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STOCK PURCHASE AGREEMENT
by and among
Satellite Acquisition Corporation,
SAFECO CORPORATION,
AND
General America CORPORATION
as the Sole Shareholder
of
TALBOT FINANCIAL CORPORATION
March 15, 2004
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TABLE OF CONTENTS
Page
1. The Closing..............................................................................................1
2. The Purchase.............................................................................................2
3. Purchase Price...........................................................................................2
4. Representations and Warranties of the Sellers............................................................2
4.1 Organization....................................................................................2
4.2 Capitalization..................................................................................2
4.3 Authorization; Validity of Agreement............................................................3
4.4 No Violations; Consents.........................................................................3
4.5 Financial Statements............................................................................4
4.6 Litigation; Compliance with Law; Licenses and Permits...........................................4
4.7 Employee Benefit Plans; ERISA...................................................................5
4.8 Real Property...................................................................................5
4.9 Material Contracts..............................................................................6
4.10 Company Software................................................................................6
4.11 Taxes...........................................................................................6
4.12 Affiliated Party Transactions...................................................................8
4.13 Brokers.........................................................................................8
4.14 Insurance.......................................................................................8
4.15 Absence of Sensitive Payments...................................................................8
5. Representations and Warranties of the Buyer..............................................................9
5.1 Organization of the Buyer.......................................................................9
5.2 Authorization; Validity of Agreement............................................................9
5.3 No Violations; Consents and Approvals...........................................................9
5.4 Financing......................................................................................10
5.5 No Brokers.....................................................................................10
6. Agreements of the Parties...............................................................................10
6.1 No Competition.................................................................................10
6.2 Taxes..........................................................................................12
6.3 Termination of Agreements and the Sellers' Release.............................................14
6.4 Required Consents..............................................................................15
6.5 Conduct of Business............................................................................15
6.6 Access and Information.........................................................................17
6.7 Public Statements..............................................................................17
6.8 Stock Options..................................................................................17
6.9 Other Actions..................................................................................17
6.10 Designated Employees...........................................................................17
6.11 HSR Filings....................................................................................18
6.12 Indemnification Insurance......................................................................18
6.13 No Solicitation................................................................................18
6.14 Interim Financial Statements; Closing Balance Sheet............................................18
7. Conditions Precedent to Closing.........................................................................19
7.1 Conditions Precedent to the Buyer's Obligations to Close.......................................19
7.2 Condition Precedent to the Sellers' Obligations to Close.......................................20
7.3 Deliveries of the Sellers......................................................................21
7.4 Deliveries of the Buyer........................................................................21
8. Indemnification.........................................................................................21
8.1 Survival of Representations and Warranties.....................................................21
8.2 Indemnification by the Sellers.................................................................22
8.3 Indemnification by the Buyer...................................................................22
8.4 Limitations on Liability.......................................................................23
8.5 Indemnification Procedures.....................................................................24
9. Termination.............................................................................................25
9.1 Events of Termination..........................................................................25
9.2 Effects of Termination.........................................................................26
10. Definitions.............................................................................................26
11. Miscellaneous...........................................................................................32
11.1 Transaction Fees and Expenses..................................................................32
11.2 Notices........................................................................................32
11.3 Amendment......................................................................................33
11.4 Waiver.........................................................................................33
11.5 Governing Law; Venue...........................................................................34
11.6 Remedies.......................................................................................34
11.7 Severability...................................................................................34
11.8 Further Assurances.............................................................................34
11.9 Assignment.....................................................................................34
11.10 Binding Effect.................................................................................35
11.11 No Third Party Beneficiaries...................................................................35
11.12 Entire Agreement...............................................................................35
STOCK PURCHASE AGREEMENT
Dated as of March 15, 2004
The parties to this Agreement (this "Agreement") are Satellite
Acquisition Corporation, a Washington corporation (the "Buyer"), Safeco
Corporation, a Washington corporation ("Parent") and General America
Corporation, a Washington corporation (the "Seller," and, collectively with
Parent, the "Sellers"). Terms not otherwise defined herein shall have the
meanings given them in Section 10.
WHEREAS, the Seller owns all of the issued and outstanding capital
stock (the "Shares") of Talbot Financial Corporation, a Washington corporation
(the "Company"); and
WHEREAS, Parent owns all of the issued and outstanding capital stock
Seller; and
WHEREAS, Xxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxx Xxxxxx (the "Management
Shareholders") and certain other members of management of the Company and its
Subsidiaries are the shareholders, directors and officers of the Buyer as of the
date hereof; and
WHEREAS, the Buyer desires to purchase all of the Shares, and the
Sellers desire to sell all of the Shares to the Buyer, upon and subject to the
terms and conditions set forth below; and
WHEREAS, the parties intend to continue to work together for their
mutual benefit to build on their long-standing relationship as an insurance
agency and insurance company; and
WHEREAS, attempts to roll, re-market or move to another insurance
company, all or substantially all of the book of insurance policies written
through an agency affiliated with the Buyer and in force with a
property-casualty Affiliate of the Sellers as of the Closing Date would be and
are inconsistent with the intent and purpose of this Agreement and contrary to
the parties' understanding; and
WHEREAS, the Sellers intend to continue to do business with Buyer and
its Affiliates on terms consistent with its past practices with regard to
compensation, support, pricing, underwriting or any other material business
term.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Buyer and the Sellers hereby agree as follows:
1. The Closing. The closing of the purchase and sale provided for in this
Agreement (the "Closing") shall take place at the offices of Xxxxxx, Xxxxxxxxxx
& Xxxxxxxxx, LLP, at 10:00 a.m. (local time) on the earliest practicable
business day after the waiting period under the HSR Act has expired or been
terminated and all other closing conditions set forth in Section 7 hereof have
been satisfied or waived by the applicable party hereto, or at such other date,
time or location as the Buyer and the Sellers shall agree (the "Closing Date").
2. The Purchase. Upon the terms and subject to the conditions set forth in
this Agreement, on the Closing Date, the Seller shall sell, assign, transfer,
convey and deliver the Shares to the Buyer, and the Buyer shall purchase the
Shares, free and clear of any Encumbrances.
3. Purchase Price. As consideration for the Shares, at the Closing the
Buyer shall pay the Seller an aggregate purchase price equal to $90,000,000 by
wire transfer of immediately available funds (the "Purchase Price"). The parties
acknowledge and agree that the Purchase Price for the Shares specifically does
not include the Designated Employees, who shall be transferred in accordance
with Section 6.11.
4. Representations and Warranties of the Sellers. The Sellers represent and
warrant to the Buyer that, except as otherwise set forth with appropriate
section references in the Schedule of Exceptions, each of the following
statements is true and correct as of the date hereof
4.1 Organization. The Company and each Subsidiary is a corporation
duly organized, validly existing and in good standing (with respect to
jurisdictions that recognize such concept) under the laws of its state of
incorporation and has the requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now
being conducted. The Company and each Subsidiary that is incorporated in
the state of Washington has paid all excise taxes required by the
Washington Department of Revenue. The Company and each Subsidiary is duly
qualified or licensed to do business as a foreign corporation and is in
good standing (with respect to jurisdictions that recognize such concept)
in each jurisdiction in which the nature of the business conducted by it
makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in
good standing individually or in the aggregate would not have a Material
Adverse Effect. The Sellers have delivered to the Buyer true, correct and
complete copies of the Articles of Incorporation and Bylaws, as currently
in effect, of the Company and of the organizational documents, as currently
in effect, of each Subsidiary.
4.2 Capitalization.
(a) All of the Shares and all of the issued and outstanding
capital stock or other equity of each Subsidiary (the "Subsidiary
Equity") and the Company is owned of record and beneficially by the
Sellers, either directly or indirectly through the Company or a
Subsidiary. The Shares and the Subsidiary Equity are currently free
and clear of all claims, liens, mortgages, encumbrances, pledges, and
other security interests of any kind (collectively, "Encumbrances")
and upon the Closing, the Buyer shall receive good and marketable
title to the Shares free and clear of all Encumbrances. The Shares and
Subsidiary Equity are duly authorized, validly issued, fully paid and
nonassessable. There are no (i) options, warrants, calls, preemptive
rights, subscriptions or other rights, convertible securities,
agreements or commitments of any character obligating now or in the
future, the Company, the Sellers or any Subsidiary to issue, transfer
or sell any Shares, any Subsidiary Equity or any shares of capital
stock, options, warrants, calls or other equity interest of any kind
whatsoever in the Company or any Subsidiary or securities convertible
into or exchangeable for such shares or equity interests, (ii)
contractual obligations of the Company to repurchase, redeem or
otherwise acquire any capital stock or equity interest of the Company
or (iii) voting trusts, proxies or similar Contracts to which the
Company, a Subsidiary or the Sellers are a party with respect to the
voting of the capital stock of the Company or any Subsidiary.
(b) Except for the Subsidiaries, all of which are listed on
Schedule 4.2(b) to the Schedule of Exceptions, the Company does not
own any outstanding shares of capital stock (or other equity interests
of entities other than corporations) of any partnership, joint
venture, trust, corporation, limited liability company or other
entity.
4.3 Authorization; Validity of Agreement. Each of the Sellers has the
requisite corporate power and authority to execute, deliver and perform
this Agreement and each of the other agreements, instruments, documents and
certificates to be executed and delivered by each of the Sellers pursuant
to this Agreement, including but not limited to any item referred to in
Section 7 (collectively, with this Agreement, the "Transaction Documents"),
and to assume and perform any obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. This Agreement
has been, and each of the other Transaction Documents upon the Closing will
be, duly executed, authorized and delivered by the Sellers and this
Agreement is, and each of the Transaction Documents upon the Closing will
be, a valid and binding obligation of each of the Sellers, enforceable
against it in accordance with its respective terms, except that the
enforceability of this Agreement and the other Transaction Documents may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to the equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought.
4.4 No Violations; Consents.
(a) The execution, delivery and performance of each of this
Agreement and the other Transaction Documents by the Sellers do not,
and the consummation by them of the transactions contemplated hereby
and thereby will not: (i) violate any provision of the Articles of
Incorporation, Bylaws or other organizational documents of each of the
Sellers, the Company or any Subsidiary, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, license, lease, option,
employment agreement, contract, undertaking, understanding, covenant,
agreement or other instrument or document (each, a "Contract") to
which the Sellers, the Company or any Subsidiary is a party or by
which any of their properties or assets may be bound or otherwise
subject, except for any consents listed on Schedule 4.4(a) to the
Schedule of Exceptions (together with the consents listed on Schedule
4.4(b) to the Schedule of Exceptions, the "Required Consents"), or
(iii) subject to the expiration or termination of the waiting period
under the HSR Act, violate any Law applicable to the Sellers, the
Company or the Subsidiaries or any of their respective properties or
assets.
(b) No consent of any legislative or executive agency or
department or other regulatory service, authority or agency or any
court, arbitration panel or other tribunal or judicial authority of
any Governmental Entity or Person (a "Consent"), is required in
connection with the execution, delivery and performance of this
Agreement or any of the other Transaction Documents by the Sellers or
the consummation by the Sellers of the transactions contemplated
hereby and thereby, except for the Consents listed on Schedule 4.4(b)
to the Schedule of Exceptions and the expiration or termination of the
waiting period under the HSR Act.
4.5 Financial Statements.
(a) Attached as Schedule 4.5(a) to the Schedule of
Exceptions is the unaudited consolidated balance sheet of the
Company as of December 31, 2003 (the "Reference Balance Sheet"),
together with the related unaudited consolidated statements of
income for the year ended December 31, 2003 (including the
related notes, if any) (collectively, the "Regular Financial
Statements").
(b) The Regular Financial Statements fairly present the
consolidated financial position of the Company and the
Subsidiaries as of the respective dates thereof and the results
of operations of the Company and the Subsidiaries for the
respective periods set forth therein. The Regular Financial
Statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied
("GAAP") as of the dates and for the periods involved, subject to
the absence of notes and to normal fiscal year-end adjustments in
the ordinary course (none of which, individually or in the
aggregate, will be material to the business or the operations of
the Company and the Subsidiaries on a consolidated basis). The
Regular Financial Statements and the Interim Financial
Statements, together with the cooperation and access to
information as provided in Section 6.7, are or will be sufficient
to permit the preparation of audited financial statements for the
year ended December 31, 2003 to allow compliance with any
obligations under applicable Law (including, but not limited, to
Regulation S-X, as promulgated by the SEC ("Regulation S-X")).
(c) Neither the Company nor any Subsidiary has any
liabilities (whether accrued, contingent, known, or otherwise)
other than those that (i) are set forth or reserved against on
the Reference Balance Sheet; (ii) were incurred in the ordinary
course of business after the date of the Reference Balance Sheet
or (iii) would not be required to be disclosed in the Company's
financial statements in accordance with GAAP.
(d) Since January 1, 2003, the Company and each Subsidiary
has maintained records that in all material respects accurately
reflect transactions in reasonable detail, and accounting
controls, policies and procedures reasonably designed to ensure
that such transactions are recorded in a manner that permits the
preparation of financial statements in accordance with GAAP.
(e) Since the date of the Reference Balance Sheet, no event,
condition or circumstance has occurred that could, or could be
reasonably likely to, have a Material Adverse Effect on the
Company or any Subsidiary.
4.6 Litigation; Compliance with Law; Licenses and Permits.
(a) There is no claim, suit, action, investigation or proceeding
(each, a "Proceeding") pending, nor is there any Proceeding
threatened, that involves or affects either of the Company or any
Subsidiary, by or before any Governmental Entity, court, arbitration
panel or any other Person.
(b) Since January 1, 2000, the Company and each Subsidiary has
complied with all applicable Laws, including but not limited to Laws
relating to zoning, building codes, antitrust, occupational safety and
health, industrial hygiene, environmental protection, water, ground or
air pollution, the generation, handling, treatment, storage or
disposal of Hazardous Substances, Environmental Laws, consumer product
safety, product liability, hiring, wages, hours, employee benefit
plans and programs, collective bargaining, except for any
non-compliance that did not have or will not have a Material Adverse
Effect. Tax representations and warranties are exclusively included in
Section 4.11. Since January 1, 2000, neither the Company nor any
Subsidiary has received any notice of any violation of any such Law.
4.7 Employee Benefit Plans; ERISA.
(a) The Company has listed on Schedule 4.7 to the Schedule of
Exceptions, and has made available to Buyer copies of, all Employee
Benefit Plans maintained, or contributed to, by the Company or any
Subsidiary for the benefit of any current of former employees,
officers or directors of the Company or any Subsidiary or pursuant to
which such current or former employees, officers or directors are
entitled to current or future benefits. Sellers have made a valid
election under section 414(r) of the Code to treat the Company and its
Subsidiaries as a qualified separate line of business for all purposes
of Section 401 of the Code.
(b) Each Assumed Plan covers only employees of the Company or its
Subsidiaries (or former employees or beneficiaries with respect to
service with each such Company or its Subsidiaries). Neither the
Company nor any Subsidiary is liable for any material amount,
contingent or otherwise, due under or relating to any Employee Benefit
Plan other than the Assumed Plans and no condition exists which could
result in any material liability associated with any Employee Benefit
Plan, other than the Assumed Plans, that could be assessed against the
Company, it Subsidiaries or the Buyer. On and after the Closing, the
Company, or its Subsidiaries, shall not be responsible for
contributions to, or the administration of, any Employee Benefit Plan,
other than those Assumed Plans.
4.8 Real Property. Neither the Company nor any Subsidiary owns
any real property.
4.9 Material Contracts. There is no Contract (including any
amendments or modifications thereto through the date hereof) to which
Parent or the Seller is a party as a result of which the Company or
any Subsidiary (a) guarantees or indemnifies or is otherwise liable or
responsible for the obligations or liabilities of another or provides
for a charitable contribution by the Company or any Subsidiary, (b)
involves an agreement with any bank, finance company or similar
organization; or (c) restricts the Company or any Subsidiary from
engaging in any business or activity anywhere in the world (the
"Material Contracts"). The Sellers have heretofore made available
true, complete and correct copies of all Material Contracts to the
Buyer.
4.10 Company Software. Except for standard, royalty-free licenses
available in the ordinary course to any insurance agent representing
Sellers' products, the Company and the Subsidiaries do not require any
license, lease, sub-lease or other agreements or permissions with
respect to use rights with or from any Seller in order to continue to
use, practice and exploit the Company Software in the conduct of their
respective businesses as currently conducted and to grant rights to
customers, brokers and others to use, practice and exploit the same.
4.11 Taxes.
(a) The Company and each Subsidiary has (A) duly and timely
filed or caused to be filed with the applicable Tax Authorities
each Tax Return that is required to be filed by or on behalf of
the Company or each such Subsidiary or that includes or relates
to the Company and each such Subsidiary, their respective income,
sales, assets or businesses, and such Tax Returns are correct and
complete in all material respects (which material limitation
shall not be taken into account for purposes of any rights to
indemnification under this Agreement); (B) duly and timely paid,
or caused to be duly and timely paid, all Taxes due and payable
(whether or not shown on any Tax Return), on or prior to the
Closing Date, including any extensions thereto, and (C) properly
accrued in accordance with GAAP on the Closing Balance Sheet a
provision for the payment of all Taxes due or claimed to be due
or for which the Company and each such Subsidiary, as applicable,
otherwise is liable, in each case with respect to the Company's
or each such Subsidiary's respective income, sales, assets or
businesses;
(b) Neither the Company nor any Subsidiary currently is the
beneficiary of any extension of time within which to file any Tax
Return;
(c) The Company and each Subsidiary has complied in all
material respects (which material limitation shall not be taken
into account for purposes of any rights to indemnification under
this Agreement) with all applicable Laws relating to the payment,
collection or withholding of any Tax, and the remittance thereof
to any and all Tax Authorities pursuant to state, local and
foreign sales, use and transfer taxes and pursuant to Code
Sections 1441, 1442, 1445, 3102, 3121, 3402, 3403, 3405, 3406 and
3509, and any comparable provision of state, local or foreign Tax
law;
(d) There is no Encumbrance for Taxes upon any asset or
property of the Company or any Subsidiary (except for any
statutory Encumbrance for any Tax not yet due);
(e) There is no outstanding written subpoena or summons from
any Tax Authority with respect to any federal income Tax, or to
Sellers' Knowledge with respect to any other Tax, for which the
Company or any Subsidiary is or may be liable or with respect to
the Company's or such Subsidiary's, as applicable, income, sales,
assets or business;
(f) To Sellers' Knowledge, neither the Company nor any
Subsidiary is a party to any agreement with any Tax Authority
(including, but not limited to, any closing agreement within the
meaning of Code Section 7121 or any analogous provision of
applicable Law) or has requested or received a private letter or
other ruling or determination from any Tax Authority relating to
any Tax for which the Company or such Subsidiary is or may be
liable or with respect to the Company's or such Subsidiary's, as
applicable, income, sales, assets or business which could affect
the Tax liability of the Company or any Subsidiary after the
Closing Date;
(g) Neither the Company nor any Subsidiary is a party to any
contract, agreement or other arrangement that could result, alone
or in conjunction with any other contract, agreement or other
arrangement, in the payment of any amount that would not be
deductible by reason of Code Section 162(m) or 280G (or
comparable provisions of state, local or foreign Tax law);
(h) Except as provided in Section 6.3, no election under
Code Section 338 or any similar provision of applicable Law has
been made or required to be made by or with respect to the
Company or any Subsidiary;
(i) To the Sellers' Knowledge, no jurisdiction where the
Company or any Subsidiary does not file a Tax Return has made a
written claim that the Company or any such Subsidiary is required
to file a Tax Return for such jurisdiction or is subject to Tax
in such jurisdiction, which Tax Return remains unfiled or Taxes
remain unpaid;
(j) The statute of limitations for any Tax Proceeding or the
assessment or collection of any Tax for which the Company or any
Subsidiary is or may be liable or with respect to its income,
sales, assets or business has never been extended or waived,
which waiver or extension remains in effect;
(k) The Company and the Subsidiaries shall not be required
to include in a Tax period ending after the Closing Date taxable
income attributable to income that accrued in a prior Tax period
but was not recognized in any prior Tax period as a result of the
installment method of accounting, the long-term contract method
of accounting, the cash method of accounting or Section 481 of
the Code or comparable provisions of state, local or foreign Tax
law;
(l) Neither the Company nor any of its Subsidiaries is or
has been a beneficiary or has otherwise participated in any
reportable transaction within the meaning of Treasury Regulation
ss. 1.6011-4(b)(1);
(m) Schedule 4.11 to the Schedule of Exceptions sets forth a
list of all jurisdictions (foreign and domestic) in which any Tax
Returns have been filed by or on behalf of the Company and any
Subsidiary, or with respect to the Company's or the Subsidiaries'
respective income, sales, assets or businesses within the
three-year period ending on (and including) the Closing Date and
a description of each such Tax Return and the period for which it
was filed;
(n) Neither Parent nor the Seller is a "foreign person" for
purposes of Section 1445 of the Code;
(o) Schedule 4.11 to the Schedule of Exceptions sets forth a
list of all jurisdictions (foreign and domestic) in which Taxes
or Tax Returns currently are or have been the subject of Tax
Proceedings for which the Company or any Subsidiary could be
liable after the Closing Date and a description of all such Tax
and Tax Returns; and
(p) The Sellers have provided to the Buyer all written audit
reports, closing agreements, letter rulings, technical advice
memoranda or determinations relating to any Taxes for which the
Company or any Subsidiary is or may be liable after the Closing
Date with respect to the Company's or such Subsidiary's
respective income, sales, assets or businesses.
4.12 Affiliated Party Transactions. Except for obligations arising
under this Agreement and the Transaction Documents, neither the Sellers nor
any Affiliate of the Sellers has, directly or indirectly, any obligation to
or cause of action or claim against the Company or any Subsidiary.
4.13 Brokers. Sellers have engaged Xxxxxxx, Xxxxx & Co. as their
financial advisor in connection with this transaction, and Sellers and
their Affiliates (other than the Company and its subsidiaries) are solely
responsible for payment of the fees and expenses of such engagement. None
of the Sellers nor any Affiliate of a Seller has employed, or otherwise
engaged, any broker or finder or incurred any liability for any brokerage
or investment banking fees, commissions, finders' fees or other similar
fees in connection with the transactions contemplated by this Agreement on
behalf of or for which the Company is or the Management Shareholders are or
will be obligated.
4.14 Insurance. All insurance policies of any kind covering the
Company and the Subsidiaries (a) are with insurance companies that are
financially sound and reputable and are in full force and effect; (b) are
sufficient for compliance with all material requirements of law and of all
applicable Material Contracts; and (c) are valid, outstanding and
enforceable policies. Since January 1, 2000, neither the Company nor any
Subsidiary has been denied any insurance coverage which it has requested.
The Buyer has been provided copies of all such policies.
4.15 Absence of Sensitive Payments. Neither the Company, any
Subsidiary nor any of their respective directors, officers, brokers,
sub-brokers, agents or employees, has made or has agreed to make on behalf
of the Company or any Subsidiary:
(a) any contributions, payments or gifts of funds or property to
any governmental official, employee or agent where either the payment
or the purpose of such contribution, payment or gift was or is illegal
under the Laws of the United States, any state thereof, or any
jurisdiction (foreign or domestic); or
(b) any contribution or expenditure, or has reimbursed any
political gift or contribution or expenditure made by any other
Person, to candidates for public office, whether federal, state or
local (foreign or domestic) where such contributions were or would be
a violation of applicable Law.
Notwithstanding the foregoing, Sellers make no representation under
this Section 4.14 with respect to any Management Shareholder.
5. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers as follows:
5.1 Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Washington. The Buyer has the requisite corporate power and
authority to carry on its business as now being conducted, except, as to
subsidiaries, for those jurisdictions where the failure to be so organized,
existing or in good standing individually or in the aggregate would not
have a Material Adverse Effect on the Buyer. The Buyer is duly qualified or
licensed to do business and is in good standing (with respect to
jurisdictions that recognize such concept) in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed or to
be in good standing individually or in the aggregate would not have a
Material Adverse Effect on the Buyer.
5.2 Authorization; Validity of Agreement. The Buyer has the requisite
corporate power and authority to execute, deliver and perform this
Agreement and each other Transaction Document executed or to be executed by
the Buyer pursuant to the terms of this Agreement and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Buyer of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of
the Buyer and no other corporate proceedings on the part of the Buyer are
necessary to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Buyer is a
party, or the consummation of the transactions contemplated hereby and
thereby. This Agreement has been, and each other Transaction Document to
which the Buyer is a party at Closing will be, duly executed and delivered
by the Buyer, and this Agreement is, and each other Transaction Document to
which the Buyer is a party at the Closing will be a valid and binding
obligation of the Buyer, enforceable against it in accordance with its
terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
5.3 No Violations; Consents and Approvals.
(a) The execution, delivery and performance by the Buyer of this
Agreement and the other Transaction Documents to which the Buyer is a
party do not, and the consummation by the Buyer of the transactions
contemplated hereby and thereby will not, (i) violate any provision of
the Articles of Incorporation or Bylaws of the Buyer; (ii) result in a
violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any material Contract to which the Buyer
is a party or by which the Buyer or any of its respective properties
or assets may be bound or otherwise subject to; or (iii) violate any
Law applicable to the Buyer, or any of its properties or assets.
(b) No Consent of any Governmental Entity is required in
connection with the execution, delivery and performance of this
Agreement or the Transaction Documents by the Buyer, or the
consummation by the Buyer of the transactions contemplated hereby and
thereby, except for the termination or expiration period under the HSR
Act.
5.4 Financing. The Buyer has sufficient funds available to it to pay
the Purchase Price at the Closing and consummate the transactions
contemplated by this Agreement.
5.5 No Brokers. Neither the Buyer nor Management Shareholders has
employed, or otherwise engaged, any other broker or finder or incurred any
liability for any brokerage or investment banking fees, commissions,
finders' fees or other similar fees in connection with the transactions
contemplated by this Agreement on behalf of or for which the Sellers are or
will be obligated.
6. Agreements of the Parties.
6.1 No Competition.
(a) The Sellers covenant and agree that, for a period of two (2)
years following the Closing Date (the "Prohibited Period"), the
Sellers and their Affiliates will not directly or indirectly, (i)
solicit any customer of the Company or any Subsidiary to terminate
his, her or its agency relationship with the Company or (ii) solicit
any employee of the Company or any Subsidiary to leave his or her
employment with the Company or such Subsidiary, except that Sellers
shall not be precluded from soliciting any such employee who (x)
responds to any public advertisement placed by Sellers, (y) was
terminated by the Company or (z) has resigned from employment with the
Company or any Subsidiary, provided that such employee has not been
contacted by or engaged in any discussions with a Seller or any
Affiliate of a Seller regarding employment prior to or within three
months after such employee's notifying his or her employer of his or
her intent to resign.
(b) The Buyer covenants and agrees that during the Prohibited
Period, Buyer and its Affiliates (including the Company and its
Subsidiaries) will not directly or indirectly solicit any employee of
any Seller or any Affiliate of a Seller other than the Management
Shareholders and any employee of the Company and its subsidiaries to
leave his or her employment with a Seller or such Affiliate, except
that Buyer shall not be precluded from soliciting any such employee
who (x) responds to any public advertisement placed by Buyer, (y) was
terminated by any Seller or any Affiliate of a Seller or (z) has
resigned from employment with the Company or any Subsidiary, provided
that such employee has not been contacted by or engaged in any
discussions with the Buyer, the Company or any Subsidiary regarding
employment prior to or within three months after such employee's
notifying his or her employer of his or her intent to resign.
(c) The Sellers covenant and agree that neither they nor their
Affiliates will, at any time during the Prohibited Period, disclose,
directly or indirectly, or make available to any person any
confidential information or trade secrets relating to the Company or
any Subsidiary, or any information concerning the Buyer's, the
Company's or any Subsidiary's financial condition, prospects,
customers, franchisees, licensees, suppliers, sources of leads and
methods of obtaining new business, distribution methods or any other
methods of doing business and operating the Company or any Subsidiary,
except to the extent that such information is or becomes, through no
action of the Sellers or any of its Affiliates, a matter of public
knowledge or is required to be disclosed by Law, stock exchange rule,
or in any proceedings involving the Sellers for which its counsel
informs the Sellers that such disclosure is required by Law (in which
case prior to such disclosure the disclosing party shall as promptly
as practicable provide prior written notice of such required
disclosure to the Buyer in order to afford the Buyer the opportunity
to seek an appropriate protective order preventing such disclosure).
(d) The Buyer covenants and agrees that neither it nor its
Affiliates (including the Company and its Subsidiaries) will, at any
time during the Prohibited Period, disclose, directly or indirectly,
or make available to any person, any confidential information or trade
secrets relating to the Sellers or any of their Affiliates, or any
information concerning the Sellers' or any of their Affiliate's
financial condition, prospects, customers, franchisees, licensees,
suppliers, sources of leads and methods of obtaining new business,
distribution methods or any other methods of doing business and
operating the Sellers or any of their Affiliates, except to the extent
that such information is or becomes, through no action of the Buyer,
the Company or any of its Subsidiaries, a matter of public knowledge
or is required to be disclosed by Law, stock exchange rule, or in any
proceedings involving the Buyer for which its counsel informs the
Buyer that such disclosure is required by Law (in which case prior to
such disclosure the disclosing party shall as promptly as practicable
provide prior written notice of such required disclosure to the
Sellers in order to afford the Sellers the opportunity to seek an
appropriate protective order preventing such disclosure).
(e) The parties acknowledge and agree that a breach of any of the
provisions of this Section 6.1 will cause irreparable harm and damage
and that, in the event of such breach, the non-breaching party shall
have, in addition to any and all remedies at law, the right to an
injunction, specific performance or other equitable relief to prevent
the violation of the obligations of the breaching party hereunder
without the necessity of proving such irreparable harm or damage or
the inadequacy of remedies at law and without the necessity of posting
any bond.
(f) The parties acknowledge and agree that each provision of this
Section 6.1 shall be treated as a separate and independent clause, and
the unenforceability of any one clause shall in no way impair the
enforceability of any of the other clauses herein. Furthermore, if one
or more of the provisions contained in this Section 6.1 shall for any
reason be held to be excessively broad as to geographical scope,
duration, activity or otherwise so as to be unenforceable at law, such
provision or provisions shall be construed by the appropriate judicial
body by limiting and reducing it or them, as the case may be, so as to
be enforceable to the maximum extent compatible with the applicable
law as it shall then appear.
6.2 Taxes.
(a) The Company and the Sellers shall join with the Buyer in
making an election under Code Section 338(h)(10) (which must be filed
by both Buyer and Sellers on Form 8023 in the Tax Returns for the
period that includes the Closing Date) and any corresponding election
under state, local or foreign Law with respect to the purchase and
sale of the Company's stock and the stock of each of the Subsidiaries
(the "Section 338(h)(10) Election"). The Sellers will include any
income, gain, loss, deduction or other Tax items resulting from the
Section 338(h)(10) Election on its Tax Returns to the extent required
by applicable Law. The Buyer and Seller shall cooperate and jointly
agree within 90 days after the Closing Date on the general methodology
to be used to determine the "Aggregate Deemed Sale Price" ("ADSP") as
defined in Treasury Regulation ss. 1.338-4 and how such ADSP is to be
allocated among the assets of the Company's assets pursuant to
Treasury Regulation ss.1.338-6 (the "Allocation Notice"). Seller and
Buyer shall cooperate fully with each other and make available to each
other such Tax data and other information as may be reasonably
requested by the other party. Seller shall complete the ADSP and the
Allocation Notice in accordance with that agreement and deliver a
draft of the Form 8023 to Buyer (together with schedules thereto and
supporting documentation) within 150 days after the Closing Date. In
the event that Buyer and Seller are unable to resolve any
disagreements regarding the ADSP, the Allocation Notice or other
aspects of the draft Form 8023 within 180 days of the Closing Date
(and a failure to raise any disagreement by Buyer will be deemed to be
considered an acquiescence), the matter in dispute shall be resolved
as soon as practicable by a "Big Four" independent accounting firm or,
if the disagreement involves valuation, to a nationally recognized
appraisal firm mutually satisfactory to the parties (but in no event
longer than 30 days), which resolution shall be binding and conclusive
upon Buyer and Seller without further appeal therefrom. Buyer and
Seller shall bear equally the fees and expenses of such firm. Promptly
after such the resolution of any disagreement, the applicable parties
shall execute the final Form 8023 (and comparable forms for state,
local or foreign Tax law) and Buyer will timely file the forms, and
any required supplements thereto, in the manner prescribed by
applicable Treasury Regulations or the corresponding provisions of
applicable foreign, state or local Tax law, and will provide written
evidence to Seller that it has done so. The Buyer and the Sellers
shall file all Tax Returns in a manner consistent with such final form
8023 (and comparable Forms for state, local or foreign Tax law).
(b) Seller Responsibility.
(i) Seller will timely file the U.S. federal income Tax
Returns of the Affiliated Group and any Combined Returns (taking
into account extensions thereto) for all periods (including any
Pre-Closing Period or Straddle Period) and will timely pay any
Taxes with respect thereto. The parties agree that they will
treat the Company and any Subsidiary as if they ceased to be part
of the Affiliated Group, and any comparable or similar provision
of state, local or foreign laws or regulations, as of the close
of business on the Closing Date.
(ii) Seller shall prepare and timely file or shall cause to
be prepared and timely filed all other Tax Returns of the Company
and the Subsidiaries for a Pre-Closing Period and a Straddle
Period. At least twenty (20) days prior to the date on which any
such Tax Return is due (including any extensions), the Seller
shall deliver such Tax Return to the Buyer for the purpose of
making reasonable changes and revisions to such Tax Return at
least three days prior to filing. Seller shall timely file such
Tax Return and duly and timely pay all Taxes shown on such Tax
Return, and the Buyer shall reimburse Seller for any Taxes
attributable to the portion of the Straddle Period after the
Closing Date as soon as practicable after the date paid by the
Seller. All such Tax Returns with respect to a Pre-Closing Period
or Straddle Period shall be prepared and filed on a basis
consistent with prior Tax Returns filed with respect to the
Company and the Subsidiaries.
(iii) If possible, Buyer shall use its best efforts to
provide timely and accurate information to Seller for Seller's
preparation of such Tax Returns at least three months before the
due date of the filing of such Tax Returns (including any
extensions).
(c) The Buyer shall prepare and file each Tax Return required for
the Company and each Subsidiary for each Post-Closing Period in
accordance with applicable Law.
(d) In the case of any Taxes that are imposed on a periodic basis
over a Straddle Period, the portion of such Tax that relates to the
portion of the period up to and including the Closing Date shall be
deemed to be the amount of such Tax for the entire Straddle Period
multiplied by a fraction the numerator of which is the number of days
in the Tax period ending on (and including) the Closing Date and the
denominator of which is the number of days in the entire Straddle
Period. In the case of any Tax based upon income or receipts, the
portion allocable to the portion of the period up to and including the
Closing Date shall include operations through the Closing Date (i.e.,
with respect to operations, based on an interim closing of the books
on the Closing Date). For those states that permit a Section
338(h)(l0) election (or the specific state counterparts), Seller will
file a separate Tax Return for the Pre-Closing Period and Buyer will
file a separate Tax Return for the Post Closing Period (and not one
Tax Return that includes a Straddle Period) unless prohibited under
applicable Tax Law.
(e) Refunds and Tax Benefits. Any tax refunds that are received
by Buyer or the Company and Subsidiaries, and any amounts credited
against Taxes to which Buyer or the Company and Subsidiaries become
entitled, that relate to Tax periods or portions thereof ending on or
before the Closing Date shall be for the account of Seller, and Buyer
shall pay over to Seller any such refund or the amount of any such
credit within fifteen (15) days after receipt or entitlement thereto,
net of any Taxes imposed upon Buyer by reason of the receipt of such
refund or credit.
(f) Amended Returns and Refund Claims. Buyer shall not file an
amended Tax Return or any claim for refund for any period ending on or
prior to the Closing Date without the written consent of Seller, which
consent will not be unreasonably withheld.
(g) Tax Sharing Agreements. Any Tax sharing agreement between
Seller and the Company and its Subsidiaries shall be settled and
terminated as of the Closing Date and shall have no further effect for
any taxable year (whether the current year, a future year or a past
year).
(h) Seller shall be solely responsible for the audit of the
consolidated federal income Tax Return of the Affiliated Group and any
Combined Returns and Seller shall have the sole discretion to settle
any audit of a U.S. federal income Tax Return of the Affiliated Group
or a Combined Return.
(i) If a state income Tax claim is made against Buyer for a
Pre-Closing Period or a Straddle Period (other than with respect to a
Combined Return, which is addressed in Section 6.2(h)) and a Section
338(h)(10) election (or the state counterpart), Seller shall conduct,
and control (through counsel of its own choosing and at its own
expense) the settlement or defense thereof. The Buyer and the Company
and the Subsidiaries shall cooperate and may provide non-binding
advice. Buyer shall have the right to approve a final settlement (with
consent not to be unreasonably withheld) only if such settlement will
have a material adverse effect on a Post-Closing Period.
(j) The Sellers and the Buyer shall preserve all such
information, records or other documents until the date that is six (6)
months after the expiration of the statute of limitations applicable
to such Tax; and the Seller agrees to give to the Buyer a reasonable
written notice prior to transferring, destroying or discarding any
such information, records or documents and, to the extent the Buyer so
requests, the Seller shall permit the Buyer to take possession of such
information, records and documents. Buyer and the Company and the
Subsidiaries, on one hand, and Seller, on the other hand, shall
cooperate fully, as and to the extent reasonably requested by the
other, in connection with the filing of Tax Returns pursuant to this
Section 6.2 and any audit, litigation or other proceeding with respect
to Taxes. In that regard, Seller, Buyer and the Company and the
Subsidiaries shall, at their own expense, maintain such Tax
information or Tax records relating to the Company and the
Subsidiaries as are regularly maintained by such party or as may be
required by Law to be maintained. Such Tax records or Tax information
shall be made available upon written request by the Seller or the
Buyer or the Company and the Subsidiaries, as the case may be, within
2 Business Days of such request. Notwithstanding the foregoing, Seller
and Buyer shall only be obligated to provide that portion of their
federal consolidated Tax Returns or Combined Tax Returns and
accompanying Tax records or Tax Returns that directly related to the
Company and the Subsidiaries. In any event, the provisions of access
to such Tax records or Tax information shall not unreasonably
interfere with the business operations of the non-requesting party.
(k) All transfer, documentary, sales, use, stamp, registration
and other similar Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by
the Seller and Buyer equally when due, and the Buyer will file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes
and fees, and if required by applicable law, the Seller will join in
the execution of any such Tax Returns or other documentation.
6.3 Termination of Agreements and the Sellers' Release.
(a) Effective as of the Closing Date, except for any obligations
arising out of this Agreement and the other Transaction Documents,
except for the agency contracts between affiliates of the Sellers and
the Company and its Subsidiaries and except as set forth on Schedule
6.3(a) to the Schedule of Exceptions, all Contracts (collectively, the
"Terminated Contracts") of whatever nature relating to the sale,
licensing, leasing or supply of goods or services, and whether oral or
in writing, between the Sellers or any of their Affiliates (other than
the Company or any Subsidiary), on the one hand, and the Company or
any Subsidiary, on the other hand, shall be terminated automatically
without liability to any party.
(b) Except as otherwise provided in this Agreement, Parent, for
itself, the Seller, for itself, its Affiliates (other than the
Company) and their respective representatives in their capacities as
such (together, in each case, with their successors), effective as of
the Closing Date, releases and discharges the Buyer, the Company, each
of their Affiliates and each of their respective representatives in
their capacities as such (together, in each case, with their
respective successors) from any and all liabilities, obligations and
losses (whether by contract, in tort or both, and whether in law, in
equity or both), rights of subrogation and contribution and remedies
of any nature whatsoever, known or unknown, relating to or arising out
of: (i) the Terminated Contracts; and (ii) any other dealings or
relationships (other than those entered into in the ordinary course of
business), existing at or prior to the Closing, between the Company,
on the one hand, and the Sellers or any of their Affiliates (other
than the Company), on the other hand.
6.4 Required Consents. The Sellers and/or the Company shall have
applied or shall apply for and shall promptly provide copies of, all
filings made with any Governmental Entity or other Person or any other
information supplied in connection with this Agreement and the transactions
contemplated hereby. The Buyer shall use its reasonable commercial efforts
to assist the Sellers and the Company in obtaining the Required Consents.
6.5 Conduct of Business. From the date hereof through the Closing
Date, except as otherwise contemplated by this Agreement and the other
Transaction Documents, the Seller shall not, in its capacity as sole
shareholder of the Company, and shall cause the director designees of the
Sellers (subject to their fiduciary obligations) to not, cause the Company
and the Subsidiaries to (without the prior written consent of the Buyer,
which shall not be unreasonably withheld):
(a) not conduct their respective businesses in the ordinary
course, consistent with past practice;
(b) amend their respective Articles of Incorporation or Bylaws or
other organizational documents;
(c) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities
or securities convertible into shares of capital stock;
(d) split, combine or reclassify any shares of their capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) to the
Sellers or any other Person or otherwise in respect of its capital
stock or redeem or otherwise acquire any of its securities, or make
any payments or distributions to or on behalf of the Sellers, any of
the Sellers' Affiliates, any Person to which the Company or any
Subsidiary has any liability (other than trade accounts payable and
other liabilities incurred in the ordinary course of business and
liabilities incurred in connection with this agreement) or any officer
or director of the Company;
(e) increase the compensation of any officer, employee or agent
of the Company or any Subsidiary (other than in connection with
performance reviews in the ordinary course of business), create any
additional Employee Benefit Plan, amend any existing Employee Benefit
Plan or create or amend any existing severance or retention agreements
with employees;
(f) propose or enter into any Contract with any Person, other
than the Buyer, providing for the possible acquisition (whether by way
of merger, purchase of capital stock purchase of assets or otherwise)
of any material portion of the capital stock or assets of another
Person;
(g) enter into any Contract in which the obligation of the
Company or any Subsidiary exceeds $250,000 (other than insurance
premium obligations incurred in the ordinary course of business) or
which does not terminate or is not subject to termination for
convenience within 180 days following execution without the Buyer's
consent;
(h) enter into any agreement not in the ordinary course of
business;
(i) except in the ordinary course of business consistent with
past practice, amend, waive, surrender, terminate, exercise any right
or option under or extend or renew any Contract or Lease;
(j) acquire, lease or dispose of any of the Company's or any
Subsidiary's assets, except for the activities carried on by the
Designated Employees or except in the ordinary course of business and
consistent with past practice;
(k) take or suffer any action that would result in the creation,
or consent to the imposition, of any Encumbrance on any of its assets
(unless such Encumbrance is promptly discharged at the sole expense of
the Sellers);
(l) (i) incur or assume any indebtedness other than Trade
Payables incurred in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any obligations of any other
Person; or (iii) except in the ordinary course of business consistent
with past practice, make any loans, advances or capital contributions
to, or investments in, any other Person;
(m) take any action in contravention of Law; or
(n) enter into any Contract to do, or take, or agree in writing
or otherwise to take or consent to, any of the foregoing actions.
6.6 Access and Information. After the date hereof through the Closing
Date, the Sellers shall use their commercially reasonable efforts to, and
shall cause its officers, directors, employees, agents, accountants and
counsel to use their commercially reasonable efforts to, upon reasonable
notice, (a) afford the Buyer and its representatives reasonable access,
during normal business hours, to (i) the business and Books and Records of
the Company and each Subsidiary, and (ii) those officers, directors,
employees, agents, accountants and counsel of the Company or any Subsidiary
who have any knowledge relating to the business of the Company or any
Subsidiary, and (b) furnish to the Buyer and its representatives such
additional information regarding the Company or any Subsidiary as the Buyer
may reasonably request, including without limitation, providing such access
and furnishing such information as necessary for the preparation and
completion by Buyer and Buyer's auditors of an audit of the Company's
consolidated financial statements as of and for the most recently completed
fiscal year prior to the Closing Date or to comply with applicable Law
(including, without limitation the HSR Act and Regulation S-X).
6.7 Public Statements. Neither the Buyer nor the Sellers shall make
any public announcement with respect to, or reveal the terms or status of
any of, the Transaction Documents or the transactions contemplated thereby,
except as required by Law.
6.8 Stock Options. All stock options and stock purchase rights with
respect to securities of the Parent previously granted to any employee of
the Company or any Subsidiary under any of the Parent's stock incentive
compensation plans who is employed by the Company on the day immediately
prior to the Closing Date shall become one hundred percent (100 %) vested
and exercisable as of the Closing Date and shall remain exerciseable for a
period of three (3) months thereafter.
6.9 Other Actions. Each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions, do, or cause to be
done, all things, and execute and deliver all documents, as in each case
may be necessary, proper or advisable under applicable Laws or reasonably
required in order to consummate the transactions contemplated hereby. Each
of the Buyer and the Sellers will, and will each cause its representatives
to, deliver all documents required to be delivered at the Closing by such
Persons as required and as set forth in Article 7 hereof.
6.10 Designated Employees. The Designated Employees provide certain
services to Safeco Life Insurance Company, a wholly owned subsidiary of
Parent ("Safeco Life"), the costs of which are and will continue to be
reimbursed to the Company by Safeco Life in accordance with its existing
arrangement with the Company. The parties understand and agree that the
Company will, and the Sellers (prior to the Closing) and the Buyer (after
the Closing) agree to cause the Company to terminate the employment by the
Company of the Designated Employees upon the earlier of (i) the request of
Safeco Life and (ii) the closing of the sale of Safeco Life by Parent. If
Safeco Life has not agreed to hire the Designated Employees upon such
termination by the Company, then notwithstanding the foregoing, the Company
shall have the right (in its sole discretion) to continue the employment of
one or more Designated Employees, in which event the provisions of Section
8.2(f) shall no longer apply. Schedule 6.10 to the Schedule of Exceptions
sets forth a list of the Designated Employees.
6.11 HSR Filings. As promptly as practicable after the date of this
Agreement, each of the Sellers and the Buyer will file or cause to be filed
a notification and report form under the HSR Act with the Federal Trade
Commission and the Department of Justice, will assist the other parties
(the Buyer and the Sellers, respectively) as may be reasonably requested in
connection with the latter's filing under the HSR Act, will request early
termination of the HSR Act waiting period and will furnish, as promptly as
practicable, any and all information and documentary materials properly and
reasonably requested by such antitrust agencies thereunder. The filing fee
payable under the HSR Act shall be shared equally by the Buyer and the
Sellers.
6.12 Indemnification Insurance.
(a) The directors and officers of the Company or any Subsidiary
(the "Separated Officers") shall be entitled to seek indemnification
with respect to any actions or omissions occurring prior to the
Closing Date to the same extent such Persons may seek indemnification
as of the date of this Agreement pursuant to the Articles of
Incorporation, Bylaws or other applicable organizational documents of
the Parent, the Company or any Subsidiary or any indemnification
agreement between any such officer or director and the Parent, the
Company, or any Subsidiary.
(b) For a period of six (6) years after the Closing Date, the
Parent will maintain in effect directors' and officers' liability
insurance covering the Separated Officers for claims arising from acts
or omissions occurring prior to the Closing Date on terms comparable
to those maintained for its then current directors and officers.
6.13 No Solicitation. From the date hereof, neither the Sellers, the
Company nor any Subsidiary (whether directly or indirectly through their
respective advisors, agents, representatives or other intermediaries)
shall, and each of the Sellers, the Company and each Subsidiary shall use
its respective best efforts to cause its respective officers, directors,
advisors, representatives and other agents not to, directly or indirectly,
(a) continue any discussions or negotiations, if any, with any Person,
other than the Buyer, conducted heretofore with respect to any Sale
Proposal or which could reasonably be expected to lead to a Sale Proposal;
(b) solicit, initiate or knowingly encourage any inquiries relating to, or
the submission of, any Sale Proposal; (c) participate in any discussions or
negotiations regarding any Sale Proposal, or, in connection with any Sale
Proposal, furnish to any Person any information or data with respect to or
access to the properties of the Company or any Subsidiary, or (d) enter
into any agreement with respect to any Sale Proposal.
6.14 Interim Financial Statements; Closing Balance Sheet.
(a) No later than fifteen days after the completion of each
fiscal quarter prior to the Closing Date, the Sellers shall deliver to
the Buyer a consolidated unaudited balance sheet of the Company as of
the last day of such quarter, together with the related unaudited
consolidated statement of income for such quarter (including the
related notes, if any) (collectively, the "Interim Financial
Statements").
(b) No later than two business days prior to the Closing Date,
the Sellers shall deliver to the Buyer a consolidated unaudited
balance sheet of the Company as of such date (the "Closing Balance
Sheet"), which balance sheet shall be prepared on the same basis as
the Reference Balance Sheet and shall show the Tangible Net Worth of
the Company and the Subsidiaries as of such date.
7. Conditions Precedent to Closing.
7.1 Conditions Precedent to the Buyer's Obligations to Close. The
obligation of the Buyer to consummate the transactions contemplated hereby
is subject to the satisfaction prior to or on the Closing of each of the
following conditions:
(a) The representations and warranties of the Sellers contained
in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct as of the Closing
Date in all material respects, with the same force and effect as if
made on the Closing Date, except for such representations and
warranties as are made as of a specific date, which shall be true and
correct as of such date.
(b) The covenants and agreements of the Sellers contained in this
Agreement and required to be complied with or performed on or prior to
the Closing Date shall have been complied with or performed in all
material respects.
(c) The Buyer shall have received a certificate dated the Closing
Date and executed by an officer of the Sellers, certifying the
satisfaction of the conditions set forth in clauses (a), (b) and (f).
(d) The Company shall have a Tangible Net Worth as of the date of
the Closing Balance Sheet equal to or greater than $5,000,000.
(e) The Buyer shall have received an opinion of inhouse counsel
to the Sellers, substantially in the form attached as Exhibit 7.1(e).
(f) No event or events shall have occurred between the date
hereof and the Closing that, individually or in the aggregate, shall
have had, or shall be reasonably likely to have, a Material Adverse
Effect.
(g) No Proceeding shall be pending or threatened against, and no
order, decree or judgment of any court, agency or other Governmental
Entity shall have been rendered against, any party hereto which: (i)
would render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its
terms; (ii) questions the validity or legality of any transaction
contemplated hereby; (iii) seeks to enjoin any transaction
contemplated hereby; (iv) seeks material damages on account of the
consummation of any transaction contemplated hereby; or (v) is a
petition of bankruptcy by or against the Sellers, the Company or any
Subsidiary, an assignment by the Company, the Sellers or any
Subsidiary for the benefit of its creditors, or other similar
Proceeding.
(h) The expiration or termination of all applicable waiting
periods under the HSR Act with respect to the transactions
contemplated by this Agreement, without the Buyer or the Sellers
having been advised by the Federal Trade Commission or Department of
Justice that they will or may seek to enjoin the consummation of, or
otherwise will or may challenge, any such transactions.
(i) In each case, without any waiver or modification, the
representations and warranties of the Management Shareholders
contained in Section 5 of that certain Subscription Agreement by and
among Hub U.S. Holdings, Inc., a Delaware corporation, the Buyer and
the Management Shareholders, a true and correct copy of which has been
previously provided to Seller, shall have been true and correct when
made and shall be true and correct as of the Closing Date in all
material respects, with the same force and effect as if made on the
Closing Date, except for such representations and warranties as are
made as of a specific date, which shall be true and correct as of such
date.
7.2 Condition Precedent to the Sellers' Obligations to Close. The
obligation of the Sellers to consummate the transactions contemplated
hereby is subject to the satisfaction prior to or on the Closing Date of
the following conditions:
(a) The representations and warranties of the Buyer contained in
this Agreement shall have been true and correct when made and shall be
true and correct, in all material respects, as of the Closing Date,
with the same force and effect as if made as of the Closing Date,
other than such representations and warranties as are made as of a
specific date, which shall be true and correct as of such date.
(b) The covenants and agreements of the Buyer contained in this
Agreement and required to be complied with or performed on or before
the Closing Date shall have been complied with or performed in all
material respects.
(c) The Sellers shall have received a certificate dated the
Closing Date and executed by an officer of the Buyer, certifying the
satisfaction of the conditions set forth in clause (a) and (b).
(d) The Sellers shall have received the Management Certificate
and such Management Certificate shall not disclose any items which
would result in a breach of a representation or warranty hereunder.
(e) No Proceeding shall be pending or threatened against, and no
order, decree or judgment of any court, agency or other Governmental
Entity shall have been rendered against, any party hereto which: (i)
would render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its
terms; (ii) questions the validity or legality of any transaction
contemplated hereby; (iii) seeks to enjoin any transaction
contemplated hereby; (iv) seeks material damages on account of the
consummation of any transaction contemplated hereby; or (v) is a
petition of bankruptcy by or against the Buyer, an assignment by the
Buyer for the benefit of its creditors, or other similar Proceeding.
(f) The expiration or termination of all applicable waiting
periods under the HSR Act with respect to the transactions
contemplated by this Agreement, without the Sellers or the Buyer
having been advised by the Federal Trade Commission or Department of
Justice that they will or may seek to enjoin the consummation of, or
otherwise will or may challenge, any such transactions.
7.3 Deliveries of the Sellers. At the Closing, the Sellers shall
deliver the following items to the Buyer:
(a) The Required Consents;
(b) Stock certificates representing all of the Shares, duly
endorsed in blank or accompanied by stock transfer powers and with all
requisite stock transfer tax stamps attached;
(c) A certificate duly executed by the Secretary of the Sellers,
attesting, with respect to the Sellers, the resolutions duly and
validly adopted by the board of directors of the Sellers evidencing
the authorization of its execution and delivery of this Agreement and
the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, as to its Articles of
Incorporation and Bylaws, and as to names and signatures of the
officers of the Buyer authorized to sign this Agreement and the other
Transaction Documents to be delivered by the Buyer hereunder;
(d) A certificate with respect to the Sellers and the Company
from the Secretary of their respective states of incorporation,
respectively, attesting as to its valid existence and its good
standing (or, as to jurisdictions that do not recognize such concept,
its payment of all taxes required by the Department of Revenue) as of
a date not earlier than two business days prior to the Closing Date;
and
(e) The documents referred to in Sections 7.1(c) and 7.1(e).
7.4 Deliveries of the Buyer. At the Closing, the Buyer shall deliver
the following items to the Sellers.
(a) A certificate of the Secretary of the Buyer certifying the
resolutions duly and validly adopted by the board of directors of the
Buyer evidencing the authorization of the execution and delivery of
this Agreement and the other Transaction Documents to which the Buyer
is a party and the consummation of the transactions contemplated
hereby and thereby, and the names and signatures of the officers of
the Buyer authorized to sign this Agreement and the other Transaction
Documents to be delivered by the Buyer hereunder; and
(b) The cash payment pursuant to Section 3.
8. Indemnification.
8.1 Survival of Representations and Warranties. Notwithstanding any
right of the Buyer to fully investigate the affairs of the Company and the
Subsidiaries and notwithstanding any knowledge of facts determined or
determinable by the Buyer pursuant to such investigation or right of
investigation, the Buyer has the right to rely fully upon the
representations, warranties, covenants and agreements of the Sellers
contained in this Agreement or in any other Transaction Document. All
covenants and agreements of the Sellers and the Buyer made in this
Agreement or in any other Transaction Document or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement until all obligations with respect thereto shall have been
performed or satisfied or shall have terminated in accordance with their
terms. All representations and warranties of the Sellers and the Buyer
shall survive the execution and delivery of this Agreement and shall
thereafter continue in full force and effect for a period of one (1) year
from the Closing; provided, however, that the representations and
warranties made in Sections 4.7 and 4.11 hereof shall survive until ninety
(90) days after the expiration of the relevant statutes of limitations and
that there shall be no limitation on the survival of the representations
and warranties set forth in Section 4.1, Section 4.2 or Section 4.3 or any
representations or warranties fraudulently made in this Agreement or any
other Transaction Documents or in any certificate delivered pursuant
hereto.
8.2 Indemnification by the Sellers. The Sellers shall indemnify and
defend each of the Company, each Subsidiary and the Buyer and each of their
respective successors, transferees, assignees, officers, directors,
employees, shareholders, agents, advisors or representatives (each, a
"Buyer Indemnitee") against, and hold each Buyer Indemnitee harmless from
any loss, liability, obligation, deficiency, damage, Tax or expense
including, without limitation, interest, penalties, reasonable attorneys'
and consultants' fees and disbursements (collectively, "Damages"), that any
Buyer Indemnitee may suffer or incur based upon, attributable to, arising
from, relating to or in connection with any of the following (whether or
not in connection with any third party claim):
(a) The inaccuracy of any representation or warranty made by the
Sellers contained in this Agreement or in any other Transaction
Documents;
(b) The Sellers' failure to perform or to comply with any
covenant or agreement required to be performed by the Sellers
contained in any Transaction Document;
(c) Any brokerage, finder's fee or the like incurred as a result
of the actions of the Sellers in connection with the transactions
herein contemplated;
(d) Any liability relating to any Employee Benefit Plan other
than Assumed Plans;
(e) Any Tax Item;
(f) Any Designated Employee Liability; and
(g) The Excluded Liabilities.
8.3 Indemnification by the Buyer. The Buyer shall indemnify and defend
the Sellers and their successors, transferees, assignees, officers,
directors, employees, shareholders, agents, advisors or representatives
(each, a "Seller Indemnitee") against, and hold each Seller Indemnitee
harmless from, any Damages that any Seller Indemnitee may suffer or incur,
based upon, attributable to, arising from, relating to or in connection
with any of the following:
(a) The inaccuracy of any representation or warranty made by the
Buyer contained in any Transaction Document;
(b) The Buyer's failure to perform or to comply with any covenant
or agreement required to be performed by the Buyer contained in any
Transaction Document to which the Buyer is a party;
(c) Any brokerage, finder's fee or the like incurred as a result
of the actions of the Buyer in connection with the transactions herein
contemplated; or
(d) The operation of the businesses of the Company and the
Subsidiaries after the Closing (including the use by the Company of
the Talbot Financial Corporation name after the Closing Date), except
as to matters which emanate from the breach by the Sellers of their
representations, warranties, covenants or agreements hereunder.
8.4 Limitations on Liability.
(a) Notwithstanding the foregoing, the Sellers shall not be
obligated to indemnify and hold harmless any Buyer Indemnitee from
Damages, (i) in the case of a claim for Damages under Section 8.2(a)
arising from a breach of representations and warranties relating
solely and exclusively to any of the Subsidiaries, unless and until
the aggregate amount of such Damages exceeds $4,500,000, (ii) in the
case of any other claim for Damages under Section 8.2(a) for breach of
any representation or warranty, unless and until the aggregate amount
of such Damages exceeds $1,000,000 or (iii) in the case of any claim
for Damages under Section 8.2(e), unless and until the aggregate
amount of such Damages exceeds $10,000. The Buyer shall not be
obligated to indemnify and hold harmless any Seller Indemnitee from
Damages with respect to one or more claims under Section 8.3(a) for
any breach of any representation or warranty, unless and until the
aggregate amount of such Damages exceeds $4,500,000. The aggregate
indemnification liability of the Sellers or the Buyer for Damages
(other than any Damages derived from or attributable to any Employee
Benefit Plan other than an Assumed Plan, any Tax Item, any Excluded
Liabilities and any Designated Employee Liability) under this
Agreement shall not exceed twenty-five percent (25%) of the Purchase
Price. The aggregate indemnification liability of the Sellers for
Damages attributable to any Designated Employee Liability under this
Agreement shall not exceed $75,000. Notwithstanding the foregoing,
nothing contained in the Management Certificate shall act to qualify,
limit, or reduce Seller's indemnification obligations pursuant to
Section 8.2, except with respect to those representations qualified by
Sellers' Knowledge. Notwithstanding anything to the contrary contained
herein, Sellers shall not be obligated to indemnify and hold harmless
any Buyer Indemnitee against indirect, special, incidental,
consequential or punitive damages, except to the extent any of the
foregoing constitute Damages payable to third parties by Buyer in
connection with any third party claim.
(b) Any indemnification payment made pursuant to this Agreement
in respect of any claim (i) shall be net of any insurance proceeds
realized by and paid to the indemnified party in respect of such
claim; and (ii) shall be reduced by an amount equal to any tax
benefits attributable to such claim, and increased by an amount equal
to any taxes attributable to the receipt of such payment, but only to
the extent that such tax benefits are actually realized, or such taxes
are actually paid, as the case may be, by the Sellers or by the Buyer
or by any consolidated, combined, or unitary group of which the Buyer
or the Sellers are a member. The indemnified party shall use its
reasonable efforts to make insurance claims relating to any claim for
which it is seeking indemnification pursuant to this Section. Any
indemnity payment under this Agreement shall be treated as an
adjustment to the purchase price.
8.5 Indemnification Procedures. Except as otherwise provided in
Sections 6.2(h) and (i):
(a) Promptly after notice to an indemnified party of any claim or
the commencement of any Proceeding, including any Proceeding by a
third party, such indemnified party shall, if a claim for
indemnification in respect thereof is to be made against an
indemnifying party pursuant to this Article 8, give written notice to
the latter of the commencement of such claim or Proceeding, setting
forth in reasonable detail the nature thereof and the basis upon which
such party seeks indemnification hereunder; provided, however, that
the failure of any indemnified party to give such notice shall not
relieve the indemnifying party of its obligations under such section,
except to the extent that the indemnifying party is actually
prejudiced by the failure to give such notice.
(b) In the case of any such Proceeding, including any Proceeding
by a third party, with respect to an indemnified party, the
indemnifying party shall, upon notice as provided above, assume the
defense thereof, with counsel reasonably satisfactory to the
indemnified party, provided, however, that (i) the indemnifying party
provides the indemnified party with a written representation to the
effect that the indemnifying party has sufficient financial resources
to satisfy the amount of any adverse monetary judgment that is
reasonably likely to result; and (ii) the indemnifying party expressly
agrees in writing that, as between the indemnifying party and the
indemnified party, the indemnifying party shall be solely obligated to
satisfy and discharge the liability claim in accordance with this
Agreement (the conditions set forth in clauses (i) and (ii) are
collectively referred to as the "Litigation Conditions") and, after
notice from the indemnifying party to the indemnified party of its
assumption of the defense thereof and compliance with the Litigation
Conditions, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense
thereof (but the indemnified party shall have the right, but not the
obligation, to participate at its own cost and expense in such defense
by counsel of its own choice) or for any amounts paid or foregone by
the indemnified party as a result of the settlement or compromise
thereof (without the written consent of the indemnifying party).
Anything in this Section 8.5(b) notwithstanding, if both the
indemnifying party and the indemnified party are named as parties or
subject to such Proceeding and either such party determines with
advice of counsel that there may be one or more legal defenses
available to it that are different from or additional to those
available to the other party or that a material conflict of interest
between such parties may exist in respect of such Proceeding, then the
indemnifying party may decline to assume the defense on behalf of the
indemnified party or the indemnified party may retain the defense on
its own behalf, and, in either such case, after notice to such effect
is duly given hereunder to the other party, the indemnifying party
shall be relieved of its obligation to assume the defense on behalf of
the indemnified party, but shall be required to pay any legal or other
expenses including, without limitation, reasonable attorneys' fees and
disbursements, incurred by the indemnified party in such defense.
(c) If the indemnifying party assumes the defense of any such
Proceeding, the indemnified party shall cooperate fully with the
indemnifying party and shall appear and give testimony, produce
documents and other tangible evidence, allow the indemnifying party
access to the books and records of the indemnified party and otherwise
assist the indemnifying party in conducting such defense. No
indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement
or compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or Proceeding and
which does not impose any obligations (including, without limitation,
any injunctive relief) upon the indemnified party. If the indemnifying
party shall (x) fail promptly and diligently to assume the defense of
any Proceeding, or (y) the Litigation Conditions cease to be met, then
the indemnified party may respond to, contest and defend against such
Proceeding and may make in good faith any compromise or settlement
with respect thereto, and recover from the indemnifying party the
entire cost and expense thereof including, without limitation,
reasonable attorneys' fees and disbursements and all amounts paid or
foregone as a result of such Proceeding, or the settlement or
compromise thereof. The indemnification required hereunder shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills or invoices are
received or loss, liability, obligation, damage or expense is actually
suffered or incurred.
(d) The liability of an indemnifying party to indemnify the
indemnified party for Damages shall be limited to claims as to which
the indemnified party has given written notice on or prior to the
expiration of the applicable survival periods set forth in Section
8.1.
8.6 Sole Remedy. Subject to Sections 7.1 and 11.6, the right of
indemnification under this Section 8 shall be the sole and exclusive remedy
for any breach of this Agreement, except with respect to a breach of
Section 6.1. In the event of a breach by either party of its obligations
under Section 6.1, the non-breaching party shall be entitled to pursue its
remedies as set forth therein or to pursue any other remedy, and the right
to pursue such remedies shall not be subject to the limitations set forth
in Sections 8.2, 8.3 or 8.4.
9. Termination.
9.1 Events of Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual agreement of the Buyer and the Sellers;
(b) by the Buyer or the Sellers giving written notice to such
effect to the other party hereto if the Closing shall not have
occurred on or before September 30, 2004, or such later date as the
parties shall have agreed upon prior to the giving of such notice; or
(c) by the Sellers or the Buyer, in the event of an inaccuracy of
any representation or warranty of the Buyer or the Sellers,
respectively, contained herein or non-compliance by the Buyer or the
Sellers, respectively, with any of their respective covenants
contained herein, which such inaccuracy or non-compliance causes any
of the conditions precedent to the obligations of the Buyer in Section
7.1 or of the Sellers in Section 7.2, respectively, to become
incapable of being satisfied, provided that such inaccuracy or
non-compliance is not cured by such respective party within 10 days
after receipt of written notice thereof from the other party.
9.2 Effects of Termination. Upon termination of this Agreement
pursuant to Section 9.1, all obligations of the parties shall terminate,
provided, however, that (a) no such termination shall relieve the Sellers
of any liability to the Buyer, or the Buyer of any liability to the
Sellers, by reason of any breach of or default under this Agreement, and
(b) the parties shall not publicly disclose, and the parties shall cause
their Affiliates not to publicly disclose, the proposed terms and
conditions set forth herein or any non-public information regarding the
other party, except as may be required by Law.
10. Definitions.
10.1 For purposes of this Agreement, the following definitions shall
apply
(a) "Agreement" shall have the meaning given in the introduction.
(b) "Affiliate" means, with respect to any Person, any other
Person that controls, is controlled by, or is under common control
with the such Person.
(c) "Affiliated Group" means the affiliate group of corporations
within the meaning of Section 1504 of the Code that includes Seller,
the Company and includable Subsidiaries. (d) "Assumed Plans" shall
mean each employee benefit plan (as defined in Section 3(3) of ERISA,
and each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, termination,
severance, compensation, medical, health, or other plan, agreement,
policy or agreement which currently is sponsored, maintained,
contributed to, or required to be contributed to, by any of the
Company or its Subsidiaries solely for the benefit of any present or
future employees, retirees, directors or independent contractors (or
their beneficiaries, dependents or spouses) of the Company or its
Subsidiaries
(e) "Books and Records" shall mean all documents, instruments,
agreements and records referred to in this Agreement including the
minute and stock record books of Company and each Subsidiary.
(f) "Buyer" shall have the meaning given in the introduction.
(g) "Buyer Indemnitee" shall have the meaning given in Section
8.2.
(h) "Closing" shall have the meaning given in Section 1.
(i) "Closing Balance Sheet" shall have the meaning given in
Section 6.16(b).
(j) "Closing Date" shall have the meaning given in Section 1.
(k) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(l) "Combined Return" means a Tax Return of Seller for any Taxes
imposed by a state, local or foreign Tax authority for which Seller or
any Affiliate of Seller other than the Company and the Subsidiaries
files with any of the Company and the Subsidiaries on a consolidated,
combined or unitary basis.
(m) "Company" shall have the meaning given in the introduction.
(n) "Company Software" means and includes: (a) the content and
the applications software used or embodied in all websites operated by
any of the Company or the Subsidiaries and (b) all computer software
programs, documentation, data bases, technical and programmers'
manuals and other supporting materials that are used by the Company or
the Subsidiaries in their respective businesses as currently
conducted.
(o) "Consent" shall have the meaning given in Section 4.4(b).
(p) "Contract" shall have the meaning given in Section 4.4(a).
(q) "Damages" shall have the meaning given in Section 8.2.
(r) "Designated Employees" means those employees listed in
Schedule 6.11.
(s) "Designated Employee Liabilities" means all liabilities
related to the termination of the employment of the Designated
Employees (including without limitation, all Taxes, COBRA costs,
expenses and severance obligations) and whether arising before or
after the Closing date.
(t) "E&O Policy" shall have the meaning given in Section 6.13.
(u) "Employee Benefit Plans" means, collectively, each bonus,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, termination, severance, compensation,
medical, health, or other plan, agreement, policy or agreement whether
or not subject to ERISA and which currently is or has been sponsored,
maintained, contributed to, or required to be contributed to, by any
of the Company or its Subsidiaries or an ERISA Affiliate, or for which
the Company or its Subsidiaries or an ERISA Affiliate has or has had
any obligation or any liability of any nature, contingent or
otherwise, or for which there is a reasonable expectation of such
obligation or liability, on or before the Closing, for the benefit of
any present or former employees, retirees, directors or independent
contractors (or their beneficiaries, dependents or spouses) of the
Company or its Subsidiaries or an ERISA Affiliate.
(v) "Encumbrances" shall have the meaning given in Section
4.2(a).
(w) "Environment" means all air, surface water, groundwater, or
land, including land surface or subsurface, including all fish,
wildlife, biota and all other natural resources.
(x) "Environmental Law" means any and all Laws relating to the
protection of health and the Environment, worker health and safety,
and/or governing the handling, use, generation, treatment, storage,
transportation, disposal, manufacture, distribution, formulation,
packaging, labeling, or Release of Hazardous Substances, whether now
existing or subsequently amended or enacted, and the state analogies
thereto, all as amended or superseded from time to time; and any
common law doctrine, including, but not limited to, negligence,
nuisance, trespass, Personal injury, or property damage related to or
arising out of the presence, Release, or exposure to a Hazardous
Substance.
(y) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(z) "ERISA Affiliate" means any entity which with respect to
Safeco, the Seller, the Company or any Subsidiary is or was a member
of (i) a controlled group of corporations (as defined in Section
414(b) of the Code; (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code); or (iii) an
affiliated service group (as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of the Code), any of which
includes or included Safeco, the Seller, the Company or any
Subsidiary.
(aa) "Excluded Liabilities" means all liabilities of Sellers and
their Affiliates (other than those of the Company and Subsidiaries),
which may accrue to the Company solely as a result of the Company
having been or being included as part of a common control group with
Sellers, as a result of a contract, guarantee, loan or other
obligation incurred by or on behalf of the Seller or an Affiliate of
the Seller, or as result of the operation of law.
(bb) "GAAP" shall have the meaning given in Section 4.5(b).
(cc) "Governmental Entity" means any legislative or executive
agency or department or other regulatory service, authority or agency
or any court, arbitration panel or other tribunal or judicial
authority of any foreign, federal, state, county, municipal or other
local jurisdiction, political entity, body, organization, subdivision
or branch.
(dd) "Hazardous Substance" means any chemicals, materials,
substances or wastes in any amount or concentration which are now
included in the definition of "hazardous substances," "hazardous
materials," "hazardous wastes," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"pollutants," "regulated substances," "solid wastes," or
"contaminants" or words of similar import, under any Environmental
Law.
(ee) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
(ff) "Interim Financial Statements" shall have the meaning given
in Section 6.16(a).
(gg) "Laws" or "Law" means all applicable criminal, civil or
common laws, statutes, ordinances, orders, codes, rules, regulations,
policies, guidance documents, writs, judgments, decrees, injunctions,
or agreements of any Governmental Entity.
(hh) "Lease" means all leases, subleases, licenses and other
agreements under which the Company or any Subsidiary uses or occupies
or has the right to use or occupy, now or in the future, any real
property, including, without limitation, any land, buildings and
improvements.
(ii) "Litigation Conditions" shall have the meaning given in
Section 8.5(b).
(jj) "Management Certificate" shall mean a certificate dated as
of the closing dated executed by the Management Shareholders and the
controller and inhouse counsel of the Company substantially in the
form attached as Exhibit 7.2(d) hereto.
(kk) "Management Shareholder" shall have the meaning given in the
introduction.
(ll) "Material Adverse Effect" means a material adverse effect on
the condition (financial or otherwise), business, assets, results of
operations or prospects of the Company or any Subsidiary taken as a
whole.
(mm) "Material Contracts" shall have the meaning given in Section
4.9.
(nn) "Parent" shall have the meaning given in the introduction.
(oo) "Person" means any natural person or legal person
(including, but not limited to, a corporation, joint stock company,
limited liability company, partnership, joint venture, association,
estate, trust, government or governmental authority, agency or
instrumentality) or any group of any of natural or legal persons
acting in concert.
(pp) "Post-Closing Period" means any Tax period beginning and
ending after the Closing Date.
(qq) "Pre-Closing Period" means any Tax period ending on (and
including) or before the Closing Date.
(rr) "Proceeding" shall have the meaning given in Section 4.6(a).
(ss) "Prohibited Period" shall have the meaning given in Section
6.1(a).
(tt) "Purchase Price" shall have the meaning given in Section 3.
(uu) "Reference Balance Sheet" shall have the meaning given in
Section 4.5(a).
(vv) "Regular Financial Statements" shall have the meaning given
in Section 4.5(a).
(ww) "Regulation S-X" shall have the meaning given in Section
4.5(b).
(xx) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing of a Hazardous Substance into the Environment.
(yy) "Required Consents" shall have the meaning given in Section
4.4(a).
(zz) "Safeco Life" shall have the meaning given in Section 6.10.
(aaa) "Sale Proposal" means any inquiry, proposal or offer (other
than by the Buyer or its Affiliates) relating to, or that could
reasonably be expected to lead to (i) a merger, consolidation, share
exchange of securities, dissolution, recapitalization, liquidation or
other business combination involving the Company; or (ii) the
acquisition in any manner, directly or indirectly, in a single
transaction or in a series of related transactions, of all or
substantially all of the assets of the Company.
(bbb) "Schedule of Exceptions" means the Sellers' Schedule of
Exceptions to the representations and warranties contained in Section
4 of this Agreement, which has been delivered to the Buyer concurrent
with the execution of this Agreement.
(ccc) "Section 338(h)(10) Election" shall have the meaning given
in Section 6.2(a).
(ddd) "Seller" and "Sellers" shall have the meanings given in the
introduction.
(eee) "Seller Indemnitee" shall have the meaning given in Section
8.3.
(fff) "Sellers' Knowledge" means the actual knowledge of Xxxxx
Xxxxx and Xxxxx Xxxx and Sellers shall be deemed to have knowledge of
those items set forth in the Management Certificate.
(ggg) "Separated Officers" shall have the meaning given in
Section 6.13(a).
(hhh) "Straddle Period" means any Tax period beginning before and
ending after the Closing Date.
(iii) "Subsidiary" means each of the subsidiaries of the Company
listed on Schedule 4.2(b) to the Schedule of Exceptions.
(jjj) "Subsidiary Equity" shall have the meaning set forth in
Section 4.2(a).
(kkk) "Tangible Net Worth" shall mean the tangible assets of the
Company and the Subsidiaries, less the liabilities of the Company and
its Subsidiaries, as calculated under GAAP and consistent with past
practices.
(lll) "Tax" means any tax, charge, fee, levy, deficiency or other
assessment of whatever kind or nature including, without limitation,
any net income, gross income, profits, gross receipts, excise, real or
personal property, sales, ad valorem, withholding, social security (or
similar), retirement, excise, employment, unemployment, minimum,
alternative or add-on minimum, estimated, severance, stamp, property,
occupation, environmental, premium, capital stock, disability,
windfall profits, use, service, net worth, payroll, franchise,
license, gains, customs, transfer, recording, registration and other
tax, duty, fee, assessment or charge of any kind whatsoever, imposed
by any Tax Authority, including any liability therefore as a
transferee (including without limitation under Code Section 6901 or
any similar provision of applicable law), as a result of Treas. Reg.
ss.1.1502-6 or any similar provision of applicable law, or as a result
of any tax sharing or similar agreement, together with any interest,
penalties or additions to tax relating thereto.
(mmm) "Tax Authority" means any branch, office, department,
agency, instrumentality, court, tribunal, officer, employee, designee,
representative, or other Person that is acting for, on behalf or as a
part of any foreign or domestic government (or any political
subdivision thereof) that is engaged in or has any power, duty,
responsibility or obligation relating to the legislation,
promulgation, interpretation, enforcement, regulation, monitoring,
supervision or collection of or any other activity relating to any Tax
or Tax Return.
(nnn) "Tax Item" means each of the following items (or any
combination thereof):
(i) any Taxes for any Pre-Closing Period or attributable to the
portion of the Straddle Period up to and including the Closing Date
(including but not limited to, any liability arising under Treas. Reg.
ss. 1.1502-6 or under any Tax allocation, Tax indemnification or Tax
sharing contract or agreement in effect on (and including) or prior to
the Closing Date), to the extent such Taxes exceed the reserve for
Taxes (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on
the face of the Closing Balance Sheet (rather than in any notes
thereto); and
(ii) any Taxes attributable to the inclusion of any income, gain,
loss, deduction or other Tax items resulting from the Section
338(h)(10) Election (in whole or in part) made pursuant to this
Agreement (Sellers do not warrant the validity of the Section
338(h)(10) Election).
(ooo) "Tax Proceeding" means any audit, examination, review,
reassessment, litigation or other administrative or judicial
proceeding relating to any Tax for which the Company is (or is
asserted to be) or may be liable, the collection, payment or
withholding of any Tax, or any Tax Return filed by or on behalf of the
Company.
(ppp) "Tax Return" means any return, election, declaration,
report, schedule, information return, document, information, opinion,
statement, or any amendment to any of the foregoing (including without
limitation any consolidated, combined or unitary return) submitted or
required to be submitted to any Tax Authority.
(qqq) "Terminated Contracts" shall have the meaning given in
Section 6.3(a).
(rrr) "Trade Payables" means the normal course accounts payable
of the Company and the Subsidiaries that relate to amounts owing to
insurance carriers for premiums for insurance policies placed on
behalf of customers of the Company or any Subsidiaries.
(sss) "Transaction Documents" shall have the meaning given in
Section 4.3.
11. Miscellaneous.
11.1 Transaction Fees and Expenses. Except as otherwise expressly
provided herein, each party shall bear such costs, fees and expenses as may
be incurred thereby in connection with this Agreement and the transactions
contemplated hereby.
11.2 Notices. Any notice, demand, request or other communication which
is required, called for or contemplated to be given or made hereunder to or
upon any party hereto shall be deemed to have been duly given or made for
all purposes if (a) in writing and sent by (i) messenger or a recognized
national overnight courier service for next day delivery with receipt
therefor, or (ii) certified or registered mail, postage paid, return
receipt requested, or (b) sent by facsimile transmission with a written
copy thereof sent on the same day by postage paid first-class mail, or (c)
by personal delivery to such party at the following address:
if to the Buyer, to:
Satellite Acquisition Corporation
0000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
(000) 000-0000
With a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
(000) 000-0000
if to Parent or Seller:
Safeco Corporation
Safeco Plaza
Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
(000) 000-0000
With a copy to:
Attention:
------------------------------------------
(---) ---------
or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this Section.
11.3 Amendment. Except as otherwise provided herein, no amendment of
this Agreement shall be valid or effective unless in writing and signed by
or on behalf of the party against whom the same is sought to be enforced.
11.4 Waiver. No course of dealing of any party hereto, no omission,
failure or delay on the part of any party hereto in asserting or exercising
any right hereunder, and no partial or single exercise of any right
hereunder by any party hereto shall constitute or operate as a waiver of
any such right or any other right hereunder. No waiver of any provision
hereof shall be effective unless in writing and signed by or on behalf of
the party to be charged therewith. No waiver of any provision hereof shall
be deemed or construed as a continuing waiver, as a waiver in respect of
any other or subsequent breach or default of such provision, or as a waiver
of any other provision hereof unless expressly so stated in writing and
signed by or on behalf of the party to be charged therewith.
11.5 Governing Law; Venue. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Washington, without
regard to conflict of law provisions, except to the extent precluded by
federal law of mandatory application.
11.6 Remedies. In the event of any actual or prospective breach or
default by any party hereto, the other parties shall be entitled to
equitable relief, including remedies in the nature of injunction and
specific performance.
11.7 Severability. The provisions hereof are severable and if any
provision of this Agreement shall be determined to be legally invalid,
inoperative or unenforceable in any respect by a court of competent
jurisdiction, then the remaining provisions hereof shall not be affected,
but shall, subject to the discretion of such court, remain in full force
and effect, and any such invalid, inoperative or unenforceable provision
shall be deemed, without any further action on the part of the parties
hereto, amended and limited to the extent necessary to render such
provision valid, operative and enforceable.
11.8 Further Assurances. Each party hereto covenants and agrees
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts
as the other party hereto may reasonably request or as may otherwise be
necessary or proper to consummate and perfect the transactions contemplated
hereby and to act reasonably and in good faith to effectuate the smooth
transfer of the business of the Company and the Subsidiaries and the
inter-relationship of the parties post-Closing.
11.9 Assignment.
(a) This Agreement is binding upon and is for the benefit of the
parties hereto and their respective successors, legal representatives,
and assigns, and no Person who is not a party hereto (or a successor
or assignee of such party) shall have any rights or benefits under
this Agreement, either as a third party beneficiary or otherwise. This
Agreement cannot be assigned, except by a written agreement executed
by the parties hereto or their respective successors and assigns.
(b) Notwithstanding the foregoing, the Buyer (including each
subsequent assignee of the Buyer) shall have the right to assign any
or all of its rights and obligations under this Agreement and the
other Transaction Documents to any other Person who acquires all or
substantially all of the assets and business of the Buyer (or a
subsequent assignee of the Buyer) or to any other Person who is an
Affiliate of the Buyer, subject in each case to the assumption in
writing, and in a form reasonably acceptable to the Sellers (which
acceptance by the Sellers shall not be unreasonably withheld, delayed
or conditioned), by such Person of all of the Buyer's obligations
hereunder and delivery of such assumption to the Sellers within five
(5) business days of the execution thereof; provided, however, that
any such assignment shall not relieve the assignor from its
obligations under this Agreement.
(c) Notwithstanding any provision of this Agreement to the
contrary, the Sellers hereby acknowledge and agree that all of the
covenants, representations, warranties and indemnities of the Sellers
under this Agreement and under any other Transaction Document, may be
collaterally assigned to any and all lenders to the Buyer or any of
its Affiliates, any and all of whom may enforce their rights and
remedies in connection with any such collateral assignment or
realization thereon to the extent provided in the applicable security
agreements and other debt instruments or at law or in equity, subject
to the terms of this Agreement and the other Transaction Documents,
and all counterclaims and defenses the Sellers may have against the
Buyer; provided, however, that any such assignment shall not relieve
the assignor from its obligations under this Agreement.
11.10 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns.
11.11 No Third Party Beneficiaries. Nothing contained in this
Agreement, whether express or implied, is intended, or shall be deemed, to
create or confer any right, interest or remedy for the benefit of any
Person other than as otherwise provided in this Agreement.
11.12 Entire Agreement. This Agreement, together with the Schedule of
Exceptions, the Exhibits, certificates and other documentation referred to
herein or required to be delivered pursuant to the terms hereof, contains
the terms of the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersedes any and all prior
agreements, commitments, understandings, discussions, negotiations or
arrangements of any nature relating thereto.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date written above.
SATELLITE ACQUISITION CORPORATION.
By: /S/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: President
SAFECO CORPORATION
By: /S/ XXXXXXX X. XXXXXXXX
Name: Xxxxxxx X. XxXxxxxx
Title: Chairman, President and
Chief Executive Officer
GENERAL AMERICA CORPORATION
By: /S/ XXXXXXX X. XXXXXXXX
Name: Xxxxxxx X. XxXxxxxx
Title: President
