EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
HUB U.S. HOLDINGS, INC.
(THE "BUYER"),
AND
FIFTH THIRD FINANCIAL CORP.
(THE "SELLER"),
AS THE SOLE SHAREHOLDER
OF
FIFTH THIRD INSURANCE SERVICES, INC.
(THE "COMPANY")
DECEMBER 29, 2002
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TABLE OF CONTENTS
Page
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SCHEDULES
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Schedule 3.1 Organization
Schedule 3.2(a) Capitalization
Schedule 3.2(b) Shares of Capital Stock Owned by the Company
Schedule 3.4(b) Required Consents
Schedule 3.5(a) Regular Financial Statements
Schedule 3.5(c) Pro Forma Adjusted Balance Sheet
Schedule 3.7(a) No Undisclosed Liabilities
Schedule 3.8(a) Litigation
Schedule 3.9(a) Employee Benefit Plans
Schedule 3.9(h) Unfunded Obligations
Schedule 3.9(i) Multi-Employer Plan
Schedule 3.9(k) Plans Owning Securities of the Company, the Seller or any
ERISA Affiliate
Schedule 3.9(m) Certain Accrued Liabilities of the Company
Schedule 3.10(b) Leases
Schedule 3.11(a) Intellectual Property
Schedule 3.12(a) Exceptions to Title to Tangible Personal Property
Schedule 3.12(c) Capital Budget
Schedule 3.13 Material Contracts
Schedule 3.14 Taxes
Schedule 3.19 Assets Used In Business
Schedule 3.22 Labor and Employment Matters
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Schedule 3.23 Restrictive Covenants
Schedule 3.24 Bank Accounts
Schedule 3.25 Directors, Officers and Certain Employees
Schedule 5.4 New Leased Property
Schedule 5.5 Allocation of Purchase Price and Liabilities
Schedule 5.7 Assets Being Contributed to the Company
Schedule 5.9 Excluded Assets
EXHIBITS
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Exhibit 5.3 Transition Services Agreement
Exhibit 5.4(a) New Leases
Exhibit 5.4(b) Memorandum of Lease
Exhibit 5.9 Xxxx of Sale, Assignment and Assumption
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STOCK PURCHASE AGREEMENT
Dated as of December 29, 2002
The parties to this Agreement (this "Agreement") are Hub U.S. Holdings,
Inc., a Delaware corporation (the "Buyer"), and Fifth Third Financial Corp., an
Ohio corporation (the "Seller").
WHEREAS, the Seller owns all of the issued and outstanding capital
stock (the "Shares") of Fifth Third Insurance Services, Inc. (the "Company"), an
Indiana corporation; and
WHEREAS, the Buyer desires to purchase all of the Shares, and the
Seller desires to sell all of the Shares to the Buyer, upon and subject to the
terms and conditions set forth below.
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 Seller hereby agree as follows:
1. 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. The Seller will deliver to the Buyer
at the Closing on the Closing Date (i) one or more certificates representing all
of the Shares, which stock certificates shall be duly endorsed in blank for
transfer and shall be presented with stock powers duly executed in blank, and
(ii) such other documents as may be reasonably required by the Buyer to effect a
valid transfer of the Shares by the Seller to the Buyer.
2. Purchase Price.
2.1 As consideration for the Shares, the Buyer shall pay the
Seller a purchase price equal to the sum of (a) the Fixed Amount Component, plus
(b) the Cash Component, plus (c) the Accounts Receivable Component, minus (d)
the Payables Component (the "Purchase Price").
2.2 On the Closing Date, the Buyer is delivering to the Seller,
by wire transfer or certified bank check, an agreed-upon estimate of the
Purchase Price, subject to final adjustment in accordance with the provisions
hereof, in the amount of $37,000,000, which amount is (a) the Fixed Amount
Component ($37,000,000), plus (b) Estimated Cash Component ($473,033), plus (c)
the Estimated Accounts Receivable Component ($6,166,220), minus (d) the
Estimated Payables Component ($6,639,253).
2.3 Purchase Price Adjustment
(a) On or before March 31, 2003, the Buyer will prepare and
deliver to the Seller financial statements of the Company for the fiscal year of
the Company ending on December 31, 2002 including schedules showing the
calculations of the Cash Component, the
Accounts Receivable Component, the Payables Component and Agency Revenue as of
and for the year ended December 31, 2002 (collectively, the "Closing Financial
Statements"). The Closing Financial Statements shall be prepared on the basis of
United States generally accepted accounting principles, consistently applied
("GAAP"). If within thirty (30) days following delivery of the Closing Financial
Statements, the Seller has not given the Buyer written notice of the Seller's
objection to the Closing Financial Statements (which notice shall state the
basis for the Seller's objection), then the Closing Financial Statements shall
be binding and conclusive on the parties and shall be used in computing any
adjustment to the Purchase Price provided in this Section 2.3 and in Section
2.5. If the Seller duly gives the Buyer such notice of objection, and if the
Buyer and the Seller fail to resolve the issues outstanding with respect to the
Closing Financial Statements within ten (10) business days of receipt of notice
of such objection, then the Buyer and the Seller shall submit the issues
remaining in dispute to Ernst & Young (the "Independent Accountants") for
resolution. The determination by the Independent Accountants shall be final,
binding and conclusive on the parties. The Seller and the Buyer will each bear
fifty percent (50%) of the fees and costs of the Independent Accountants for
such determination.
(b) For all purposes of calculating the Estimated Accounts
Receivable Component and the Accounts Receivable Component, Accounts Receivable
aged ninety (90) days or over on the Closing Date (the "Non-Valued Receivables")
will be deemed to have no value and such Non-Valued Receivables shall not be
taken into account in determining the Purchase Price.
(c) If the actual Accounts Receivable Component determined
in accordance with subparagraph (a) of this Section 2.3 exceeds the Estimated
Accounts Receivable Component, then the Buyer shall pay the Seller the
difference between such amounts. If the Estimated Accounts Receivable Component
exceeds the actual Accounts Receivable Component, then the Seller shall pay the
Buyer the difference between such amounts.
(d) If the actual Cash Component determined in accordance
with subparagraph (a) of this Section 2.3 exceeds the Estimated Cash Component,
then the Buyer shall pay the Seller the difference between such amounts. If the
Estimated Cash Component exceeds the actual Cash Component, then the Seller
shall pay the Buyer the difference between such amounts.
(e) If the actual Payables Component determined in
accordance with subparagraph (a) of this Section 2.3 exceeds the Estimated
Payables Component, then the Seller shall pay the Buyer the difference between
such amounts. If the Estimated Payables Component exceeds the actual Payables
Component, then the Buyer shall pay the Seller the difference between such
amounts.
(f) Any net payment required to be made pursuant to
subparagraphs (c), (d) and (e) above shall be made by wire transfer of
immediately available funds within ten (10) business days of the final
determination of the Closing Financial Statements pursuant to subparagraph (a)
above. Notwithstanding the foregoing, in the event the Seller gives the Buyer a
notice of objection that indicates that a portion of such net payment is not in
dispute, then the undisputed portion of the payment shall be made by the Seller
or the Buyer, as the case may be, within ten (10) business days after the notice
of objection is delivered by the Seller to the Buyer.
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2.4 Accounts Receivable Payments.
(a) On the date that is ninety (90) days after the Closing
Date, the Buyer will deliver to the Seller a detailed statement setting forth
the then uncollected amounts of Accounts Receivable which were ascribed a value
in determining the Purchase Price (the "Valued Receivables") and which, despite
commercially reasonable efforts of the Buyer after the Closing Date (including
the application, subject to applicable Law, with respect to each customer of
amounts received from such customer to the oldest then outstanding Accounts
Receivable from such customer aged less than 365 days at the time of such
receipt), shall have not yet then been collected in full by the Buyer. The
Seller shall pay the Buyer a cash amount equal to the uncollected face amount of
the Valued Receivables within ten (10) business days after receipt of such
statement by the Seller;
(b) Within fifteen (15) business days after the Closing
Date, the Buyer shall assign to the Seller, for no consideration, the Non-Valued
Receivables. In addition, to the extent that the Buyer shall have received
payment from the Seller under Section 2.4(a) with respect to any of the Valued
Receivables, the Buyer shall assign, for no additional consideration, the Valued
Receivables as to which such payment has been received from the Seller. The
Buyer and the Seller will consult with respect to their respective collection
efforts, so as to develop collection processes and procedures that are
reasonable under all of the circumstances.
(c) With respect to the Valued Receivables as to which
payment has been received from the Seller under Section 2.4(a) and with respect
to the Non-Valued Receivables, if any of such Valued or Non-Valued Receivables
are subsequently collected by the Buyer within six (6) months of the Closing
Date, the Buyer will pay to the Seller the amount of any such collection,
subject to a reasonable deduction for interest accrued on the Valued Receivables
until, and costs associated with, the collection of the Valued and the
Non-Valued Receivables.
2.5 Client Retention Adjustment.
(a) If the excess, if any, of (i) $26,337,000 over (ii) the
Agency Revenue reflected on the Closing Financial Statements is $1 million or
more, the Seller shall pay to the Buyer the product of (i) such excess in its
entirety and (ii) 1.4. Such payment, if any, shall be made promptly in
immediately available funds by the Seller to the Buyer, after the Closing
Financial Statements are final.
(b) For purposes of this Agreement, "Agency Revenue" means,
as derived from the Closing Financial Statements, revenue generated by the
Business from fees, volume overrides, commissions and contingent profits for the
calendar year
2.6 [RESERVED]
2.7 Closing. Except as otherwise mutually agreed upon by the
Buyer and the Seller, the Closing shall occur no later than December 31, 2002,
subject to satisfaction or waiver of each condition to Closing.
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3. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that each of the following statements is
true and correct as of the date hereof:
3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana 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. Except as
set forth in Schedule 3.1, the Company is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of the business conducted by it makes such qualification or
licensing necessary. The Seller has delivered to the Buyer true, correct and
complete copies of the Company's Articles of Incorporation and Bylaws, as
currently in effect.
3.2 Capitalization.
(a) The authorized capital stock of the Company, the issued
and outstanding capital stock of the Company and the record and beneficial
ownership of the capital stock of the Company are set forth on Schedule 3.2(a).
All of the Shares are owned of record and beneficially by the Seller. The Shares
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 are duly authorized,
validly issued, fully paid and nonassessable. Except as set forth on Schedule
3.2(a), 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 or the Seller to
issue, transfer or sell any shares of capital stock, options, warrants, calls or
other equity interest of any kind whatsoever in the Company 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 agreements to which the Company or the Seller is a
party with respect to the voting of the capital stock of the Company.
(b) Except as set forth in Schedule 3.2(b), 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.
3.3 Authorization; Validity of Agreement. The Seller 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 the Seller pursuant to this
Agreement, including but not limited to any item referred to in Section 6
(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. Each of this Agreement and the
other Transaction Documents has been duly executed, authorized and delivered by
the Seller and is a valid and binding obligation of the Seller, enforceable
against it in accordance with its respective terms, except that the
enforceability hereof and thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally,
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and that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
3.4 No Violations; Consents and Approvals.
(a) The execution, delivery and performance of each of this
Agreement and the other Transaction Documents by the Seller do not, and the
consummation by it of the transactions contemplated hereby and thereby will not:
(i) violate any provision of the Articles of Incorporation or Bylaws of the
Seller or the Company, (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 (collectively, a "Contract") to which the Seller or the
Company is a party or by which any of its properties or assets may be bound or
otherwise subject, except for any Required Consents, or (iii) violate any Law
applicable to the Seller or the Company or any of their respective properties or
assets.
(b) No filing or registration with, notification to, or
authorization, consent or approval 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, is required in connection with the execution, delivery and
performance of this Agreement or any of the other Transaction Documents by the
Seller or the consummation by the Seller of the transactions contemplated hereby
and thereby, except for such consents, approvals, orders, authorizations,
notifications, notices, estoppel certificates, releases, registrations,
ratifications, declarations, filings, waivers, exemptions or variances (each a
"Consent") with respect to any License (as defined in Section 3.8(c)) or Law or
otherwise as are set forth on Schedule 3.4(b) hereof (the "Required Consents").
3.5 Financial Statements.
(a) Attached to Schedule 3.5(a) is the balance sheet of the
Company as of November 30, 2002 (the "Latest Balance Sheet"), together with the
related unaudited statements of income for the eleven-month period ended
November 30, 2002 ("Interim Financial Statements") and the unaudited balance
sheets of the Company as of December 31, 2001 and December 31, 2000, together
with the related unaudited statements of income (including the related notes, if
any) for the two fiscal years then ended (together, with the Latest Balance
Sheet and the Interim Financial Statements, the "Regular Financial Statements").
(b) The Regular Financial Statements have been prepared by
the Company and have been derived from, and agree with, the books and records of
the Company and fairly present the financial position of the Company as of the
respective dates thereof and the results of operations of the Company for the
respective periods set forth therein. The Regular Financial Statements have been
prepared in accordance with GAAP as of the dates and for the periods involved,
subject to the absence of notes and, in the case of the Latest Balance Sheet and
the related statements of operations for the interim period, to normal fiscal
year-end adjustments
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in the ordinary course (none of which, individually or in the aggregate, will be
material to the business or the operations of the Company).
(c) Attached as Schedule 3.5(c) is the pro forma balance
sheet of the Company as of December 26, 2002 ("Pro Forma Adjusted Balance
Sheet"), which gives effect to the following pro forma adjustments: (i) the
transfer out by the Company and the assumption by the Seller of the Excluded
Business, the Excluded Assets and the Excluded Liabilities and (ii) the
reclassification of certain accounts payable, accounts receivable and other
assets as set forth on Schedule 3.5(c). The Pro Forma Adjusted Balance Sheet was
prepared in accordance with GAAP based upon, and agrees with, the Interim
Financial Statements and the books and records of the Company, was prepared in
good faith and fairly presents the financial condition of the Company as of
December 26, 2002 after giving effect to said adjustments and the consummation
of the transactions contemplated by this Agreement.
3.6 Operation of Business. (a) Since the date of the Latest
Balance Sheet, the Company has continued to operate the Business in a manner and
system of operation employed immediately prior to the date of the Latest Balance
Sheet, and the Company has used its best efforts to prevent harm or damage to
the reputation of the Business or reduction of existing customer accounts (other
than in the ordinary course of business).
(b) Except as specifically contemplated by this Agreement
and other Transaction Documents, since the date of the Latest Balance Sheet the
Company has not (i) incurred any liabilities, except in the ordinary course of
business consistent with past practice; (ii) paid any obligation or liability,
or discharged or satisfied any Encumbrance other than those securing current
liabilities, in each case in the ordinary course of business; (iii) mortgaged,
pledged or subjected to any Encumbrance any of its assets, tangible or
intangible, except in the ordinary course of business; (iv) sold, transferred or
leased any of its assets except the sale of inventory in the ordinary course of
business; (v) suffered any material physical damage, destruction or loss
(whether or not covered by insurance) affecting its properties, business or
prospects; (vi) entered into any transaction other than in the ordinary course
of business; (vii) encountered any labor difficulties or labor union organizing
activities; (viii) issued or sold any shares of capital stock or other
securities or granted any options, warrants, or other purchase rights with
respect thereto other than pursuant to this Agreement; (ix) made any acquisition
or disposition of any assets or become involved in any other material
transaction, including, without any limitation, any merger or consolidation
with, purchase of all or part of the assets of, or acquisition of any business
of any proprietorship, firm, association, corporation or other business
organization or division thereof; (x) except in the ordinary course of business
consistent with past practice, increased the compensation payable, or to become
payable, to any of its directors or employees, or made any bonus payment or
similar arrangement with any directors or employees or increased the scope or
nature of any fringe benefits provided for its employees or directors; (xi) made
any capital investment in, any loan to or any acquisition of the securities or
assets of any other person; (xii) canceled, compromised, waived or released any
material right or claim; (xiii) made any change in employment terms for any of
its directors, officers or employees outside the ordinary course of business;
(xiv) made or pledged to make any charitable contribution or other capital
contribution outside the ordinary course of business; (xv) violated any Law, if
such violation could have resulted in a material adverse effect on the condition
(financial or otherwise), business, assets, results of operations or prospects
of the Company (a
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"Material Adverse Effect"), or failed to maintain all governmental licenses and
approvals required to operate its business as currently being conducted; or
(xvi) agreed or committed, whether in writing or otherwise, to do any of the
foregoing other than pursuant to the Transaction Documents and the transactions
contemplated hereby and thereby. In addition, since the date of the Latest
Balance Sheet the Company has not accelerated, terminated, modified or canceled
any material agreement, contract, lease or license to which it is a party or by
which it or its assets are bound.
(c) Since the date of the Latest Balance Sheet, no event,
condition or circumstance has occurred that could, or could be reasonably likely
to, have a Material Adverse Effect on the Business.
3.7 No Undisclosed Liabilities.
(a) Except as set forth on Schedule 3.7(a), the Company has
no liabilities (whether accrued, contingent, known, or otherwise) other than
those that (i) are set forth or reserved against on the Latest Balance Sheet; or
(ii) were incurred in the operation of the Business since the date of the Latest
Balance Sheet in the ordinary course of business.
(b) The accounts payable of the Company set forth in the
Latest Balance Sheet or arising subsequent thereto are the result of bona fide
transactions in the ordinary course of business.
3.8 Litigation; Compliance with Law; Licenses and Permits.
(a) Except as set forth on Schedule 3.8(a), there is no
claim, suit, action, investigation or proceeding (each, a "Proceeding") pending,
nor is there any Proceeding threatened, that involves or affects the Company, by
or before any Governmental Entity, court, arbitration panel or any other Person.
(b) The Company has since January 2000, and on the Closing
Date will have, complied with all applicable Laws, including but not limited to
Laws relating to Taxes, 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, consumer product safety, product liability, hiring, wages, hours,
employee benefit plans and programs, collective bargaining and the payment of
withholding and social security taxes, except for any non-compliance that did
not have or will not have a Material Adverse Effect. Since January 1, 2000, the
Company has not received any notice of any violation of any Law.
(c) The Company has every license, permit, certification,
qualification or franchise issued by any Governmental Entity (each, a
"License"), and every Consent by or on behalf of any Person that is not a party
to this Agreement, required for it to conduct its business as presently
conducted. All such Licenses and Consents are in full force and effect and
neither the Company nor the Seller has received notice of any pending
cancellation or suspension of any thereof nor is any cancellation or suspension
thereof threatened. The applicability and validity of each such License and
Consent will not be adversely affected by the consummation of the transactions
contemplated by this Agreement or any other Transaction Document.
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3.9 Employee Benefit Plans; ERISA.
(a) Schedule 3.9(a) contains a complete and accurate list of
all Employee Benefit Plans (as defined below) (excluding bonuses, pay practices,
leave policy and ad hoc employment practices and similar non-material
arrangements (the "Payroll Practices")) which Seller, the Company or an ERISA
Affiliate (as defined below) has sponsored, maintained or contributed to, or to
which such entities have or have had any obligation or any liability of any
nature on or before the Closing for the benefit of any employees of the Company
(and their beneficiaries) (individually a "Listed Plan" or collectively the
"Listed Plans"). Each and all the Employee Benefit Plans (as defined below)
(including, without limitation, the Payroll Practices) which any of the Seller,
the Company or an ERISA Affiliate (as defined below) has sponsored, maintained
or contributed to, or to which such entities have or have had any obligation or
any liability of any nature on or before the Closing for the benefit of any
employees of the Company (and their beneficiaries) (individually a "Plan" or
collectively the "Plans") have been administered in all respects in accordance
with its terms, and any of the Company, the Seller or any ERISA Affiliate (as
the case may be) has met its obligations with respect to such Plan.. For
purposes of this Agreement, "Employee Benefit Plan" means (i) any "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (ii) any "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), and (iii) any other written
or oral plan, agreement or arrangement involving direct or indirect
compensation, including without limitation, a "multiemployer plan" (as defined
in either Section 3(37) or Section 4001(a)(13) of ERISA), insurance coverage,
severance benefits, disability benefits, deferred compensation, bonuses, stock
options, stock purchase, phantom stock, stock appreciation, one or more of the
Severance Plans (as defined below) or other forms of incentive compensation or
post-retirement compensation which has been sponsored, maintained or contributed
to, by any of the Company, the Seller or any ERISA Affiliate, or for which the
Company, Seller or any ERISA Affiliate has or has had any obligation or any
liability of any nature. For purposes of this Agreement, "ERISA Affiliate" means
any entity which with respect to the Company or the Seller is 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 the Company or the Seller. Complete and accurate copies of
the following documents for the last two (2) plan years for each Plan have been
delivered or made available to the Buyer: (A) any Listed Plan which has been
reduced to writing, (B) any written summary of any unwritten Listed Plan, (C)
any related trust agreement, insurance contract and summary plan description
including any modification communicated to any participant, (D) any annual
report filed on Internal Revenue Service ("IRS") Forms 5500, 5500C or 5500R, (E)
the most recent determination letter with respect to any Listed Plan, if any,
and the full and complete application therefor submitted to the IRS, (F) any
actuarial report with respect to any Plan; (G) any collective bargaining
agreement pursuant to which contributions have been made or obligations incurred
(including both pension and welfare benefits) by any of the Company, the Seller
or an ERISA Affiliate, and any collective bargaining agreement pursuant to which
contributions are being made or obligations are owed by such entities, (H) any
contract with any third party administrator, actuary, investment manager,
consultant, or other independent contractor that relates to any Listed Plan, (I)
any report prepared and distributed within the four (4) years preceding the date
of this Agreement by any third party administrator, actuary, investment
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manager, consultant, or other independent contractor with respect to any Listed
Plan, (J) any notification to any employee of his rights under ERISA Section 601
et seq. and Section 4980B of the Code, (K) any notice that was given by any of
the Company, the Seller or any ERISA Affiliate or any Plan to the IRS, the
Pension Benefit Guaranty Corporation ("PBGC"), or any participant or
beneficiary, pursuant to statute, within the four (4) years preceding the
Closing Date, including notices that are expressly mentioned elsewhere in this
Agreement, and (L) any notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, the Seller or any ERISA Affiliate, or any
Listed Plan within the four (4) years preceding the Closing Date. Each of the
Company, the Seller and each ERISA Affiliate and Plan is in compliance (both in
form and operation) in all respects with the currently applicable provisions of
ERISA and the Code and the regulations thereunder, and other applicable laws to
the extent required.
(b) There are no termination proceedings with respect to any
of the Plans (excluding any Payroll Practices). There are no claims (except
claims for benefits payable in the normal operation of the Plan and proceedings
with respect to qualified domestic relations orders), suits or proceedings
against or involving any Plan or asserting any rights or claims to benefits
under any Plan that could give rise to any liability. To the Seller's, each
ERISA Affiliate's and Company's knowledge, there are no investigations by any
governmental entity involving any Plan.
(c) To the knowledge of any of the Company, the Seller and
any ERISA Affiliate, there are no threatened audits, investigations, claims,
suits, grievances or other proceedings, involving, directly or indirectly, any
Plan, or any rights or benefits thereunder (except claims for benefits payable
in the normal operation of the Plan and proceedings with respect to qualified
domestic relations orders).
(d) The Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the IRS to
the effect that such Plans are qualified and the plans and the trusts related
thereto are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code. No such determination letter has been revoked and
revocation has not been threatened.
(e) No Plan is or has been a multiemployer plan. The Company
does not have any liability or obligation of any nature to any Employee Benefit
Plan, the PBGC or any other person, arising directly or indirectly under Title
IV of ERISA or Section 412 of the Code. No "reportable event" within the meaning
of Section 4043 of ERISA for which reporting is not waived has occurred with
respect to any Plan that would in any manner give rise to liability or
obligation to the Company or Buyer. None of the Company, the Seller or any ERISA
Affiliate has ceased operations at any facility which has subjected or could
subject the Company or Buyer to any liability or obligation under Sections
4062(e), 4063 or 4064 of ERISA. None of the Company, the Seller or any ERISA
Affiliate currently has any obligation, to make any withdrawal liability payment
to any Employee Benefit Plan which is a multiemployer plan, but only if such
withdrawal liability payment has resulted or could result in any liability or
obligation to the Company or Buyer. None of the Company, the Seller or any ERISA
Affiliate has been a party to a sale of assets to which Section 4204 of ERISA
applied with respect to which it could incur any withdrawal liability (including
any contingent or secondary withdrawal liability) to any multiemployer plan, but
only to the extent that any such liability has subjected or
9
could subject to the Company or Buyer to any liability or obligation. None of
the Company, the Seller, or any ERISA Affiliate has incurred, or has experienced
an event that may, within the ensuing twelve (12) months, result in a "complete
withdrawal" or "partial withdrawal" as such terms are defined in Sections 4203
or 4205 of ERISA and nothing has occurred that could result in such a complete
or partial withdrawal, but only to the extent that any such withdrawal has
subjected or could subject to the Company or Buyer to any liability or
obligation. None of the Company, the Seller or any ERISA Affiliate has incurred
a decline in contributions to any multiemployer plan such that, if the current
rate of contributions continues, a seventy percent (70%) decline in
contributions (as defined in Section 4205 of ERISA) will occur within the next
three plan years, but only to the extent that any such decline in contributions
has subjected or could subject the Company or Buyer to any liability or
obligation.
(f) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by the Company, Seller or
an ERISA Affiliate that would subject either Buyer or the Company to any fine,
penalty or Taxes.
(g) To the knowledge of the Company, the Seller and each
ERISA Affiliate, neither the Company, the Seller nor any ERISA Affiliate, or any
plan fiduciary of any employee welfare benefit plan or employee pension benefit
plan has engaged in any transaction in violation of Section 406(a) or (b) of
ERISA or any "prohibited transaction" (as defined in Section 4975(c)(1) of the
Code), which could subject the Company, the Seller or the Buyer to any Taxes,
penalties or other liabilities resulting from such prohibited transaction.
(h) There are no unfunded obligations which have subjected
or could subject the Company or Buyer to any liability or obligation under any
Employee Benefit Plan providing benefits after termination of employment of any
employee of the Company, the Seller or any ERISA Affiliate (or to any
beneficiary of any such employee), including but not limited to, any retiree
health coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code ("COBRA") and
insurance conversion privileges under state law. No written or oral
representations have been made to any employee or former employee of the Company
promising or guaranteeing any employer payment or funding for the continuation
of medical, dental or disability coverage beyond that legally required. No
unwritten amendment exists with respect to any Plan.
(i) Except as disclosed in Schedule 3.9(i), no Plan which is
legally or otherwise assumed by Company or Buyer on or after the Closing as a
result of the consummation of this Agreement, including those set forth in
Section 5.16 ("Assumed Plan") is funded by, associated with, or related to a
"voluntary employee's beneficiary association" within the meaning of Section
501(c)(9) of the Code, a "welfare benefit fund" within the meaning of Section
419 of the Code, a "qualified asset account" within the meaning of Section 419A
of the Code or a "multiple employer welfare arrangement" within the meaning of
Section 3(40) of ERISA. No Plan which is an employee welfare benefit plan is a
multiemployer plan.
(j) No plan documentation or agreement, summary plan
description or other written communication distributed generally to employees
prohibits the Company, the Seller or any ERISA Affiliate from amending or
terminating any Assumed Plan.
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(k) None of the assets of any Assumed Plan include any
securities issued by the Company, the Seller or any ERISA Affiliate; provided
however, some Plans referred to in Section 5.16 may include such securities.
(l) "Severance Plans" shall mean (i) each agreement with any
employee or director of the Company (A) the benefits of which are contingent, or
the terms of which are altered, upon the occurrence of a transaction involving
the Company, the Seller or an ERISA Affiliate of the nature of any of the
transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee or (C) providing severance benefits or
other benefits after the termination of employment of such employee or director;
(ii) each agreement, plan or arrangement under which any person may receive
payments from the Company, the Seller or any ERISA Affiliate that has subjected
or could subject the Buyer or Company to the Taxes imposed by Section 4999 of
the Code or included in the determination of such person's parachute payment
under Section 280G of the Code; and (iii) each agreement, plan or arrangement,
including without limitation any stock option plan, stock appreciation right
plan, restricted stock plan, stock purchase plan or severance benefit plan which
has subjected or could subject the Buyer or Company to any liability or
obligation. None of the Severance Plans which are Assumed Plans provide that any
of the benefits under such Severance Plans will be increased, nor will the
vesting of the benefits under such Severance Plans which are Assumed Plans be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement nor will the value of any of the benefits under such Severance Plans
which are Assumed Plans be calculated on the basis of any of the transactions
contemplated by this Agreement. No payments under any Severance Plans or other
agreement will be parachute payments under Section 280G of the Code that are
non-deductible to the Company or the Buyer or subject to Taxes under Section
4999 of the Code.
(m) Schedule 3.9(m) sets forth a reasonable estimate of the
Company's accrued liability for vacation, sickness and disability expenses
through and including the Closing Date.
(n) None of the assets of any Assumed Plan is or has been
invested in any property constituting employee real property or any employee
security within the meaning of Section 407(d) of ERISA; provided, however, some
of the Plans referred to in Section 5.16 may include employer securities.
(o) On and after the Closing Date and except as otherwise
provided in Section 5.16, neither Company nor Buyer will have any liability or
be under any obligation with respect to any Employee Benefit Plan (excluding
Payroll Practices which are assumed or otherwise adopted by the Company or the
Buyer after Closing Date).
(p) Full payment has or will, prior to the Closing Date,
have been made of all amounts which the Company, the Seller or any ERISA
Affiliate is directly or indirectly required, under applicable law, the terms of
any Plan or any agreement relating to any Plan to have paid as a contribution,
premium or other remittance thereto or benefit thereunder if such payment has a
deadline on or before the Closing Date. The Company, the Seller and each ERISA
Affiliate has made adequate provisions for reserves or accruals in accordance
with GAAP to meet contribution, benefit or funding obligations arising under
applicable law or the
11
terms of any Plan or related agreement. There will be no change on or before the
Closing Date in the operation of any Plan or any documents with respect thereto
which will result in an increase in the benefit under such plans, except as may
be required by law.
(q) The Company, the Seller and each ERISA Affiliate have
timely complied with all reporting and disclosure obligations with respect to
the Plans imposed by the Code, ERISA or other applicable law.
(r) The transactions contemplated herein will not result in
the acceleration of accrual, vesting, funding or payment of any contribution or
benefit under any Employee Benefit Plan which could subject the Company or Buyer
to any liability or obligation.
(s) No action or omission of the Company, the Seller, any
ERISA Affiliate or any director, officer, employee, or agent thereof in any way
restricts, impairs or prohibits the Buyer, the Seller or the Company or any
successor thereof from amending, merging, or terminating any Assumed Plan in
accordance with the express terms of any such plan and applicable law.
(t) To the knowledge of the Company, any Seller or ERISA
Affiliate, the actuarial report for a Plan fairly presents the financial
condition and the results of operations of each such Plan in accordance with
GAAP as of the date stated therein.
(u) Each Assumed Plan covers only employees of the Company
(or former employees or beneficiaries with respect to service with each such
Company or Subsidiary), so that except as provided in Section 5.16, the
transaction contemplated by this Agreement will require no spin-off of assets or
other division or transfer of rights with respect to any such plan.
(v) The Company does not now, nor has it ever, had the
obligation to maintain, establish, sponsor, participate in, or contribute to any
International Employee Plan. International Employee Plan shall mean any Employee
Benefit Plan (determined without regard to whether such plan is subject to
ERISA) that has been adopted or maintained by the Company, the Seller or any
ERISA Affiliate, whether formally or informally, or with respect to which the
Company, the Seller or any ERISA Affiliate will or may have any liability, for
the benefit of any employees who perform services outside of the United States.
3.10 Real Property.
(a) The Company owns no real property.
(b) Schedule 3.10(b) contains a true, correct and complete
list and summary of all Leases under which the Company uses or occupies or has
the right to use or occupy, now or in the future, any Leased Real Property. The
Company has heretofore delivered to the Buyer true and correct copies of all
Leases with parties that are not Affiliates to the Seller. Each such Lease is in
full force and effect, is enforceable against the parties thereto in accordance
with its terms, all rent and other sums and charges payable by the Company
thereunder are current, no termination event or condition or default which has
remained uncured beyond applicable cure periods on the part of the Company or
any other Person exists under any such Lease, and no event has occurred and no
condition exists which, with the giving of notice or
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the lapse of time or both, would constitute such a default or termination event
or condition. Except to the extent set forth in Schedule 3.10(b), no such Lease
has been amended, modified or extended as of the date hereof. The Company is in
possession of and quietly enjoys the Leased Real Property applicable to it and
the Company has a valid and enforceable leasehold interest, subject to no Title
Defects except such immaterial easements and rights-of-way, none of which
interferes with the operation of the business. The Company has not entered into
any assignment of any Lease, sublease of all or any portion of any Leased Real
Property and no Person has any right to occupy the Leased Real Property other
than the Company.
(c) There has been no service, material or other work
provided or supplied to the Leased Real Property that has not been paid in full.
(d) With respect to each parcel of the Leased Real Property
(i) there is a right of ingress and egress to public thoroughfares to and from
each parcel of the Leased Real Property, (ii) each parcel of the Leased Real
Property has adequate water supply and septic service for the present use
thereof and all septic service and water supply facilities required for the
present use of the Leased Real Property are properly and fully installed and
operating and (iii) all curb cut and street opening permits or licenses required
for vehicles access to and from and part of the Leased Real Property to any
adjoining public street have been obtained and if required, paid for by the
Company and are in full force and effect. The Company has obtained all necessary
governmental approvals to build and operate its septic system which system was
built by a company licensed for the construction of septic systems. There is no
Leased Real Property of any kind whatsoever used by the Company in its business,
except for the Leased Real Property, and the Leased Real Property constitutes
all of the Leased Real Property necessary to conduct such business as presently
conducted.
(e) All Approvals in connection with the construction, use,
occupancy and maintenance of any Leased Real Property of all governmental
authorities or from all insurance companies and fire rating and similar boards
and organizations required to have been issued to enable the Leased Real
Property to be lawfully occupied and used for all of the purposes for which it
is presently occupied now and lawfully issued and are in full force and effect
in accordance with the respective terms thereof, and none of the Approvals has
been amended, assigned, pledged or otherwise transferred. There is no
alteration, improvement or change in use of any building or other improvement
located on the Leased Real Property that would require any new Approvals or
amendment of an existing Approval. The condition and use of the Leased Real
Property conforms to each Approval. The Company and the Leased Real Property is
in compliance with all Leased Real Property Laws or any public health, public
safety, sewage, water or sanitation Law, any Environmental Law or any Title
Defect affecting the Leased Real Property, and no notice of any such default or
violation has been received by the Company or the Seller. The Company has
obtained all of the approvals necessary for the operation of its business on the
Leased Real Property. The Leased Real Property and its continued use, occupancy
and operation as currently used, occupied or operated does not constitute a
non-conforming use under any Leased Real Property Law and the continued
existence, use, occupancy and operation of the Leased Real Property and the
right and ability to repair and/or rebuild any improvements thereon in the event
of a casualty, is not dependent on any special permit exception, approval or
variance.
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(f) The Leased Real Property including, without limitation,
all building systems and equipment, all structural components, the roof, the
basement, all plumbing, electrical, mechanical, heating, ventilating, air
conditioning and sprinkler systems, and all sewer, waste water, storm water,
paving and parking equipment, systems and facilities, are fully installed and,
as applicable, operating, in good condition and repair and adequate for the
conduct of the business of the Company as presently conducted. There are no
defects in the same that would hinder or impair the business and operations of
the Company. No extraordinary repair or improvement expense with respect thereto
is anticipated during the one year following the Closing Date. The electricity,
water, gas and telephone service and all other public or private utilities
serving the Leased Real Property are fully installed and operating, adequate for
the conduct of the business of the Company as presently conducted, and enter the
Leased Real Property through adjoining public streets or through valid easements
across adjoining private lands, and all installation, connection and capital
recovery charges in connection with any such utilities have been paid in full.
(g) There is no pending, or to the knowledge of the Seller,
proposed (i) annexation, condemnation, eminent domain or similar proceeding
affecting, or that may affect any of the Leased Real Property, (ii) proceeding
to change or redefine the zoning classification of any of the Leased Real
Property, (iii) imposition of any special or other assessments for public
betterments or otherwise, (iv) special assessments affecting any of the Leased
Real Property that are or would be payable by the Company and could result in a
Lien against any of the Leased Real Property, (v) change in any applicable Laws
relating to the use, occupation or operation of the Leased Real Property, (vi)
tax certiorari proceeding with respect to any Leased Real Property or (vii)
changes in road patterns or grades that may adversely affect access to any roads
providing a means of ingress or egress from any of the Leased Real Property.
(h) Neither the Company nor the Seller have received notice
from any insurance company or Board of Fire Underwriters (or organization
exercising functions similar thereto) or from any mortgagee requesting the
performance of any work or alteration in respect of any of the Leased Real
Property, and there are no outstanding requirements or recommendations from any
of the foregoing.
(i) There has been no material damage to any portion of the
Leased Real Property caused by fire or other casualty that has not been
completely repaired and restored.
(j) The Company is not a "foreign person" and the Seller is
not a "foreign person" for purposes of Section 1445 of the Code.
(k) No portion of the Leased Real Property is located in a
special flood hazard area designated by Federal governmental authorities.
(l) No application or proceeding is pending with respect to
a reduction of the taxes on the Leased Real Property.
(m) The Company does not owe any monies to any contractor,
subcontractor, materialman or other Person for labor or materials performed,
rendered or
14
supplied in connection with any Leased Real Property for which such Person could
claim a lien against any of the Leased Real Property.
(n) Neither the Company nor the Seller have transferred any
development rights applicable to the Leased Real Property.
(o) There are no brokerage commissions due and payable by
the Company with respect to the Leased Real Property or with respect to the
Leases.
(p) Each parcel of Leased Real Property is an independent
unit which does not rely or depend on land, improvements, drainage, rights of
way, easements, utility lines or equipment, sewer service, access to public
ways, parking, structural or other facilities located on any Leased Real
Property not forming part of the Leased Real Property to satisfy or comply with
any Leased Real Property Laws or to sustain its current operations at the
subject location.
3.11 Intellectual Property; Computer Software.
(a) Schedule 3.1l(a) lists all Intellectual Property of the
Company, and there are no pending or threatened claims by any Person relating to
the Company's use of any Intellectual Property. The Company has such rights of
ownership (free and clear of all Encumbrances) of, or such rights by license,
lease or other agreement to use (free and clear of all Encumbrances), the
Intellectual Property as are necessary to permit the Company to conduct its
business, and the Company is not obligated to pay any royalty or similar fee to
any Person in connection with the Company's use or license of any of the
Intellectual Property.
(b) The Company has such rights of ownership (free and clear
of all Encumbrances) of, or such rights by license, lease or other agreement to
use (free and clear of all Encumbrances), all computer software programs
including, without limitation, application software that are used by the Company
and that are material to the conduct of its business as currently conducted, as
are necessary to permit the conduct of its business as currently conducted. None
of the Company's ownership rights or rights to use any of the computer programs
referred to above will be adversely affected by the consummation of any of the
transactions contemplated hereby.
3.12 Tangible Personal Property.
(a) The Company has good, marketable and valid title to all
tangible Personal Property used in its business or located on its premises free
and clear of all Encumbrances, except as set forth on Schedule 3.12(a).
(b) The Personal Property conforms to all material
requirements of applicable Laws. All of the items of machinery and equipment
included within the Personal Property are fully operational and operating in the
ordinary course of the Company's business, as applicable, are in good operating
condition and in a good state of maintenance and repair, ordinary wear and tear
excepted, and are adequate for use in the conduct of the Company's business as
presently conducted.
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(c) Except as set forth on Schedule 3.12(c), no capital
expenditures are contemplated by the Company.
3.13 Material Contracts.
(a) Schedule 3.13 sets forth a true, complete and correct
list of every Contract that: (i) provides for aggregate future payments by the
Company or to the Company of more than $5,000; (ii) was entered into by the
Company with the Seller, or an officer, director, key employee or Affiliate of
the Company; (iii) is a collective bargaining or similar agreement; (iv)
guarantees or indemnifies or otherwise causes the Company to be liable or
otherwise responsible for the obligations or liabilities of another or provides
for a charitable contribution by the Company; (v) involves an agreement with any
bank (other than Fifth Third Bank), finance company or similar organization;
(vi) restricts the Company from engaging in any business or activity anywhere in
the world; (vii) is an employment agreement, consulting agreement, independent
sales representative agreement or similar arrangement with any employee of the
Company; (viii) is a lease of real property; or (ix) is otherwise material to
the rights, properties, assets, business or operations of the Company (the
foregoing, collectively, "Material Contracts"). The Seller has heretofore made
available true, complete and correct copies of all Material Contracts to the
Buyer.
(b) Each of the Material Contracts is in full force and
effect and there is not now and there has not been claimed or alleged, to the
Seller's knowledge, by any Person with respect to any Material Contract, any
existing default, or event that with notice or lapse of time or both would
constitute a default or event of default, on the part of the Company or on the
part of any other party thereto and, except as set forth on Schedule 3.4(b), no
Consent from, or notice to, any Governmental Entity or other Person is required
in order to maintain in full force and effect any of the Material Contracts,
other than such Consents that have been obtained and are in full force and
effect and delivered to Buyer and such notices that have been duly given.
3.14 Taxes.
(a) Except as set forth in Schedule 3.14:
(i) the Company has (A) duly and timely filed or caused to
be filed with Tax Authorities each Tax Return that is required to be filed by or
on behalf of the Company or that includes or relates to the Company, its income,
sales, assets or business, which Tax Return is true, correct and complete, (B)
duly and timely paid in full, or caused to be paid in full, all Taxes due and
payable on or prior to the Closing Date, and (C) properly accrued on the books
and records of the Company in accordance with GAAP a provision for the payment
of all Taxes due or claimed to be due or for which the Company otherwise is
liable, in each case with respect to the Company's income, sales, assets or
business;
(ii) the Company has not requested an extension of time
within which to file any Tax Return in respect of any Tax Period which has not
since been filed;
(iii) the Company has complied in all respects with all
applicable laws relating to the payment, collection or withholding of any Tax,
and the remittance thereof to any and all Tax Authorities, including, but not
limited to, Code Section 3402;
16
(iv) there is no Encumbrance for Taxes upon any asset or
property of the Company (except for any statutory Encumbrance for any Tax not
yet due);
(v) all Taxes assessed or for which the Company is liable
with respect to the Company's income, sales, assets or business have been paid
or accrued;
(vi) any assessment, deficiency or adjustment related to
or in connection with any Tax for which the Company is liable or with respect to
the Company's income, sales, assets or business that is or was required to be
reported to any Tax Authority has been so reported, and any additional Taxes
owed with respect thereto have been paid;
(vii) there is no outstanding subpoena or summons from any
Tax Authority with respect to any Tax for which the Company is or may be liable
or with respect to the Company's income, sales, assets or business;
(viii) the Company is not 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)
nor has requested or received a private letter or other ruling from any Tax
Authority relating to any Tax for which the Company is or may be liable or with
respect to the Company's income, sales, assets or business;
(ix) the Company is not 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), 280G or 404 or any
similar provision of applicable law;
(x) the Company has no "tax-exempt use property" within
the meaning of Code Section 168(h) or any similar provision of applicable law
with respect to the Company, its income, sales, assets or business;
(xi) no asset of the Company is required to be treated as
being owned by any other Person pursuant to any provision of applicable law,
including, but not limited to, the "safe harbor" leasing provisions of Code
Section 168(f)(8) as in effect prior to the repeal of those "safe harbor"
leasing provisions;
(xii) the Company is not, nor has it ever been, a "United
States real property holding corporation" within the meaning of Code Section
897(c)(2) at any time during the applicable period referred to in Code Section
897(c)(l)(A)(ii);
(xiii) 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 a subsidiary, if any, of the Company);
(xiv) there is no power of attorney in effect relating to
the Company; and
17
(xv) no jurisdiction where the Company does not file a Tax
Return has made or, to the Seller's knowledge, threatened to make a claim that
the Company is required to file a Tax Return for such jurisdiction or is subject
to Tax in such jurisdiction.
(b) Schedule 3.14 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, or with respect to the Company's income, assets or business
within the three-year period ending on the Closing Date and a description of
each such Tax Return and the period for which it was filed.
(c) Schedule 3.14 sets forth a list of all jurisdictions
(foreign and domestic) in which state income, franchise and other state or local
Tax Returns have been the subject of Tax Proceedings and a description of each
such Tax Return and the period for which it was filed.
(d) The Company has provided to the Buyer all audit reports,
closing agreements, letter rulings, or technical advice memoranda relating to
any Taxes for which the Company is or may be liable with respect to the
Company's income, assets or business.
3.15 Affiliated Party Transactions.
(a) Except for obligations arising under this Agreement and
the other Transaction Documents, neither any Affiliate of the Company, nor the
Seller nor any of its Affiliates has, directly or indirectly, any obligation to
or cause of action or claim against the Company.
(b) The Company has no loan or advance in excess of $1,000
outstanding to any stockholder, officer, director or employee thereof and, to
the knowledge of the Company, no officer or director of the Company or Affiliate
or "associate" (as such term is defined in Rule 405 of the Rules and Regulations
under the Securities Act of 1933, as amended) of the Company or any such person
has, either directly or indirectly:
(i) an equity interest of five percent (5%) or more in any
corporation, partnership, joint venture, association, organization or other
person or entity which purchases from or sells or furnishes to the Company any
goods or otherwise does business with the Company; or
(ii) a beneficial interest in any contract, commitment or
agreement to which the Company is a party or under which the Company is
obligated or bound or to which the property of the Company may be subject, other
than contracts, commitments or agreements between the Company and such persons
in their capacities as employees, officers or directors of the Company;
provided, however, that such representation and warranty shall not apply to the
ownership, as a passive investment, by any such officer, Affiliate or
"associate" of less than two percent (2%) of a class of securities listed for
trading on a national securities exchange or publicly trade in the
over-the-counter market.
3.16 Environmental Matters.
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(a) The Company is in compliance with, and its business has
been conducted in compliance with, all Environmental Laws and Environmental
Permits;
(b) No Site is a treatment, storage or disposal facility, as
defined in and regulated under the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., is on or ever was listed or is proposed for listing
on the National Priorities List pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., or on
any similar state list of sites requiring investigation or cleanup;
(c) Neither the Seller nor the Company has received any
notice that remains pending or outstanding with respect to the Company's
business or any Site from any Governmental Entity or Person alleging that the
Company is not in compliance with any Environmental Law;
(d) There has been no Release of a Hazardous Substance by
the Company at, from, in, to, on or under any Site and no Hazardous Substances
are present in, on, about or migrating to or from any Site that could give rise
to an Environmental Claim against the Company;
(e) There are no pending or outstanding corrective actions
requested, required or being conducted by any Governmental Entity for the
investigation, remediation or cleanup of any Site, and there have been no such
corrective actions, whether still pending or otherwise;
(f) The Company has obtained and holds all necessary
Environmental Permits, and those Environmental Permits will remain in full force
and effect after the consummation of the transactions contemplated hereby;
(g) There are no past or pending or threatened Environmental
Claims against the Company, and the Seller is not aware of any facts or
circumstances that could be expected to form the basis for any Environmental
Claim against the Company;
(h) Neither the Company, any entity previously owned by the
Company, nor any predecessor of the Company, has transported or arranged for the
treatment, storage, handling, disposal, or transportation of any Hazardous
Substance to any off-Site location that could result in an Environmental Claim
against the Company;
(i) At any Site there are no (i) underground storage tanks,
active or abandoned, (ii) polychlorinated biphenyl containing equipment, (iii)
asbestos containing material, or (iv) recognized environmental condition, as
defined by ASTM E1527-97; and
(j) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses (which have been reduced to
writing) conducted by, on behalf of, or that are in the possession of the
Company with respect to any Site or any transportation, handling or disposal of
any Hazardous Substance that has not been delivered to the Buyer prior to
execution of this Agreement.
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3.17 No Brokers. Neither the Company nor the Seller nor any
Affiliate thereof 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.
3.18 Receivables. All of the Accounts Receivable of the Company
have arisen from bona fide transactions in the ordinary course of the Company's
business consistent with past practice and established in the ordinary course of
the Company's business consistent with past practice.
3.19 Assets Utilized in the Business. The assets, properties and
rights owned, leased or licensed by the Company and used in connection with the
Business and all the agreements to which the Company is a party relating to the
Business, constitute all of the properties, assets and agreements required in
connection with the operation and conduct by the Company of the Business as
presently conducted. As a result of the transactions contemplated by this
Agreement, on the Closing Date the Buyer will have good title to all of such
assets, properties and rights, free and clear of all Encumbrances, except as set
forth on Schedule 3.19. Except for assets set forth in Schedule 3.19, the
Seller, its Affiliates and other persons affiliated with them do not own any
assets (including, without limitation, any equipment, intellectual property or
other assets) that are used primarily by the Company in the operation of the
Business.
3.20 Insurance. All insurance policies of any kind covering the
Company (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 agreements,
and (c) are valid, outstanding and enforceable policies. Since January 1, 2000,
the Company has not been denied any insurance coverage which it has requested.
3.21 Delivery of Documents; Corporate Records. The Seller has
heretofore delivered to the Buyer true, correct and complete copies of all
documents, instruments, agreements and records referred to in this Article 3 or
in the Schedules to this Agreement and copies of the minute and stock record
books of the Company. The minute and stock record books of the Company contain
true, correct and complete copies of the records of all meetings and consents in
lieu of meetings of the Company's board of directors (and all committees
thereof) and the shareholders of the Company since the date of its
incorporation.
3.22 Labor and Employment Matters.
(a) (i) The Company is not party to or bound by any
collective bargaining agreement or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company, (ii) none of the
employees of the Company are represented by any labor organization and there are
no organizational campaigns, demands, petitions or proceedings pending or, to
the knowledge of the Seller, threatened by any labor organization or group of
employees seeking recognition or certification as collective bargaining
representative of any group of employees of the Company, (iii) to the knowledge
of the Seller, there are no union claims to represent the employees of the
Company, and (iv) there are no strikes, controversies,
20
slowdowns, work stoppages, lockouts or labor disputes pending or, to the
knowledge of the Seller, threatened against or affecting the Company, and there
has not been any such action during the past five (5) years.
(b) The Company is, and has at all times during at least the
last three (3) years, been in compliance with all applicable laws, regulations
and ordinances respecting immigration, employment and employment practices, and
the terms and conditions of employment, including, without limitation,
employment standards, equal employment opportunity, family and medical leave,
wages, hours of work and occupational health and safety, and is not engaged in
any unfair labor practices as defined in the National Labor Relations Act or any
other applicable law, ordinance or regulation. There are no employment
contracts, severance agreements or retention agreements, oral or written, with
any employees of the Company and no written personnel policies, rules or
procedures applicable to employees of the Company, other than those set forth in
Schedule 3.22, true and correct copies of which have heretofore been made
available to the Buyer. Except as set forth in Schedule 3.22, there are (i) no
complaints, claims, controversies, charges, lawsuits or other proceedings
related to the Company pending, or, to Seller's knowledge, threatened, in any
court or with any agency responsible for the enforcement of federal, state,
local or foreign labor or employment laws regarding breach of any express or
implied contract of employment, any law or regulation governing employment or
the termination thereof or other illegal, discriminatory, wrongful or tortious
conduct in connection with the employment relationship, the terms and conditions
of employment, or applications for employment with the Company, and (ii) no
federal, state, local or foreign agency responsible for the enforcement of
immigration, labor, equal employment opportunity, family and medical leave,
wages, hours of work, occupational health and safety or any other employment law
intends to conduct or is conducting an investigation with respect to or relating
to the Company.
(c) Since January 1, 2001, the Company has not effectuated
(i) a "plant closing" as defined in the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN") affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
the Company, or (ii) a "mass layoff" as defined in WARN affecting any site of
employment or facility of the Company; nor has the Company been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. None of the
employees of the Company has suffered an "employment loss" as defined in WARN
since January 1, 2001. The Seller shall be solely and exclusively liable to
provide such WARN or other plant closing or mass layoff notices as may be
necessary in connection with any loss of employment by any employee of the
Company through and including the Closing Date.
3.23 Restrictive Covenants. Except as set forth on Schedule 3.23,
the Company is not subject to any covenant that would restrict the Buyer's
operation of the Business.
3.24 Bank Accounts. Schedule 3.24 sets forth the names and
locations of all banks, depositories and other financial institutions in which
the Company has an account or safe deposit box and the names of all Persons
authorized to draw thereon or to have access thereto.
3.25 Directors, Officers and Certain Employees. Schedule 3.25
sets forth a complete and correct list of the names, current annual salary,
bonus and title, for each director
21
and officer and each other employee of the Company, who received compensation
during the Company's most recently ended fiscal year. The Seller is not aware of
any employee who intends to terminate his or her employment relationship with
the Company, either as a result of the transactions contemplated hereby or
otherwise.
3.26 No Misstatements or Omissions. No representation or warranty
by the Seller contained in this Agreement or in any certificate, list, Schedule,
Exhibit or other instrument specified or referred to in this Agreement, whether
heretofore furnished to the Buyer or hereafter furnished to the Buyer pursuant
to this Agreement on the part of the Seller, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
3.27 Absence of Sensitive Payments. Neither the Company, the
Seller nor any of their directors, officers, brokers, sub-brokers, agents, or
employees, has made or has agreed to make on behalf of the Company:
(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.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller as follows:
4.1 Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. 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.
4.2 Authorization; Validity of Agreement. The Buyer has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and each other agreement executed or to be executed by the Buyer
pursuant to the terms of this Agreement (collectively, the "Buyer Acquisition
Agreements") and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Buyer of this
22
Agreement and the other Buyer Acquisition Agreements 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 Buyer Acquisition
Agreements by the Buyer, and the consummation of the transactions contemplated
hereby and thereby. Each of this Agreement and each Buyer Acquisition Agreement
has been duly executed and delivered by the Buyer, and is 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.
4.3 No Violations; Consents and Approvals.
(a) The execution, delivery and performance of this
Agreement and the Buyer Acquisition Agreements by the Buyer do not, and the
consummation by the Buyer of the transactions contemplated hereby and thereby
will not, (i) violate any provision of the Certificate 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
Buyer Acquisition Agreements by the Buyer, or the consummation by the Buyer of
the transactions contemplated hereby and thereby.
4.4 Financing. The Buyer has sufficient funds required to pay the
Purchase Price at the Closing and consummate the transactions contemplated by
this Agreement.
5. Other Agreements of the Parties.
5.1 Conduct of Business Following the Closing.
(a) The Seller covenants and agrees that, for a period of
five (5) years following the Closing Date (the "Prohibited Period"), the Seller
and its Affiliates will not directly or indirectly, alone or as a partner, joint
venturer or otherwise, engage in the insurance agency business anywhere in the
United States, other than (i) pursuant to an agreement with the Buyer or any of
its Affiliates, and (ii) such activities undertaken for the purposes of
operating the Excluded Business.
(b) The Seller covenants and agrees that, during the
Prohibited Period, the Seller and its Affiliates will not directly or
indirectly, employ, hire, engage or be associated with Xx. Xxxxx Xxxxxxxx, or
(other than through advertisements to the general public) solicit any
23
Person (including Xx. Xxxxx Xxxxxxxx) who was employed by, or acted as an
independent contractor or consultant for, the Company during the twelve (12)
months prior to the Closing Date or is employed by, or acts as a sales
representative for, the Company at any time during the seven-year period from
and after the Closing Date.
(c) Notwithstanding the above, if at any time during the
Prohibited Period, the Seller or any of its Affiliates should acquire the stock
or assets of another Person (through a purchase of stock or assets, merger,
consolidation or otherwise), the provisions of Section 5.1(a) shall not preclude
the Seller or its Affiliate from continuing, through such acquired Person, to
engage in operations that would otherwise breach Section 5.1(a) so long as
Seller divests or otherwise discontinues the competitive activity as soon as
commercially practicable, but in any event no later than twelve (12) months from
the closing of the acquisition. If the Seller elects to divest such operations
(which election shall be made within six months of the closing of such
acquisition), then the Seller or one of its Affiliates shall notify the Buyer of
such election to divest and for a period of twenty (20) business days following
the Buyer's receipt of a notice from Seller or one of its Affiliates (the
"Negotiation Period), the Seller shall, if the Buyer desires, negotiate
exclusively with the Buyer in good faith in an attempt to reach agreement upon
the terms and conditions of such sale to the Buyer. If, at the end of the
Negotiation Period, the parties have not reached an agreement with respect to
such sale to the Buyer, the Seller's obligations under this Section to negotiate
exclusively with the Buyer shall terminate and the Seller may elect to proceed
with a third party suitor on whatever terms and conditions as it determines in
its sole discretion; provided that if the Seller fails to complete such sale
within six months following the end of the Negotiation Period, then this Section
shall apply again.
(d) Notwithstanding the above, a Competitive Acquirer may
continue its competitive activity after it acquires control of a majority of the
capital stock of the Seller or an Affiliate of Seller in a sale of stock or
merger, except that: (a) the Competitive Acquirer may not, directly or
indirectly, engage through the then existing branch network of the Seller and
its Affiliates in activity which would be a breach of Section 5.1(a); and (b) if
the Competitive Acquirer is not, prior to the sale of stock or merger,
conducting competitive activity within 50 miles from where the Company conducts
its business, then this Section 5.1 shall prohibit the Competitive Acquirer from
engaging in competitive activity within such area.
(e) The Seller covenants and agrees that it will not, at any
time during the Prohibited Period (except that with respect to trade secrets,
the undertakings in this Section 5.1(e) shall be applicable without any time
limitation after the date hereof), disclose, directly or indirectly, or make
available to any person, or in any manner use for its own benefit, any
confidential information or trade secrets relating to the Business, or any
information concerning the Seller's or the Buyer's or the Company'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 and operating the Business, except to the extent that such
information is or becomes, through no action of the Seller, a matter of public
knowledge or is required to be disclosed by law, or in any proceedings involving
the Seller for which its counsel informs the Seller that such disclosure is
required by law (in which case prior to such disclosure the disclosing party
shall promptly provide prior written notice of such
24
required disclosure to the Buyer in order to afford the Buyer the opportunity to
seek an appropriate protective order preventing such disclosure).
The Buyer covenants and agrees that it will not (and will cause its
Affiliates not to), at any time during the Prohibited Period (except that with
respect to trade secrets, the undertakings in this Section 5.1(e) shall be
applicable without any time limitation after the date hereof), disclose,
directly or indirectly, or make available to any person, or in any manner use
for its own benefit, any confidential information or trade secrets relating to
the Excluded Business, or any information concerning the Seller's or its
Affiliates financial condition, prospects, customers, franchisees, licensees,
suppliers, sources of leads and methods of obtaining new business, distribution
methods or any other methods of doing and operating the Excluded Business,
except to the extent that such information is or becomes, through no action of
the Buyer or one of its Affiliates, a matter of public knowledge or is required
to be disclosed by law, 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 promptly provide prior
written notice of such required disclosure to the Seller in order to afford the
Seller the opportunity to seek an appropriate protective order preventing such
disclosure) and except to the extent that such information as is required to
operate the Business in the normal course and in a manner consistent with the
operation of the Business prior to the Closing.
(f) The Buyer and the Seller shall consult with each other
prior to issuing any press release or otherwise making any public statements
with respect to this Agreement or the transactions contemplated hereby and shall
not issue any such press release or make any such public statement prior to such
consultation.
(g) The Seller acknowledges and agrees that a breach by it
of any of the provisions of this Section 5.1 will cause irreparable harm and
damage to the Buyer and that, in the event of such breach, the Buyer 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 Seller 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.
The Buyer acknowledges and agrees that a breach by it of any of the
provisions of this Section 5.1 will cause irreparable harm and damage to the
Seller and that, in the event of such breach, the Seller 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
Buyer 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.
(h) The Seller acknowledges and agrees that each provision
of this Section 5.1 shall be treated as a separate and independent clause, and
the unenforceability by 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 5.1 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.
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5.2 [RESERVED]
5.3 Transition Services Agreement. The Seller shall cause to be
executed and delivered to the Buyer at or prior to the Closing that certain
Transition Services Agreement, between the Company and the Seller, in the form
annexed hereto as Exhibit 5.3.
5.4 Master Lease. Concurrently herewith, the Seller and the
Company are entering into a lease (the "Master Lease") in the form set forth on
Exhibit 5.4(a) which will be deemed to be a Lease under this Agreement leasing
the real property set forth on Schedule 5.4 which will be deemed to be Leased
Real Property under this Agreement.
5.5 Taxes.
(a) The Company and the Seller shall join with the Buyer in
making an election under Code Section 338(h)(10) and any corresponding election
under state and local Law with respect to the purchase of the Company's stock
(the "Section 338(h)(10) Election"). The Seller 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.
(b) The Buyer and Seller agree that the purchase price (as
set forth in Section 2 hereof) and the liabilities of the Company shall be
allocated to the assets of the Company for all purposes (including Tax and
financial accounting) in accordance with the requirements of Code Section 338.
The Buyer and the Seller shall file all Tax Returns (including any claims for
refund) in a manner consistent with such allocation.
(c) To the extent permitted under applicable law, the
Company and the Buyer shall close or terminate (or cause to be closed or
terminated), as of the Closing date, each Tax period relating to the Company or
its income, sales, assets, business or other activities.
(d) To the extent not filed prior hereto, the Seller shall
prepare (or cause to be prepared) each Tax Return required for the Company for
each Pre-Closing Period in accordance with applicable Law. At least twenty (20)
days prior to which a Tax Return for a Pre-Closing Period 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 prior to
filing. At least three (3) days prior to the date on which such Tax Return is
due to be filed (including any extensions) with the appropriate tax Authority
pursuant to applicable Law, the Seller shall pay to the Buyer an amount equal to
the Taxes due with respect to such Tax Return (as reasonably revised by the
Buyer) and the Buyer shall file such Tax Return.
(e) The Buyer shall prepare and file each Tax Return
required for the Company for each Post-Closing Period in accordance with
applicable Law. At least twenty (20) days prior to the date on which a Tax
Return for a Post-Closing Period is due (including any extensions), the Buyer
shall deliver such Tax Return to the Seller for the purpose of making reasonable
changes and revisions to such Tax Return prior to filing. At least three (3)
days prior to the date on which Tax Return is due to be filed (including any
extension), the Seller shall pay to the Company an amount equal to the Taxes on
such Tax Return to the extent such Taxes relate to the portion of such
Post-Closing Period ending on and including the Closing Date.
26
(f) Notwithstanding the above, the Seller shall prepare all
consolidated or combined returns relating to or including the Company for any
Pre-Closing Period and shall pay all Taxes shown on such consolidated or
combined returns.
(g) In the case of a Tax payable for a Post-Closing Period,
the portion of such Tax that relates to the portion of Post-Closing Period
ending on and including the Closing Date shall (i) in the case of a Tax (other
than a Tax based upon or related to income, employment, sales or other
transactions, franchise or receipts) be deemed to be the amount of such Tax for
the entire Post-Closing Period multiplied by a fraction the numerator of which
is the number of days in the Post-Closing Period ending on and including the
Closing Date and the denominator of which is the number of all of the days in
the Post-Closing Period, and (ii) in the case of a Tax based upon or related to
income, employment, sales or other transactions, franchise or receipts, be
deemed equal to the amount which would be payable if the Post-Closing Period
ended on the Closing Date. Any credits relating to a Post-Closing Period shall
be taken into account as though the Post-Closing Period ended on the Closing
Date.
(h) Each party shall promptly forward to the other a copy of
all written communications from any Tax Authority received relating to any
Pre-Closing Period for which the Company or the Buyer is or may be liable.
(i) After the Closing Date, the Buyer and the Seller shall
each make available to the other, upon reasonable request, all information,
records or other documents relating to any Tax relating to the Company, and (i)
the Seller 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 (ii) 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. In addition, the Buyer and the Seller shall
cooperate with each other upon request in connection with all matters relating
to the preparation of any Tax Returns relating to the Company and in connection
with any Proceeding (including any Tax Proceeding) referred to in this
provision. Any investigation, review, comment or discussion by the Buyer related
to or in connection with the payment of Taxes, the preparation of Tax Returns or
drafts of Tax Returns, the filing of Tax Returns, any Tax Proceeding or any
provision of this Section 5.5 shall not affect the indemnity provisions of
Article 7 or limit the scope of such provisions (including but not limited to
Section 7.1) in any way, or affect any other representations, warranties or
obligations of the Company or Shareholder. Each party shall bear its own costs
and expenses in complying with the provisions of this Section 5.5(h).
(j) 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
when due, and the Seller will, at its own expense, 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 Buyer will join in the execution of any such Tax Returns or
other documentation.
27
(k) If the Company receives a refund of taxes for any Tax
Period ending on or prior to the Closing Date, the Buyer shall promptly pay to
the Seller the amount of such refund attributable to the Tax Period ending on or
prior to the Closing Date. The Seller shall not make or request a refund of any
Taxes paid by, on behalf of, or attributable to the Company, unless the Buyer,
in its sole discretion, consents. The Buyer shall not be obligated to seek or
request any refund.
5.6 Termination of Agreements and Seller's Release.
(a) Effective as of the Closing Date, except for any
obligations arising out of this Agreement and other Transaction Documents, all
contracts, commitments and understandings (collectively, the "Terminated
Contracts") of whatever nature (including contracts or understandings relating
to the sale, licensing, leasing or supply of goods or services, and whether oral
or in writing), between the Seller or any of its Affiliates (other than the
Company), on the one hand, and the Company, on the other hand, shall be
terminated automatically without liability to any party.
(b) As soon as commercially practicable but in no event
later than February 15, 2003, the Seller, at its own cost and expense, shall
substitute itself or one of its Affiliates as the guarantor on the Guarantee
(retroactive to January 1, 2003) and shall obtain a release and termination of
the Company's obligations under the Guarantee (retroactive to January 1, 2003).
(c) Except as otherwise provided in this Agreement, 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 Guarantee; (ii) the
Terminated Contacts, and (iii) any other dealings or relationships, existing at
or prior to the Closing, between the Company, on the one hand, and the Seller or
any of its Affiliates (other than the Company), on the other hand.
5.7 Contribution of Assets. Simultaneously with the Closing, the
Seller, its Affiliates and other Persons affiliated with them shall contribute
to the Company the assets set forth in Schedule 5.7.
5.8 Required Consents. The Seller shall furnish to the Buyer at
the Closing all Required Consents. The Seller and/or the Company shall promptly
provide (i) 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 and (ii) all Consents obtained from any
party to any Contract or any Lease and any Approval with respect to the Leased
Real Property.
28
5.9 Xxxx of Sale, Assignment and Assumption. At the Closing, the
Company shall assign by dividend to the Seller the Excluded Business and the
Excluded Assets set forth in Schedule 5.9, and the Seller shall accept such
assignment and shall assume the Excluded Liabilities, all in accordance with
that certain Xxxx of Sale, Assignment and Assumption Agreement between the
Company and the Seller, in the form annexed hereto as Exhibit 5.9.
5.10 [RESERVED].
5.11 Change of Name. (a) Promptly following the Closing Date, the
Buyer shall cause the name of the Company to be changed so that it does not
include the words "Fifth", "Third" or any combination thereof and shall cancel
and cease to use any assumed name currently using the words "Fifth" or "Third".
(b) Effective for a period of 60 days following the Closing,
the Seller hereby grants the Buyer the non-exclusive, royalty-free,
non-assignable right to use the "Fifth Third Insurance" name for the limited
purpose of transitioning the Business to the Buyer. The Buyer shall not, and
shall cause the Company to not, use "Fifth Third Insurance" in any written
materials, excluding routine or billing correspondence to customers, a
Governmental Entity, insurance carriers or other vendors, without the Seller's
prior written approval.
5.12 Conduct of Business. From the date hereof through the
Closing Date, except as otherwise contemplated by this Agreement and other
Transaction Documents, the Seller shall cause the Company to conduct its
business in the ordinary course, consistent with past practice, and the Seller
shall cause the Company not to (without the prior written consent of the Buyer,
which shall not be unreasonably withheld):
(a) amend its articles of incorporation or bylaws;
(b) 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;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) to the Seller 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 Seller, any of the Seller's Affiliates, any Person to which the
Company 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;
(d) make or incur any capital expenditure, lease or
commitment for additions to property, plant, equipment or other capital assets
in excess of $10,000;
(e) 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;
29
(f) acquire, lease or dispose of any of its assets except in
the ordinary course of business and consistent with past practice;
(g) take any action to terminate or amend any of its Plans;
(h) 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
Company);
(i) incur or assume any indebtedness other than trade
payables incurred in the ordinary course of business; (i) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for any obligations of any other Person; or (ii)
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; or
(j) enter into any Contract to do, or take, or agree in
writing or otherwise to take or consent to, any of the foregoing actions.
5.13 Access and Information. After the date hereof through the
Closing Date, the Seller shall, and shall cause its officers, directors,
employees, agents, accountants and counsel to, upon reasonable notice, (a)
afford the Buyer and its representatives reasonable access, during normal
business hours, to (i) the properties of the Company, and (ii) those officers,
directors, employees, agents, accountants and counsel of the Company who have
any knowledge relating to the Company's business, and (b) furnish to the Buyer
and its representatives such additional information regarding the Company as the
Buyer may reasonably request.
5.14 Public Statements. From and after the date hereof, the
Seller shall not make any public announcement with respect to, or reveal the
terms or status of any of, the Transaction Documents, the Buyer Acquisition
Agreements or the transactions contemplated thereby, except as required by Law.
5.15 Exclusivity. From and after the date hereof until the
earlier to occur of the Closing and the termination of this Agreement as
provided in Section 8, the Seller shall not, and shall not permit his Affiliates
or representatives to, directly or indirectly, (a) solicit or participate in
discussions with any third party that involves the disposition of all or any
portion of the Company or its stock or any business combination of any kind
involving the Company, or (b) furnish to any Person (other than the Buyer and
its Affiliates) any information with respect to the foregoing except to
professionals representing the Seller. If the Seller receives or becomes aware
of any offer or proposed offer for such disposition, the Seller shall promptly
notify the Buyer and shall provide the Buyer with the details thereof.
5.16 Participation of Employees in Plans. Seller maintains
medical and dental plans, and long term disability benefits and a premium
conversion portion of a cafeteria plan intended to satisfy section 125 of the
Code covering ("cafeteria plan"), among others, the employees of the Company
("Seller's Health Plans"). Following the Closing Date and for a period of 60
days thereafter (or for a shorter period, at the Buyer's option) ("Continuation
Coverage Period"), the Buyer and Company hereby adopt plans identical in
substantive benefits to the Seller's Health Plans ("Buyer's Health Plans") (but
not any flexible or dependent care
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spending accounts) only for the benefit of Company employees (and their eligible
dependents), effective on the Closing; provided, that the Buyer's Health Plans
shall in all cases for purposes of the Code and ERISA be treated as a separate
plan spun-off from the Seller's Health Plans. Buyer and Company hereby adopt as
of the Closing the respective Seller's Health Plans documents to serve as the
plan documents which document the Buyer's Health Plans, provided, however, that
(i) the name of the Seller shall be deleted from the Buyer's Health Plans, (ii)
the Company shall be substituted in each and every place where the name of the
Seller appeared and was deleted, (iii) notwithstanding any provision in the
Buyer's Health Plans to the contrary, only employees (and their eligible
dependents) of the Company shall be eligible to participate in the Buyer's
Health Plans, and (iv) all elections made under the Seller's Health Plans by
participants before Closing may (in the sole discretion of the Buyer timely
communicated to Seller) continue to apply under the Buyer's Health Plans as if
such elections were made under the Buyer's Health Plans. The proper officers of
Buyer are authorized, empowered, and directed to take such action or amend such
other plans of Buyer or Company as may be necessary to transition the employees
of the Company into any other of Buyer's or Company's health plans at the end of
the Continuation Coverage Period, including, without limitation, the
establishment or amendment of any new benefit programs or plans for employees of
Company, and any such benefit programs, plans or amendments are adopted by the
Company and Buyer without further action.
Notwithstanding any provision of this Section 5.16 to the contrary,
Buyer shall use its best efforts commencing on Closing Date to secure long-term
disability coverage and health and dental coverage for the Company employees
under another of Buyer's plans within thirty (30) days from the date of Closing.
The proper officers of the Buyer and Seller shall be and are authorized,
empowered and directed to take all action and to cooperate with each other with
regard to the Buyer's Health Plans.
Each and all of the Buyer's Health Plans shall terminate as determined
by a proper officer of Buyer within sixty (60) days of the Closing, or if no
officer terminates such Buyer's Health Plans within that sixty (60) day period,
each of the Buyer's Health Plans, respectively, shall automatically terminate at
the end of the sixtieth (60th) day following the Closing, or if earlier, the
date that alternative coverage with respect to each of the respective Buyer's
Health Plans is secured as provided in the directly preceding paragraph.
Notwithstanding the preceding sentence, the Buyer's cafeteria plan established
pursuant to this Section 5.16 shall terminate as determined by a proper officer
of the Buyer at any time during or at the end of the sixty (60) day Continuation
Coverage Period. For the Continuation Coverage Period, the Seller shall provide
such reasonable administrative services under the Buyer's Health Plans as may be
reasonably requested by Buyer for such period.
The Buyer shall reimburse the Seller for the actual premiums incurred
by Seller with respect to third-party insurers only, as shown on the books and
records of the Seller and determined on the date of Closing under the Seller's
Health Plans, which premiums shall equal the amount withheld from participants'
salary for payment of benefits under the Buyer's Health Plans and an additional
amount equal to Seller's portion of such applicable premium. Such reimbursement
shall be made by the Buyer to the Seller promptly after the Seller submits to
the Buyer evidence satisfactory to the Buyer as to such premiums; provided,
however, that Buyer shall have the right to offset or set-off from any amounts
due under this paragraph an amount
31
equal to the amounts which may be due to Buyer from Seller under the directly
following paragraph.
Notwithstanding any provision of this Agreement to the contrary, the
Seller shall indemnify Buyer fully and completely (100%) from the first dollar
($1) for all claims for benefits incurred by Buyer or Company under the Buyer's
Health Plans attributable to the Continuation Coverage Period, but only the
extent such claims under the Buyer's Health Plans are not satisfied by a
third-party insurer or provider unrelated to Buyer or the Company; provided,
however, between the thirty-first (31st) day of the Continuation Coverage Period
and the last day of the Continuation Coverage Period, inclusive, instead of a
100% indemnification by Seller, the Seller shall indemnify the Buyer in an
amount equal to 50 cents ($.50) for each dollar of claims (from the first dollar
($1)) for benefits claimed under the Buyer's Health Plans. Such indemnification
shall be made by the Seller to the Buyer promptly after the Buyer submits to the
Seller evidence satisfactory to the Buyer as to such claims.
Except as otherwise provided in this Section 5.16, the employees (and
their dependents and beneficiaries) of the Company shall no longer be active
participants or eligible for benefits in any Employee Benefit Plan of Seller or
Seller's ERISA Affiliates after the Closing Date; provided, however that the
employees of the Company shall be treated as (i) employed by the Company, (ii)
active participants and (iii) eligible for benefits under each and every Plan
(and for all Plan purposes) for the entire Closing Date, regardless of when
Closing actually occurs during that day.
The Seller agrees to cooperate, at the reasonable request of the Buyer,
and the Buyer agrees to cooperate with Seller with respect to any reasonable
request made to Buyer, regarding the transfer of all or any portion of a Plan to
the Buyer on or after the Closing, and the Seller agrees, at the reasonable
request of Buyer, to amend any Plan to the extent necessary to effectuate
distribution of plan benefits to employees of the Company, but only to the
extent that the consummation of the transaction contemplated by this Agreement
would not otherwise cause or permit full and complete distribution of benefits
under such Plan on or after the Closing to employees of the Company.
All employees of the Company on short-term disability on the date of
Closing shall continue as employees of the Seller on and after the Closing Date
until such employee's first return to employment with the Company after the
Closing Date.
5.17 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 Seller will, and will each cause its representatives to, deliver all
documents required to be delivered at the Closing by such persons and entities
as required and as set forth in Article 6 hereof.
5.18 Release. As part of its post-Closing retention and
compensation program, the Buyer shall, and shall cause the Company to, use
commercially reasonable efforts to obtain
32
from each employee of the Company an executed general release of claims against
Seller and its Affiliates (excluding the Company) in a form reasonably
acceptable to the Buyer and the Seller.
5.19 Provision of Financial Information.
(a) The Seller, at its own expense, shall, and shall engage
its auditors to, prepare and deliver to the Buyer audited financial statements
(and auditor's reports thereon) relating to the Business (i.e., not including
the Excluded Business, the Excluded Assets and the Excluded Liabilities), for
the most recently completed fiscal year of the Seller, meeting the requirements
for audited financial statements under GAAP and Regulation S-X ("Regulation
S-X") promulgated by the United States Securities and Exchange Commission (the
"SEC"), in sufficient in form, scope and substance for filing with a Form 8-K of
the Buyer's parent (relating to the transactions covered by this Agreement) and
Form 10-K of the Buyer's parent (relating to the annual report). The Seller
shall use its best efforts to deliver to the Buyer the audited financial
statements described in the proceeding sentence on or before February 15, 2003
but, in no event, later than February 18, 2003.
(b) The Seller, at its own expense, shall prepare and
deliver to the Buyer within 75 days after the Closing Date unaudited interim
financial statements relating to the Business, for the three month periods (in
each case) and the cumulative six and nine month periods (as applicable) ending
March 31, June 30 and September 30, 2002, respectively, and meeting the
requirements of Article 10 of Regulation S-X, in each case sufficient in form,
scope and substance for filing with the Buyer's parent first quarter, second
quarter and third quarter Form 10-Qs for the fiscal year ending December 31,
2003.
(c) In addition to the foregoing, if requested by the Buyer,
the Seller, at its own expense, shall, and if requested by the Buyer's parent,
shall cause its auditors, within 45 days of such requests, to prepare and
deliver to the Buyer any other financial statements, related to fiscal period
commencing prior to January 1, 2003, which the Buyer deems necessary for any
purpose, including but not limited to the filing of any reports or registration
statements with the SEC, the provision of copies of such financial statements to
any governmental agency, financial institution, bank or any securities exchange,
in each case sufficient in form, scope and substance for such purposes as
reasonably determined by the Buyer in its sole discretion.
(d) On or prior to the Closing Date, the Seller shall cause
the Seller's auditors to deliver to the Buyer a letter from the Seller's auditor
(in form and substance acceptable to the Buyer), confirming such auditor's
independence in accordance with Independence Standards Board Statement No. 1,
and shall engage the Seller's auditors to provide the foregoing financial
statements and auditor's reports thereon, and any consents needed in order to
include such financial statements and auditor's reports thereon in any
governmental filings, including, without limitation, any registration statements
to be filed with the SEC. The Buyer will cause the Company to make available to
the Seller and Seller's auditors appropriate personnel on a reasonable basis to
assist in the preparation of the financial statements and information
contemplated by this Section 5.19.
(e) The Seller shall direct, at its own expense, its
auditors to co-ordinate and co-operate with the Buyer's auditors as to the scope
and conduct of any audit
33
services to be rendered in connection with the preparation of any audited or
unaudited financial statements required under or as a result of this Agreement
and as to the thresholds or other standards to be applied in determining the
materiality of any adjustment or other item. In addition, the Seller shall, and
shall cause the Seller's auditor to, allow the Buyer's auditor to inspect and
review any non-proprietary work papers or other information used or prepared by
the Seller's auditors in connection with the preparation of any audited or
unaudited financial statement.
5.20 Proration. Except as otherwise provided herein, for purposes
of determining Excluded Liabilities and Retained Liabilities, all deposits,
reserves and deferred income and expenses relating to the Business shall be
prorated between the Buyer and the Seller in accordance with GAAP as of 11:59
p.m., eastern time, on the Closing Date. Such prorations include, without
limitation, all personal property Taxes, business and license fees, utility
expenses, amounts due or to become due under contracts, rents, lease payments
and similar deferred items.
6. Conditions Precedent to Closing.
6.1 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 Seller
contained in this Agreement 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.
(b) The covenants and agreements of the Seller 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 Seller, certifying the
satisfaction of the conditions set forth in clauses (a) and (b).
(d) No event or events shall have occurred between the date
hereof and the Closing that, individually or in the aggregate, shall have, or
shall be reasonably likely to have, a Material Adverse Effect.
(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 Seller or the Company, an assignment by
the Company or the Seller
34
for the benefit of its creditors, or other similar Proceeding.
6.2 Condition Precedent to Seller's Obligations to Close. The
obligation of the Seller 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 Seller 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) 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.
6.3 Deliveries of the Seller. At the Closing, the Seller shall
deliver the following items to the Buyer:
(a) The Required Consents;
(b) A tax, lien and judgment search of the Company showing
no items not disclosed in the schedules to this Agreement;
(c) 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;
(d) A certificate duly executed by the Secretary of the
Seller, attesting, with respect to the Seller, the resolutions duly and validly
adopted by the board of directors of the Seller 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 the incumbency of each of
its executive officers;
35
(e) A certificate with respect to each of the Seller and the
Company from the Secretary of the State of Ohio and Indiana, respectively,
attesting as to its valid existence thereof as of a date not earlier than two
business days prior to the date hereof; and
(f) The documents referred to in Sections 5.3, 5.4, 5.9 and
6.1(c).
6.4 Deliveries of the Buyer. At the Closing, the Buyer shall
deliver the following items to the Seller.
(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 Buyer Acquisition Agreements 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 Buyer Acquisition
Agreements to be delivered hereunder; and
(b) The cash payment pursuant to Section 2.2.
7. Indemnification.
7.1 Survival of Representations and Warranties. Notwithstanding
any right of the Buyer to fully investigate the affairs of the Company and the
Seller 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 Seller contained in this Agreement or in any other Transaction
Document. All covenants and agreements of the Seller and the Buyer made in this
Agreement or in any other Transaction Document or in any certificate delivered
pursuant hereto shall survive, without limitation, the execution and delivery of
this Agreement. Except as otherwise provided in this Agreement, all
representations and warranties of the Seller 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 two (2) years from the Closing; provided,
however, that the representations and warranties made in Sections 3.14 and 3.16
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 3.1, Section 3.2 or
Section 3.3 or any representations or warranties fraudulently made in this
Agreement or any other Transaction Documents or in any certificate delivered
pursuant hereto.
7.2 [reserved]
7.3 Indemnification by the Seller. The Seller shall indemnify and
defend each of the Company 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):
36
(a) The inaccuracy of any representation or warranty (other
than the representations and warranties set forth in Section 3.1, Section 3.2,
Section 3.3 or Section 3.21, made by the Seller contained in this Agreement or
in any other Transaction Documents;
(b) The Seller's failure to perform or to comply with any
covenant or agreement required to be performed by the Seller contained in any
Transaction Document;
(c) The Excluded Liabilities;
(d) Any brokerage, finder's fee or the like incurred as a
result of the actions of the Seller in connection with the transactions herein
contemplated;
(e) The ownership or operation of the Business prior to the
Closing, or the ownership, operation or transfer of the Excluded Assets at any
time or the ownership, operation or transfer of the Excluded Business at any
time;
(f) The representations and warranties set forth in Section
3.1, Section 3.2, Section 3.3 or Section 3.21;
(g) Any Tax Item;
(h) The ownership, operation or transfer of the Reinsurance
Company or the guarantee of any contract or other obligation of the Reinsurance
Company, including the Guarantee; or
(i) Any material reduction in the size and scope of the
Excluded Business resulting in a Material Adverse Effect.
7.4 Indemnification by the Buyer. The Buyer shall indemnify and
defend the Seller and its 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 Buyer Acquisition Agreement;
(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
Buyer Acquisition Agreement;
(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 Business after the Closing
(including the use by the Company of the Fifth Third Insurance name after
Closing), except as to matters which emanate from the breach by the Seller of
its representations, warranties, covenants or agreements hereunder.
37
7.5 Limitations on Liability.
(a) Notwithstanding the foregoing, the Seller shall not be
obligated to indemnify and hold harmless any Buyer Indemnitee from Damages under
clause (a) of Section 7.3 (which are not also Damages under clauses (b) through
(i) of Section 7.3) unless and until the aggregate amount of such Damages
exceeds $200,000, and the Buyer shall not be obligated to indemnify and hold
harmless any Seller Indemnitee from Damages under clause (a) of Section 7.4
(which are not also Damages under clauses (b) through (d) of Section 7.4) unless
and until the aggregate amount of such Damages exceeds $200,000. The aggregate
indemnification liability of the Seller for Damages under clause (a) of Section
7.3 (which are not also Damages under clauses (b) through (i) of Section 7.3)
shall not exceed the Purchase Price.
(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 Seller or
by the Buyer or by any consolidated, combined, or unitary group of which the
Buyer or the Seller is 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.
7.6 Indemnification Procedures.
(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 7,
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 by a third party
against 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 indemnifying party with a written representation to the effect that
the indemnified party has sufficient financial resources to satisfy the amount
of any adverse monetary judgment that is reasonably likely to result; (ii) the
liability claim solely seeks (and continues to seek) monetary damages; and (iii)
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) through (iii) 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
38
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 7.6 (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. 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 7.1.
7.7 No Double Recovery. The Buyer shall not be entitled to
indemnification to the extent that it is compensated as part of an adjustment
under Section 2.3(c).
8. Termination
39
8.1 This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual agreement of the Buyer and the Seller;
(b) by the Buyer or the Seller giving written notice to such
effect to the other party hereto if the Closing shall not have occurred on or
before December 31, 2002 (the "Expiration Date"), or such later date as the
parties shall have agreed upon prior to the giving of such notice;
(c) by the Seller or the Buyer, in the event of an
inaccuracy of any representation or warranty of the Buyer or the Seller,
respectively, contained herein or non-compliance by the Buyer or the Seller,
respectively, with any of their covenants contained herein, which such
inaccuracy or non-compliance causes any of the conditions precedent to the
obligations of the Buyer in Section 6.1 or of the Seller in Section 6.2,
respectively, to become incapable of being satisfied, provided that such
inaccuracy or non-compliance is not cured by the respective party within 10 days
after receipt of written notice thereof from the other party.
8.2 Upon termination of this Agreement pursuant to Section 8.1,
all obligations of the parties shall terminate, provided, however, that (i) no
such termination shall relieve the Seller of any liability to the Buyer, or the
Buyer of any liability to the Seller, by reason of any breach of or default
under this Agreement, and (ii) 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.
9. Definitions
9.1 For purposes of this Agreement, the following definitions
shall apply:
(a) "Accounts Receivable" means the Company's customer
premium and direct xxxx accounts receivable relating to the Business, net of any
unearned commission reserves maintained in accordance with SAB 101.
(b) "Accounts Receivable Component" means the Accounts
Receivable of the Company as of the Closing Date.
(c) "Affiliate" means, with respect to any Person, any other
Person that controls, is controlled by, or is under common control with the such
Person.
(d) "Agency Revenue" has the meaning set forth in Section
2.5(b).
(e) "Agreement" means this Stock Purchase Agreement.
(f) "Approvals" means all licenses, permits and certificates
of occupancy for any Real Property.
40
(g) "Business" means, at any particular time, the business
activities and operations associated with the Company's insurance agency
operations, other than the operations related to the Excluded Business.
(h) "Buyer" means Hub U.S. Holdings, Inc., a Delaware
corporation.
(i) "Buyer Acquisition Agreements" has the meaning set forth
in Section 4.2.
(j) "Buyer Indemnitee" has the meaning set forth in Section
7.3.
(k) "Cash Component" means the actual amount of cash and
cash equivalents of the Company as of the Closing Date.
(l) "Change of Control" shall mean, with respect to any
Person, (i) a sale of the majority of such Person's capital stock to a Person
that was not an Affiliate of such Person prior to such sale, or (ii) the result
of a merger of such Person with an entity that is not an Affiliate in which a
majority of the capital stock of such Person is transferred to a Person that was
not an Affiliate of such Person prior to such merger.
(m) "Closing" means the consummation of the transactions
contemplated by this Agreement.
(n) "Closing Date" means the date on which the Closing
occurs.
(o) "Closing Financial Statements" has the meaning set forth
in Section 2.3(a).
(p) "COBRA" has the meaning set forth in Section 3.9(h).
(q) "Code" means the Internal Revenue Code of 1986, as
amended.
(r) "Company" means Fifth Third Insurance Services, Inc., an
Indiana corporation or any successor thereto or transferee thereof.
(s) "Competitive Acquirer" means a single entity which (i)
engages in business operations that would breach the provisions of Section
5.1(a) if the entity were an Affiliate of the Seller, (ii) acquires more than a
majority of the capital stock of the Seller or an Affiliate in a transaction
constituting a Change of Control, and (iii) is not a direct or indirect holder
of 2% or more of the capital stock of the Seller or an Affiliate prior to such
acquisition.
(t) "Consent" has the meaning set forth in Section 3.4(b).
(u) "Contract" has the meaning set forth in Section 3.4(a).
(v) "Damages" has the meaning set forth in Section 7.3.
(w) "Employee Benefit and Plans" has the meaning set forth
in Section 3.9
41
(x) "Encumbrance" has the meaning set forth in Section
3.2(a).
(y) "Environment" means all air, surface water, groundwater,
or land, including land surface or subsurface, including all fish, wildlife,
biota and all other natural resources.
(z) "Environmental Claim" means any and all administrative
or judicial actions, suits, orders, claims, liens, notices, notices of
violations, investigations, complaints, requests for information, proceedings or
other communications (written or oral), whether criminal or civil pursuant to or
relating to any applicable Environmental Law by any Person (including, but not
limited to, any Governmental Entity, Person and citizens' group) based upon,
alleging, asserting, or claiming any actual or potential: (i) violation of or
liability under any Environmental Law, (ii) violation of any Environmental
Permit, or (iii) liability for investigatory costs, cleanup costs, removal
costs, remedial costs, response costs, natural resource damages, property
damage, Personal injury, fines, or penalties arising out of, based on, resulting
from, or related to the presence, Release, or threatened Release into the
Environment, of any Hazardous Substances at any location, including, but not
limited to, any off-Site location to which Hazardous Substances or materials
containing Hazardous Substances were sent for handling, storage, treatment, or
disposal.
(aa) "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.
(bb) "Environmental Permit" means any Licenses or Consents
required by any Governmental Entity under or in connection with any
Environmental Law.
(cc) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(dd) "ERISA Affiliate" has the meaning set forth in Section
3.9(a).
(ee) "Estimated Accounts Receivable Component" means the
amount of $6,166,220.
(ff) "Estimated Cash Component" means the amount of
$473,033.
(gg) "Estimated Payables Component" means the amount of
$6,639,253.
(hh) "Excluded Assets" means the items listed on Schedule
5.9 hereto.
42
(ii) "Excluded Business" means the operations, assets and
obligations relating to the placement or sale of life insurance (including
variable products and annuities) currently placed through Fifth Third Bank's
Investment Advisors Division, its Retail and Consumer Banking Network, and/or
Fifth Third Securities, credit insurance, and title insurance, and not accounted
for in the financial statements of the Business.
(jj) "Excluded Liabilities" means all liabilities and
obligations of the Company, except for Retained Liabilities.
(kk) "Expiration date" has the meaning set forth in Section
8.1(b).
(ll) "Fixed Amount Component" means the fixed amount of
$37.0 million.
(mm) "GAAP" has the meaning set forth in Section 2.3(a).
(nn) "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.
(oo) "Guarantee" means the Company's guarantee of certain
obligations of the Reinsurance Company to the insurer disclosed on Schedule
3.13.
(pp) "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.
(qq) "Hub" means Hub International Limited, a corporation
formed under the laws of Ontario.
(rr) "Intellectual Property" means all rights to service
customer accounts, trademarks, trade names, service marks, service names, domain
names, uniform resource locators (URLs), keywords, logos, assumed names,
copyrights, mask works, patents, know-how and all applications therefor, trade
secrets and invention disclosures, that are owned by the Seller, the Company or
any other Person and used by the Company in the operation of its business.
(ss) "Interim Financial Statements" has the meaning set
forth in Section 3.5(a).
(tt) "International Employee Plan" has the meaning set forth
in Section 3.9(w).
(uu) "IRS" has the meaning set forth in Section 3.9(a).
43
(vv) "Latest Balance Sheet" has the meaning set forth in
Section 3.5(a)
(ww) "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.
(xx) "Lease" means all leases, subleases, licenses and other
agreements under which the Company uses or occupies or has the right to use or
occupy, now or in the future, any Leased Real Property.
(yy) "Leased Real Property" means the land, buildings and
improvements covered by any Lease.
(zz) "License" has the meaning set forth in Section 3.8(c).
(aaa) "Litigation Conditions" has the meaning set forth in
Section 7.6. (bbb) "Master Lease" has the meaning set forth in Section 5.4.
(ccc) "Material Adverse Effect" has the meaning set forth in
Section 3.6(b).
(ddd) "Material Contracts" has the meaning set forth in
Section 3.13(a).
(eee) "Negotiation Period" has the meaning set forth in
Section 5.2(b).
(fff) "Non-Valued Receivables" has the meaning set forth in
Section 2.4(b).
(ggg) "Obligations" has the meaning set forth in Section
10.12(a).
(hhh) "Owned Real Property" means all real property,
buildings, structures and other improvements located thereon owned by the
Company.
(iii) "Payables Component" means the Trade Payables of the
Company as of the Closing Date.
(jjj) "PBGC" has the meaning set forth in Section 3.9(a).
(kkk) "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.
(lll) "Personal Property" means all machinery, equipment,
tooling and other tangible Personal property owned or leased by the Company and
used in the conduct of its business (other than items of inventory), as listed
in the fixed assets ledger of the Company.
(mmm) "Plan" has the meaning set forth in Section 3.9(a).
44
(nnn) "Pre-Closing Period" means any Tax period ending on or
before the Closing Date.
(ooo) "Post-Closing Period" means any Tax period ending
after the Closing Date.
(ppp) "Proceeding" has the meaning set forth in Section
3.8(a).
(qqq) "Pro Forma Adjusted Balance Sheet" has the meaning set
forth in Section 3.5(c).
(rrr) "Prohibited Period" has the meaning set forth in
Section 5.1(a).
(sss) "Regular Financial Statements" has the meaning set
forth in Section 3.5(a).
(ttt) "Regulation S-X" has the meaning set forth in Section
5.19.
(uuu) "Reinsurance Company" means Fifth Third Reinsurance
Company, Ltd., a Turks & Caicos corporation.
(vvv) "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing of a Hazardous Substance into the Environment.
(www) "Required Consents" means any Consent as defined in
Section 3.4(b) and set forth on Schedule 3.4(b) hereof.
(xxx) "Retained Liabilities" means (1) the Seller's
executory obligations arising after the Closing Date with respect to the
Contracts listed on Schedule 3.13 or entered into in the ordinary course of the
Business; (2) Trade Payables; and (3) the non-financial obligations of the
Seller under restrictive covenants set forth on Schedule 3.23.
(yyy) "Section 338(h)(10) Election" has the meaning set
forth in Section 5.5(a).
(zzz) "SEC" has the meaning set forth in Section 5.19.
(aaaa) "Seller" means Fifth Third Financial Corp., an Ohio
corporation.
(bbbb) "Seller Indemnitee" has the meaning set forth in
Section 7.4.
(cccc) "Severance Plans" has the meaning set forth in
Section 3.9(l)
(dddd) "Shares" has the meaning set forth in the Preamble.
(eeee) "Site" means any of the real properties currently or
previously owned, leased, used or operated by the Company, any predecessors of
the Company or any
45
entities previously owned by the Company, including all soil, subsoil, surface
waters and groundwater thereat.
(ffff) "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, retirement, excise,
employment, unemployment, minimum, estimated, severance, stamp, property,
occupation, environmental, windfall profits, use, service, net worth, payroll,
franchise, license, gains, customs, transfer, recording and other tax, duty,
fee, assessment or charge of any kind whatsoever, imposed by any Tax Authority,
including any liability therefor as a transferee (including without limitation
under Code Section 6901 or any similar provision of applicable law), as a result
of Treas. Reg. Section 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.
(gggg) "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.
(hhhh) "Tax Item" means each of the following items (or any
combination thereof):
(i) Any extension of time within which to file any Tax
Return in respect of any Pre-Closing Period which has not since been filed with
respect to the Company, its income or assets;
(ii) Any Taxes of the Company for any Pre-Closing Period
or the portion of any Post-Closing Period ending on the Closing Date;
(iii) Any Section 338(h)(10) Election (in whole or in
part) made pursuant to this Agreement;
(iv) To the extent attributable to any Pre-Closing Period
or any transaction occurring prior to or circumstances existing on or before the
Closing Date, any Tax as a transferee or successor of any Person (including, but
not limited to, any liability arising under Treas. Reg. Section 1.1502-6) or
under any Tax allocation, Tax indemnification or Tax sharing contract or
agreement in effect on or prior to the Closing Date;
(v) Any pending, proposed, or threatened Tax Proceedings
with respect to any Tax for which the Company is or may be liable, the payment,
collection or withholding of any Tax by the company or any Tax Return filed by
or on behalf of the Company for any Pre-Closing Period or the portion of any
Post-Closing Period ending with the Closing Date;
46
(vi) Any waivers or extensions or requests for waivers or
extensions of the time within which unpaid Tax may be assessed or asserted
against the Company relating to any Pre-Closing Period or the portion of any
Post-Closing Period ending with the Closing Date;
(vii) With respect to any Tax for which the Company is or
may be liable or with respect to the Company's income, sales, assets or
business, any request for information or documents from any Tax Authority;
(viii) With respect to any Tax for which the Company is or
may be liable or with respect to the Company's income, sales, assets or
business, any agreement with any Tax Authority;
(ix) Any adjustment or change in the Company's accounting
method in effect on or before the Closing Date or any request, demand, or
proposal from a Tax Authority to adjust or change any accounting method received
on or before the Closing Date;
(x) Any adjustment pursuant to Code Section 481(a) (or any
similar provision of applicable law) by reason of a change in accounting method
occurring on or before the Closing Date; or
(xi) With respect to the company or its income, sales,
assets or business, any deferral of any income to a period after the Closing
Date that has economically accrued prior to the Closing Date or any acceleration
of any deductions into a period ending on or before the Closing Date that
economically accrues after the Closing Date other than as a result of the
transactions contemplated by this Agreement.
(iiii) "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.
(jjjj) "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.
(kkkk) "Terminated Contracts" has the meaning set forth in
Section 5.6.
(llll) "Title Defects" means any mortgage, deed of trust,
lien, pledge, security interest, claim, lease, sublease, option, right of first
refusal, easement, restrictive covenant, encroachment, survey defect,
encumbrance, restriction, limitation or document of record.
(mmmm) "Trade Payables" means the Company's normal course
accounts payable that relate to amounts owing to insurance carriers for premiums
for insurance policies placed on behalf of customers of the Business.
47
(nnnn) "Transaction Documents" has the meaning set forth in
Section 3.3.
(oooo) "Valued Receivables" has the meaning set forth in
Section 2.4(a).
(pppp) "WARN" has the meaning set forth in Section 3.22(c).
10. Miscellaneous.
10.1 Transaction Fees and Expenses. Each party shall bear such
costs, fees and expenses as may be incurred thereby in connection with this
Agreement and the transactions contemplated hereby.
10.2 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 any of the Buyer, to:
Hub U.S. Holdings, Inc.
00 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: W. Xxxx Xxxxx, Esq.
(000) 000-0000
With a copy to:
Hub International Limited
00 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: W. Xxxx Xxxxx, Esq.
(000) 000-0000
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
(000) 000-0000
48
if to the Seller:
General Counsel
Fifth Third Bancorp
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Esq.
(000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxx & Xxxx LLP
900 Fifth Third Center
000 Xxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
(000) 000-0000
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.
10.3 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.
10.4 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.
10.5 Governing Law; Venue. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
regard to conflict of law provisions, except to the extent precluded by federal
law of mandatory application. Any proceeding arising out of or relating to this
Agreement shall be brought in the courts of the State of New York, County of New
York, or, if it has or can acquire jurisdiction, in the United States District
Court for the Southern District of New York, and each of the parties irrevocably
submits to the exclusive jurisdiction of each such court in any such proceeding,
waives any objection it may now or hereafter have to venue or to convenience of
forum, agrees that all claims in respect of the proceeding shall be heard and
determined only in any such court and agrees not to bring
49
any proceeding arising out of or relating to this Agreement in any other court.
Process in any proceeding may be served on any party anywhere in the world by
registered mail.
10.6 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.
All remedies hereunder are cumulative and not exclusive. Nothing contained
herein and no election of any particular remedy shall be deemed to prohibit or
limit any party from pursuing, or be deemed a waiver of the right to pursue, any
other remedy or relief available now or hereafter existing at law or in equity
(whether by statute or otherwise) for such actual or prospective breach or
default, including the recovery of damages.
10.7 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.
10.8 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 transaction of the
Business and the inter-relationship of the parties post-Closing.
10.9 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 Buyer Acquisition
Agreements 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 Seller (which
acceptance by the Seller shall not be delayed), by such Person of all of the
Buyer's obligations hereunder and delivery of such assumption to the Seller
within five (5) business days of the execution thereof; provided that any such
assignment shall not relieve the assignor from its obligations under this
Agreement.
50
(c) Notwithstanding any provision of this Agreement to the
contrary, the Seller hereby acknowledges and agrees that all of the covenants,
representations, warranties and indemnities of the Seller 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 Seller may have against the Buyer; provided that
any such assignment shall not relieve the assignor from its obligations under
this Agreement.
10.10 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.
10.11 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.
10.12 Guarantee. (a) By executing this Agreement, Hub
International Ltd. hereby guarantees to Seller the due and prompt payment and
performance of all obligations, covenants and agreements contained in this
Agreement to be performed by the Buyer at any time (the "Obligations").
(b) This guaranty is a guaranty of payment and performance,
not merely of collection, and is independent of any other guaranty or surety of
the Obligations. If the Buyer shall fail to perform or pay any Obligation, Hub
International Ltd. shall pay or perform such Obligation as and when due. The
rights, powers and remedies of the Seller hereunder are cumulative and not
exclusive of any other right, power and remedy which the Buyer otherwise has.
(c) Hub International Ltd. hereby expressly waives, for the
benefit of the Seller: (a) all demands for payment or performance, notices of
nonpayment of nonperformance, and all other notices or demands of any kind or
nature whatsoever with respect to the Obligations other than as provided in this
Agreement; and (b) to the extent permitted by law, any and all defenses now or
hereafter arising or asserted in favor of Hub International Ltd., but which are
not available to the Buyer, such as by reason of (i) restructuring of the
Obligations by new agreement, waiver, consent, amendment, partial payment,
release, settlement, operation of law or otherwise, or (ii) any action taken by
the Seller that is authorized by any provision of this Agreement or any
agreement, instrument or document related hereto, and (c) any disability or lack
of authority of the Buyer with respect to the Obligations.
10.13 Entire Agreement. This Agreement, together with the
Exhibits, Schedules, 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,
51
commitments, understandings, discussions, negotiations or arrangements of any
nature relating thereto.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
52
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date written above.
FIFTH THIRD FINANCIAL CORP.
By: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Title: Treasurer
HUB U.S. HOLDINGS, INC.
By: /s/ W. Xxxx Xxxxx
---------------------------------
Name: W. Xxxx Xxxxx
Title: Secretary
For Purposes of Section 10.12 hereof:
HUB INTERNATIONAL LIMITED
By: /s/ W. Xxxx Xxxxx
---------------------------------
Name: W. Xxxx Xxxxx
Title: Vice President, Secretary
and General Counsel
53
