EXHIBIT 4
MERGER AGREEMENT
AGREEMENT AND PLAN OF REORGANIZATION
DATED DECEMBER 20, 1996
BY AND AMONG
FIRST SECURITY CORPORATION,
FIRST SECURITY INSURANCE INC.,
XXXXX & XXXX EMPLOYEE BENEFITS, INC.
AND
XXXXX XXXX
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT"), is made
and entered into as of the 20th day of December, 1996, by and among First
Security Corporation, a Delaware corporation ("FSC"), First Security
Insurance Inc., a Utah corporation ("FSI"), Xxxxx & Xxxx Employee Benefits,
Inc., a Utah corporation ("O&H"), and Xxxxx Xxxx, an officer and director and
the sole shareholder of O&H ("SHAREHOLDER").
RECITALS
A. FSC is a multi-bank holding company with its principal place of
business in Salt Lake City, Utah.
B. FSI is a wholly-owned insurance subsidiary of FSC with its principal
place of business in Salt Lake City, Utah.
C. O&H is an insurance agency specializing in health and employee benefits
with its principal place of business in Sandy, Utah.
D. O&H is authorized by its Articles of Incorporation to issue 40,000
shares of common stock, par value $1.00 per share, ("O&H COMMON STOCK") of which
as of the date of this Agreement there were 999 shares issued and outstanding,
and 10,000 shares of preferred stock, par value $1.00 per share, ("O&H PREFERRED
STOCK") of which as of the date of this Agreement there were no shares issued
and outstanding.
D. The parties hereto desire that O&H be merged with and into FSI upon the
terms and subject to the conditions set forth in this Agreement.
AGREEMENT
In consideration of the recitals listed above, and of the terms and
mutual covenants and conditions set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which the parties
hereby acknowledge, the parties hereto covenant and agree, subject to the
satisfaction or waiver of the conditions contained herein, that O&H shall be
merged with and into FSI, in accordance with the laws of the State of Utah,
and do hereby agree, prescribe and set forth the terms and conditions of such
merger (the "MERGER"), and the mode of carrying the same into effect, as
follows:
1. MERGER OF O&H INTO FSI.
1.1 MERGER. Subject to the terms and conditions of this Agreement,
O&H shall be merged with and into FSI at the Closing (as defined in Section 2.1
below), with FSI being the surviving corporation. The parties intend the Merger
to constitute a nontaxable reorganization in accordance with Section 368(a) of
the Internal Revenue Code of 1986, as amended.
2. CLOSING OF THE MERGER.
2.1 CLOSING. Unless this Agreement is earlier terminated in
accordance with Article 8, O&H shall be merged with and into FSI, with FSI being
the surviving entity, all as contemplated by this Agreement and in the Merger
Agreement attached hereto as Exhibit A, at a closing (the "CLOSING") to be held
at the offices of Ray, Xxxxxxx & Xxxxxxx, 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxx Xxxx, Xxxx, on December 31, 1996 (the "CLOSING DATE"), or in such other
manner or at such other date and time as upon which the parties may mutually
agree.
2.2 FILING OF ARTICLES OF MERGER AND PLAN OF MERGER. FSI and O&H
shall execute Articles of Merger in substantially the form attached to this
Agreement as Exhibit B. The Merger shall be effected by filing such Articles of
Merger with the Utah Department of Commerce, Division of Corporations and
Commercial Code (the "DIVISION"). The term "EFFECTIVE DATE" shall mean the date
on which the Articles of Merger are filed in Utah, and the "EFFECTIVE TIME"
shall mean the time at which the Merger is effective under the Utah Revised
Business Corporation Act.
2.3 EFFECT OF THE MERGER. At the Effective Time, O&H shall be
merged, in accordance with the Utah Revised Business Corporation Act, with and
into FSI, and FSI, as the surviving corporation, shall continue its corporate
existence under the laws of the State of Utah. The separate corporate existence
of O&H shall terminate at the Effective Time and all of the assets of O&H shall
become the property of FSI as the surviving corporation. The outstanding shares
of O&H Common Stock shall be converted into shares of FSC common stock and cash,
as provided in Section 2.4, below.
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2.4 CONVERSION OF SHARES.
(a) BASIS FOR CONVERSION OF SHARES. The basis for converting
and exchanging the issued and outstanding shares of the stock of each of the
constituent corporations shall be as follows:
(i) FSI SHARES. All shares of common stock, par value
$10.00 per share, of FSI ("FSI COMMON STOCK") that are outstanding
immediately prior to the Effective Time of the Merger shall continue to be
outstanding immediately after the Effective Time of the Merger.
(ii) O&H CAPITAL STOCK. There are no shares of O&H
Preferred Stock issued and outstanding as of the date hereof, and there
shall be no shares of Preferred Stock issued and outstanding prior to the
Effective Time. All of the issued and outstanding shares of O&H Common
Stock, and all rights in respect thereof, shall be converted, IPSO FACTO,
and without any action on the part of the Shareholder, into the right to
receive a total of 52,000 shares of the common stock, par value $1.25, of
FSC ("FSC COMMON STOCK").
(b) SURRENDER OF CERTIFICATES.
(i) RIGHTS UPON SURRENDER. After the Effective Time of
the Merger, Shareholder shall, upon surrender for cancellation of a
certificate or certificates representing such shares to FSC or its agent
designated for such purpose, be entitled to receive a certificate or
certificates representing the number of shares of FSC Common Stock into
which such shares of O&H Common Stock shall have been converted pursuant
to the provisions of this Article 2 (subject to Section 2.4.3 below).
(ii) RIGHTS PENDING SURRENDER. Until so surrendered, the
certificates which prior to the merger represented shares of O&H Common
Stock shall be deemed, for all corporate purposes, to evidence the right to
receive the shares of FSC Common Stock into which such shares of O&H Common
Stock shall have been converted; provided, however, that (a) no dividends
with respect to shares of O&H Common Stock so converted to FSC Common Stock
shall be paid until the holder shall have surrendered certificates
therefor, at which time the Shareholder shall be paid the amount of
dividends, if any, without interest, which shall theretofore have become
payable with respect to the shares of FSC Common Stock into which such
shares shall have been converted, and (b) no interest shall accrue or be
payable with respect to the amount of cash into which any fractional share
shall have been converted pursuant to Section 2.4.3 below.
(iii) ISSUANCE OF CERTIFICATES IN DIFFERENT NAME. If any
certificate for shares of FSC Common Stock is to be issued in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition
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of the issuance thereof that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer, and that
the person requesting such exchange pay to FSC or its agent designated
for such purpose any transfer or other taxes required by reason of the
issuance of a certificate for shares of FSC Common Stock in any name
other than that of the registered holder of the certificate surrendered,
or establish to the satisfaction of FSC or its agent that such tax has
been paid or is not payable. In this connection, Shareholder shall not
transfer shares of FSC or present any certificate of transfer into the
name of another person for a period of time measured by the holding
period of Rule 144 under the Securities Act of 1933, as amended
from time to time, except as such transfer or certificate transfer is
permitted under the provisions of this Agreement covering the registration
of Shareholder's shares of FSC Common Stock, and except as may be called
for by a bona fide estate plan of Shareholder.
(c) FRACTIONAL SHARES. No fractional shares of FSC Common Stock
shall be issued in or as a result of the Merger. In lieu of any such fractional
shares, Shareholder, if entitled to a fraction of a share of FSC Common Stock
upon surrender of stock certificates as provided in Section 2.4.2 above, will be
paid an amount of cash (without interest) determined by multiplying (a) $25.00,
by (b) the fractional share interest in FSC Common Stock to which Shareholder
would otherwise be entitled.
2.5 ARTICLES OF INCORPORATION. The Articles of Incorporation of FSI
in effect immediately prior to the Effective Time of the Merger shall be and
constitute the Articles of Merger of FSI as the surviving corporation until
further amended in the manner provided by law.
2.6 BYLAWS. The Bylaws of FSI as in effect immediately prior to the
Effective Time of the Merger shall be and constitute the Bylaws of FSI as the
surviving corporation, until further amended in the manner provided by law.
2.7 DIRECTORS. The Board of Directors of FSI, and the members
thereof, immediately prior to the Effective Time shall be and constitute the
Board of Directors and the members thereof of FSI as the surviving corporation.
2.8 OFFICERS. The officers of FSI immediately prior to the Effective
Time shall be and constitute the officers of FSI as the surviving corporation.
2.9 SUBSEQUENT ACTIONS. If, at any time after the Effective Time,
FSI as the surviving corporation, or its successors or assigns, shall consider
or be advised that any deeds, bills of sale, assignments, assurances, or any
other actions or things are necessary or desirable to vest, perfect or confirm
(of record or otherwise) in FSI its rights, title or interest in, to or under
any of the rights, properties or assets of O&H acquired or to be acquired by FSI
as a result of, or in connection with, the Merger, or otherwise to carry out
this Agreement, the officers and directors of FSI shall be authorized to execute
and deliver, in the name and on behalf of O&H or otherwise, all deeds, bills of
sale, assignments and
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assurances, and to take and do, in the name and on behalf of O&H or otherwise,
all such actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties and assets of O&H or otherwise to carry out this Agreement.
3. CONDITIONS OF CLOSING.
3.1 CONDITIONS OF CLOSING FOR ALL PARTIES. The consummation of the
transactions contemplated by this Agreement is conditioned upon the following:
(a) REGULATORY APPROVAL. All consents, approvals and
permissions and the satisfaction of all of the requirements prescribed by law,
including but not limited to, the consents, approvals and permissions of all
applicable regulatory authorities, which are necessary to the carrying out of
the Merger as described in this Agreement, shall have been procured; provided,
however, the approvals referred to in this subparagraph 3.1.1 shall not have
imposed any significant conditions which FSC and FSI reasonably deem to be
materially disadvantageous or burdensome.
(b) NO INJUNCTION, ETC. There shall not have been instituted
any litigation, regulatory proceeding or other matter by any third party which
challenges the legality or effectiveness of the transactions contemplated hereby
or seeks an order, decree or injunction enjoining or prohibiting the
consummation of the Merger.
3.2 CONDITIONS OF CLOSING FOR FSC AND FSI. The obligation of FSC and
FSI, respectively, to consummate the transactions contemplated by this Agreement
is conditioned upon the following:
(a) O&H RESOLUTIONS; CORPORATE DOCUMENTS. O&H shall have
delivered to FSI a certified copy of resolutions duly adopted by its Board of
Directors and by Shareholder approving this Agreement and the Merger as
contemplated hereby. O&H shall deliver to FSI (i) a copy, certified by the
Division, of O&H's Articles of Incorporation as amended to date; (ii) a copy,
certified by O&H's corporate secretary, of O&H's Bylaws as amended to date; and
(iii) a certificate of good standing as to O&H, dated as of a recent date,
issued by the Division.
(b) O&H'S AND SHAREHOLDER'S REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS. Unless waived in writing by FSI and FSC in their sole
discretion, the respective representations and warranties of O&H and Shareholder
contained in this Agreement shall be correct on and as of the Effective Date
with the same effect as though made on and as of such date. Except as otherwise
contemplated by this Agreement, O&H and Shareholder shall have performed all of
their respective obligations and agreements hereunder theretofore to be
performed by them. FSC and FSI shall have received at the Closing a certificate
to the foregoing effect, dated the Closing Date, from O&H, executed on its
behalf by one of its duly authorized executive officers, and from Shareholder.
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(c) OPINION OF O&H'S COUNSEL. Unless waived in writing by
FSC and FSI in their sole discretion, FSC and FSI shall have received at the
Closing from Hill, Harrison, Xxxxxxx & Xxxxxxx, counsel to O&H and
Shareholder, a written opinion, dated the Closing Date, substantially in the
form of Exhibit C hereto.
(d) POOLING OF INTERESTS. Unless waived in writing by FSC in
its sole discretion, FSC shall have received a letter from Deloitte & Touche,
its independent public accountants, in form and substance reasonably
satisfactory to FSC, that the transaction may be properly accounted for as a
"pooling of interests."
(e) CONDITION OF O&H. FSI shall have determined, based on an
audit and review by its officers, accountants and legal counsel, conducted as
soon as possible after execution of this Agreement and updated as of the
Closing Date, that (i) the assets, books, records and operations of O&H are
in satisfactory condition and will not adversely impact FSI after
consummation of the Merger; (ii) based on the review of the assets, books,
records and operations of O&H by FSI, there are no liabilities (existing,
threatened or contingent) which FSI, in its discretion, determines to be
unacceptable; (iii) O&H owns its assets free and clear of any claims or
encumbrances except as otherwise set forth on Section 5.10 of the Disclosure
Schedule, as defined in Section 5.1, below; (iv) the net earnings before
taxes of O&H for the fiscal years ended December 31, 1994, and December 31,
1995, and for the period ended June 30, 1996, are as reported in the O&H
Financial Statements, as defined in Section 5.6 below, previously delivered
to FSI; and (v) as of the Closing Date, the net worth of O&H, calculated in
accordance with generally accepted accounting principles, and after accrual
or payment of all applicable taxes and of its expenses incurred with respect
to the Merger, including but not limited to auditor's and attorneys' fees,
will equal or exceed its net worth as set forth in the December 31, 1995 O&H
Financial Statements.
(f) SHAREHOLDER'S EMPLOYMENT AGREEMENT. Shareholder shall
have entered into an employment agreement with FSI substantially in the form
of Exhibit D hereto.
(g) NON-COMPETITION AGREEMENTS. Each licensed sales person
employed by O&H shall have entered into an agreement not to compete with FSI
substantially in the form of Exhibit E hereto.
(h) TAX MATTERS. Unless waived in writing by FSC in its sole
discretion, FSC shall have received an opinion from its counsel to the effect
(i) that the Merger will constitute a nontaxable reorganization in accordance
with Section 368(a) of the Code, and (ii) that any other matters agreed to by
the parties will be favorably treated for tax purposes.
(i) TERMINATION OF O&H EMPLOYEE BENEFIT PLANS. With the
exception of the Xxxxx & Xxxx (formerly Benefit Brokers, Inc.) Employees'
Retirement Plan and Trust (the "RETIREMENT PLAN"), the Plans, as defined in
Section 5.18 below, shall have been terminated prior to the Closing Date.
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(j) RETIREMENT PLAN. The Retirement Plan shall not have been
terminated and O&H and Shareholder shall execute and deliver to FSI all such
documents and take all such actions as are necessary to cause FSC to be
substituted as the sole sponsor and First Security Bank, N.A. to be
substituted as the sole Trustee under the Retirement Plan effective as of the
Effective Date of the Merger.
3.3 CONDITIONS OF CLOSING FOR O&H AND SHAREHOLDER. The obligation
of O&H and Shareholder, respectively, to consummate the transactions
contemplated by this Agreement is conditioned upon the following:
(a) FSC AND FSI REPRESENTATIONS AND WARRANTIES. Unless
waived in writing by O&H in its discretion, the representations and
warranties of FSC and FSI contained in this Agreement shall be correct on and
as of the Effective Time with the same effect as though made on and as of
such date, except for changes which are not, in the aggregate, material and
adverse to the financial condition, businesses, properties or operations of
FSC and its consolidated subsidiaries, and, except as otherwise contemplated
by this Agreement, FSC and FSI shall have performed all of their obligations
and agreements hereunder theretofore to be performed by them. O&H shall have
received at the Closing a certificate to the foregoing effect dated the
Closing Date and executed on behalf of each of FSC and FSI by one of their
respective duly authorized executive officers.
(b) OPINION OF FSC COUNSEL. Unless waived in writing by O&H,
O&H shall have received at the Closing from Ray, Xxxxxxx & Xxxxxxx, counsel
to FSC, a written opinion, dated the Closing Date, substantially in the form
of Exhibit F hereto.
4. COVENANTS OF O&H AND SHAREHOLDER.
4.1 NEGATIVE COVENANTS. Except as otherwise specifically provided
in this Agreement, between the date hereof and the Effective Time or the time
when this Agreement terminates as provided herein, neither O&H nor
Shareholder shall, without the prior written authorization of the President
of FSI:
(a) CHANGE IN CAPITAL STOCK; ISSUANCE OF SHARES. Make or
approve any change in O&H's authorized capital stock, or issue, agree to
issue or permit O&H to become obligated to issue any shares of O&H's capital
stock, or securities convertible into its capital stock, or, with respect to
Shareholder, sell, agree to sell or become obligated to sell any shares of
O&H Common Stock.
(b) OPTIONS, WARRANTS, AND RIGHTS. Grant or issue any
options, warrants or other rights of any kind relating to the purchase of
shares of O&H Common Stock, or securities convertible into shares of O&H
Common or Preferred Stock.
(c) DIVIDENDS. Declare or pay any dividends or other
distributions on any shares of O&H Common Stock.
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(d) PURCHASE OF SHARES. Purchase or otherwise acquire, or
agree or become obligated to acquire, any shares of O&H Common Stock.
(e) BENEFIT PLANS. Except as required by law, enter into or
amend any pension, retirement, stock option, profit sharing, deferred
compensation, consultant, bonus, group insurance or similar benefit plan in
respect of any of its directors, officers or other employees.
(f) CONDUCT OF BUSINESS. Except as contemplated by this
Agreement, take or omit to take any action which (i) causes O&H not to
conduct its business in a manner consistent with normal business practices or
(ii) has or is likely to have a material and adverse effect on O&H's
financial condition (present or prospective), businesses, properties, assets
or operations (the parties hereto recognize that the operation of O&H until
the Effective Time is the responsibility of O&H and its Board of Directors
and officers; nevertheless, O&H shall keep FSI advised of all important
changes in its financial condition (present or prospective), businesses,
properties, assets or operations).
(g) ACQUISITIONS AND MERGERS. Acquire or merge with any
other company or acquire any significant part of the assets of any other
company.
(h) LIENS; INDEBTEDNESS; INCREASE IN COMPENSATION, ETC.
Except in the ordinary course of business, mortgage, pledge or subject to a
lien or any other encumbrance any of O&H's assets, dispose of any of O&H's
assets, incur or cancel any of O&H's indebtedness or claims, permit O&H to
purchase or lease any assets having a purchase price or lease cost, in the
aggregate, of more than $5,000.00, or increase any compensation or benefits
payable to O&H's officers or employees, except routine merit increases in
accordance with past practices.
(i) AMENDMENTS TO ARTICLES AND BYLAWS. Amend O&H's Articles
of Incorporation or Bylaws.
(j) BANK ACCOUNTS. Change O&H's banking or safe deposit
arrangements.
4.2 AFFIRMATIVE COVENANTS. O&H and Shareholder hereby jointly
and severally covenant to and agree with FSI and FSC that:
(a) ACTIONS; INVESTIGATION; ACCESS. O&H and Shareholder
shall diligently endeavor to take or cause to be taken all action required
under this Agreement on their part to be taken as promptly as practicable so
as to permit the consummation of the transactions contemplated by this
Agreement at the earliest possible date, and cooperate fully with FSC and FSI
to that end, including, without limitation, by providing to FSC and FSI, and
their employees, agents, accountants and counsel, access to O&H's books,
records, reports, tax returns and facilities and to O&H's employees, agents,
accountants and counsel; provided,
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however, that FSC and FSI shall perform and conduct such investigation in a
manner that will not unreasonably interfere with O&H's normal operations,
customers or employee relations.
(b) REGULATORY APPROVALS. O&H and Shareholder shall (i) use
their best efforts in good faith to obtain all necessary regulatory approvals
and to take or cause to be taken all other action required under this
Agreement on its part to be taken, as promptly as practicable so as to permit
the consummation of the transactions contemplated by this Agreement at the
earliest possible date, and cooperate fully with FSC and FSI to that end, and
(ii) furnish all necessary information for inclusion in any applications
relating to the consents, approvals, and permissions of regulatory
authorities referred to in Section 3.1.1. O&H shall have the right to review
all applications to such regulatory authorities before the filing thereof and
to comment upon the form of such applications and the information contained
therein.
(c) NOTIFICATION OF ACTIONS. O&H & Shareholder shall
immediately notify FSC and FSI in the event of the breach of any of its
covenants, or the covenants of Shareholder, as set forth in this Article 4.
(d) INTERIM FINANCIAL STATEMENTS. O&H will promptly provide
to FSI from time to time prior to the Effective Time all interim financial
statements that it customarily prepares.
(e) CONDUCT AND PRESERVATION OF BUSINESS AND EMPLOYEE
RELATIONSHIPS. Between the date hereof and the Effective Time, O&H shall
conduct its business in the normal and regular manner and shall cooperate
with FSI in its efforts to retain for the benefit of FSC and FSI the
continuing service of the present officers and employees of O&H, and shall
continue to conduct business with the normal efforts to preserve the goodwill
of customers and others having business relations with O&H, to preserve the
benefits of all contractual relationships with others and to keep in force at
least at their present limits all policies of insurance currently in effect.
5. REPRESENTATIONS AND WARRANTIES OF O&H AND SHAREHOLDER. As an
inducement to FSI and FSC to enter into this Agreement, and in addition to
any representations and warranties made elsewhere in this Agreement, O&H and
Shareholder hereby jointly and severally represent and warrant to FSI and FSC
that the statements contained in this Article 5 are correct and complete in
all material respects as of the date of this Agreement and will be correct
and complete in all material respects as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 5).
5.1 DISCLOSURE SCHEDULE. Attached to this Agreement is a schedule
(the "DISCLOSURE SCHEDULE") which contains certain information regarding O&H
as referenced in various places in this Agreement. All information set forth
in the Disclosure Schedule shall be deemed for purposes of this Agreement to
constitute an integral part of this Agreement
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and of O&H's representations and warranties under this Agreement. The
Disclosure Schedule is arranged in sections corresponding to the lettered and
numbered paragraphs within this Article 5.
5.2 ORGANIZATION, CONDUCT OF BUSINESS, ETC. O&H (i) is duly
organized, validly existing and in good standing under the laws of the State
of Utah; (ii) has all requisite power and authority (corporate and other) to
own its properties and conduct its businesses as now being conducted; (iii)
is duly qualified to do business and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it therein or in
which the transaction of its businesses require such qualification, except
where failure to so qualify would not have a material adverse effect on O&H
or its businesses, operations, properties, assets or condition (financial or
otherwise); and (iv) is not transacting business, or operating any properties
owned or leased by it, in violation of any provision of federal or state law
or any rule or regulation promulgated thereunder, which violation would have
a material adverse effect on O&H or its businesses, operations, properties,
assets or condition (financial or otherwise). The states in which O&H is
qualified to do business are listed on Section 5.2 of the Disclosure
Schedule. There has not been any claim by any other state or jurisdiction to
the effect that O&H is required to qualify or otherwise be authorized to do
business as a foreign corporation therein.
5.3 OPTIONS, WARRANTS, ETC. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, calls, units or other commitments of any
kind relating to the issuance, sale, purchase or redemption of, or securities
convertible into, capital stock of O&H, whether by O&H or Shareholder.
5.4 CAPITAL STOCK. All the outstanding shares of O&H Common Stock
have been duly authorized and are validly issued, fully paid and
nonassessable. Shareholder owns all of the issued and outstanding shares of
O&H Common Stock, free and clear of any security interest, pledge, lien,
encumbrance or claim. No shares of O&H Common Stock are subject to any
voting or shareholder's or similar agreement or arrangement restricting the
transferability thereof, granting to any person or entity a right of first
refusal with respect thereto, or restricting or controlling the voting
thereof. No restrictive legend appears on the face or back of any
certificates representing O&H Common Stock. O&H has no equity interest in
any other business entity or organization. There are no shares of Preferred
Stock issued and outstanding as of the date hereof and no shares of Preferred
Stock shall be issued prior to the Effective Time.
5.5 AUTHORIZATION; VALIDITY OF AGREEMENT. O&H has all necessary
corporate power and authority to execute and deliver this Agreement.
Shareholder has all necessary power and authority to execute and deliver this
Agreement. This Agreement has been, or will have been prior to the Closing
Date, duly and validly approved by all necessary corporate action on the part
of O&H, including by the Board of Directors of O&H and its sole shareholder,
has been duly executed and delivered on O&H's behalf, has been duly executed
and delivered
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by Shareholder, constitutes a valid and binding agreement of O&H and
Shareholder, and is enforceable against each of them in accordance with its
terms.
5.6 O&H FINANCIAL STATEMENTS. Section 5.6 contains O&H's Balance
Sheets as of December 31, 1994, and December 31, 1995, and its Statements of
Income and Statements of Cash Flow for its fiscal years ended December 31,
1994, and December 31, 1995, together with a review thereof by independent
certified accountants reasonably acceptable to FSC and FSI and its interim
Balance Sheet and Statement of Income for the period ended June 30, 1996
(collectively, the "O&H FINANCIAL STATEMENTS"). The O&H Financial Statements
were prepared in accordance with generally accepted accounting principles
consistently applied and present fairly O&H's financial condition, results of
operations and changes in cash position as of their respective dates (except
for such interim statements which require customary year-end adjustments).
5.7 O&H TAX RETURNS. O&H has delivered true and correct copies of
all tax returns filed by it for its fiscal years ending 1993, 1994 and 1995.
O&H has filed all federal tax returns and all state and local tax returns
(whether relating to income, sales, franchise, real or personal property or
other types of taxes) required to be filed, and has paid all taxes that have
become due pursuant to such returns. No penalties or other charges are, or
will become, due with respect to the late filing of any such return. Each
such tax return heretofore filed by O&H correctly and accurately reflects the
amount of its tax liability thereunder. O&H has also paid all other
assessments or taxes to the extent that the same have become due and payable.
The reserve on its Balance Sheet as of June 30, 1996, as included in Section
5.6 of the Disclosure Schedule, for accrued and unpaid taxes is sufficient
for the payment of all federal, state, local, county and foreign taxes,
whether disputed or not, which are hereafter found to be, or to have been,
due with respect to the conduct of O&H's business up to and through the date
of such balance sheet. None of O&H's federal, state or local income or other
tax returns has been audited. Except as set forth on Section 5.7 of the
Disclosure Schedule, there are not in force any extensions of time with
respect to the dates on which any tax return was or is due to be filed by
O&H, or any waivers or agreements by it for the extension of time for the
assessment or payment of any tax.
5.8 OTHER LIABILITIES. Except as and to the extent reflected or
reserved against in O&H's Balance Sheet as at June 30, 1996, as included in
Section 5.6 of the Disclosure Schedule, or as set forth on Section 5.8 of the
Disclosure Schedule, O&H has no liabilities or debts, whether accrued,
absolute, contingent or otherwise, and whether due or to become due,
including but not limited to liabilities on account of taxes, other
governmental charges or lawsuits subsequently brought. Subsequent to the
date of such Balance Sheet, O&H has not incurred any liabilities or debts of
any nature whatsoever other than those incurred in the ordinary course of
business and which, individually or in the aggregate, exceed $2,500.00.
Except as set forth on Section 5.8 of the Disclosure Schedule, there are no
suits, actions or proceedings pending or, to the knowledge of O&H or any of
its directors, officers or Shareholder, threatened, or any contingent
liability, which would give rise to any right of
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indemnification on the part of any director or officer of O&H or his or her
heirs, executors or administrators, as against O&H or any successor to the
business of O&H.
5.9 ENVIRONMENTAL MATTERS.
(a) CERTAIN DEFINITIONS. For purposes of this Agreement,
the term "ENVIRONMENTAL LAWS" shall include all state and federal laws,
rules, regulations and standards designed to protect human health or the
environment, as amended from time to time, and all regulations promulgated
thereunder, including, without limitation, the Clean Air Act, 42 U.S.C.A.
Sections 7401, ET SEQ., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.A. Sections 9601, ET SEQ., the
Federal Water Pollution Control Act, 33 U.S.C.A. Sections 1251, ET SEQ., the
Resource Conservation and Recovery Act, 42 U.S.C.A. Sections 6901, ET SEQ.,
the Toxic Substances Control Act, 15 U.S.C.A. Sections 2601, ET SEQ., any
Utah underground storage tank laws, and other federal or state environmental
law or regulation. "HAZARDOUS SUBSTANCE" shall include all petroleum
products as well as any toxic or hazardous material, hazardous waste or other
hazardous or regulated substance defined in or regulated by any Environmental
Law.
(b) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth
in Section 5.9 of the Disclosure Schedule, with respect to the real property
owned, leased or operated by O&H, to the best knowledge of O&H, neither O&H
nor any predecessor owner to O&H has stored, disposed of or arranged for the
disposal of any hazardous substance at any such site, or permitted others to
do so, so as to be or become a potentially liable party for remedial action
or response costs in connection with such facility, location or site under
any Environmental Law.
(c) NO CONTAMINATION. Except as set forth in Section 5.9 of
the Disclosure Schedule, after due inquiry and investigation, the real
property owned, leased or operated by O&H has never contained or had located
thereon, or been used by previous owners and/or operators or O&H, for storage
of, or construction with, any Hazardous Substance.
(d) NOTICE OF VIOLATION. O&H has not received a summons,
citation, directive, letter, notice of violation, request for information or
other written communication from any local, state or federal agency
concerning any possible intentional or unintentional action or omission on
the part of any person which has resulted in the possible release of any
Hazardous Substance affecting property owned, leased or operated by O&H or
concerning any other possible violation by O&H of any Environmental Law.
5.10 TITLE TO PROPERTIES. Except as set forth in Section 5.10 of
the Disclosure Schedule, O&H owns, free and clear of any security interest,
lien, claim, charge, option, or other encumbrance, all of the property, real,
personal or mixed, reflected in its Financial Statements or otherwise owned
by it, and all property acquired since such date. In O&H's opinion, all such
properties which are material to its business or operations are in a good
state of maintenance and repair and are adequate for their current uses and
purposes.
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During each of the past three calendar years, O&H and its properties have
been insured for customary risks with customary limits, deductibles, and
exclusions, and such insurance protection continues in effect as of the date
hereof. O&H has delivered to FSI true and correct copies of all deeds, title
insurance policies and surveys it has with respect to the real property owned
by it and copies of all leases with respect to real property leased by it, if
any.
5.11 ABSENCE OF DEFAULTS. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will conflict with or result in a breach of or constitute a default under any
provision of O&H's Articles of Incorporation or Bylaws, or any agreement to
which O&H is a party or by which it is bound or to which any of its
properties is subject, or result in the creation of any liens or encumbrances
upon its assets, and no consents or waivers thereunder are required to be
obtained in connection with the transactions contemplated hereby, except for
the approval of required regulatory authorities.
5.12 LICENSES. All licenses, permits, and other governmental
authorizations that are required in connection with O&H's business have been
obtained, are in full force and effect as of the date hereof, and will be in
full force and effect on the Effective Date. Such licenses, permits, and
authorizations are valid and sufficient for all business presently carried on
by it, and no consents or waivers thereunder are required to be obtained in
connection with the transactions contemplated hereby, except for the approval
of required regulatory authorities. Section 5.12 of the Disclosure Schedule
contains a list of all such licenses, permits and authorizations and all
applications therefor.
5.13 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31,
1995, there has been no material adverse change, and no development involving
a reasonably foreseeable prospective material adverse change, in or affecting
the financial condition (present or prospective), businesses, properties,
assets or operations (present or prospective) of O&H.
5.14 ACTIONS, PROCEEDINGS AND INVESTIGATIONS. Set forth on
Section 5.14 of the Disclosure Schedule is a complete and accurate listing of
all litigation, administrative and other proceedings to which O&H is a party.
There are no other actions, proceedings or investigations pending, or to the
knowledge of Shareholder, the directors or the executive officers of O&H,
threatened or contemplated, against or relating to O&H or any of its
properties or assets (and none of the directors or officers or Shareholder
are aware of any facts that would give rise to any such claim).
5.15 ABSENCE OF BROKERAGE COMMISSIONS, ETC. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by Shareholder and O&H directly with FSC and FSI without the
participation or intervention of any other person, firm or corporation
employed or engaged by or on behalf of Shareholder or O&H in such a manner as
to give rise to any valid claim against O&H, FSC or FSI for a brokerage
commission, finder's fee or like payment.
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5.16 MATERIAL CONTRACTS. Section 5.16 of the Disclosure Schedule
is a complete and accurate list of the following contracts, agreements, and
other legally binding arrangements (hereinafter collectively referred to as
"ARRANGEMENTS"), to which O&H is a party on the date hereof:
(a) any arrangement with any employee, agent or independent
contractor;
(b) any management incentive, bonus or compensation plans not
described in Section 5.18 of the Disclosure Schedule;
(c) any arrangement or group of related arrangements (including
the lease of real or personal property from or to third parties) providing
for payments in excess of $2,500 per annum or in excess of $5,000 for the
remaining term of the arrangement;
(d) any arrangement in which O&H is participating as a general
partner or joint venturer;
(e) any arrangement which shall survive the Closing under which
O&H has created, incurred, assumed, or guaranteed (or may create, incur,
assume, or guarantee) indebtedness for borrowed money (including
capitalized lease obligations) involving more than $2,500;
(f) any arrangement restricting the ability of O&H or
Shareholder to compete with others;
(g) any arrangement between Shareholder, on the one hand, and
O&H, on the other hand;
(h) any arrangement pursuant to which Shareholder has promised
to pay, or loan any amount to, or sold, transferred or leased any property
or assets to or from O&H;
(i) any arrangement requiring O&H to pay severance or similar
payments as a result of the transactions contemplated hereby;
(j) any other material arrangement which will survive the
Closing not entered into in the ordinary course of business;
(k) any general power of attorney or similar arrangement;
(l) any arrangement for the sale of any of O&H's assets other
than in the ordinary course of business or for the grant of any
preferential rights to purchase any of its assets;
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(m) any arrangement under which O&H agrees to indemnify any
party against tax liability;
(n) material arrangements that can be canceled without
liability, premium or penalty only on ninety days' or more notice; or
(o) any arrangement for data processing services providing for
payments in excess of $2,500 for the remaining term of the arrangement.
O&H has made available to FSC and FSI a correct and complete copy of each
written arrangement listed in Section 5.16 of the Disclosure Schedule. With
respect to each arrangement so listed, except for such of the following as to
which the failure to be true and correct would not have a material adverse
effect: (1) the arrangement is in full force and effect; (2) O&H is not in
breach or default, and no event has occurred which with notice or lapse of
time or both would constitute a breach or default by O&H, or permit
termination, modification, or acceleration against O&H under the arrangement
applicable to it; (3) O&H has not repudiated or waived any material provision
of any such arrangement; (4) no other party to any such arrangement is in
default in any respect thereunder; and (5) with respect to any lease
disclosed pursuant to this Section 5.16, all rents and other amounts
currently due thereunder have been paid; no waiver or indulgence or
postponement of any obligation thereunder has been granted by any lessor or
sublessor; and O&H has not received any notice that it has breached any term,
condition or covenant. Except as disclosed in Section 5.16 of the Disclosure
Schedule, none of the payments required to be made under any such arrangement
has been prepaid more than 30 days prior to the date of such payment
there-under.
5.17 COMPLIANCE WITH LAWS. Except as set forth on Section 5.17 of
the Disclosure Schedule, the conduct by O&H of its business does not violate
or infringe any domestic or foreign laws, statutes, ordinances, rules or
regulations, the enforcement of which, individually or in the aggregate,
would materially and adversely affect the business, operations, properties,
assets or condition (financial or otherwise) of O&H.
5.18 O&H'S EMPLOYEE BENEFITS.
(a) Section 5.18 of the Disclosure Schedule contains a true and
complete list of each employee benefit, compensation or welfare benefit
plan, program or agreement maintained or contributed to or required to be
contributed to by O&H (the "PLANS"). O&H has no formal plan or commitment,
whether legally binding or not, to create any additional Plan or modify or
change any existing Plan that would affect any employee or terminated
employee of O&H.
(b) With respect to each of the Plans, O&H has heretofore
delivered to FSC and FSI true and complete copies of each of the following
documents: (i) each Plan and related trust, if any, (including all
amendments thereto); (ii) annual report and actuarial
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report, if required to be filed under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), for the last two (2) years and
the latest financial statement, if any, for each such Plan; (iii) the most
recent summary plan description, together with each summary of material
modifications, required under ERISA; and (iv) the most recent determination
letter received from the Internal Revenue Service ("IRS") with respect to
each Plan that is intended to be qualified under Section 401 of the Code.
(c) All required contributions have been, or will be, made with
respect to each Plan on or prior to the date of this Agreement and have
been properly recorded on the Financial Statements.
(d) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including, but not
limited to, ERISA and the Code and each of the Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified.
(e) All amendments required under the Code have been made by O&H
and approved by the IRS with respect to each Plan on or prior to the date
of this Agreement.
(f) Except as set forth in Section 5.18 of the Disclosure
Schedule, no Plan provides benefits, including, without limitation, death
or medical benefits (whether or not insured), with respect to current or
former employees beyond their retirement or other termination of service
(other than (A) coverage mandated by applicable law, (B) death benefits or
retirement benefits under any "employee pension plan," as that term is
defined in Section 3(2) of ERISA, (C) deferred compensation benefits
accrued as liabilities on the books of O&H, or (D) benefits the full cost
of which is borne by the current or former employee (or his or her
beneficiary)).
(g) There are no pending or, to O&H's knowledge, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf
of or against any of the Plans or any trusts related thereto.
(h) Except as set forth in Section 5.18 of the Disclosure
Schedule, the consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional
acts or events) (A) entitle any current or former employee of O&H to
severance pay, employment compensation or any other payment, benefit or
award, or (B) accelerate or modify the time of payment or vesting, or
increase the amount of any benefit, award or compensation due any such
employee.
5.19 BANK ACCOUNTS. Section 5.19 of the Disclosure Schedule lists
(a) the names of each bank, savings and loan, or other financial institution
in which O&H has an account, and the account numbers and names of all persons
authorized to draw thereon or have access thereto, and (b) the location of
all lockboxes and safe deposit boxes of O&H and the names of all persons
authorized to draw thereon or have access thereto. At the Closing
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Date, O&H shall not have any such account, lockbox or safe deposit box other
than those listed in Section 5.19 of the Disclosure Schedule.
5.20 BOOK OF BUSINESS. Section 5.20 of the Disclosure Schedule
contains a complete and accurate listing of O&H's "book of business" (as such
term is used in the insurance industry), which identifies the name and
address of every customer, together with (i) the annualized premium therefor;
(ii) the term; and (iii) the commission. Except as set forth in such Section
of the Disclosure Schedule, O&H has remitted to the applicable carrier all
premiums received on or before the date hereof.
5.21 ACCOUNTS RECEIVABLE. Section 5.21 of the Disclosure Schedule
contains a complete and accurate list of all accounts receivable held by O&H
on the date hereof. All accounts receivable listed thereon (a) have arisen
in the ordinary course of business; (b) represent valid obligations due to
O&H and that are enforceable in accordance with their terms, except as
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally or (ii) general principles of equity; and (c)
will be collectible at their face amounts.
5.22 INTELLECTUAL PROPERTY. Section 5.22 of the Disclosure
Schedule contains a complete and accurate list of all trademarks, trade
names, service marks and copyrights used by O&H as of the date hereof.
Except as set forth in Section 5.22 of the Disclosure Schedule, O&H owns or
possess the royalty free licenses or other rights to use all copyrights,
trademarks, service marks, trade secrets and other proprietary rights
necessary to conduct its business as it is presently operated. O&H is not
infringing upon or otherwise acting adversely to any copyrights, trademarks,
trademark rights, service marks, service names, trade names, licenses, trade
secrets or other proprietary rights owned by any other person or persons, and
there is no claim or action by any such persons pending, or to the knowledge
of O&H and Shareholder threatened, with respect thereto.
5.23 RECORDS. The books of account, minute books, stock record
books and other records of O&H are complete and correct in all material
respects and have been maintained in accordance with sound business
practices, and there have been no transactions involving the business of O&H
which properly should have been set forth therein and which have not been
accurately so set forth.
5.24 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither O&H nor any
officer, employee or agent of O&H, nor any other person acting on its behalf,
has, directly or indirectly, within the past three (3) years given or agreed
to give any gift or similar benefit to any customer, supplier, governmental
employee or other person who is or may be in a position to help or hinder the
business of O&H (or assist O&H in connection with any active or proposed
transaction) which (a) would subject O&H to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (b), if not given
in the past, would have had a materially adverse effect on the assets,
business or operations of O&H, or (c), if not continued in the future, would
materially adversely affect O&H's assets, business, operations
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or prospects or which would subject O&H to suit or penalty in any private or
governmental litigation or proceeding.
5.25 DISCLOSURE. No representation or warranty by O&H or
Shareholder contained in this Agreement, nor any statement or certificate
furnished or to be furnished by O&H or Shareholder to FSC or FSI or their
representatives in connection herewith or pursuant hereto, contains or will
contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to make the statements herein or therein
contained not misleading or necessary in order to provide a prospective
purchaser of the business of O&H with adequate information as to O&H and its
condition (financial and otherwise), properties, assets, liabilities,
business and prospects, and O&H and Shareholder have disclosed to FSC and FSI
in writing all material adverse facts known to them relating to the same.
6. COVENANTS, REPRESENTATIONS AND WARRANTIES OF FSC AND FSI. As an
inducement to O&H to enter into this Agreement, and in addition to any
representations and warranties made elsewhere in this Agreement, FSC and FSI
jointly and severally represent and warrant to O&H that the statements
contained in this Article 6 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 6).
6.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. Each of FSC and FSI
(i) is duly incorporated and validly existing and in good standing under the
laws of the State of Delaware (in the case of FSC), or the State of Utah (in
the case of FSI), (ii) has all requisite power and authority (corporate and
other) to own its properties and conduct its businesses as now being
conducted, (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by
it therein or in which the transaction of its businesses makes such
qualification necessary, except when failure to so qualify would not have a
material adverse effect on FSC and its consolidated subsidiaries, and (iv) is
not transacting business, or operating any properties owned or leased by it
in violation of any provision of federal or state law or any rule or
regulation promulgated thereunder, which violation would have a material
adverse effect on FSC and its consolidated subsidiaries.
6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of FSC and FSI
has all necessary corporate power and authority to execute and deliver this
Agreement. This Agreement has been, or will have been prior to the Closing
Date, duly and validly approved by their respective Boards of Directors (or
the Executive Committee in the case of FSC) and by FSI's sole shareholder,
has been duly executed and delivered on their behalf, and constitutes a valid
and binding agreement of each, enforceable against each in accordance with
its terms.
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6.3 FSC REPORTS. Since January 1, 1995, FSC and its consolidated
subsidiaries have filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that were
required to be filed with (i) the United States Securities and Exchange
Commission (the "SEC") including, but not limited to, Form 10-K, Form 10-Q,
Form 8-K and proxy statements, (ii) the Federal Reserve Board, (iii) the
Office of the Comptroller of the Currency, and (iv) the FDIC. All such
reports and statements filed with the SEC, the Federal Reserve Board, the
Office of the Comptroller of the Currency, the FDIC, and other applicable
state securities authorities are collectively referred to herein as the "FSC
Reports." As of their respective dates, to the best knowledge of the
officers of FSC, the FSC Reports complied in all material respects with all
the statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they were filed and did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
6.4 FSC FINANCIAL STATEMENTS; TAX RETURNS. FSC's Consolidated
Balance Sheets as of December 31, 1994 and December 31, 1995, and its
Consolidated Statements of Income and Consolidated Statements of Cash Flow
for the years then ended, heretofore, or hereafter to be, delivered to O&H,
were prepared in accordance with generally accepted accounting principles
consistently applied and present fairly its consolidated financial condition,
results of operations and changes in financial position as of such dates and
for such periods. FSC and FSI have filed all federal, state and local tax
returns and forms, which are required by law to be filed or delivered as of
the date hereof and have paid all taxes which have become due. Where payment
of such taxes is not required to be made as of the date hereof, FSC or FSI
(as the case may be) has set up an adequate reserve or accrual for the
payment of all taxes required to be paid in respect of the periods covered by
such returns.
6.5 OTHER LIABILITIES. Except as and to the extent stated in the
FSC Financial Statements provided by FSC to O&H, and except for those
liabilities incurred in the normal course of FSC's or any of its
subsidiaries' respective businesses, FSC and its consolidated subsidiaries do
not have any material liabilities or obligations, secured or unsecured
(whether accrued, absolute, contingent or otherwise).
6.6 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1995
there has been no material adverse change, and no development involving a
reasonably foreseeable prospective material adverse change, in or affecting
the financial condition (present or prospective), businesses, properties or
operations of FSC and its consolidated subsidiaries.
6.7 ABSENCE OF DEFAULTS. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will conflict with or result in a breach of or constitute a default under any
provision of FSC's or FSI's respective Certificate or Articles of
Incorporation or Bylaws, or any material agreement to which FSC or FSI is a
party or by which either of them is bound or to which any of their respective
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properties is subject or result in the creation of any liens or encumbrances
upon their respective assets, and no consents or waivers thereunder are
required to be obtained in connection with the transactions contemplated
hereby, except for the approval of required regulatory authorities.
6.8 ACTIONS, PROCEEDINGS, AND INVESTIGATIONS. Except as set forth
in FSC's filings with the SEC, there are no actions, proceedings or
investigations pending, or to the knowledge of the executive officers of FSC,
threatened or contemplated, against or relating to FSC or any of its
consolidated subsidiaries, or any of their respective properties, which would
materially and adversely affect the financial condition (present or
prospective), businesses, properties or operations of FSC and its
consolidated subsidiaries, or the ability of FSC and FSI to consummate the
Merger contemplated hereby.
6.9 REGULATORY APPROVALS. FSC and FSI shall (i) use their best
efforts in good faith to obtain all necessary regulatory approvals and to
take or cause to be taken all other action required under this Agreement on
their part to be taken as promptly as practicable so as to permit the
consummation of the transactions contemplated by this Agreement at the
earliest possible date, and cooperate fully with O&H to that end, and (ii)
furnish all necessary information for inclusion in any applications relating
to the consents, approvals, and permissions of regulatory authorities
referred to in Section 3.1.1.
6.10 FSC COMMON STOCK. All of the outstanding Common Stock of FSC
is duly authorized and validly issued, fully paid and nonassessable. The FSC
Common Stock to be issued and delivered pursuant to the Merger, when issued
as contemplated hereby, will be duly authorized, validly issued, fully paid
and nonassessable.
6.11 REGISTRATION OF SHAREHOLDER'S SHARES. With respect to the
FSC Common stock which is to be issued in connection with the transactions
contemplated by this Agreement, FSC shall use its best efforts to cause a
Registration Statement on Form S-3 or other appropriate form to be filed with
the Securities and Exchange Commission (the "SEC") within one hundred twenty
(120) days of the Effective Time and shall maintain the effectiveness of such
registration for a period measured by the shorter of (a) twelve (12) months
from and after the effectiveness of the registration under the Securities Act
of 1933, as amended (the "1933 ACT") and (b) the holding period specified in
Rule 144 under the 1933 Act, as amended from time to time, for the release of
all restrictions and requirements of Rule 144 (for example, as currently
provided in Rule 144(b) under the 1933 Act). The Registration Statement, at
the time it becomes effective and during the effectiveness period, shall in
all material respects conform to the requirements of the 1933 Act and the
General Rules and Regulations of the SEC under the 1933 Act (the "1933
RULES"). FSC will notify Shareholder of the date of filing the Registration
Statement and will provide copies of the Registration Statement as filed,
together with all amendments, to Shareholder on a timely basis. Upon
effectiveness of the Registration Statement, FSC will provide Shareholder
with five (5) copies of a "resale prospectus" for Shareholder's use in
selling shares through the Registration Statement. The FSC Common Stock to
be issued by FSC in connection with
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the Merger, as of the Effective Time, shall be duly qualified or exempted, as
the case may be, under applicable federal and state Blue Sky securities laws.
6.12 NOTIFICATION OF ACTIONS. FSC and FSI covenant and agree to
immediately notify O&H in the event of the breach of any of the covenants set
forth in this Article 7.
7. TERMINATION.
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual consent of the Boards of Directors of FSC and FSI
(or the Executive Committee in the case of FSC) and the Board of Directors
of O&H; or
(b) by the Boards of Directors of FSC and FSI (or the Executive
Committee in the case of FSC) or the Board of Directors of O&H at any time
after the expiration of sixty (60) days from the date hereof, if the Merger
shall not theretofore have been consummated by the failure to satisfy the
conditions to Closing not within the control of the electing party; or
(c) by O&H, upon written notice to FSC and FSI at any time if
any material representation or warranty of FSC or FSI contained in this
Agreement was materially incorrect when made or becomes materially
incorrect on or prior to the Closing Date, or if FSC or FSI fails to comply
with any of their respective covenants contained in this Agreement, and the
same is not cured within thirty (30) days after notice of such inaccuracy
or noncompliance; or
(d) by FSC and FSI upon written notice to O&H and Shareholder at
any time if any material representation or warranty of O&H or Shareholder
contained in this Agreement was materially incorrect when made or becomes
materially incorrect on or prior to the Closing Date, or if O&H or
Shareholder fails to comply with any of their respective covenants
contained in this Agreement, and the same is not cured within thirty (30)
days after notice of such inaccuracy or noncompliance.
7.2 EFFECT OF TERMINATION. In the event of termination and
abandonment of this Agreement pursuant to the provisions of Section 7.1
above, this Agreement shall become void and have no force or effect, except
that provisions of this Agreement relating to confidentiality or payment of
expenses and this Section shall survive the termination. Such termination
shall not relieve any party of liability for any default prior to such
termination.
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8. INDEMNIFICATION.
8.1 INDEMNIFICATION BY SHAREHOLDER. Shareholder agrees that,
notwithstanding the Closing or the Effective Time, and regardless of any
investigation at any time made by or on behalf of FSC or FSI in respect thereof,
Shareholder will indemnify and save and hold FSC and FSI harmless from and
against any cost, damage, liability, loss, expense or deficiency suffered or
incurred by either of them, including without limitation court and investigation
costs and reasonable attorneys' fees, arising out of or resulting from (a) any
inaccuracy in any representation or the breach of any warranty made by O&H or
Shareholder in this Agreement, (b) the inaccuracy of any information provided by
Shareholder to FSC in connection with the preparation and filing of the
Registration Statement, or (c) the failure by O&H or Shareholder to perform or
observe any term, provision or covenant of this Agreement. Shareholder's
indemnification obligations shall survive the Closing.
8.2 INDEMNIFICATION BY FSC AND FSI. FSC and FSI agree that,
notwithstanding the Closing or the Effective Time, and regardless of any
investigation at any time made by or on behalf of O&H or Shareholder in respect
thereof, FSC and FSI will jointly and severally indemnify and save and hold O&H
and Shareholder harmless from and against any cost, damage, liability, loss,
expense or deficiency suffered or incurred by either of them, including without
limitation court and investigation costs and reasonable attorneys' fees, arising
out of or resulting from any inaccuracy in any representation or the breach of
any warranty made by FSC or FSI in this Agreement. FSC's and FSI's
indemnification obligations shall survive the Closing.
8.3 NOTICE. If any lawsuit or enforcement action is filed against
any party entitled to the benefit of indemnity hereunder, or if such party
receives notice of any matter for which indemnification is to be given
hereunder, written notice thereof shall be given to the indemnifying party as
promptly as practicable (and in any event within ten (10) days after the service
of a citation, summons or notice); provided, that the failure of any indemnified
party to give timely notice shall not affect rights to indemnification hereunder
except to the extent that the indemnifying party demonstrates actual damage
caused by such failure. After such notice, if the indemnifying party shall
acknowledge in writing to the indemnified party that the indemnifying party
shall be obligated under the terms of its indemnity hereunder in connection with
such lawsuit, action or notice, then the indemnifying party shall be entitled,
if it so elects, to take control of the defense and investigation of such
lawsuit or action not seeking injunctive relief, and to employ and engage
attorneys reasonably acceptable to the indemnified party to handle and defend
the same, at the indemnifying party's cost, risk and expense; and such
indemnified party shall cooperate in all reasonable respects with the
indemnifying party and such attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; provided, further, that
the indemnified party may, at its own cost, participate in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom.
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9. MISCELLANEOUS.
9.1 COSTS. Each of the parties to this Agreement shall pay its or
his own charges and costs incurred or to be incurred in connection with the
execution and performance of this Agreement. In the event of a willful breach
of a material agreement or covenant contained herein by O&H or Shareholder, FSC
or FSI, which breach either directly or indirectly results or would result in a
failure to consummate the Merger, and which breach cannot be cured or is not
cured within thirty (30) days after written notice of such breach is given to
the party committing such breach, the party causing such breach shall be liable
to the other parties for damages; provided, however, that any party may elect to
forego the receipt of such payment, and pursue its right to the specific
performance or enforcement of the terms and provisions of this Agreement.
9.2 INSTRUMENTS OF TRANSFER, ETC. Each of the parties hereto shall
cooperate with the others in every way in carrying out the transactions
contemplated herein, in delivering instruments to perfect the conveyances,
assignments and transfers contemplated herein, and in delivering all documents
and instruments reasonably deemed necessary or useful by counsel for any party
hereto.
9.3 NOTICES.
(a) MANNER OF GIVING NOTICE. All notices, requests, consents
and demands shall be given to or made upon the parties at their respective
addresses set forth below, or at such other address as a party may designate in
writing delivered to the other parties. Unless otherwise agreed in this
Agreement, all notices, requests, consents and demands shall be given or made by
personal delivery, by confirmed air courier, by facsimile transmission ("FAX"),
or by first class mail, postage prepaid, to the party or parties addressed as
aforesaid. If sent by confirmed air courier, such notice shall be deemed to be
given upon the earlier to occur of the date upon which it is actually received
by the addressee or the business day upon which delivery is made at such address
as confirmed by the air courier (or if the date of such confirmed delivery is
not a business day, the next succeeding business day). If mailed, such notice
shall be deemed to be given upon the earlier to occur of the date upon which it
is actually received by the addressee or the second business day following the
date upon which it is deposited in a first-class postage-prepaid envelope in the
United States mail addressed to such address. If given by fax, such notice
shall be deemed to be given upon the date it is actually received by the
addressee, but only if receipt is confirmed by a return fax signed by the
addressee.
IF TO FSC AND FSI, TO:
First Security Insurance Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
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WITH A COPY TO:
First Security Corporation
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
AND WITH A COPY TO:
Xxxxxx X. Xxxxxxxx, Esq.
Ray, Xxxxxxx & Xxxxxxx
400 Deseret Building
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
IF TO O&H:
Xxxxx & Xxxx Employee Benefits, Inc.
c/o Xxxxx Xxxx
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxx, Xxxx 00000
WITH A COPY TO:
Xxxx X. Xxxxxxx, Esq.
Hill, Harrison, Xxxxxxx & Xxxxxxx
0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxx 00000
(b) REQUIRED NOTICE. Each party hereto shall notify promptly
the other in writing of the occurrence of any event which will or may result in
the failure to satisfy the conditions specified in Article 3 hereof. Between
the date of this Agreement and the Effective Time, each party hereto will advise
the other of the satisfaction of such conditions as they occur.
9.4 AMENDMENTS. Prior to the Effective Time, any provision of this
Agreement and of the Merger Agreement, except for Section 2.4.1 of this
Agreement, may be amended or modified at any time, either before or after its
approval by the shareholders of either party to this Agreement, by an agreement
in writing between the parties hereto approved by their respective Boards of
Directors (or Executive Committee in the case of FSC) and executed in the same
manner as this Agreement.
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9.5 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by the substantive laws of, the State of Utah, without
reference to principles governing choice or conflicts of laws.
9.6 ASSIGNMENT. The benefit of this Agreement may not be assigned or
in any other manner transferred and the obligations may not be delegated.
Subject to the foregoing limitation upon assignment and delegation, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective legal representatives, successors, agents, heirs and assigns.
9.7 COUNTERPARTS. Any number of counterparts of this Agreement may
be signed and delivered and each shall be considered an original and together
they shall constitute one agreement.
9.8 EXCLUSIVE MERGER AGREEMENT. O&H, its Board of Directors, and
Shareholder covenant and agree that they will not, either directly or
indirectly, solicit or attempt to procure offers relating to the merger or
acquisition of O&H with or by any entity not a party to this Agreement, or
negotiate or enter into any agreements relating to the merger or acquisition of
O&H with or by any such third party.
9.9 PUBLIC STATEMENTS. No party to this Agreement shall issue any
press release or other public statement concerning the transactions contemplated
by this Agreement without first providing the other parties hereto with a
written copy of the text of such release or statement and obtaining the consent
of the other parties respecting such release or statement, which consent will
not be unreasonably withheld. The consent provided for in this Section 9.9
shall not be required if the delay necessary to obtain such consent would
preclude the timely issuance of a press release or public statement as required
by law. The provisions of this Section 9.9 shall not be construed as
prohibiting the filing of copies of this Agreement or descriptions of this
Agreement with regulatory agencies as to which regulatory approvals are
contemplated by this Agreement.
9.10 CONFIDENTIALITY. Each party shall use all information that it
obtains from the others pursuant to this Agreement solely for the effectuation
of the transactions contemplated by this Agreement or for other purposes
consistent with the intent of this Agreement and shall not use any of such
information for any other purpose, including, without limitation, the
competitive detriment of the other parties. Each party shall maintain as
strictly confidential all information it learns from the others and shall upon
expiration or termination of this Agreement without the Merger having been
consummated, return promptly to the other parties all documentation provided by
them or made available by third parties. Each party may disclose such
information to its respective affiliates, counsel, accountants, tax advisors and
consultants. This provision shall not prohibit the use or disclosure of
confidential information pursuant to court order or which has otherwise become
publicly available through no fault of the recipient party.
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9.11 ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
attached hereto constitute the entire agreement between the parties hereto with
respect to the subject matter contained herein, and there are no covenants,
terms or conditions, express or implied, other than as set forth or referred to
herein. This Agreement supersedes all prior agreements between the parties
hereto relating to all or part of the subject matter herein. No party has made
any representations, oral or written, modifying or contradicting the terms of
this Agreement. The parties may not amend, modify or cancel this Agreement
except as provided herein or by a written agreement signed by all the parties to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above.
FIRST SECURITY CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx,
President and Chief Operating Officer
FIRST SECURITY INSURANCE INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx,
President and Chief Executive Officer
XXXXX & XXXX EMPLOYEE BENEFITS, INC.
By: /s/ Xxxxx Xxxx
------------------------------------
Xxxxx Xxxx, President
SHAREHOLDER
/s/ Xxxxx Xxxx
----------------------------------------
XXXXX XXXX, INDIVIDUALLY
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