Exhibit 10.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
WARNER INSURANCE SERVICES, INC.,
THE XXXXXX PLAN CORPORATION
AND
MDA SERVICES, INC.
DATED AS OF MARCH 1, 1996
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of this 1st
day of March, 1996, by and among WARNER INSURANCE SERVICES, INC.,
a Delaware corporation ("Seller"), MDA SERVICES, INC., a New
Jersey corporation ("Purchaser"), and THE XXXXXX PLAN
CORPORATION, a Delaware corporation ("Xxxxxx Plan").
W I T N E S S E T H:
WHEREAS, Seller owns and operates an insurance services
business which provides underwriting, policy maintenance, claims
adjustment and other administrative services to the automobile
insurance industry (the "Business") known as the Insurance
Services Group of Seller ("ISG"); and
WHEREAS, Seller desires to sell and transfer to
Purchaser, a wholly-owned subsidiary of Xxxxxx Plan, and
Purchaser desires to purchase and acquire from Seller, all of
Seller's right, title and interest in and to the tangible and
intangible assets of Seller relating to the Business, and
Purchaser desires to enter into new insurance services contracts
with certain of the customers of Seller, all upon the terms and
conditions herein set forth; and
WHEREAS, contemporaneously herewith Seller is entering
into a Restructuring Agreement (the "Restructuring Agreement")
with Atlantic Employers Insurance Company, Pacific Employers
Insurance Company, Electric Insurance Company (sometimes
individually herein referred to as a "Customer" or collectively
as the "Customers"), Xxxxxx Plan, Material Damage Adjustment
Corporation, Lion Insurance Company and National Consumer
Insurance Company (sometimes herein individually called a
"Releasee" or collectively, the "Releasees") pursuant to which
Seller is inducing the Customers (i) to release Seller from
existing insurance services contracts between Seller and each
such Customer (the "Services Contracts"), and (ii) to enter into
new insurance services contracts with Purchaser on revised terms
(the "New Services Contracts"), and pursuant to which Seller and
the Releasees are settling certain lawsuits among them.
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets.
--------------------------- Subject to the terms
and conditions hereof, on the Closing Date (as hereinafter
defined), Seller agrees to and shall sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser agrees to and
shall acquire from Seller, all of Seller's right, title and
interest in and to the properties, assets and rights comprising,
relating to or used in the Business (said properties, assets and
rights being referred to collectively as the "Purchased Assets"),
said Purchased Assets being listed below:
(a) all tangible personal property, equipment and
computer hardware (collectively, the "Equipment") as listed and
described on Schedule 1.1(a) hereto;
(b) all books, records and files or other
documentation as listed and described on Schedule 1.1(b) hereto;
(c) all methods of operation and manuals, patents,
trademarks, trade names, trade secrets, know-how and all other
intellectual property of Seller, and all applications for the
same, as listed and described on Schedule 1.1(c) hereto;
(d) all technology, computer programs, computer
software, source codes and master disks containing such codes,
licenses, permits and other proprietary information of Seller,
and all technology and know-how agreements, and licensing
arrangements, as listed and described on Schedule 1.1(d) hereto;
(e) the lease for real property (the "Lease") and the
leases for personal property ("Personal Property Leases") as
listed and described on Schedule 1.1(e) hereto (collectively the
"Leases");
(f) all customer contracts, franchise agreements, as
listed on Schedule 1.1(f) hereto, the Personal Property Leases,
as listed and described on Schedule 1.1(e) hereto, those certain
data processing contracts set forth and described on Exhibit A
hereto (the "Data Processing Contracts"), and all permits (all of
which contracts and agreements are hereinafter collectively
referred to as the "Assigned Contracts"); and
(g) all customer lists and vendor lists as listed on
Schedule 1.1(g) hereto, including all goodwill related to the
Business.
1.2 Excluded Assets.
--------------- The Purchased Assets shall
exclude all other assets of Seller not identified in Section 1.1
hereof or on the Schedules referred to therein, and Seller shall
retain all of its right, title and interest in and to all of, and
shall not transfer to Purchaser, such assets, rights and
properties, including, without limitation, the following (said
assets being referred to collectively as the "Excluded Assets"):
(a) all investments and cash on hand or in transit and
in the bank accounts of Seller;
(b) Seller's right to any refund of any tax, charge,
fee, duty, levy or other assessment, including income, gross
receipts, net proceeds, ad valorem, turnover, real and personal
property, sales, use, franchise, excise, value added, stamp,
leasing, lease, user, equalization, windfall profits, severance,
employees' income withholding, unemployment and Social Security
taxes and other withholding taxes, which are imposed by any
Governmental Authority (as defined in Section 3.1(b) herein), and
including any interest, penalties or additions to tax
attributable thereto;
(c) all billed and unbilled costs and accounts, notes,
fees, commissions, and all other receivables payable to Seller in
respect of insurance services rendered by Seller prior to the
Closing Date, including, but not limited to, those accounts and
receivables listed on Schedule 1.2(c) hereto;
(d) all of Seller's right to the LAD Servicing Carrier
security deposit in the amount of $250,000 required by the State
of New Jersey Department of Insurance, including any interest
thereon;
(e) all of Seller's rights in COVER-ALL Systems, Inc.,
Warner Information Technologies, Inc., Alerion Insurance Company
and all insurance policies; and
(f) all of the furniture, fixtures and equipment
listed and described on Schedule 1.2(f) hereto.
1.3 Assumption of Liabilities and Obligations by
--------------------------------------------
Purchaser.
--------- On the Closing Date, Purchaser shall (i) pursuant to
the Assignment and Assumption Agreement in, or substantially in,
the form annexed hereto as Exhibit C (the "Assignment and
Assumption Agreement"), assume and agree to pay, perform and
discharge when due the liabilities and obligations of Seller
under the Assigned Contracts and the liability of Seller to pay
the accrued vacation pay in an aggregate amount of $167,000 with
respect to the employees listed on Schedule 1.3 hereto (the
"Additional Liability"); and (ii) pursuant to the Assignment and
Assumption of Lease, in, or substantially in, the form annexed
hereto as Exhibit D (the "Assignment and Assumption of Lease"),
assume and agree to pay, perform and discharge when due the
liabilities and obligations of Seller under the real property
Lease listed and described on Schedule 1.1(e) hereto; provided,
--------
however, that Purchaser shall not be obligated to assume on the
-------
Closing Date, the Lease or any Assigned Contract or other
obligation of Seller, which, in Purchaser's reasonable opinion
(i) requires by agreement or law the written consent of any party
thereto for assignment and assumption to be fully effective, if
such written consent has not been duly obtained and delivered, or
(ii) is not the subject of a written "estoppel letter" of each
party thereto other than Seller stating that there is no material
default by Seller thereunder or with respect thereto known to
such party or believed by such party to exist, or waiving the
same. Seller agrees that on the Closing Date, Seller shall make
a cash payment to Purchaser in the amount of $67,000 which sum
shall be applied by Purchaser towards its obligation to pay the
full amount of the Additional Liability as the same shall become
due and payable by Purchaser from time to time following the
Closing Date.
1.4 Liabilities and Obligations not Assumed by
------------------------------------------
Purchaser.
--------- Except as specifically and expressly provided for in
this Agreement, Purchaser shall not, by any agreement,
circumstance or operation of law, become primarily or secondarily
obligated or liable for, nor will it assume or be required to
pay, perform, or discharge any obligation of Seller (whether or
not disclosed, contingent, material or otherwise, and whether or
not incidental to or associated with any asset, the Business, or
any other business of Seller). Without limiting the generality
of the foregoing, Purchaser shall not be liable for or assume (i)
any federal, state or local tax imposed upon or payable by Seller
as a result of any sale or transaction, or with respect to any
period or the income earned therein; (ii) any obligation of
Seller based upon events occurring, acts taken, or services
performed prior to the Closing Date (notwithstanding the date of
claim therefor or thereon); (iii) any obligation to make any
refund, payment or adjustment relating to or retroactive to any
period prior to the Closing Date; and (iv) any obligation for
employment or related acts, omissions, policies or practices of
Seller prior to or after the Closing Date. Seller shall pay and
file any returns for any sales, use, or similar transaction tax,
imposed upon any sale, assignment or assumption contemplated
hereunder. Except as expressly and specifically provided for in
this Agreement, there are no third party beneficiaries of this
Agreement or of any instrument delivered to Seller hereunder.
Seller further agrees that, following the Closing Date, it shall
incur and pay all moving costs and refurbishing expenses relating
to the relocation of furniture, fixtures, related equipment and
employees of COVER-ALL Systems, Inc. and of Seller not related to
the Business from the leasehold premises located at 00-00 Xxxxxxx
Xxxxx, which premises are being taken over by Purchaser on the
Closing Date, to the leasehold premises located at 00-00 Xxxxxxx
Xxxxx; provided, however, that in no event shall Seller be liable
-------- -------
for the payment of any moving or other related costs and expenses
in connection with establishing Purchaser's ISG operation at the
leasehold premises located at 00-00 Xxxxxxx Xxxxx including, but
not limited to, relocating the ISG employees hired by Purchaser
and related furniture, fixtures and equipment from the leasehold
premises located at 00-00 Xxxxxxx Xxxxx and the leasehold
premises located in Somerset, New Jersey to the leasehold
premises located at 00-00 Xxxxxxx Xxxxx.
ARTICLE 2
CLOSING; CONSIDERATION FOR TRANSFER OF PURCHASED ASSETS
2.1 Closing Date.
------------ The closing of the transactions
provided for herein (the "Closing") will take place on March 1,
1996 at 10:00 A.M. at the offices of Xxxx & Priest LLP, 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or on such other date and
at such other time as the parties may mutually agree upon (the
"Closing Date").
2.2 Consideration for Transfer of Purchased Assets.
----------------------------------------------
In consideration of the execution and delivery of the
Restructuring Agreement by Seller, Xxxxxx Plan and the other
parties thereto, of the Mutual General Release by each of the
Releasees, in the form annexed to the Restructuring Agreement as
Exhibit D, of the settlement and dismissal of certain Lawsuits
among Seller and the Releasees, pursuant to the Stipulation, in
the form annexed to the Restructuring Agreement as Exhibit C, of
Purchaser and Customers entering into the New Service Contracts,
and in consideration of the Purchaser and Xxxxxx Plan executing
and delivering this Agreement and performing its obligations
hereunder, Seller shall transfer and deliver the Purchased Assets
to the Purchaser.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller.
---------------------------------------- In
order to induce Purchaser to enter into and perform this
Agreement, Seller hereby represents and warrants to Purchaser, as
of the date of this Agreement and as of the Closing Date, as
follows:
(a) Due Incorporation; Authority.
---------------------------- Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Seller has all
requisite power and authority to own, lease and operate its
properties and to conduct its business as currently conducted,
and to execute, deliver and perform this Agreement and all of the
other agreements to be executed by it in connection with or
pursuant to this Agreement, including the assumption and transfer
documents required hereunder (all collectively, the "Related
Agreements"). Seller is qualified to do business and is in good
standing as a foreign corporation in the jurisdictions set forth
on Schedule 3.1(a) hereto, which are the jurisdictions in which
the character and location of the Purchased Assets, or the nature
of the Business transacted by it, or both, require such
qualification.
Seller's execution, delivery, and performance of this
Agreement and the Related Agreements have been duly and validly
authorized by all necessary corporate action on the part of
Seller. This Agreement has been duly executed and delivered by
Seller and this Agreement constitutes, and when executed and
delivered by Seller, each of the Related Agreements will
constitute, the legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms against
Seller, except to the extent that such validity, binding effect
or enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and by
general equitable principles.
(b) No Restrictions Against Performance.
----------------------------------- Except as
set forth on Schedule 3.1(b) hereto, neither the execution and
delivery of this Agreement or the Related Agreements by Seller,
nor the performance of the obligations of Seller hereunder or
thereunder, nor the consummation of the transactions contemplated
in this Agreement or in the Related Agreements will, with or
without the giving of notice or the passage of time, or both,
violate any provisions of, conflict with, result in a breach of,
constitute a default under, or result in the creation or
imposition of any Lien or condition under, (i) Seller's
Certificate of Incorporation, as amended, or By-Laws, as amended;
(ii) any federal, state or local law, statute, ordinance,
regulation or rule, which is or may be applicable to Seller or to
any of the Purchased Assets; (iii) any contract, indenture,
instrument, agreement, mortgage, lease, right or other obligation
or restriction to which Seller is a party or by which Seller or
any of the Purchased Assets is or may be bound; or (iv) any
order, judgment, writ, injunction, decree, license, franchise,
permit or other authorization of any federal, state or local
court, arbitration tribunal or governmental agency (collectively,
a "Governmental Authority") by which Seller or any of the
Purchased Assets is or may be bound. The execution and delivery
of this Agreement and the Related Agreements by Seller and the
performance by Seller of the transactions contemplated herein and
therein will not constitute an act of bulk sale, bankruptcy,
preference, insolvency or fraudulent conveyance under any
bankruptcy act or other law for the protection of debtors or
creditors.
(c) Third-Party and Governmental Consents.
------------------------------------- Except as
set forth on Schedule 3.1(c) hereto, no approval, consent,
waiver, order or authorization of, or registration,
qualification, declaration, or filing with, or notice to, any
Governmental Authority or other third party is required on the
part of Seller in connection with the execution and delivery of
this Agreement or the Related Agreements, or the consummation of
the transactions contemplated hereby or thereby.
(d) Validity of Lease and Assigned Contracts.
---------------------------------------- The
Lease and the Assigned Contracts are valid and in full force and
effect and constitute the legal, valid and binding obligations of
Seller and the other parties thereto, enforceable against the
other parties thereto in accordance with their respective terms,
and there are no existing violations or defaults by Seller and no
event, act or omission has occurred which (with or without notice
or lapse of time or both) would result in a violation or default
thereunder. No other party to the Lease or any Assigned Contract
has asserted the right, and no basis exists for the assertion of
any enforceable right, to renegotiate, or cancel or terminate
prior to the full term thereof, any of the terms or conditions of
the Lease or any of the Assigned Contracts, nor does Seller have
any knowledge that any party to the Lease or any of the Assigned
Contracts intends not to renew such Lease or Assigned Contract
upon termination of its current term. Except as set forth on
Schedule 3.1(d) hereto, all of Seller's rights to and under the
Lease and the Assigned Contracts are fully and freely assignable
by Seller to Purchaser and no consent of any party to the Lease
or any of the Assigned Contracts is required for the execution,
delivery or performance by Seller of this Agreement or the
consummation by Seller of the transactions contemplated hereby.
Seller has heretofore delivered to Purchaser true, correct and
complete copies of the Lease and all of the Assigned Contracts.
Seller has not failed to perform any Assigned Contract in such a
prudent, timely, systematic and workmanlike manner as would cause
Purchaser in its performance thereof and as contemplated by this
Agreement, to incur material, unusual or extraordinary
obligations to cure or rectify such failure.
(e) Title to the Purchased Assets.
----------------------------- Except as
otherwise identified on Schedule 3.1(e) hereto, Seller has, and
pursuant to this Agreement will convey, sell, transfer, assign
and deliver to Purchaser, all Seller's title, and good, valid,
marketable, legal and beneficial title to all of the Purchased
Assets, free and clear of all liens, liabilities, claims,
security interests, mortgages, pledges, agreements, obligations,
restrictions, options or other encumbrances of any nature
whatsoever, whether absolute, legal, equitable, accrued,
contingent or otherwise, including, without limitation, any
rights of first refusal as to any of the Purchased Assets
(collectively, "Liens"). There are no outstanding options,
warrants, commitments, agreements or any other rights of any
character, entitling any person or entity other than Purchaser to
acquire any interest in all, or any part of, the Purchased
Assets. All Seller's leasehold or other executory interests in
and to the Purchased Assets are fully and freely assignable,
except as set forth in Schedule 3.1(e) hereto.
(f) Trademark Rights; Proprietary Information.
-----------------------------------------
Schedule 1.1(c) and Schedule 1.1(d) hereto contain a true,
correct and complete list of all patents, trademarks, trade
names, service marks, copyrights (including any registrations of
or pending applications for any of the foregoing), methods of
operation and manuals, trade secrets, customer lists, computer
programs, computer software, master disk of source codes,
licenses, royalty or other agreements relating thereto and all
other intangible assets, properties and rights used by Seller in
the conduct of the Business or any part of the Purchased Assets
(collectively, the "Intellectual Property"). Except as disclosed
on Schedule 3.1(f) hereto:
(i) all of the Intellectual Property is owned by Seller
free and clear of all Liens, and is not subject to any license,
royalty or other agreement;
(ii) none of the Intellectual Property has been or is the
subject of any pending or threatened litigation or claim of
infringement;
(iii) the Purchased Assets do not infringe any patent,
trademark, service xxxx, trade name, copyright, trade secret or
confidential or proprietary rights of another, and Seller has not
received any notice contesting Seller's right to use any
Intellectual Property;
(iv) Seller has not granted any license or agreed to pay or
receive any royalty in respect of any Intellectual Property; and
(v) Seller owns or possesses adequate rights in perpetuity
in and to all Intellectual Property necessary to conduct the
Business.
(g) Litigation.
---------- Except as set forth on Schedule
3.1(g), there is no judicial or administrative action, suit or
proceeding pending or threatened against or relating to Seller,
the Purchased Assets or the transactions contemplated hereby,
before any federal, state or local court, arbitration tribunal or
Governmental Authority, which could or might, individually or in
the aggregate, materially adversely affect Seller, the Purchased
Assets or the transactions contemplated hereby, and Seller is not
aware of any facts or circumstances which may give rise to any of
the foregoing. There are no claims, actions, suits, proceedings
or investigations pending or threatened by or against Seller with
respect to this Agreement or the Related Agreements, or in
connection with the transactions contemplated hereby or thereby,
and Seller has no reason to believe there is a valid basis for
any such claim, action, suit, proceeding or investigation.
Seller is not the subject of any order, judgment, decree,
injunction or stipulation of any court or other Governmental
Authority.
(h) Compliance with Laws; Permits.
----------------------------- During the three
(3) year period preceding the date hereof, Seller has complied in
all material respects with all applicable federal and state
domestic and foreign laws, rules, regulations, judgments, orders
and other legal requirements (including, but not limited to,
those relating to environmental, safety and labor matters)
affecting the Business. Schedule 3.1(h) hereto sets forth a
true, correct and complete list of all permits, licenses,
franchises, orders, certificates and approvals (collectively, the
"Permits") of any federal, state or local regulatory or
Governmental Authority relating to the Purchased Assets or the
Business. The Permits constitute all permits, licenses,
franchises, orders, certificates and approvals which are required
for the lawful operation of the Business and the operation of the
Purchased Assets. Seller is in compliance in all material
respects with all such Permits and Seller owns or has owned or
had valid Permits to use all properties, tangible or intangible,
necessary for the conduct of the Business and the operation of
the Purchased Assets in the manner in which they are presently
conducted and operated. Except for the LAD Servicing Carrier
security deposit in the amount of $250,000, required by the State
of New Jersey Department of Insurance in connection with
performing services as a LAD Servicing Carrier, which is an
Excluded Asset pursuant to Section 1.2(d) hereof, and except as
otherwise disclosed on Schedule 3.1(h) hereto, all such Permits,
if any, are freely assignable by Seller to Purchaser and will
continue as valid Permits to allow the continuation of the
Business by Purchaser as it is now conducted by Seller, without
interruption, following the Closing and that, to the best of
Seller's knowledge, assignment of such Permits would not require
any bonding or financial qualification of Purchaser nor does
Seller know of any reason why Purchaser would not qualify for
assignment thereof.
(i) Conduct of Business through the Closing Date.
-------------------------------------------- For
the period commencing on the date hereof and ending on the
Closing Date, Seller (i) will conduct the Business in its
ordinary course, but will not increase the rate of salary or
benefits to any employee of ISG or make any unusual or
unnecessary commitments or enter into any leases relating to the
Business, or enter into any data processing or policy or claims
servicing contracts relating to the Business, and will endeavor
to maintain the Business substantially as it is on the date
hereof, and (ii) will not effect any transaction materially
adversely affecting its ability to effect the transactions
contemplated by this Agreement.
(j) Condition and Sufficiency of Purchased Assets.
---------------------------------------------
All of the tangible assets and properties of Seller, whether
owned or leased, relating to the Business or constituting a
portion of the Purchased Assets have been well maintained and are
in good operating condition and repair (with the exception of
normal wear and tear), and are free from defects other than such
minor defects as do not interfere with the intended use thereof
in the conduct of normal operations or adversely affect the
resale value thereof. The Purchased Assets as listed in the
schedules annexed hereto constitute all of the tangible and
intangible assets comprising, related to, or used in the
Business, and all the assets required for the operation of the
Business as presently conducted, except for the LAD Servicing
Carrier security deposit in the amount of $250,000 required by
the State of New Jersey Department of Insurance, which is an
Excluded Asset pursuant to Section 1.2(d) hereof, and except to
the extent of certain real estate leases used in the operation of
the Business which are not being assumed by Purchaser and certain
employees of the Business who will not be offered employment by
Purchaser.
(k) Employees.
--------- Schedule 3.1(k) hereto contains a
true, correct and complete list of all of the employees related
to the Business which Seller currently employs, listing, with
respect to each such employee, the employee number, title and
division.
(l) Solvency of Seller.
------------------ Seller represents and
warrants that it is receiving fair and adequate consideration, as
a result of arms length negotiations, for the transfer of the
Purchased Assets as set forth in Section 2.2 hereof. Seller
further represents and warrants that its current net worth
deficit should be decreased as a result of the consummation of
the transactions contemplated by this Agreement and the
Restructuring Agreement, and that Seller currently intends and
believes it will be able to pay its retained liabilities in
accordance with their terms as they mature.
(m) No Misstatements or Omissions.
----------------------------- No representation
or warranty made in this Agreement or on any Schedule hereto by
Seller is false or misleading as to any material fact, or omits
to state a material fact required to make any of the statements
made herein or therein not misleading in any material respect.
All of the Schedules hereto applicable to Seller will constitute
representations and warranties by Seller herein. All
representations, covenants and warranties made by or on behalf of
Seller in this Agreement will be deemed to have been relied upon
by Purchaser (notwithstanding any investigation by Purchaser).
3.2 Representations and Warranties of Purchaser.
------------------------------------------- In
order to induce Seller to enter into and perform this Agreement,
Purchaser hereby represents and warrants to Seller, as of the
date of this Agreement and as of the Closing Date, as follows:
(a) Due Incorporation; Authority.
---------------------------- Purchaser is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey. Purchaser
has all requisite power and authority to own, lease and operate
its properties and to conduct its business as currently
conducted, and to execute, deliver and perform this Agreement
and, as appropriate, the Related Agreements.
Purchaser's execution, delivery, and performance of
this Agreement and the Related Agreements have been duly and
validly authorized by all necessary corporate action on the part
of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and this Agreement constitutes, and each
of the Related Agreements when executed and delivered by
Purchaser, will constitute, the legal, valid and binding
obligations of Purchaser, enforceable in accordance with their
respective terms against Purchaser, except to the extent that
such validity, binding effect or enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors' rights generally from time to
time in effect and by general equitable principles.
(b) No Restrictions Against Performance.
----------------------------------- Neither the
execution and delivery of this Agreement or, as appropriate, the
Related Agreements by Purchaser, nor the performance of the
obligations of Purchaser hereunder or thereunder, nor the
consummation of the transactions contemplated in this Agreement
or in the Related Agreements will, with or without the giving of
notice or the passage of time, or both, violate any provisions
of, conflict with, result in a breach of, constitute a default
under, or result in the creation or imposition of any Lien or
condition under, (i) Purchaser's Certificate of Incorporation or
By-Laws; (ii) any federal, state or local law, statute,
ordinance, regulation or rule, which is or may be applicable to
Purchaser; (iii) any contract, indenture, instrument, agreement,
mortgage, lease, right or other obligation or restriction to
which Purchaser is a party or by which Purchaser is or may be
bound; or (iv) any order, judgment, writ, injunction, decree,
license, franchise, permit or other authorization of any
Governmental Authority by which Purchaser is or may be bound.
(c) No Misstatements or Omissions.
----------------------------- No representation
or warranty made in this Agreement or on any Schedule hereto by
Purchaser is false or misleading as to any material fact, or
omits to state a material fact required to make any of the
statements made herein or therein not misleading in any material
respect. Schedule 4.2(d) hereto constitutes representations and
warranties by Purchaser herein. All representations, covenants
and warranties made by or on behalf of Purchaser in this
Agreement will be deemed to have been relied upon by Seller
(notwithstanding any investigation by Seller).
ARTICLE 4
COVENANTS
4.1 Covenants of Seller.
-------------------
(a) Implementing Agreement.
---------------------- Subject to the terms and
conditions hereof, Seller shall use its best efforts to take all
actions required of it to fulfill its obligations under the terms
of this Agreement and to consummate the transactions contemplated
hereby.
(b) Further Assurances.
------------------ Seller shall, without further
consideration, execute and deliver following the execution and
delivery of this Agreement such other instruments of transfer and
take such other actions as Purchaser may reasonably request in
order to put Purchaser in possession of, and to vest in
Purchaser, the warranted title to the Purchased Assets in
accordance with this Agreement and to consummate the transactions
contemplated hereby.
(c) Consents and Approvals.
---------------------- Seller shall, prior to
the Closing Date, obtain all consents, approvals, certificates
and other documents required in connection with the performance
by Seller of this Agreement and the consummation of the
transactions contemplated hereby, including all such consents and
approvals referred to in Schedule 3.1(d) as required under the
Lease or any of the Assigned Contracts. Seller shall make all
filings, applications, statements and reports to all Governmental
Authorities and other persons which are required to be made prior
to the Closing Date by or on behalf of Seller pursuant to any
applicable law, contract or lease in connection with this
Agreement and the transactions contemplated hereby.
(d) Concurrent Execution.
-------------------- Seller covenants and agrees
to enter into the Restructuring Agreement, and pursuant to the
Restructuring Agreement and as required thereby, on the Closing
Date, to execute the Stipulation, the Mutual General Release, the
CWP Assignment and the Services Contract Releases.
(e) Employees of Seller.
------------------- Seller covenants and agrees
that it will not offer continued employment on terms and
conditions more favorable than those offered by Purchaser to any
current employees of Seller selected by Purchaser for hire by
Purchaser for the purpose of enabling Purchaser to carry on the
Business as previously carried out by Seller.
(f) Relocation of Premises.
---------------------- Seller covenants and
agrees, promptly following the Closing Date, to move certain
furniture, fixtures, equipment and employees from the leasehold
premises located at 00-00 Xxxxxxx Xxxxx to the leasehold premises
located at 00-00 Xxxxxxx Xxxxx and to cooperate with Purchaser as
to the time and manner in which said relocation is accomplished.
4.2 Covenants of Purchaser and Xxxxxx Plan.
--------------------------------------
(a) Implementing Agreement.
---------------------- Subject to the terms and
conditions hereof (i) Purchaser shall take all actions required
of it to fulfill its obligations under the terms of this
Agreement and to consummate the transactions contemplated hereby,
and (ii) Xxxxxx Plan shall use its best efforts to take all
actions required of it pursuant to the terms hereof, to cause
Purchaser to execute and deliver this Agreement, to perform its
obligations at the Closing as provided in the Agreement, and to
extend its employee benefits to employees of ISG which are hired
by Purchaser pursuant to the provisions of Section 4.2(e) hereof.
(b) Further Assurances.
------------------ Each of Purchaser and Xxxxxx
Plan shall, without further consideration, execute and deliver,
following the Closing Date, such other instruments of transfer
and take such other actions as Seller may reasonably request in
order to put Purchaser in possession of, and to vest in
Purchaser, good, valid, and unencumbered title to the Purchased
Assets in accordance with this Agreement and to consummate the
transactions contemplated hereby; provided, however, that nothing
-------- -------
herein shall require that Xxxxxx Plan guarantee or otherwise
undertake any financial or operating obligations of Purchaser.
(c) Concurrent Execution.
-------------------- Xxxxxx Plan covenants and
agrees to enter into the Restructuring Agreement and to cause its
affiliated companies, Material Damage Adjustment Corporation,
Lion Insurance Company and National Consumer Insurance Company,
to enter into the Restructuring Agreement, and pursuant to the
Restructuring Agreement and as required thereby, on the Closing
Date, to execute, and to cause said affiliated companies to
execute, the Stipulation, the Mutual General Release and the CWP
Assignment.
(d) New Service Contracts.
--------------------- Purchaser covenants and
agrees to enter into the New Services Contracts with the
Customers of Seller on or before the Closing Date.
(e) Employees of Seller.
------------------- Purchaser agrees, for
Seller's benefit only, that each individual who is offered and
accepts an offer of employment from Purchaser (a "Transferred
Employee") shall, subject to good conduct, (i) for the six (6)
month period following the Closing Date be entitled to be paid a
salary equal to no less than the rate of salary paid to such
individual by Seller immediately prior to the Closing Date; and
(ii) for the six (6) month period following the Closing Date,
each Transferred Employee shall be eligible to participate in any
now existing employee benefit plan of Purchaser and/or Xxxxxx
Plan for similarly situated employees of a subsidiary of Xxxxxx
Plan, in substantially the same manner and to the same extent as
such Transferred Employee participates in a similar plan of
Seller as of the date hereof. For purposes of eligibility to
participate in, calculation of, and vesting of benefits under,
such employee benefit plans sponsored by Purchaser and/or Xxxxxx
Plan for its employees, service performed by a Transferred
Employee for Seller prior to the Closing Date shall be considered
as performed for Purchaser to the extent allowed by such employee
benefit plan.
(f) Access to Records.
----------------- For a period of six (6) years
from the Closing Date, Purchaser shall allow Seller access to all
records related to the Business or the Purchased Assets in
periods prior to the Closing which are transferred to Purchaser
by Seller at the Closing and Purchaser further agrees to maintain
and not to destroy such records for said six (6) year period
until specifically instructed to do such by Seller, including
without limitation, (i) inventory, maintenance and asset history
records, (ii) all customer lists and telephone numbers with
respect to past or present customers of Seller in the Business
and all related sales and credit records, (iii) all employee
lists and telephone numbers used in the Business and all other
documentation relating to the Purchased Assets and (iv) all
records, documentation, computer tapes, cartridges, microfilm and
imaging records containing data relating to policy processing
work and claims work performed by Seller prior to the Closing
Date for the former customers of Seller listed on Schedule 4.2(f)
hereto. The parties hereto acknowledge that the access to
records provided herein by Purchaser to Seller is (i) for income
tax purposes of Seller and (ii) for the purpose of enabling
Seller to perform residual requests for documentation by former
customers of Seller in respect of services performed by Seller
prior to the Closing Date and to allow Seller to represent itself
with respect to claims of former customers, relating to services
performed by Seller prior to the Closing Date, and not for the
transfer thereof to Seller or for any other use by Seller.
(g) Relocation of Premises.
---------------------- Purchaser covenants and
agrees, promptly following the Closing Date, to move the ISG
operation to the leasehold premises located at 00-00 Xxxxxxx
Xxxxx and to cooperate with Seller so that the relocation of said
ISG operation is undertaken at such time and accomplished in such
manner so as to cause a minimum of disruption to the operations
of Seller.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to Obligations of Purchaser.
------------------------------------------------
This Agreement and the obligations of Purchaser to perform
hereunder at the Closing are subject to the satisfaction by
Seller, or the waiver in writing by Purchaser, of the following
conditions at or prior to the Closing Date:
(a) Corporate Authorization.
----------------------- Seller shall have
delivered to Purchaser certified copies of the resolution(s) of
the Board of Directors of Seller authorizing the execution,
delivery and performance of this Agreement, the Related
Agreements and the consummation of the transactions contemplated
hereby and thereby.
(b) Representations and Warranties True; Covenants
----------------------------------------------
Satisfied.
---------. All representations and warranties of Seller
contained in this Agreement and in the Schedules hereto shall be
true and correct in all material respects commencing as of the
date hereof and ending with and on the Closing Date as though
made on and as of the Closing Date. Seller shall have performed
and complied with all of its respective covenants and obligations
under this Agreement in all material respects.
(c) Third-Party Consents.
-------------------- Seller shall have obtained
and delivered to Purchaser all necessary consents and approvals
of Governmental Authorities or third parties to permit Seller to
sell the Purchased Assets, including such consents of parties to
the Leases, the Assigned Contracts and the Data Processing
Contracts as required under Section 3.1(d) hereof.
(d) Execution of New Services Contracts with
----------------------------------------
Customers.
--------- The Customers of Seller shall have entered into the
New Services Contracts pursuant to the provisions of the
Restructuring Agreement.
(e) Restructuring Agreement.
----------------------- A closing with respect
to the Restructuring Agreement shall have been held, in all
material respects, as provided therein, and all parties thereto
shall, in all material respects, have performed all acts required
thereby to be performed at such closing and to the closing date.
(f) Deliveries.
---------- Seller shall have delivered to
Purchaser each of the documents specified in Section 6.1 hereof.
(g) Concurrent Execution.
-------------------- Xxxxxx Plan shall have
entered into the Restructuring Agreement of even date herewith,
and shall have, pursuant to the Restructuring Agreement and as
required thereby, on the Closing Date, execute the Stipulation
and the Mutual General Release.
5.2 Conditions Precedent to Obligations of Seller.
---------------------------------------------
This Agreement and the obligations of Seller to perform hereunder
are subject to the satisfaction by Purchaser and Xxxxxx Plan, or
waiver in writing by Seller, of the following conditions at or
prior to the Closing Date:
(a) Corporate Authorization.
----------------------- Purchaser shall have
delivered to Seller certified copies of the resolution(s) of the
Board of Directors of Purchaser authorizing the execution,
delivery and performance of this Agreement and the Related
Agreements and the consummation of the transactions contemplated
hereby and thereby.
(b) Representations and Warranties True; Covenants
----------------------------------------------
Satisfied.
--------- All representations and warranties of Purchaser and
Xxxxxx Plan contained in this Agreement and in the Schedules
hereto shall be true and correct in all material respects
commencing as of the date hereof and ending with and on the
Closing Date as though made on and as of the Closing Date.
Purchaser and Xxxxxx Plan shall have performed and complied with
all of their respective covenants and obligations under this
Agreement in all material respects.
(c) Execution of New Services Contracts with
----------------------------------------
Customers.
--------- Purchaser shall have entered into the New Services
Contracts with certain of the Customers of Seller pursuant to the
provisions of the Restructuring Agreement.
(d) Restructuring Agreement.
----------------------- A closing with respect
to the Restructuring Agreement shall have been held, in all
material respects, as provided therein, and all parties thereto
shall, in all material respects, have performed all acts required
thereby to be performed at such closing and to the closing date.
(e) Deliveries.
---------- Purchaser shall have delivered to
Seller each of the documents specified in Section 6.2 hereof.
ARTICLE 6
DELIVERIES
6.1 Seller's Deliveries.
------------------- In addition to any other
documents or agreements required under this Agreement, on or
before the Closing Date, Seller shall deliver to Purchaser the
following:
(a) the Xxxx of Sale in, or substantially in, the form
annexed hereto as Exhibit B;
(b) the Assignment and Assumption Agreement, in, or
substantially in, the form annexed hereto as Exhibit C, pursuant
to which Seller will assign to Purchaser all of Seller's rights
in and under each Assigned Contract being assigned to Purchaser
as provided for herein;
(c) the Assignment and Assumption of Lease, in, or
substantially in, the form annexed hereto as Exhibit D, pursuant
to which Seller will assign to Purchaser all of Seller's rights
in and under the real property Lease being assigned to Purchaser
as provided for herein;
(d) such other assignments and other instruments of
transfer and conveyance, in form and substance reasonably
satisfactory to Purchaser's counsel, as shall be effective to
vest in Purchaser the warranted title to all of the Purchased
Assets;
(e) all of the Purchased Assets as described in
Section 1.1 hereto and the Schedules thereto;
(f) a certificate dated the Closing Date, executed by
an executive officer of Seller, certifying as to the accuracy of,
or compliance by Seller with, all representations, warranties and
covenants of Seller as set forth herein;
(g) copies of all consents and approvals obtained, and
registrations, qualifications, declarations, filings and notices
made by Seller pursuant to Section 5.1(c) hereto;
(h) a certificate dated the Closing Date, executed by
the secretary or assistant secretary of Seller, certifying
resolutions of the Board of Directors approving and authorizing
the execution, delivery and performance by Seller of this
Agreement, the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby; and
(i) a legal opinion, dated as of the Closing Date, of
Xxxx & Priest LLP, counsel to Seller, and addressed to Purchaser,
in the form set forth in Exhibit E annexed hereto.
6.2 Purchaser's/Xxxxxx Plan's Deliveries.
------------------------------------ In addition
to any other documents or agreements required under this
Agreement, on or before the Closing Date, Purchaser and/or Xxxxxx
Plan shall deliver to Seller the following:
(a) the Assignment and Assumption Agreement, in, or
substantially in, the form annexed hereto as Exhibit C;
(b) a certificate dated the Closing Date, executed by
an executive officer of each of Purchaser and Xxxxxx Plan,
certifying as to the accuracy of, or compliance by each of
Purchaser and Xxxxxx Plan with, the respective representations,
warranties and covenants of Purchaser and Xxxxxx Plan as set
forth herein; and
(c) a certificate dated the Closing Date, executed by
the secretary or assistant secretary of Purchaser, certifying
resolutions of the Board of Directors approving and authorizing
the execution, delivery and performance by Purchaser of this
Agreement, and as appropriate, the Related Agreements, and the
consummation of the transactions contemplated hereby.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Seller.
------------------------- Seller agrees to
defend, indemnify and hold Purchaser and any subsidiary or
affiliate thereof, (the "Indemnified Purchaser Group"), harmless
from and against any and all losses, liabilities, damages,
claims, suits, costs or expenses (including reasonable attorneys'
fees, penalties and interest) actually, or asserted by a third-
party to be, resulting from, arising out of, or incurred as a
result of (a) the breach of any representation made by Seller
herein or in accordance herewith; (b) the breach of any warranty
or covenant made by Seller herein or in accordance herewith; (c)
any claim, whether made before or after the date of this
Agreement, or any litigation, proceeding or governmental
investigation, whether commenced before or after the date of this
Agreement, arising out of the Business prior to the Closing Date,
or otherwise arising out of any act or occurrence prior to, or
any state of facts existing as of, the Closing Date (regardless
of whether or not referred to on a Schedule to this Agreement or
otherwise disclosed or known to Purchaser or any of the
Customers); or (d) the failure of Seller to pay, perform or
discharge any of Seller's obligations, liabilities, agreements or
commitments not assumed by Purchaser pursuant to the provisions
of this Agreement.
7.2 Indemnification by Purchaser.
---------------------------- Purchaser agrees to
defend, indemnify and hold Seller and any subsidiary or affiliate
thereof (the "Indemnified Seller Group") harmless from and
against any and all losses, liabilities, damages, claims, suits,
costs, or expenses (including reasonable attorneys' fees,
penalties and interest) actually, or asserted by a third-party to
be, resulting from, arising out of, or incurred as a result of
(a) the breach of any representation made by Purchaser herein or
in accordance herewith; (b) the breach of any warranty or
covenant made by Purchaser herein or in accordance herewith; (c)
any claim or any litigation, proceeding or governmental
investigation, commenced after the date of this Agreement arising
out of the operations of the Business by Purchaser; or (d) the
failure of Purchaser to pay, perform or discharge the Lease, any
of the Assigned Contracts or any Additional Liability assumed by
Purchaser pursuant to Section 1.3 hereof.
7.3 Survival of Covenants and Warranties.
------------------------------------
Notwithstanding anything to the contrary set forth herein, the
representations, warranties, covenants and agreements made by
Seller, on the one hand, and Purchaser, on the other hand, shall
survive the execution of this Agreement.
7.4 Notice of Claims.
---------------- Each of Purchaser and Seller
agrees to give prompt written notice to the other of any claim
against the party giving notice which might give rise to a claim
by it or them against the other party hereto based upon the
indemnity provisions contained herein, stating the nature and
basis of the claim and the actual or estimated amount thereof;
provided, however, that failure to give such notice will not;
-------- -------
affect the obligation of the indemnifying party to provide
indemnification in accordance with the provisions of this Article
7 unless, and only to the extent that, such indemnifying party is
actually prejudiced thereby. In the event that any action, suit
or proceeding is brought against any member of the Indemnified
Seller Group or the Indemnified Purchaser Group with respect to
which any party hereto may have liability under the
indemnification provisions contained herein, the indemnifying
party shall have the duty, at his or its sole cost and expense,
to defend such action in the name or on behalf of the indemnified
party and, in connection with any such action, suit or
proceeding, the parties hereto agree to render to each other such
assistance as may reasonably be required in order to ensure the
proper and adequate defense of any such action, suit or
proceeding; provided, however, that an indemnified party shall
-------- -------
have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate because of actual or
potential differing interests between such indemnified party and
any other party represented by such counsel. If the indemnifying
party shall undertake to defend such action, suit or proceeding,
or to compromise any such asserted liability, it shall promptly
notify the indemnified party of its intention to do so and
provide the indemnified party with reasonable assurance as to the
ability of the indemnifying party to defend or compromise, as the
case may be, such matter which, with respect to Seller as
indemnifying party, shall include reasonable assurance that
Seller has and will have the financial capability to pay any
judgment or compromise resulting from such asserted liability.
Neither party hereto shall make any settlement of any claim which
might give rise to liability of the other party under the
indemnification provisions contained herein without the written
consent of such other party, which consent such other party
covenants shall not be unreasonably withheld.
ARTICLE 8
GENERAL PROVISIONS
8.1 Successors and Assigns. This Agreement shall be
---------------------- This Agreement shall be
binding upon and inure to the benefit of Seller, Purchaser, and
Xxxxxx Plan and their respective successors, representatives and
assigns.
8.2 Waiver.
------ No provision of this Agreement shall be
deemed waived by course of conduct, unless such waiver is made in
a writing signed by all parties hereto stating that it is
intended specifically to modify this Agreement, nor shall any
course of conduct operate or be construed as a waiver of any
subsequent breach of this Agreement, whether of a similar or
dissimilar nature.
8.3 Entire Agreement.
---------------- This Agreement (together with
the Schedules and Exhibits hereto) supersedes any other
agreement, whether written or oral, that may have been made or
entered into by Purchaser, Seller and Xxxxxx Plan (or by any
director, officer, agent, or other representative of such
parties) relating to the matters contemplated hereby. This
Agreement, together with the Schedules and Exhibits hereto and
together with the Related Agreements, constitutes the entire
agreement by and among the parties and there are no agreements or
commitments except as expressly set forth herein.
8.4 Notices.
------- Any notice, demand, request, or other
communication required or permitted hereunder shall be in writing
and shall be deemed to have been duly given if delivered by hand,
or sent by certified or registered United States mail, postage
prepaid and return receipt requested, or by prepaid overnight
express service to the respective addresses of the parties as set
forth herein. Any party hereto may by notice so given change its
address for future notice hereunder. Notice shall conclusively
be deemed to have been given when delivered in the manner set
forth above and shall be deemed to have been received when
delivered. Notices shall be sent to the parties at the following
addresses:
(a) If to Seller:
Warner Insurance Services, Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: President
with a copy (which shall not constitute notice)
to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
(b) If to Purchaser:
MDA Services, Inc.
000 Xxxxxxx Xxxxxxxxx Xxxx.
Xxxxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxxx
If to Xxxxxx Plan:
The Xxxxxx Plan Corporation
000 Xxxxxxx Xxxxxxxxx Xxxx.
Xxxxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000-000-0000
Attention: Xx. Xxxxxx Xxxxxxx
with a copy (which shall not constitute notice)
to:
Xxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxxx, Esq.
8.5 Amendments, Supplements, Etc.
----------------------------- This Agreement may
be amended or modified only by a written instrument executed by
all parties hereto which states specifically that it is intended
to amend or modify this Agreement.
8.6 Severability.
------------ If any provision of this Agreement
shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall
not in any manner affect or render invalid or unenforceable any
other severable provision of this Agreement, and this Agreement
shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
8.7 Applicable Law.
-------------- This Agreement and the legal
relations between the parties hereto shall be governed by and
construed in accordance with the substantive laws of the State of
New York, without giving effect to the principles of conflicts of
law thereof.
8.8 Titles and Headings.
------------------- Titles and headings to
sections hereof are inserted for convenience of reference only
and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
8.9 Execution in Counterparts.
------------------------- This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
WARNER INSURANCE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
MDA SERVICES, INC.
By: /s/ Philber A. Nezamoodeen
------------------------------
Name: Xxxxxxxx X. Nezamoondeen
Title: Executive Vice President
THE XXXXXX PLAN CORPORATION
By: /s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
