faith and for which adequate reserves are reflected on the
Interim Balance Sheet, have been paid.
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(b) Statute of Limitations and Tax Actions. Seller has not
executed any presently effective waiver or extension of any statute of
limitations against assessments and collection of Taxes. There are no pending
or, to Seller's Knowledge, threatened Claims, assessments, notices, proposals
to assess, deficiencies or audits with respect to Taxes.
(c) Miscellaneous Tax Representations. Proper and accurate
amounts have been withheld and remitted by Seller from and in respect of all
Persons from whom it is required by applicable law to withhold for all periods
in compliance with the tax withholding provisions of all Laws. Neither Seller
nor, to Seller's Knowledge, any other corporation has filed an election under
Section 341(f) of Code that is applicable to Seller or any of the Purchased
Assets. Seller is not a party to any tax sharing agreement. There is no
contract, plan or arrangement covering any Person that, individually or
collectively, would give rise to the payment of any amount that would not be
deductible by Seller by reason of Section 280G of the Code. Seller is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Code. Seller
has never been a member of any group that filed a consolidated federal income
tax return.
Section 4.24 Bank Accounts; Powers of Attorney. Schedule 4.24 lists
the names of (a) each bank, trust company and stock or other broker with which
Seller has an account, credit line or safe deposit box or vault, or otherwise
maintains relations (the "BANK ACCOUNTS"), (b) all Persons authorized to draw
on, or to have access to, each of the Accounts, and (c) all Persons authorized
by proxies, powers of attorney or other like instrument to act on behalf of
Seller in any matter concerning the Business. Each of the Accounts has a
positive cash balance. No proxies, powers of attorney or other like instruments
are irrevocable.
Section 4.25 Suppliers and Customers. The relationships of Seller with
its suppliers and customers are satisfactory. No such material customer or
supplier has canceled or otherwise terminated, or threatened to cancel or
otherwise terminate, its relationship with Seller, or to materially decrease
its services to Seller or its usage of the services of Seller.
Section 4.26 Affiliated Transactions. Since the Year-End Balance Sheet
Date, except as listed on Schedule 4.26 Seller has not paid, loaned or advanced
any amount to, or sold, transferred or leased any properties or assets
(tangible or intangible) to, or entered into any agreement or arrangement with,
any of the officers, directors or stockholders of Seller or any of its
affiliates, except for compensation to officers at rates not exceeding the
rates of compensation paid during the fiscal year ended on the Year-End Balance
Sheet Date and routine travel advances to officers and employees.
Section 4.27 Books and Records. The Books and Records of Seller, all
of which have been made available to Purchaser, are complete and correct and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
Section 4.28 Full Disclosure. No representation or warranty of Seller
made in this Agreement, nor any written statement furnished to Purchaser
pursuant hereto or in connection
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with the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact which affects the Business or financial condition
of Seller, or omits or will omit to state a material fact necessary to make the
statements or facts contained herein or therein not misleading.
Section 4.29 Brokers. No Person is or will become entitled to receive
any brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of having been engaged by
or acted on behalf of Seller.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that the statements
set forth in this Article V are correct and complete.
Section 5.1 Organization; Good Standing; Delivery of Charter
Documents. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. Purchaser is duly qualified
or licensed as a foreign corporation in each jurisdiction in which its assets
are owned or leased, or the nature of its business makes such qualification or
licensing necessary, except those jurisdictions wherein the failure to so
qualify could not have a Material Adverse Effect on Purchaser. Prior to the
Signing Date, Purchaser has delivered to Seller true and complete copies of
Purchaser's Charter Documents as in effect on the Signing Date.
Section 5.2 Power and Authority. Purchaser has all requisite corporate
power and authority necessary to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, including the execution, delivery and performance of all the other
Transaction Documents to which Purchaser is a party. Purchaser has all
requisite corporate power and authority necessary to own, operate and lease its
assets and to carry on its business as and where conducted.
Section 5.3 Authorization; Execution and Validity. Each of the
Transaction Documents, when executed by Purchaser and delivered to Seller, will
be duly authorized, executed and delivered, and will constitute a valid, legal
and binding obligation of Purchaser, enforceable against Purchaser in
accordance with the terms of such Transaction Document, subject to any Law
Affecting Creditors' Rights.
Section 5.4 No Conflict; Purchaser Consents. The execution, delivery
and performance by Purchaser of each Transaction Document to which it is a
party will not (a) violate any Law, (b) violate any Charter Document of
Purchaser, (c) violate any Order to which Purchaser is a party or by which
Purchaser or its assets is bound, or (d) require any Consent from any Person.
Section 5.5 Full Disclosure. No representation or warranty of
Purchaser made in this Agreement, nor any written statement furnished to Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact which affects
the business or financial condition of Purchaser, or omits or will omit to
state a material fact necessary to make the statements or facts contained
herein or therein not misleading.
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Section 5.6 Brokers. No Person is or will become entitled to receive
any brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of having been engaged by
or acted on behalf of Purchaser.
ARTICLE VI.
COVENANTS OF SELLER
Section 6.1 Cooperation by Seller. From the Signing Date through the
Closing Date, Seller will use all reasonable efforts (a) to take all actions
and to do all things necessary or advisable to consummate the transactions
contemplated by this Agreement, (b) to cooperate with Purchaser in connection
with the foregoing, including using reasonable efforts to obtain all of the
Consents, and (c) subject to the other terms and conditions of this Agreement,
to cause all the conditions set forth in Section 9.1, the satisfaction of which
is in the reasonable control of Seller, to be satisfied on or prior to Closing.
Section 6.2 Pre-Closing Access to Information. From the Signing Date
through the Closing Date, Seller will afford to Purchaser its Representatives
access to the properties and the Books and Records of Seller.
Section 6.3 Conduct of Business.
(a) Ordinary Course. From the Signing Date through the
Closing Date, Seller, in connection with the conduct of the Business, will use
all reasonable efforts to (i) preserve substantially the relationships with its
Representatives, suppliers and customers, (ii) perform its obligations under
all contracts, leases and Permits in all material respects, (iii) comply with
all Laws, (iv) confer with Purchaser regarding operational matters of a
material nature, (v) report periodically to Purchaser regarding the status of
the Businesses and the results of operations of Seller, and (vi) conduct the
Businesses in the ordinary course and consistent with past practices.
(b) Prohibited Actions. Except as otherwise required or
permitted by this Agreement or listed on Schedule 6.3(b), from the Signing Date
through the Closing Date Seller will not, without the prior written consent of
Purchaser, take or fail to take any action as a result of which any of the
changes or events listed in Section 4.7 occur or become likely to occur.
Section 6.4 Supplements to Schedules. If, between the Signing Date and
the Closing Date, Seller becomes aware that any of its representations and
warranties in this Agreement or the schedules to this Agreement was inaccurate
when made or if during such period any event occurs or condition changes that
causes any of such representations and warranties to be inaccurate, then Seller
will notify Purchaser thereof in writing and supplement the schedules hereto to
account for any such inaccuracy, event or change. Any such supplement to the
schedules will not be deemed to have been disclosed as of the Signing Date or
to have cured any breach of a representations and warranties made in this
Agreement, unless so agreed to in writing by Purchaser.
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Section 6.5 Post-Closing Conduct of Business. Immediately following
the Closing, Seller will take all actions and do all things necessary to (a)
cease all activities which constitute the conduct of the Businesses (other than
matters related to the transition of the Businesses to Purchaser), (b) change
the name of Seller to a name that is not similar to its current corporate name,
and (c) terminate all of its assumed name filings.
Section 6.6 Standstill. Until the earlier to occur of the Closing or
the termination of this Agreement pursuant to Article X, Seller will not, nor
will Seller permit any of its Representatives to, (a) directly or indirectly,
encourage, solicit, initiate or participate in discussions or negotiations
with, or provide any information or assistance to, any Person (other than
Purchaser and its Representatives) concerning any merger, sale of securities,
sale of substantial assets, investment proposals or similar transaction
involving Seller, (b) entertain or discuss any acquisition or investment
proposals whatsoever, (c) disclose to any third party any non-published
information concerning Seller, the Business or Seller's financial condition, or
(d) withdraw Seller's intention to sell the Purchased Assets to Purchaser.
Section 6.7 Discharge of Encumbrances. Seller will take all actions
and do all things necessary to cause all Encumbrances other than Permitted
Encumbrances on any Purchased Assets to be terminated or otherwise discharged
at or prior to the Closing.
Section 6.8 Non-Disclosure; Non-Competition; Non-Solicitation.
(a) Non-Disclosure Agreement. Seller acknowledges, for itself
and each of its Affiliates, that it has and may have access to Confidential
Information and that such Confidential Information does and will constitute
valuable, special and unique property of Purchaser. At no time will Seller, and
at no time will Seller allow its Affiliates or its Representatives to, (i) use
any Confidential Information in any manner adverse to the business interests of
Purchaser, or (ii) disclose any such Confidential Information to any Person for
any reason or purpose whatsoever. Upon the request of Purchaser, Seller will,
and will cause its Affiliates and Representatives to, deliver to Purchaser all
letters, notes, computer disks, software, notebooks, reports and other
materials which contain Confidential Information and which are in the
possession or under the control of Seller, Affiliate or Representative.
(b) Non-Competition Agreement. Seller agrees, and will cause
each of its Affiliates, not to provide, either directly or indirectly, any of
the Restricted Services within the United States of America for so long as
Purchaser provides services to Seller or any Affiliate of Seller (such time
period, the "RESTRICTIVE PERIOD").
(c) Non-Solicitation Agreement. For a period equal to the
Restrictive Period, Seller will not, and will cause each of its Affiliates not
to, either on its own behalf or on behalf of any entity providing Restrictive
Services, directly or indirectly to the extent that Seller is prohibited in
engaging in such business pursuant to this Section, (i) solicit or induce, or
in any manner attempt to solicit or induce any person employed by, or an agent
of, Purchaser (including those Employees who accept employment with Purchaser
pursuant to Article XI) to terminate such person's employment or agency, as the
case may be, with Purchaser, or (ii) solicit, divert, or attempt to solicit or
divert, or otherwise accept as a supplier or customer, any Person which sells
any products and services of Purchaser, furnishes products or services to, or
receives products and services from, Purchaser, nor will Seller attempt to
induce any such supplier or customer to cease being (or any prospective
supplier or customer not to become) a supplier or customer of Purchaser.
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(d) Independent Covenants. The covenants contained in this
Section are independent and separate, and in the event that any provision
contained herein is declared invalid or illegal, the other provisions hereof
will not be affected or impaired thereby and will remain valid and enforceable.
(e) Injunctive Relief. In the event of a breach or threatened
breach by Seller of any provision of this Section, Purchaser will be entitled
to an injunction to prevent irreparable injury to such Purchaser. Nothing
herein will be construed as prohibiting Purchaser from pursuing any other
remedies available to Purchaser for such breach or threatened breach, including
the recovery of damages from Seller.
(f) Acknowledgments of Seller. Seller acknowledges that (i)
any public disclosure of the Confidential Information will have an adverse
effect on Purchaser and the Business, (ii) Purchaser would suffer irreparable
injury if Seller breaches any of the terms of this Section, (iii) Purchaser
will be at a substantial competitive disadvantage if Purchaser fails to acquire
and maintain exclusive ownership of the Confidential Information or to abide by
the restrictions provided for in this Section, (iv) the scope of the protective
restrictions provided for in this Section are reasonable when taking into
account (A) the negotiations between the Parties and (B) that Seller is the
direct beneficiary of the Purchase Price paid pursuant to this Agreement, (v)
the consideration being paid to Seller pursuant to this Agreement is sufficient
inducement for Seller to agree to the terms hereof, (vi) the provisions of this
Section are reasonable and necessary to protect the Business, to prevent the
improper use or disclosure of the Confidential Information and to provide
Purchaser with exclusive ownership of all such Confidential Information and
(vii) the terms of this Section preclude Seller from providing the Restricted
Services. Without limiting the foregoing, in the event that a court of
competent jurisdiction determines that the Restriction Period exceeds the
maximum reasonable and enforceable time period or that the designated area
exceeds the maximum reasonable and enforceable area, the Restriction Period or
designated area shall be deemed to become and thereafter shall be the maximum
time period or area which such court deems reasonable and enforceable.
ARTICLE VII.
COVENANTS OF PURCHASER
Section 7.1 Cooperation by Purchaser. From the Signing Date through
the Closing Date, Purchaser will use all reasonable efforts (a) to take all
actions and to do all things necessary or advisable to consummate the
transactions contemplated by this Agreement, (b) to cooperate with Seller in
connection with the foregoing, including using reasonable efforts to obtain all
of the Consents and the Releases, and (c) subject to the other terms and
conditions of this Agreement, to cause all the conditions set forth in Section
9.2, the satisfaction of which is in the reasonable control of Purchaser, to be
satisfied on or prior to Closing.
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Section 7.2 Pre-Closing Access to Information. Purchaser will
refrain from imposing any undue burden upon Seller and from interfering with
the operations and conduct of the Business.
Section 7.3 Purchasers' Consent. If Seller gives written notice to
Purchaser that Seller proposes to take any action for which Purchaser's consent
is required under Section 6.3 and if Purchaser has not delivered to Seller a
written objection to such proposed action within 10 business days of Seller's
notice, then Purchaser will be deemed to have consented to such proposed action.
Purchaser's consent to any such proposed action will not be unreasonably
withheld.
Section 7.4 Maintenance of the Segregated Account. Until the earlier
to occur of the Closing or the termination of this Agreement pursuant to Article
X, Purchaser will maintain in the Segregated Account a balance equal to the
lesser of the Base Purchase Price or the Final Purchase Price.
ARTICLE VIII.
MUTUAL COVENANTS
Section 8.1 Governmental Consents.
(a) HSR Filing. Within five business days after the Signing
Date, each Party will take all actions and do all things necessary to file the
notification required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR ACT"). The Parties will use all reasonable efforts
to comply as promptly as practicable with any request made pursuant to the HSR
Act for additional information. Purchaser will pay the statutory filing fees
required by the HSR Act. The Parties anticipate all applicable waiting periods
under the HSR Act to be expired or terminated within 30 days of the filing of
the initial notification required under the HSR Act.
(b) Other Governmental Consents. Promptly after the Signing
Date, each Party will take all actions and do all things necessary to obtain
all Consents required by any Governmental Authority to consummate the
transactions contemplated hereby. Each Party will reasonably cooperate with the
other Parties in obtaining the Consents specified in this Section.
Section 8.2 Consents to Assign Leases and Contracts.
(a) Cooperation and Reasonable Efforts. Each Party hereby
agrees to use reasonable efforts, to take reasonable actions (including
Purchaser's delivery to third parties of its financial statements) and to
cooperate with each other as may be necessary to obtain Consents to transfer
and assign the Encumbered Instruments. Except as expressly provided herein,
neither Party will be required to pay any sum, to incur any obligation or to
agree to any amendment of any Encumbered Instrument in order to obtain any such
Consent to transfer and assign the Encumbered Instrument.
(b) Pre-Closing; Required Consents. Schedule 8.2(b) lists the
Encumbered Instruments to which a Consent to transfer and assign must be
obtained from the appropriate
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third party prior to Closing (collectively, the "REQUIRED CONSENTS"). Except
for the Required Consents, the obtaining of any Consents related to the
Encumbered Instruments will not be a condition to Closing, and Closing will
occur irrespective of whether any such Consent has been obtained.
(c) Post-Closing Efforts to Obtain Consents. In the event any
Consent necessary to effect the transfer and assignment of any Encumbered
Instrument is not obtained on or prior to Closing, each Party will, for a
period of one year following the Closing Date, (i) abide by the requirements of
Section 8.2(a), and (ii) cooperate with each other in any lawful and reasonable
arrangement to provide that Purchaser will receive the benefits under any
Encumbered Instrument not assigned and transferred at the Closing by reason of
the failure to obtain such Consent (a "NON-TRANSFERRED INSTRUMENT"), including,
if necessary, at the request and expense (unless any such failure of
performance by a third party is due to the failure to obtain the Consent of
such third party to the transfer and assignment of the Non-Transferred
Instrument) of Seller, enforcing performance by any third party of its
obligations in respect of such Non-Transferred Instrument; provided that, to
the extent the Parties are successful in providing the material benefits of any
Non-Transferred Instrument to Purchaser, such Purchaser will pay, honor and
discharge when due all liabilities of Seller related thereto to the extent the
liabilities were incurred after the Closing Date. Seller will immediately
transfer and assign to Purchaser any Non-Transferred Instrument for which a
Consent has been received.
(d) No Assignment. Notwithstanding anything to the contrary
in this Agreement, Seller will not transfer or assign any interest in any
Encumbered Instrument, and Purchaser will not assume any liability arising
thereunder or resulting therefrom, if an assignment or transfer or an attempt
to make an assignment or transfer of such Encumbered Instrument without the
Consent of a third party would constitute a breach or violation thereof or a
violation of Law, or affect adversely the rights of Purchaser or Seller
thereunder, until such Consent has been obtained.
Section 8.3 Permits.
(a) Cooperation and Reasonable Efforts. Each Party hereby
agrees to use reasonable efforts, to take reasonable actions (including
Purchaser's delivery to any Governmental Authority of its financial statements)
and to cooperate with each other as may be necessary to transfer to Purchaser,
or assist Purchaser in obtaining, all Permits required to conduct the Business.
On or as soon as practicable after the Signing Date, each Party will file,
separately or jointly with the other Party, as the case may be, all
applications necessary to transfer or obtain the Permits. Each Party will use
reasonable efforts to resolve such objections, if any, as may be asserted by
any Governmental Authority with respect to the applications contemplated
hereby. Seller and Purchaser will each pay one-half of the fees and expenses
incurred in connection with transferring or obtaining all Permits.
(b) Pre-Closing; Required Permits. Schedule 8.3(b) lists the
Permits which must be transferred to or obtained by Purchaser prior to Closing
(the "REQUIRED PERMITS"). Except for the Required Permits, the transfer or
issuance to Purchaser of any Permit will not be a condition to Closing, and
Closing will occur irrespective of whether any such Permit has been transferred
or obtained.
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(c) Post-Closing Efforts to Obtain Permits. In the event any
Permit is not obtained on or prior to Closing, each Party will, for a period of
one year following the Closing Date, (i) abide by the requirements of Section
8.3(a), and (ii) cooperate with each other in any lawful and reasonable
arrangement to provide that Purchaser will receive the benefits under any
Permit not transferred to or obtained by Purchaser at the Closing (a
"NON-TRANSFERRED PERMIT"); provided that, to the extent the Parties are
successful in providing the material benefits of any Non-Transferred Permit to
Purchaser, Purchaser will pay, honor and discharge when due all liabilities of
Seller related thereto to the extent the liabilities were incurred after the
Closing Date. Seller will immediately transfer and assign to Purchaser any
Non-Transferred Permit for which a Consent has been received.
(d) No Assignment. Notwithstanding anything to the contrary
in this Agreement, Seller will not transfer or assign any interest in any
Permit, and Purchaser will not assume any liability arising thereunder or
resulting therefrom, if an assignment or transfer or an attempt to make an
assignment or transfer of such Permit without the Consent of a Governmental
Authority would constitute a breach or violation thereof or a violation of Law,
or affect adversely the rights of Purchaser or Seller thereunder, until such
Consent has been obtained.
Section 8.4 Taxes. The Parties will provide each other with such
assistance as may reasonably be requested by them in connection with the
preparation of any Return, any Tax audit or other examination by any
Governmental Authority, or any judicial or administrative proceedings related
to liability for Taxes. The Parties will retain and provide each other with any
records or information which may be relevant to such preparation, audit,
examination, proceeding or determination. Such assistance will include making
employees available on a mutually convenient basis to provide and explain such
records and information, and will include providing copies of any relevant
Returns and supporting work schedules. The Party requesting assistance
hereunder will reimburse the other for reasonable out-of-pocket expenses
incurred in providing such assistance.
Section 8.5 Books and Records.
(a) Access. For a period of six years after Closing, each
Party will provide the other Party with reasonable access during normal
business hours to its Books and Records relating to the Business (other than
books and records protected by the attorney-client privilege) to the extent
that they relate to the condition or operation of the Business prior to Closing
and are requested by such Party to prepare its Returns, to respond to third
party Claims or for any other legitimate purpose specified in writing. Each
Party will have the right, at its own expense, to make copies of any such Books
and Records.
(b) Destruction. For a period of six years after the Closing
(unless otherwise required by Law) no Party will dispose of or destroy any
Books and Records relating to the Business to the extent that they relate to
the condition or operation of the Business prior to the Closing without first
offering to turn over possession thereof to the other Party by written notice
at least 30 days prior to the proposed date of disposition or destruction.
(c) Confidentiality. Each Party may take such action as it
deems reasonably appropriate to separate or redact information unrelated to the
Business from documents and other
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materials requested and made available pursuant to this Section and may
condition the other Party's access to documents and other materials that it
deems confidential to the execution and delivery of an agreement by the other
Party not to disclose or misuse such information.
(d) Assistance. Each Party will, upon written request and at
the requesting Party's expense, make personnel available to assist in locating
and obtaining any Books and Records relating to the Business to the extent that
they relate to the condition or operation of the Business prior to Closing and
make personnel available whose assistance, participation or testimony is
reasonably required in anticipation of, preparation for or the prosecution or
defense of any third party Claim in which the other Party does not have any
adverse interest.
Section 8.6 Further Assurances. Subject to the other terms and
conditions of this Agreement, at any time and from time to time, whether before
or after Closing, each Party will execute and deliver all instruments and
documents and take all other action that the other Party may reasonably request
to consummate or to evidence the consummation of the transactions contemplated
by this Agreement.
ARTICLE IX.
CONDITIONS PRECEDENT TO CLOSING
Section 9.1 Conditions Precedent to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement will be subject to the satisfaction of the following conditions, any
of which may be waived in writing by Purchaser.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Seller in this Agreement will have been
true and complete as of the Signing Date and as of the Closing Date as though
made as of the Closing Date, except to the extent such representations or
warranties made as of a specific date will have been correct and complete as of
the specified date.
(b) Performance of Covenants. Seller will have performed and
complied with all agreements, covenants and obligations required by this
Agreement to be performed by Seller prior to or at the Closing.
(c) Consents. Seller will have received and delivered to
Purchaser all the Required Consents and the Required Permits, each in form and
substance satisfactory to Purchaser, and will have given all notices required
to be given to any Persons prior to the consummation of the transactions
contemplated by this Agreement.
(d) Closing Certificate. An executive officer of Seller will
have delivered to Purchaser a certificate confirming the satisfaction of the
conditions set forth in Sections 9.1(a) and 9.1(b), and the continuing force
and effect of the Required Consents and Required Permits.
(e) Secretary's Certificate. Seller will have delivered to
Purchaser a certificate executed by the Secretary or an Assistant Secretary of
Seller certifying as to (i) Seller's Charter Documents, (ii) Seller's good
standing, (iii) the resolutions in which Seller's board of directors approved
this Agreement and the transactions contemplated hereby, and (iv) the
incumbency of Seller's officers who execute any documents on behalf of Seller in
connection with this Agreement.
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(f) Legal Opinion. Seller will have delivered to Purchaser
the legal opinion referred to in Section 3.2(h).
(g) Deliveries. Seller will have delivered to Purchaser the
documents required by Section 3.2 and such other documents as Purchaser may
reasonably require.
(h) Compliance with HSR Act. All applicable waiting periods
under the HSR Act will have expired or been terminated.
(i) No Order or Action. No Order will be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No
Action will be pending or threatened before any court or other Governmental
Authority seeking to enjoin the Closing or seeking damages against Purchaser or
any of its Representatives as a result of any of the transactions contemplated
by this Agreement, provided that neither Purchaser nor any of its affiliates
instituted such Action.
(j) Consummation of Stock Purchase. The consummation of the
transactions set forth in that certain Stock Purchase Agreement, dated the
Signing Date, between Purchaser, Arrow Claims Management, Inc. and all the
shareholders of Arrow Claims Management, Inc.
(k) Claims and Policy Administration Services Agreements. The
execution and delivery by each of Arrowhead Management Company, Inc., Arrowhead
General Insurance Agency, Inc. and the transferee of the Transferred Assets of
(i) a Claims Administration Services Agreement in substantially the form
attached hereto as Exhibit 9.1(k)(1) and (ii) a Policy Administration Services
Agreement in substantially the form attached hereto as Exhibit 9.1(k)(2).
(l) Establishment of a Ethical Wall. Company and each of
Arrowhead Management Company, Inc. and Arrowhead General Insurance Agency, Inc.
will have agreed to the establishment of written procedures related to the use
by Company of the software applications listed on Schedule 9.1(l).
(m) No Material Adverse Change. Seller has not undergone any
Material Adverse Change since the Signing Date.
Section 9.2 Conditions Precedent to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated by this
Agreement will be subject to the satisfaction of the following conditions, any
of which may be waived in writing by Seller.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement will have
been true and complete as of the Signing Date and as of the Closing Date as
though made as of the Closing Date, except to the extent such representations
or warranties made as of a specific date will have been correct and complete as
of the specified date.
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(b) Performance of Covenants. Purchaser will have performed
and complied with all agreements, covenants and obligations required by this
Agreement to be performed by Purchaser prior to or at the Closing.
(c) Closing Certificate. An executive officer of Purchaser
will have delivered to Seller a certificate confirming the satisfaction of the
conditions set forth in Sections 9.2(a) and 9.2(b).
(d) Secretary's Certificate. Purchaser will have delivered to
Seller a certificate executed by the Secretary or an Assistant Secretary of
Purchaser certifying as to (i) Purchaser's Charter Documents, (ii) Purchaser's
good standing, (iii) the resolutions in which Purchaser's board of directors
approved this Agreement and the transactions contemplated hereby, and (iv) the
incumbency of Purchaser's officers who execute any documents on behalf of
Purchaser in connection with this Agreement.
(e) Legal Opinion. Purchaser will have delivered to Seller
the legal opinion referred to in Section 3.3(d).
(f) Deliveries. Purchaser will have delivered to Seller the
documents required by Section 3.3 and such other documents as Seller may
reasonably require.
(g) Compliance with HSR Act. All applicable waiting periods
under the HSR Act will have expired or been terminated.
(h) Consummation of Stock Purchase. The consummation of the
transactions set forth in that certain Stock Purchase Agreement, dated the
Signing Date, between Purchaser, Arrow Claims Management, Inc. and all the
shareholders of Arrow Claims Management, Inc.
(i) No Order. No Order will be in effect forbidding or
enjoining the consummation of the transactions contemplated hereby. No Action
will be pending or threatened before any court or other Governmental Authority
seeking to enjoin the Closing or seeking damages against Seller or any of its
Representatives as a result of any of the transactions contemplated by this
Agreement, provided that neither Seller nor any of its affiliates instituted
such Action.
Section 9.3 If Conditions Not Satisfied. In the event that any of the
conditions set forth in this Article IX are not satisfied, and the Parties
nevertheless consummate the transactions contemplated by this Agreement to take
place at the Closing, the Parties will not be deemed to have waived any Claim
for damages or other relief arising from or in connection with such
non-satisfaction.
ARTICLE X.
TERMINATION PRIOR TO CLOSING
Section 10.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of the Parties;
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(b) by Purchaser at any time after the occurrence of a
Material Adverse Change in Seller; or
(c) by Purchaser or Seller at any time on or after December
31, 1998 if any of the conditions provided for in Section 9.1 or 9.2,
respectively, will not have been met or waived in writing prior to such date.
Section 10.2 Procedure Upon Termination. In the event of termination
pursuant to Section 10.1, written notice thereof will be immediately given to
the other Party and the transactions contemplated by this Agreement will be
terminated, without any further action by either Party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) each Party will return all documents, work papers and
other materials of the other party, whether obtained before or after the
execution hereof, to the party furnishing the same; and
(b) such termination will not in any way limit, restrict or
relieve any Party of liability for any breach of this Agreement.
ARTICLE XI.
EMPLOYEE MATTERS
Section 11.1 Offer of Employment. Effective as of the Closing Date,
Purchaser will offer those Employees specified on Schedule 11.1 an employment
at will position with such Purchaser in connection with the Business
(collectively, the "RETAINED EMPLOYEES"). Each Retained Employee will be
offered employment with Purchaser at substantially the same position and salary
at which such Retained Employee is employed by Seller as of the Closing Date.
Section 11.2 Benefit Plans, Accrued Benefits, etc. The Parties
acknowledge that Purchaser is not under any obligation whatsoever to provide
any benefits to the Retained Employees other than those benefits currently
offered or provided to the employees of Purchaser in a comparable position. The
Parties further acknowledge that Purchaser is not assuming any obligation of
Seller under any Employee Benefit Plans or under any policy of Seller related
to its Employees, including any obligations related to overtime pay.
Section 11.3 COBRA.
(a) COBRA Liability. Seller agrees to provide any and all
continuation coverage to Employees (other than Retained Employees) and their
qualified beneficiaries (as defined in Section 4980B(g)(1) of the Code) that
may be required under Section 4980B of the Code or Part 6 of Title I of ERISA
as a result of any events that occur on or prior to the Closing Date, including
the consummation of the transactions contemplated by this Agreement.
(b) COBRA Information. Seller agrees to use its best efforts
to provide expeditiously to Purchaser or its Representatives all information
that such Person deems necessary to determine whether there has been any
failure to comply with the continuation health
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care requirements of Section 4980B of the Code and Part 6 of Title I of ERISA
as such requirements have applied to any group health plan maintained by or for
Seller which failure occurred with respect to any current or former employee of
Seller or any spouse, former spouse, dependent child, or former dependent child
of any such employee, on or prior to the Closing Date. Seller further agrees to
use its best efforts to provide expeditiously to Purchaser or its
Representatives all information that such Person deems necessary to correct any
failures to comply with such continuation health care coverage requirements.
Such information will include the identification of all covered employees (as
defined in Section 4980(B)(f)(7) of the Code) and their qualified beneficiaries
(as defined in Section 4980B(g)(1) of the Code), the identification of all
qualifying events with respect to such covered employees or qualified
beneficiaries (as defined in Section 4980B(f)(3) of the Code) and information
otherwise demonstrating compliance with all of the continuation health coverage
requirements of Section 4980B of the Code and Part 6 of Title I of ERISA.
ARTICLE XII.
INDEMNIFICATION
Section 12.1 Indemnification of Purchaser. Seller will indemnify,
defend, and hold Purchaser harmless from any and all Claims directly or
indirectly related or arising with respect to:
(a) Breaches of Representations and Warranties. Any
inaccuracy in any representation or warranty of Seller under this Agreement;
(b) Breaches of Covenants. Any failure to perform or observe
any covenant or agreement to be performed by Seller set forth in this Agreement
or any document delivered to Purchaser pursuant to this Agreement, including
the agreement of Seller contained in Section 11.3(a); or
(c) Failure to Pay or Perform Excluded Liabilities. Any
failure of Seller to pay or perform any of the Excluded Liabilities.
(d) Failure to Comply with Laws. Any failure of Seller to
comply with all Laws in the conduct of the Business on or prior to the Closing
Date.
Section 12.2 Indemnification of Seller. Purchaser will indemnify,
defend, and hold Seller harmless from any and all Claims directly or indirectly
related or arising with respect to:
(a) Breaches of Representations and Warranties. Any
inaccuracy in any representation or warranty of Purchaser under this Agreement;
(b) Breaches of Covenants. Any failure to perform or observe
any covenant or agreement to be performed by Purchaser set forth in this
Agreement or any document delivered to Seller pursuant to this Agreement; or
(c) Failure to Pay or Perform Assumed Liabilities. Any
failure of Purchaser to pay or perform any of the Assumed Liabilities.
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Section 12.3 Indemnification Procedure. The indemnification
obligations under this Agreement will be subject to the following procedures:
(a) Defense of Claim. Within five days after a Party entitled
to indemnification (an "INDEMNITEE") receives a notice of any Claim that may
give rise to an indemnification obligation under this Agreement, the Indemnitee
will give the Party responsible for providing indemnification with respect to
such Claim (the "INDEMNITOR") notice of such Claim, together with a copy of all
documents relating to such Claim that the Indemnitee possesses. The Indemnitor
will then immediately undertake the defense of such Claim by representatives of
its own choosing, provided that the Indemnitee will have the right to control
and undertake such defense by representatives of its own choosing if the Claim
could have a continuing effect upon the Indemnitee or involves any
Environmental Law or Hazardous Material. The Indemnitor will notify the
Indemnitee of the Indemnitor's undertaking of the defense of a Claim promptly
after receiving the notice of the Claim. Similarly, the Indemnitee will notify
the Indemnitor of the Indemnitee's election of its right to control such
defense under the circumstances described above. The failure to give notice of
a Claim within the period described above will not affect the Indemnitee's
rights to indemnification under this Agreement unless such delay prejudices the
Indemnitor.
(b) Participation of the Indemnitee. If ten days after
delivering notice of a Claim to the Indemnitor or such shorter period necessary
to prevent judgment by default in favor of the Person asserting the Claim, the
Indemnitor has not begun to defend against such Claim, the Indemnitee will have
the right to defend or settle such Claim on behalf of the Indemnitor.
Notwithstanding whether the Indemnitor commences at any time to defend against
a Claim, the Indemnitee will have the right to participate in such defense by
representatives of its own choosing. The Indemnitee will bear any expense of
such participation if the Indemnitor is defending against the Claim unless
defenses exist to the Indemnitee that are unavailable to the Indemnitor or the
Indemnitor otherwise possesses a conflict of interest with respect to the
Indemnitee. Under such circumstances, the Indemnitor will reimburse the
Indemnitee for the Indemnitee's reasonable attorneys' fees and expenses. In
addition, the Indemnitor will reimburse the Indemnitee for the Indemnitee's
reasonable attorneys' fees and expenses incurred during the period when the
Indemnitor did not defend against the Claim and in connection with Claims that
Purchaser possesses the right to defend. Notwithstanding whether the Claim
involves a purported breach of the Indemnitor's representations and warranties,
the Indemnitor's obligation to reimburse such fees and expenses will not be
subject to the Indemnitor's Basket. The Indemnitor will make such reimbursement
payments to the Indemnitee upon the Indemnitee's submission of periodic
invoices describing such fees and expenses in reasonable detail.
(c) Settlement of Claims. The Indemnitor may settle any Claim
at its own expense, provided that the Indemnitor will not settle any Claim or
consent to the entry of any judgment without the consent of the Indemnitee if
such settlement or judgment (i) includes any admission of wrongdoing by the
Indemnitee or any of the Indemnitee's Representatives, (ii) includes any
consent to any type of injunctive relief affecting the Indemnitee or any of the
Indemnitee's Representatives, (iii) excludes an unconditional release by the
Person asserting the Claim of the Indemnitee and the Indemnitee's
Representatives from all liability with respect to such Claim, or (iv) requires
the Indemnitee or any of the Indemnitee's Representatives.
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(d) Reimbursement. If an Indemnitor undertakes the defense of
any Claim or settles any Claim and such Claim was not within the scope of the
Indemnitor's indemnification obligations under this Agreement, the Indemnitee
will promptly reimburse the Indemnitor for all expenses with respect to such
defense or settlement, including the Indemnitor's reasonable attorneys' fees
and expenses.
(e) Cooperation. In connection with any indemnity obligation,
the Indemnitee will cooperate with all reasonable requests of the Indemnitor.
(f) Payment--Net of Insurance Proceeds. The amount of any
damage or indemnification payable pursuant to this Article XII will be net of
any insurance proceeds actually received by the Indemnitee in connection with
the circumstances giving rise to the Claim. The calculation of net insurance
proceeds will give effect to all costs incurred by the Indemnitee for such
insurance recovery, including all costs associated with retrospective premium
adjustments, experienced-based premium adjustments, and indemnification
obligations. Nothing in this section will be construed or interpreted as a
guaranty of any level or amount of insurance recovery with respect to any Claim
hereunder.
(g) Payment--Net of Tax Benefit and Detriment. The Parties
will treat any payment or receipt of damages or indemnification hereunder as an
adjustment to the Final Purchase Price on all Tax Returns, except for the
interest component of any such payment, which the Parties will treat as
interest income or expense, as the case may be. To the extent that any damage
or indemnification payment exclusive of the interest component constitutes
taxable income to the Indemnitee, the amount of such damage or indemnification
payment will be increased by the amount of any income Tax attributable to such
payment and the reimbursement of any related income Taxes. To the extent that
any damage or indemnification payment exclusive of the interest component
constitutes a reduction of taxable income to the Indemnitee, the amount of such
damage or indemnification payment will be decreased by the amount of any income
Tax attributable to such reduction of taxable income.
Section 12.4 Meritless Third Party Claims, If a third party makes a
Claim against the Indemnitee that ultimately proves to be meritless, the
Indemnitee may nevertheless require the Indemnitor to defend such Claim and
reimburse the Indemnitee for its reasonable attorneys' fees and expenses in
connection with such Claim if such Claim was within the scope of the
Indemnitor's indemnification obligations under this Agreement.
Section 12.5 Assignment of Claims. If any amounts for which the
Indemnitor is responsible are recoverable from a third party, the Indemnitee
will assign any rights that it may have to recover such amounts to the
Indemnitor.
Section 12.6 Other Indemnitees. Upon Purchaser's request, Seller will
indemnify any of Purchaser's Representatives to the same extent as Purchaser.
Conversely, upon Seller's request Purchaser will indemnify any of Seller's
Representatives to the same extent as Seller. No Representative of any Party,
however, will be a third party beneficiary of the indemnification provisions
contained in this Agreement. In addition, a Party may release or waive any
Claim to which such Party previously requested another Party to indemnify such
Party's Representatives, and such Representatives will have no recourse against
the Party releasing or waiving such
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Claim. To the extent that a Party requests another Party to indemnify such
Party's Representatives, such Party will cause its Representatives to comply
with the indemnification provisions and abide by the indemnification
limitations set forth in this Agreement.
Section 12.7 Contribution. If the indemnity obligations provided for
in this Agreement are held unenforceable in whole or in part for any reason,
each Party will perform such indemnity obligations to the extent enforceable.
To the extent that such indemnity obligations are unenforceable, the Party that
would have been the Indemnitor with respect to a Claim except for such
unenforceability will contribute to such Claim in such proportion as
appropriate to reflect the relative fault of such Party as opposed to the
relative fault of the Person who would have been the Indemnitee, as well as any
other relevant equitable considerations.
Section 12.8 Damages Without Indemnification. A Party may assert a
Claim for damages against another Party for a breach of this Agreement even
though the Party seeking such damages has not incurred a liability or made a
payment to another Person.
Section 12.9 Basket. The Parties acknowledge that all the
representations and warranties contained in this Agreement are without
qualification as to materiality and that the provisions of this Section
regarding the Basket are intended to serve as the exclusive standard of
materiality for purposes of this Agreement. No Party will be liable for any
Claim for damages or indemnification with respect to a breach of such Party's
representations and warranties under this Agreement until the aggregate amount
of such Claims for damages and indemnification for which such Party would
otherwise be responsible concerning breaches of its representations and
warranties exceeds $10,000 (the "BASKET"). If the aggregate amount of such
Claims for which a Party is responsible exceeds the Basket, such Party will
then only be responsible for the amount of such excess.
Section 12.10 Liability Not Limited to Set-Off Under the Option
Agreement. Each Party acknowledges and agrees that (a) the value of the Option
Shares (as defined in the Option Agreement) is not intended to be, nor will
that amount be construed as, Seller's maximum amount of damages or
indemnification with respect to any Claim for a breach of representations and
warranties under this Agreement and (b) Purchaser may pursue any rights or
remedies available at law or in equity in connection with this Agreement
notwithstanding the availability of the right of set-off under the Option
Agreement.
Section 12.11 Liabilities for Special Indemnities and Breaches of
Covenants. Seller's Basket will be inapplicable with respect to any Claim for
damages or indemnification concerning Seller's breach of any representation and
warranty that the indemnities pursuant to Sections 12.1(c) and 12.1(d) cover.
Any damages or indemnification with respect to any such Claims will not count
toward Seller's Basket. A Party's Basket will be inapplicable with respect to
any Claim for damages or indemnification concerning such Party's breach of any
of its covenants under this Agreement or any other terms of this Agreement
applicable to such Party, other than the representations and warranties to
which such Party's Basket apply.
Section 12.12 Consequential Damages. A Party will be (a) liable for
any consequential, incidental, punitive, or special damages with respect to any
breach of this Agreement, and (b) responsible for indemnifying an Indemnitee
for any consequential, incidental, punitive, or special damages that such
Indemnitee incurs if within the scope of such Party's indemnification
obligation.
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Section 12.13 Interest. A Party will pay interest computed at the then
current prime rate on (a) any Claim for damages with respect to such Party's
breach of this Agreement from the date of the breach through the date that the
Party pays such damages, and (b) any Claim for indemnification under this
Agreement for which such Party is the Indemnitor from the date of the
Indemnitee's indemnifiable out-of-pocket expenditure through the date that the
Party pays such Claim.
Section 12.14 Notice of Breach. If before the Closing a Party notifies
another Party of its breach of this Agreement, such notification will neither
prevent such other Party from seeking damages for such breach nor decrease or
mitigate such damages if such other Party still closes the transactions
contemplated by this Agreement.
Section 12.15 Discovery of Breach. If before the Closing a Party
discovers that another Party has breached this Agreement, such discovery will
neither prevent such Party from seeking damages for such breach nor decrease or
mitigate such damages if such Party still closes the transactions contemplated
by this Agreement.
Section 12.16 Survival of Terms. The agreements, covenants, indemnity
obligations, representations and warranties, and other terms of this Agreement,
Purchaser's closing certificate, Seller's closing certificate, and any other
documents contemplated under this Agreement will survive the Closing and any
investigation or notice by any Party, provided that the representations and
warranties of each Party under this Agreement will expire 30 days after the
expiration of the applicable statute of limitations, as such statutory period
may be extended from time to time. Notwithstanding the general expiration of
each Party's representations and warranties described above, Seller's
representations and warranties contained in Sections 4.2 (Power and Authority),
4.3 (Authorization; Execution and Validity), 4.4 (No Conflict), 4.9(c) (Title
to Purchased Assets), 4.28 (Full Disclosure) and 4.29 (Brokers) will survive
forever, subject to all defenses available under Law, including the expiration
of any applicable statute of limitations. A Party will not be responsible with
respect to any Claim for damages or indemnification with respect to any
inaccuracy in any of such Party's representations or warranties unless such
Party receives notice of the Claim with respect to such inaccuracy before such
representation and warranty expires. With respect to any such Claim received
before the expiration of a particular representation or warranty, the Party
responsible for such representation or warranty will remain responsible for any
damage or indemnification amounts claimed notwithstanding the subsequent
expiration of such representation or warranty.
Section 12.17 Negligence and Strict Liability. THE PROVISIONS OF THIS
AGREEMENT CONCERNING CLAIMS FOR DAMAGES AND INDEMNIFICATION WILL APPLY WHETHER
OR NOT THE PARTY OR OTHER PERSON CLAIMING SUCH DAMAGES OR INDEMNIFICATION WAS
NEGLIGENT, GROSSLY NEGLIGENT, OR STRICTLY LIABLE IN CONNECTION WITH THE EVENTS
GIVING RISE TO SUCH CLAIM.
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ARTICLE XIII.
MISCELLANEOUS
Section 13.1 Amendment. No amendment of this Agreement will be
effective unless in a writing signed by the Parties.
Section 13.2 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original
agreement, but all of which will constitute one and the same agreement. Any
Party may execute and deliver this Agreement by an executed signature page
transmitted by a facsimile machine. If a Party transmits its signature page by
a facsimile machine, such Party will promptly thereafter deliver an originally
executed signature page to the other Party, provided that any failure to
deliver such an originally executed signature page will not affect the
validity, legality, or enforceability of this Agreement.
Section 13.3 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.
Section 13.4 Expenses. Each Party will bear its own expenses with
respect to the negotiation and preparation of this Agreement and the Closing,
including any fees and expenses of its Representatives, provided that if a
Party terminates this Agreement because of another Party's breach of this
Agreement, the non-breaching Party will be entitled to seek reimbursement of
its expenses as part of its damages with respect to such breach. Seller will
bear any Tax imposed in connection with the transfer of the Purchased Assets to
Purchaser pursuant to this Agreement.
Section 13.5 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY THE
LAWS OF THE STATE OF DELAWARE REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER THE CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE.
Section 13.6 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of the other
Party. Any attempted assignment or delegation without such prior consent will
be void. Notwithstanding the foregoing, after the Closing each Party may assign
its rights under this Agreement to a purchaser of all of the assets or equity
of such Party without the other Party's consent, and any such purchaser and any
subsequent purchasers of all of the assets or equity of a Party may similarly
assign such rights.
Section 13.7 No Third Party Beneficiaries. This Agreement is solely
for the benefit of the Parties and no other Person will have any right,
interest, or claim under this Agreement.
Section 13.8 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement will be in
writing. Such claims, consents, designations, notices, waivers, and other
communications will be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal,
(b) on the next business day following actual transmittal when transmitted by a
nationally recognized overnight courier, or (c) on the third business day
following actual
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transmittal when transmitted by certified mail, postage prepaid, return receipt
requested; in each case when transmitted to a Party at its address set forth on
Schedule 13.8 (or to such other address to which such Party has notified the
other Parties in accordance with this Section to send such claims, consents,
designations, notices, waivers, and other communications).
Section 13.9 Public Announcements. The Parties will agree on the terms
of any press releases or other public announcements related to this Agreement,
and will consult with each other before issuing any press releases or other
public announcements related to this Agreement; provided, however, that any
Party may make a public disclosure if in the opinion of such party's counsel it
is required by Law or the rules of the New York Stock Exchange or the Nasdaq
National Market to make such disclosure. The parties agree, to the extent
practicable, to consult with each other regarding any such public announcement
in advance thereof.
Section 13.10 Representation by Legal Counsel. Each Party is a
sophisticated Person that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 13.11 Schedules. All references in this Agreement to schedules
will mean the schedules identified in this Agreement, which are incorporated
into this Agreement and will be deemed a part of this Agreement for all
purposes. Each Section of this Agreement that refers to a schedule will have a
separate schedule. In addition, any disclosure under a particular section's
schedule will be made under the heading of any relevant subsection of such
section. A disclosure of an item in a schedule for a particular section or
under a heading in a schedule corresponding to a particular subsection will not
be a disclosure under any other section's schedule or any other subsection,
unless so noted specifically on such schedule. Seller has delivered to
Purchaser a correct and complete copy of each document described on each
schedule to this Agreement and a correct and complete written description of
each unwritten arrangement or other item described on each such schedule.
Section 13.12 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction will not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited
or unenforceable provision will be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
Section 13.13 Successors. This Agreement will be binding upon and will
inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this Section will not permit
the assignment or other transfer of this Agreement, whether by operation of law
or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 13.14 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 13.15 Waiver. No provision of this Agreement will be
considered waived unless such waiver is in writing and signed by the Party that
benefits from the enforcement of such provision. No waiver of any provision in
this Agreement, however, will be deemed a waiver of a
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subsequent breach of such provision or a waiver of a similar provision. In
addition, a waiver of any breach or a failure to enforce any term or condition
of this Agreement will not in any way affect, limit, or waive a Party's rights
under this Agreement at any time to enforce strict compliance thereafter with
every term and condition of this Agreement.
Section 13.16 Attorney's Fees. In the event of any Action among the
Parties seeking enforcement of any of the terms and conditions of this
Agreement, the prevailing party in such Action will be awarded its reasonable
costs and expenses, including its court costs and reasonable attorneys' fees.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by a duly authorized officer as of the Signing Date.
SELLER: ARROWHEAD GENERAL INSURANCE AGENCY, INC.
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx, President
PURCHASER: INSpire INSURANCE SOLUTIONS, INC.
By: /s/ XXXXXXX X. XXXXX, III
--------------------------------------
Xxxxxxx X. Xxxxx, III, President
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APPENDIX A
DEFINITIONS AND RULES OF INTERPRETATION
Definitions. Unless the context otherwise requires, the terms defined
in this Appendix will have the meanings specified below for all purposes of
this Agreement:
(a) "ACCOUNTS RECEIVABLE" will have the meaning set forth in
Section 4.10.
(b) "ACTION" means any action, arbitration proceeding, cause
of action, charge, counterclaim, cross claim, inquiry, investigation, legal
action, litigation, Order, proceeding, or suit.
(c) "AFFILIATE" means with respect to a Person means any
other Person that directly or indirectly controls, is controlled by, or is
under common control with such Person. For the purposes of this definition,
control means the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise. Control shall be presumed by an individual that is a
director, executive officer, general partner, manager, or similar functionary
of a Person, or a Person that beneficially owns more than 10% of any class of
securities of such Person having general voting rights. For purpose of this
Agreement, each of Xxxxxxx Xxxxxxxx and Arrowhead Management Company, Inc., and
each Affiliate of such Person shall be considered an Affiliate of each Seller.
(d) "AGREEMENT" will have the meaning set forth in the first
paragraph.
(e) "ALLOCATION STATEMENT" will have the meaning set forth in
Section 2.3.
(f) "ASSUMED LIABILITIES" will have the meaning set forth in
Section 1.3.
(g) "BALANCE SHEET DATE" will have the meaning set forth in
Section 4.5(a).
(h) "BANK ACCOUNTS" will have the meaning set forth in
Section 4.24.
(i) "BASE PURCHASE PRICE" will have the meaning set forth in
Section 2.1.
(j) "BASKET" will have the meaning set forth in Section 12.9.
(k) "BOOKS AND RECORDS" will mean all the books and records
maintained by or for Seller, including all accounting records, minute books,
stock records, computerized records and storage media and the software used in
connection therewith.
(l) "BUSINESS" will have the meaning set forth in Recital A.
(m) "CHARTER DOCUMENTS" will mean (i) in the case of a
corporation, its articles or certificate of incorporation and its bylaws, (ii)
in the case of a partnership, its partnership certificate and its partnership
agreement, and (iii) in the case of any other Person, its organic and governing
documents; in each case as such document has been amended or supplemented from
time to time prior to the Signing Date.
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(n) "CLAIM" will mean any arbitration award, assessment,
charge, citation, claim, damage, demand, directive, expense, fine, interest,
joint or several liability, Lawsuit, notice, obligation, payment, penalty, or
summons of any kind or nature whatsoever, including any damages incurred
because of the claimant's negligence or gross negligence or any strict
liability imposed upon the claimant, any consequential or punitive damages, and
any reasonable attorneys' fees and expenses. A Claim will be considered to
exist even though it may be conditional, contingent, indirect, potential,
secondary, unaccrued, unasserted, unknown, unliquidated, or unmatured.
(o) "CLOSING" will have the meaning set forth in Section 3.1.
(p) "CLOSING CASH PAYMENT" will have the meaning set forth in
Section 2.2.
(q) "CLOSING DATE" will have the meaning set forth in Section
3.1.
(r) "CLOSING PREMIUM STATEMENT" will have the meaning set
forth in Section 2.4(a).
(s) "CODE" will mean the Internal Revenue Code of 1986, as
amended.
(t) "CONFIDENTIAL INFORMATION" means any proprietary
information, and any information which Purchaser reasonably considers to be
proprietary, pertaining to each of Seller's and Purchaser's past, present or
prospective business secrets, methods or policies, earnings, finances, security
holders, lenders, key employees, nature of services performed by such entity's
sales personnel, procedures, standards and methods, information relating to
arrangements with suppliers, the identity and requirements of arrangements with
customers, the type, volume or profitability of services or products for
customers, drawings, records, reports, documents, manuals, techniques, ratings,
information, data, statistics, trade secrets and all other information of any
kind or character relating to each of the Parties, whether or not reduced to
writing.
(u) "CONFIDENTIALITY AGREEMENT" will have the meaning set
forth in Section 6.2.
(v) "CONSENT" will mean a consent, approval, order,
authorization or waiver from, notice to or declaration, registration or filing
with any Person.
(w) "DIRECT WRITTEN PREMIUMS" will mean the sum of (i) with
respect to all insurance policies except personal automobile insurance
policies, the aggregate amount of premiums payable to Purchaser on all the
insurance policies issued by Purchaser during a time particular period, plus
(ii) with respect to personal automobile insurance policies, the aggregate
amount of premiums paid to Purchaser by insureds during a particular time
period.
(x) "DIVISION" will have the meaning set forth in Recital A.
(y) "EMPLOYEE BENEFIT PLAN" will mean any (i) Pension Benefit
Plan, (ii) Welfare Benefit Plan, (iii) accident, dental, disability, health,
life, medical, or vision plan or insurance policy, (iv) bonus, executive,
incentive or deferred compensation plan, (v) change in control plan, (vi)
fringe benefits and perquisites, (vii) holiday, sick pay, leave, vacation,
moving
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or tuition reimbursement or other similar policy, (viii) stock option,
stock purchase, phantom stock, restricted stock or stock appreciation plan,
(ix) severance plan, or (x) other employee arrangement, commitment, custom,
policy or practice.
(z) "EMPLOYEES" will have the meaning set forth in Section
4.21(a).
(aa) "ENCUMBERED INSTRUMENT" will mean any the contract and
lease to be assigned by Seller and assumed by Purchaser pursuant to the terms
of this Agreement that by its terms require Consent from a third party in order
to transfer and assign the rights and obligations thereunder.
(bb) "ENCUMBRANCE" will mean any title defect or objection,
mortgage, lien, deed of trust, equity, judgment, claim, restrictive covenant,
use restriction, charge, pledge, security interest or other encumbrance of any
nature whatsoever, including all leases, chattel mortgages, conditional sales
contracts, collateral security arrangements and other title or interest
retention arrangements.
(cc) "ENVIRONMENTAL LAW" will mean (i) the Clean Air Act (42
U.S.C. Section 7401 et seq.), (ii) the Clean Water Act (33 U.S.C. Section 1251
et seq.), (iii) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act
of 1986 (42 U.S.C. Section 9601 et seq.), (iv) the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), (v) the Hazardous Materials
Transportation Act (49 U.S.C. Section 5101 et seq.), (vi) the National
Environmental Policy Act (42 U.S.C. Section 4321 et seq.), (vii) the Oil
Pollution Act of 1990 (33 U.S.C. Section 2701 et seq.), (viii) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984 (42 U.S.C. Section 6901 et seq.), (ix) the Safe Drinking
Water Act (42 U.S.C. Section 300f et seq.), (x) the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), (xi) any state, local, tribal, or foreign
law, ordinance, regulation, or statute analogous to any of the foregoing
statutes, or (xii) any other federal, state, local, tribal, or foreign law,
ordinance, regulation, or statute prohibiting, regulating, or restricting the
disposal, generation, handling, placement, recycling, release, storage, or
treatment of any contaminant, liquid, mass, material, matter, pollutant, solid,
substance, or waste classified or considered to be hazardous or toxic to human
health or the environment or otherwise related to environmental protection or
health and safety.
(dd) "ERISA" will mean the Employee Retirement Income
Security Act of 1974, as amended.
(ee) "EXCLUDED ASSETS" will have the meaning set forth in
Section 1.2.
(ff) "EXCLUDED LIABILITIES" will have the meaning set forth
in Section 1.4.
(gg) "FINAL CLOSING PREMIUM STATEMENT" will have the meaning
set forth in Section 2.4(b).
(hh) "FINAL PURCHASE PRICE" will have the meaning set forth
in Section 2.1.
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(ii) "GAAP" will mean generally accepted accounting
principles in effect in the United States of America as of the Signing Date.
(jj) "GOVERNMENTAL AUTHORITY" will mean any federal, state,
local, tribal, foreign or other governmental agency, department, branch,
commission, board, bureau, court, instrumentality or body.
(kk) "HAZARDOUS MATERIAL" will mean (i) any contaminant,
liquid, mass, material, matter, pollutant, solid, substance, or waste for which
any Environmental Law limits, prohibits, or regulates its disposal, generation,
handling, placement, recycling, release, storage, or treatment, (ii) any
carcinogenic, corrosive, explosive, flammable, infectious, mutagenic,
radioactive, or toxic substance, (iii) any diesel fuel, gasoline, or other
petroleum product in an unconfined manner, (iv) any substance that contains
polychlorinated biphenyls, (v) any substance that contains asbestos, (vi) any
substance that contains urea formaldehyde foam installation, (vii) any
substance that constitutes a nuisance upon any property, or (viii) any
substance that imposes a hazard to the health or safety of any individual.
(ll) "HSR ACT" will have the meaning set forth in Section
8.1.
(mm) "INDEMNITEE" will have the meaning set forth in Section
12.3(a).
(nn) "INDEMNITOR" will have the meaning set forth in Section
12.3(a).
(oo) "INSURANCE POLICIES" will have the meaning set forth in
Section 4.15.
(pp) "INTANGIBLE ASSET" will mean any patent, trademark,
trademark license, computer software, trade name, masthead, brand name, slogan,
copyright, reprint right, franchise, license, process, authorization,
invention, know-how, formula, trade secret and other intangible asset, together
with any pending application, continuation-in-part or extension therefor.
(qq) "INTERIM BALANCE SHEET" will have the meaning set forth
in Section 4.5(b).
(rr) "LAW" will mean any applicable code, statute, law,
common law, rule, regulation, order, ordinance, judgment, decree, order, writ
or injunction of any Governmental Authority.
(ss) "LAW AFFECTING CREDITORS' RIGHTS" will mean any
bankruptcy, fraudulent conveyance or transfer, insolvency, moratorium,
reorganization, or other law affecting the enforcement of creditors' rights
generally, and any general principles of equity.
(tt) "MATERIAL ADVERSE CHANGE" will mean, with respect to a
Person, that such Person has (i) breached a Material Contract, (ii) incurred a
Claim or become a party to an Action that could have a significant and
detrimental effect upon it, (iii) suffered a Material Adverse Effect, or (iv)
violated any Law or Order to which it or any of its assets is subject or bound.
(uu) "MATERIAL ADVERSE EFFECT" will mean, with respect to a
Person, the occurrence of an event or the existence of a circumstance that has
a material adverse effect on such Person's assets, business, cash flows,
financial condition, liabilities, operations, prospects,
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or relationships, including the occurrence of any event or the existence of any
circumstance that could cause such an effect in the future.
(vv) "MATERIAL CONTRACTS" will have the meaning set forth in
Section 4.16.
(ww) "NON-TRANSFERRED INSTRUMENT" will have the meaning set
forth in Section 8.2(c).
(xx) "NON-TRANSFERRED PERMIT" will have the meaning set forth
in Section 8.3(c).
(yy) "OBJECTION NOTICE" will have the meaning set forth in
Section 2.4(b).
(zz) "OPTION AGREEMENT" will have the meaning set forth in
Section 2.2.
(aaa) "ORDER" will mean any consent decree, decree,
determination, injunction, judgment, order, or writ of any arbitrator or
Governmental Authority.
(bbb) "OWNED REAL PROPERTY" will have the meaning set forth
in Section 4.12(a).
(ccc) "PARTY" will have the meaning set forth in the first
paragraph.
(ddd) "PENSION BENEFIT PLAN" will mean an "employee pension
benefit plan" as defined in Section 3(2) of ERISA, and a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
(eee) "PERMIT" will mean any license, approval, certificate,
franchise, registration, permit or authorization issuable by any Governmental
Authority.
(fff) "PERMITTED ENCUMBRANCE" will mean any Encumbrance
directly related to (i) Taxes that are not yet due and payable or Taxes that
are being contested in good faith by an appropriate proceeding, and in each
case as to which adequate reserves have been established in accordance with
GAAP, (ii) Encumbrances shown on the Interim Balance Sheet as securing
specified Claims with respect to which no breach or default exists, (iii)
workers', repairmen's and similar Encumbrances imposed by Law that have been
incurred in the ordinary course of business, (iv) retention of title agreements
with suppliers entered into in the ordinary course of business, and (v) the
rights of others to customer deposits.
(ggg) "PERSON" will mean any association, bank, business
trust, corporation, estate, general partnership, Governmental Authority,
individual, joint stock company, joint venture, labor union, limited liability
company, limited partnership, non-profit corporation, professional association,
professional corporation, trust, or any other organization or entity.
(hhh) "PERSONAL PROPERTY LEASES" will have the meaning set
forth in Section 4.13(b).
(iii) "PLAN" will mean any bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance,
hospitalization or other medical, life or
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other insurance, supplemental unemployment benefit, profit sharing, pension, or
retirement plan, program, agreement or arrangement.
(jjj) "PURCHASED ASSETS" will have the meaning set forth in
Section 1.1.
(kkk) "PURCHASER" will have the meaning set forth in first
paragraph.
(lll) "REAL PROPERTY LEASES" will have the meaning set forth
in Section 4.12(a).
(mmm) "REGISTRATION RIGHTS AGREEMENT" will have the meaning
set forth in Section 3.2(i).
(nnn) "REPRESENTATIVES" will mean, with respect to a Person,
such Person's directors, employees, officers, agents, accountants, affiliates,
consultants, investment bankers, attorneys, lenders, representatives and
shareholders.
(ooo) "REQUIRED CONSENT" will have the meaning set forth in
Section 8.2(b).
(ppp) "REQUIRED PERMIT" will have the meaning set forth in
Section 8.3(b).
(qqq) "RESTRICTED SERVICES" means any actions directly or
indirectly related to providing or soliciting third party administrator
services in connection with property and casualty insurance lines.
(rrr) "RESTRICTION PERIOD" will have the meaning set forth in
Section 6.8(b).
(sss) "RETAINED EMPLOYEES" will have the meaning set forth in
Section 11.1.
(ttt) "RETURNS" will have the meaning set forth in Section
4.23(a).
(uuu) "SEGREGATED ACCOUNT" will have the meaning set forth in
Section 2.2.
(vvv) "SELLER" will have the meaning set forth in the first
paragraph.
(www) "SELLER'S KNOWLEDGE" will mean the actual knowledge as
of the date that a specific representation or warranty is made or deemed made,
after reasonable inquiry, of Xxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxx Xxxx,
Xxxx Xxxxxx, Xxx Xxxxx and Xxxxx XxXxxxxx.
(xxx) "SIGNING DATE" will have the meaning set forth in the
first paragraph.
(yyy) "TAX" will mean any assessment, charge, duty, fee,
impost, levy, tariff, or tax of any nature whatsoever imposed by any
Governmental Authority or payable pursuant to any tax sharing agreement,
including any income, payroll, withholding, excise, gift, alternative minimum,
capital gain, added value, social security, sales, use, real and personal
property, use and occupancy, business and occupation, mercantile, real estate,
capital stock, and franchise tax or charge, together with any related interest,
penalties or additions thereon.
(zzz) "TRANSACTION DOCUMENTS" will have the meaning set forth
in Section 4.2.
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(aaaa) "INTERIM FINANCIAL STATEMENTS" will have the meaning
set forth in Section 4.5(b).
(bbbb) "WELFARE BENEFIT PLAN" will mean an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, including an employee
welfare benefit plan which is a "multiemployer welfare plan" as defined in
Section 3(37) of ERISA and a "multiple employer welfare arrangement" as defined
in Section 3(40) of ERISA.
(cccc) "WRITTEN PREMIUM AMOUNT" will have the meaning set
forth in Section 2.4(b).
(dddd) "YEAR-END BALANCE SHEET" will have the meaning set
forth in Section 4.5(a).
(eeee) "YEAR-END FINANCIAL STATEMENTS" will have the meaning
set forth in Section 4.5(a).
Accounting Terms. Except as otherwise provided in this Agreement, all
accounting terms defined in this Agreement, whether defined in this Article or
otherwise, will be construed in accordance with GAAP on a consolidated basis.
Articles, Sections, Exhibits and Schedules. Except as specifically
stated otherwise, references to Articles, Sections, Exhibits and Schedules
refer to the Articles, Sections, Exhibits and Schedules of this Agreement.
Attorneys' Fees. Whenever this Agreement refers to a Person's
"attorneys' fees and expenses," such reference also will include any fees and
expenses of accountants, experts, investigators, and other professional
advisors whose services such Person's attorney considered advisable in
connection with the prosecution or defense of the particular matter.
Breach. The term "breach" with respect to any contract or instrument
means any breach or violation of, or default under, such contract or
instrument, any conflict with another contract or instrument or any emergence
of a right of another party to such contract or instrument to accelerate,
cancel, modify or terminate such contract or instrument, including any such
breach, violation, default, conflict, or right that will arise after notice or
lapse of time.
Disclosure Thresholds. The establishment of any monetary thresholds
for the disclosure of particular items will not create a materiality standard
under this Agreement.
Drafting. Neither this Agreement nor any provision contained in this
Agreement will be interpreted in favor of or against either Party because such
Party or its legal counsel drafted this Agreement or such provision. No prior
draft of this Agreement or any provision contained in this Agreement will be
used when interpreting this Agreement or its provisions.
Headings. Article and section headings are used in this Agreement only
as a matter of convenience and will not have any effect upon the construction
or interpretation of this Agreement.
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Include. The term "include" or any derivative of such term does not
mean that the items following such term are the only types of such items.
Or. The term "or" will not be interpreted as excluding any of the
items described.
Plural and Singular Words. Whenever the plural form of a word is used
in this Agreement, that word will include the singular form of that word.
Whenever the singular form of a word is used in this Agreement, that word will
include the plural form of that word.
Predecessors. Any of Seller's representations and warranties
concerning any Claim against Seller, any liability or obligation of Seller, or
any violation of Law by Seller will include any Claims with respect to each
predecessor of Seller, including all direct and indirect predecessors of any
such predecessor.
Pronouns. Whenever a pronoun of a particular gender is used in this
Agreement, if appropriate that pronoun also will refer to the other gender and
the neuter. Whenever a neuter pronoun is used in this Agreement, if appropriate
that pronoun also will refer to the masculine and feminine gender.
Representations and Warranties. Seller's representations and
warranties under this Agreement will mean the representations and warranties
contained in Article IV and the reaffirmation of Seller's representations and
warranties in Seller's Closing Certificate. Purchaser's representations and
warranties under this Agreement will mean the representations and warranties
contained in Article V and the reaffirmation of those representations and
warranties in Purchaser's Closing Certificate.
Statutes. Any reference to Law or any specific statute will include
any changes to such law or statute after the Signing Date, any successor law or
statute, and any regulations and rules promulgated under such law or statute
and any successor law or statute, whether promulgated before or after the
Signing Date.
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reaffirmation of Seller's representations and warranties in Seller's Closing
Certificate. Purchaser's representations and warranties under this Agreement
will mean the representations and warranties contained in Article V and the
reaffirmation of those representations and warranties in Purchaser's Closing
Certificate.
Statutes. Any reference to Law or any specific statute will include
any changes to such law or statute after the Signing Date, any successor law or
statute, and any regulations and rules promulgated under such law or statute
and any successor law or statute, whether promulgated before or after the
Signing Date.
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