EXHIBIT 10.10
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (hereinafter referred to as "Agreement")
dated as of December 31, 1997, is entered into by and between Collateral Agency
of Texas, Inc. (hereinafter referred to as "Company") and Collateral Investment
Corp. (hereinafter referred to as "CIC") (collectively Company and CIC shall be
referred to as "Sellers") and New South Bancshares, Inc. (hereinafter referred
to as "Buyer").
WITNESSETH: THAT
WHEREAS, the Buyer is a corporation duly organized and validly existing
under the laws of the State of Delaware with its principal place of business at
1900 Crestwood Boulevard, Birmingham, Alabama; and
WHEREAS, the Company is a business corporation duly organized and validly
existing under the laws of the State of Texas, with its principal place of
business at 6044 Gateway East El Paso, Texas; and
WHEREAS, CIC owns 100% of the stock of Company; and
WHEREAS, CIC desires to sell to Buyer, and Buyer desires to purchase from
CIC, all of CIC's shares of capital stock of Company, on the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, but subject to the conditions
hereinafter set forth, the parties hereto agree as follows.
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
1.1 Purchased Shares. Subject to the terms and conditions of this
----------------
Agreement, Buyer agrees to purchase from the CIC, and CIC agrees to sell,
transfer, and deliver to Buyer the shares of Company for the Purchase Price.
1.2 Purchase Price. In full consideration for the conveyance, transfer,
--------------
assignment and delivery of the Shares, Buyer shall pay $197,488 in cash.
ARTICLE II
BEST EFFORTS
------------
Each of the parties agrees to use its best efforts to furnish the
information herein required and to take all necessary action so that the
conditions to Closing may be satisfied, and Closing held, at the earliest
practicable date.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
----------------------------------------------------
Contemporaneously with the execution of this Agreement, Sellers have
delivered to Buyer a schedule (the "Schedule") disclosing certain items and
organized in such a way as to identify the section of this Agreement to which
such items disclosed relate, and a disclosure referencing one section of the
Schedule shall not be deemed adequate to disclose an exception to a
representation or warranty made in another section of this Agreement. Except as
and to the
2
extent expressly disclosed in the Schedule, subject to the foregoing, the
Company and CIC as Sellers, jointly and severally, hereby represent, warrant and
covenant to Buyer, as of the date hereof and as of the Closing Date, as follows:
3.1 Organization of the Company. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the state of
its incorporation recited on page one with full power and authority to own the
respective properties which it now owns; and neither the Company nor CIC has
received any notice which states, nor does the Company or CIC have any
reasonable basis to believe, that the corporation is engaged in business in any
state, district or territory in such fashion as to require qualification as a
foreign corporation in such state, district or territory or that the Company is
required to be licensed under insurance or other laws of such state, district or
territory, except for those states, districts, or territories in which it is
currently so qualified or licensed and as is disclosed in the Schedule. There is
no agreement, contract or commitment purporting to limit or restrict the freedom
of the Company to engage in any line of business for which it is licensed or
compete with any other company nor so affecting any account which produces a
material amount of revenue for Company.
3.2 Stock. CIC owns all record and beneficial title to all of the capital
-----
stock of the Company, and there are no securities convertible into or
exchangeable for any shares of the capital stock or the Company nor does the
Company have any authorization therefore in effect.
3.3 Execution of Documents. The execution and consummation of this
----------------------
Agreement by CIC and the Company is binding upon CIC and the Company,
respectively, and this Agreement is enforceable against CIC and the Company in
accordance with its terms.
3
3.4 No Breach. Neither the execution of this Agreement nor compliance
---------
with its terms and provisions does or will conflict with or result in a breach
or violation of, or default under, any of the terms, conditions or provisions of
the Articles of Incorporation or By-Laws of Sellers or of any judgment, order,
injunction, decree, ruling of any court or governmental authority, domestic or
foreign, or of any agreement, indenture or instrument to which the Sellers are a
party or by which they are bound.
3.5 Tax Matters. There have been heretofore furnished to Buyer true and
-----------
correct copies of all federal income tax returns of Company as filed for the
1996 taxable year. This return has been duly filed and all amounts shown as due
thereon have been paid. There have been no documents, notices or correspondence
relating to any deficiencies in any income tax, interest or penalties asserted
by the Federal government with respect to any periods for Company ending prior
to the date hereof nor has Company agreed to or executed any waivers of statutes
of limitation. No audit, examination, investigation or hearing with respect to
any tax by any governmental subdivision, agency or body, is known by Company or
CIC to be pending or threatened against Company. There is no unaccrued liability
(statutory or otherwise) for any state, federal or local tax, increase in tax or
penalty or interest, or reduction or decrease in losses shown on said return,
nor any basis for the assertion thereof against Company except as may be set
forth in the Schedule.
Proper and accurate amounts have been withheld by Company from its agents
and employees and others for all prior periods in compliance in all material
respects with the tax withholding provisions of applicable Federal, state and
local laws and regulations, and proper due diligence steps have been taken in
connection with back-up withholding. Federal, state and
4
local returns which are accurate and complete in all material respects have been
filed by Company for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes and the amounts
shown on such returns to be due and payable have been paid in full.
3.6 Title to Properties. Except as disclosed in the Schedule, none of the
-------------------
assets of Company is subject to any lien, claim, option, charge, mortgage,
encumbrance or security agreement other than the lien for current taxes on real
and personal property not yet due and payable, and all of the assets of Company
are in the possession of the corporation or are subject to its sole control.
3.7 Insurance. There is, and there shall be at the time of the Closing
---------
hereof, in full force and effect, comprehensive general liability, personal
liability, and other forms of liability insurance as disclosed in the Schedule
as well as fire and extended coverage insurance on all improved real property
which is under mortgage to Company, which insurance is sufficient to protect
fully the interests of Company in same.
3.8 Payments to Shareholders. There have been no cash or other payments
------------------------
or distribution or transfers of property of Company made, directly or
indirectly, to CIC except reimbursement of expenses and as expressly described
on the Schedule.
3.9 Financial Statement There has been heretofore furnished to Buyer
-------------------
balance sheets and statements of profits and loss of the Company for the two
year period ending December 31, 1996. Except as disclosed in the Schedule, all
said balance sheets and statements of profit and loss were prepared on the
accrual basis in accordance with generally accepted accounting principles and
practices applied on a basis consistent with that of the preceding year and
fairly
5
reflect, with reasonable accuracy, each of the line items therein and, in
general, the financial condition of the Company.
3.10 Form of Agreements. There have been heretofore furnished to Buyer for
-------------------
review and identified in the Schedule (i) all standard forms of contracts and
endorsements of Company, (ii) all standard forms of amendments and supplements
to each such form, and (iii) copies of all appendices, supplements or amendments
to each of the foregoing which in any manner changes, deletes from or adds to
any provision of the forms listed in (i) and (ii). The documents offered
pursuant to (i), (ii), and (iii) together reflect with reasonable accuracy the
provisions of all of the outstanding written contracts between Company, on the
one hand, and (1) all customers of their services, (2) employees, agents,
brokers and other persons who may solicit applications for insurance
(hereinafter referred to as "Agent" or collectively as "Agents") on behalf of
Company, and (3) insurers whose products are sold by the Company. Except as
disclosed in the Schedule, Company is not, nor to the best of knowledge of CIC
is any other party, in material default with respect to such contracts and no
such contract contains any provision for a right of terminating in event of the
transactions contemplated in this Agreement or any provisions which would be
altered or otherwise would become applicable by reason of such transactions.
3.11 Employee Matters. The Company does not have any employment contracts
-----------------
with any of its employees not terminable at will either for cause upon notice
not exceeding 48 hours or otherwise upon notice not exceeding two weeks, nor
does it have any collective bargaining agreement covering any of its employees.
No present or former agent or employee of the Company has any rights under any
contract that contains any material term or provision not embodied in the
documents described in the Schedule. Disclosed in the Schedule is a list of
6
every agent and a description of every written or oral agreement between the
Company and such agent. Except as disclosed in the Schedule, no present or
former agent, employee, director, stockholder, officer or any person claiming
any such relationship to the Company has any claim or right against the Company
or CIC, and neither the Company or CIC have any obligations to such persons, for
any reason whatsoever, other than current salaries due as disclosed in the
Schedule. Except as described in the Schedule, the Company does not maintain or
contribute to, and has never maintained or contributed to, any employee benefit
plan as defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any multi-employer plan as defined in ERISA. With respect
to any plan described in the Schedule, the Company does not owe any excise tax
or other fine or penalty on account of past operations or such plans nor any
benefit under any kind of plan except that the Company may owe or carry a
premium it has collected by payroll deduction.
3.12 Obligations Relating to Liabilities Not Assumed. Company is not a
-----------------------------------------------
party to any contract or commitment, written or oral, express or implied (other
than contracts listed in the Schedule) which in any respect has not been fully
performed by Company which is a party thereto and the other party or parties
thereto and Company has no other obligations of any kind in which the cumulative
value of such obligations remaining at Closing to be performed by Company may
exceed $1,000 except for (i) current salaries due under current schedules or
obligations provided for in the Schedule, and (ii) obligations to pay current
professional fees.
3.13 (a) Default. Except as disclosed in the Schedule, Company has not
-------
breached any provision of and is not and will not be in default in any respect
under the terms of, any contract, plan or instrument described in the Schedule,
and no party to any such contract, plan or
7
instrument does or will have the right to terminate any or all of the provisions
of any such contract, plan or instrument as a result of the transaction
contemplated by this Agreement.
(b) Compliance with Laws. Company is, in the conduct of its business, in
--------------------
compliance with all applicable Federal, state or local laws, statutes,
ordinances and regulations, the failure to comply with which would materially
adversely affect the business of Company or the aggregate value of its property
or assets. Except as disclosed in the Schedule, Company has not received any
notification from any agency or department of Federal, state or local government
or the staff thereof asserting that Company is not in compliance with any of the
statutes, regulations or ordinances which such governmental authority or
regulatory agency enforces, or threatening to revoke any license, franchise,
permit or governmental authorization, or terminate the tax favored status of any
plan within the scope of Section 3.11, and Company is subject to no formal
agreement with any such regulatory agency with respect to any of their assets or
businesses.
3.14 Lawsuits. No suit, action, arbitration, investigation or other legal
--------
or administrative proceeding is pending or threatened against Company or against
or pertaining to any property owned by or leased by Company.
3.15 Articles of Incorporation. There have been delivered to Buyer a true
-------------------------
and correct copy of the current Articles of Incorporation and By-Laws, and all
amendments thereto, of Company.
3.16 Brokers. CIC has not retained or used the services of any individual,
-------
firm or corporation in such manner as to entitle such individual, firm or
corporation to compensation as a
8
broker or finder as a result of the execution of this Agreement or consummation
of the transactions contemplated therein.
3.17 Subsidiaries. Company has no subsidiaries and is not a partner or
------------
joint venturer with any other person, firm, or corporation.
3.18 Assets. Except as expressly disclosed in the Schedule, CIC is not
------
owed any money or other consideration nor shall it be by the Closing, on account
of any contract, agreement or understanding with Company.
3.19 Authorizations. (a) The Company has complete and unrestricted power
--------------
to enter into and to consummate the transaction set forth in this Agreement. All
approvals of Company directors and of CIC as stockholder to the consummation of
the transactions contemplated herein have been obtained and shall be in full
force and effect at Closing.
(b) Consents. No consents or approvals of or filings or
--------
registrations with any third party or any public body, agency or authority are
necessary in connection with the execution, delivery and consummation of this
Agreement by the Company.
3.20 Representations. To the best knowledge of Sellers, all material facts
---------------
relating to the business, operations, properties, assets, liabilities
(contingent or otherwise) and financial condition of Company have been disclosed
to Buyer in writing. No representation or warranty contained in this Agreement,
and no statement contained in any certificate contained in the Schedule, list or
other writing furnished to Buyer pursuant to the provisions hereof, to the best
knowledge of Company and CIC, contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
herein or therein not misleading. No information material to Company which is
necessary to make the representations and
9
warranties herein contained not misleading, to the best knowledge of CIC and
Company, has been withheld from, or has not been delivered in writing to, Buyer.
Wherever reference is made herein to the delivery of copies of documents and
instruments to Buyer, such copies are true and accurate reproductions of
original documents and instruments in the possession of the party delivering
same.
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
--------------------------------------------------
Buyer represents, warrants and covenants to CIC and Company as of the date
hereof and as of the Closing.
4.1 Organization. Buyer is a corporation duly organized, validly existing
------------
and in good standing under the laws of the State of Delaware, with power and
authority to own all properties which it now owns and to conduct the business in
which it is now engaged, and has complete and unrestricted power to enter into
and to consummate the transactions required by this Agreement.
4.2 Conflicts. Neither the making of this Agreement nor compliance with
---------
the terms and provisions of this Agreement by Buyer will conflict with or result
in a breach of or violation of or default under any of the terms, conditions or
provisions of the Certificate or Articles of Incorporation or By-Laws of Buyer,
or any judgment, order, injunction, decree or ruling of any court or
governmental authority, domestic or foreign, or of any agreement or instrument
to which Buyer is or will be a party by Closing.
10
4.3 Authorization. The execution and consummation of this Agreement by
-------------
Buyer has been duly authorized by its Board of Directors which authorization is
in full force and effect, and no further authority is required to bind Buyer to
the performance of this Agreement.
4.4 Brokers. Buyer has not retained or used the services of any
-------
individual, firm or corporation in such a manner as to entitle such individual,
firm or corporation to compensation as a broker or finder as a result of the
execution of this Agreement or consummation of the transactions contemplated
herein.
ARTICLE V.
OBLIGATIONS FOLLOWING EXECUTION OF AGREEMENT
--------------------------------------------
5.1 Obligations. From and after the date of execution of this Agreement
-----------
through the Closing, CIC shall take, or cause Company, as the case may be, to
take the following action or CIC shall refrain from taking and shall not permit
Company, as the case may be, to take the following actions, as the case may be:
Company shall --
(a) make no payments or distribution of money or property, directly
or indirectly, to any shareholder on account of shares of stock except as
expressly required by the terms of this Agreement;
(b) without the prior written consent of Buyer, not grant any
increase in the rates of pay, bonus or commissions of directors, officers,
employees, brokers, or agents, or any increase in the salary or rate of pay or
other compensation, present or deferred, of any director, officer, employee,
broker, or agent;
11
(c) without the prior written consent of Buyer, not grant any bonus
or enter into any new or amended bonus, pension, profit-sharing or retirement
plan, or other deferred compensation or fringe benefit, or other contract or
commitment pertaining to compensation with any current director, officer,
employee, broker or agent, or otherwise, directly or indirectly increase the
total compensation, present or deferred, of any officer, director, or employee,
or any former officer, director or employee, or the rates of commissions,
overrides, bonuses or other compensation of any present or former agent; and not
hire any new officer, employee, broker, or agent under any arrangement which is
not terminable without cause or liability upon not more than thirty days'
notice;
(d) carry on its business in the ordinary course and in substantially
the same manner as heretofore, and not make or institute any unusual methods of
management, sale, investment or operation without the prior written consent to
Buyer;
(e) keep in effect and undiminished as to coverage and limits of
coverage the insurance in its favor now in effect upon its employees, business,
property and assets, and prosecute diligently all claims for losses under any of
the foregoing;
(f) not issue or acquire any stock or security of Company of
whatsoever kind and not grant any option to purchase, or other right to acquire,
any such stock or securities;
(g) use its best efforts to sell insurance in accordance with present
practices and under plans presently offered by it, and conserve and prevent from
lapsing as much of the insurance handled by it as may be reasonably practicable
and in keeping with present marketing methods;
12
(h) use its best efforts to maintain and preserve its present
accounts and its business organization (except as otherwise requested by Buyer);
and
(i) allow counsel, auditors, actuaries and other representatives of
buyer full and complete access (with right to copy), at reasonable times and
intervals during normal business hours, to all of its files, books, papers,
records, contracts and offices with respect to any and all aspects of its
business; provided, however, that until such time as this Agreement is
consummated, as to any information not in the possession of buyer prior to
commencement of the negotiations or in the public domain, Buyer shall treat the
same as confidential and shall use its best efforts to prevent disclosure of
such information to third parties except to the extent that such shall be deemed
reasonably necessary to carry out and perform this Agreement; and if this
Agreement is not consummated, Buyer shall return such documents to Company; and
in addition, Company shall instruct its officers, employees, counsel, and
accountants to be available for, and respond to any questions of, all such
representatives of Buyer;
(j) report promptly to Buyer any fact, circumstance or occurrence
which in the reasonable business judgment of management of Company may be
expected to result in an adverse change in the financial condition or prospects
of Company.
5.2 Other parties. During the period from the date of this Agreement to
-------------
the earlier of the termination or abandonment of this Agreement pursuant to
Article VIII, CIC and its agents shall not, directly or indirectly, take any
action to seek, encourage or support any offer from any corporation,
partnership, person or other entity or group to acquire any shares of Company
stock or other equity securities of or interest in Company, or to merge with
Company or to otherwise acquire any significant portion of the assets of
Company. In amplication but not in limitation of
13
the foregoing, Sellers shall not solicit, approve, or discuss, undertake or
enter into, with Company either as the surviving or disappearing or the
acquiring or acquired corporation, any other merger, consolidation, asset
acquisition, tender offer or other takeover transactions or (except as may be
required by law in the opinion of counsel for Company after consultation with
counsel for Buyer) furnish or cause to be furnished any information concerning
the business, properties or assets of Company to any nongovernmental person or
entity which it at the time believes to be interested in any such transaction.
ARTICLE VI.
CONDITIONS
----------
6.1 The fulfillment of the following is a condition to the Closing of this
Agreement and consummation of the transactions described herein:
(a) no action, suit or proceeding shall have been instituted or shall
have been threatened, before any court or any other governmental body, by any
public authority or by a person or other legal entity to restrain, enjoin or
prohibit any of the transactions contemplated herein, or subject any of Buyer,
CIC, Company or their directors or officers of any of them (including as
directors of Company after the Closing) to any material liability, fine,
forfeiture or penalty on the ground that the transactions contemplated herein,
or any of them, are unlawful in any respect, or that Buyer, CIC, Company or
their directors or officers have breached or violated, or will breach or violate
by the consummation hereof, any applicable law, rule or regulation, or otherwise
have acted improperly or in breach of any duty in connection with this Agreement
or transactions contemplated herein.
14
6.2 The obligations of Buyer to close are also subject to the fulfillment
of each of the following conditions:
(a) The representations and warranties of CIC and Company contained in
Article III hereof shall be true and correct in all material respects as of the
time of Closing, with the same force and effect as if made at the time of
Closing.
(b) All actions, proceedings, instruments and documents required to
carry out this Agreement, and all other related legal matters, shall have been
approved by counsel for Buyer, which approval shall not be unreasonably
withheld.
(c) Each of Company and CIC shall have performed its or their
respective obligations under Article V hereof.
(d) There shall be no actions, suits or other proceedings pending of
threatened against Company.
(e) There has been no adverse change in the business, condition,
(financial or otherwise), operations or prospects of Company.
6.3 The obligation of CIC to close is also subject to the fulfillment of
each of the following conditions:
(a) The representations and warranties of Buyer contained in Article
IV hereof shall be true and correct in all material respects as of the time of
Closing, with the same force and effect as if made at, and at the time of, the
Closing.
(b) All actions, proceedings, instruments and documents required to
carry out this Agreement and all other related legal matters shall have been
approved by counsel for Seller, which approval shall not be unreasonably
withheld.
15
ARTICLE VII.
CLOSING
-------
7.1 Location of Closing. The Closing and deliveries hereunder shall take
-------------------
place at the offices of Buyer at 1900 Crestwood Boulevard, Birmingham, Alabama
or at such other place as may be mutually agreed upon by CIC and Buyer, at 9:00
A.M., local time, December 31, 1997, or at such other time thereafter as may be
mutually agreed upon by CIC and Buyer.
7.2 At the Closing, Buyer shall deliver the following to CIC (and receipt
of each of the following is a condition precedent to the consummation of this
Agreement by CIC);
(a) the opinion of counsel to Buyer, satisfactory in form and content
to CIC's Counsel, dated the date of Closing that:
(i) Buyer is duly authorized and empowered to consummate this
Agreement and the transactions provided for herein; Buyer has taken all action
required by applicable law for the consummation of this Agreement, and
transactions contemplated herein; and this Agreement constitutes a binding and
enforceable obligation of Buyer, subject only to the laws respecting creditors'
rights generally and subject to the discretion as to specific performance and
other matters applied by courts under general equitable principals, except that
such counsel shall not be required to express any opinion as to the law of the
state other than Delaware;
(ii) this Agreement is valid and effective in accordance with its
terms under the laws of the State of Delaware, with the reservations set forth
in (i) above;
(iii) the execution, performance and consummation by Buyer of
this Agreement will not result in any violation of the Certificate or Articles
of Incorporation or By-Laws of Buyer or in any breach of or any default under
any agreement or commitment to which
16
Buyer is a party or by which it is bound and of which counsel for Subsidiary has
actual knowledge; and
(c) all such documents as may reasonably be necessary to assure CIC
and CIC's counsel that the provisions of and conditions specified in this
Agreement to be performed or satisfied by Buyer have been performed or
satisfied.
7.3 At the Closing, CIC shall deliver the following to Buyer (and receipt
of each of the following is a condition precedent to the consummation of this
Agreement by Buyer);
(a) a certificate signed by CIC in form satisfactory to counsel for
Buyer, certifying that, to the best of the knowledge, all of the warranties and
representations contained in Article III hereof are true and correct as of the
time of Closing, and that all of the covenants, terms and conditions of this
Agreement to be complied with and performed by CIC, Company prior to Closing
have been complied with and performed;
(b) the opinion of counsel to CIC, satisfactory in form and content to
counsel to Buyer, dated the date of Closing that:
(i) this Agreement is valid and effective in accordance with its terms
under the laws of the State of Texas and constitutes a binding and enforceable
obligation of each of CIC and Company in accordance with its terms (except in
all such cases as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally and except that the availability
of the equitable remedies of specific performance or injunctive relief is
subject to the discretion of the court before which any proceedings may be
brought);
17
(ii) the execution, performance and consummation by each of CIC and
Company of this Agreement and the undertakings herein will not result in any
violation of the Articles of Incorporation or By-Laws of Company or in any
breach of or any default under any agreement or commitment to which CIC or the
Company is a party or by which they are bound and of which CIC's counsel has
actual knowledge;
(iii) to the best of such counsel's knowledge after reasonable
investigation, there is no litigation pending or threatened, nor any proceedings
before any governmental or other agencies which would have any material adverse
effect upon Company or upon CIC's title to, and right to vote 100% of the stock
of Company in favor of the consummation of this Agreement upon Closing or
constitute a lien, charge or encumbrance on CIC's title to Company stock.
(iv) under Texas law, each agent and employee of Company may be
discharged without liability, including but not limited to liability for accrued
vacation or severance pay, except as otherwise set forth in written contracts
heretofore delivered to buyer and identified by such counsel or as otherwise
expressly set forth in such opinion;
(v) under Texas law, bulk sales and similar laws are not applicable
and have no field of operation to the transaction contemplated herein;
(c) a certificate signed by the Chief Executive Officer of Company
certifying to the best of such Chief Executive Officer's information and belief
that no actions, lawsuits or other proceedings are pending against Company
except as identified in the Schedule;
(d) such deeds, bills of sale, endorsements, assignments, and other
good and sufficient instruments of conveyance and transfer in form satisfactory
to Buyer's counsel, and
18
containing full warranties of title as shall be effective to vest in Buyer good,
absolute, and marketable title to the properties, assets, and business being
transferred to Buyer by CIC, free and clear of all liens, charges, encumbrances,
and restrictions whatsoever;
(e) all contracts, agreements, commitments, and rights pertaining to
the Company's business and other data relating to its assets, business and
operations;
(f) where necessary, consents to the assignments of leases and
contracts;
(g) all documents as may reasonably ne necessary to assure buyer and
its Counsel that the provisions of and conditions specified in this Agreement to
be performed or satisfied by CIC or Company have been performed or satisfied.
(h) a certification of true copy of the minutes of the Company signed
by the Secretary which states that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly and
appropriately authorized and approved by the requisite number of shareholders of
the Company with regard to the sale and transfer of assets by CIC and the
Company.
(i) a certificate signed by the Chief Executive Officer of Company
certifying that the Company agrees to the allocation of purchase price required
by Internal Revenue Code Section 1060 to be furnished by the Buyer prior to the
due date of the Company's federal income tax return for the year of sale.
7.4 Each party agrees to execute and deliver such instruments and take
such other action as may be reasonably required, or as shall be reasonably
requested by the other party, in order to carry out the transactions,
agreements, and covenants contemplated in this Agreement before, at or after the
Closing Date.
19
ARTICLE VIII.
TERMINATION AND ABANDONMENT
---------------------------
8.1 Anything contained in this Agreement to the contrary
notwithstanding, this Agreement and the transactions outlined herein may be
terminated and abandoned:
(a) upon the mutual written consent of Buyer and Seller;
(b) by Buyer, by written notice to CIC, if by December 31, 1997
conditions to Closing set forth in Section 7.1 and 7.2 which are not within the
control of Buyer to satisfy are not satisfied or if Closing shall have been
agreed to sooner and if any such condition to perform or refrain from any act at
Closing is not so performed or refrained from at Closing; or
(c) by CIC, by written notice to the President of Buyer, if by
December 31, 1997 conditions to Closing set forth in Section 7.1 and 7.3 which
are not within the control of Seller to satisfy are not satisfied or if Closing
shall have been agreed to sooner and if any such condition to perform or refrain
from any act at Closing is not so performed or refrained from at Closing.
ARTICLE IX.
SHAREHOLDER
-----------
CIC agrees that, as soon as practicable after the execution of this
Agreement, it will, commence activities toward convening a meeting of
shareholders of the Company to vote upon the approval by such shareholders of
the transactions contemplated by this Agreement. Such activities shall include,
without limitation, establishing a record date for shareholders entitled to vote
on the Agreement; complying with applicable legal requirements under state law
regarding the giving of notice as to such record date; mailing notice of the
meeting and form of proxy to
20
Shareholder; and in all other respects taking all action required by law to
authorize the consummation of the transactions contemplated herein insofar as
authorization thereof by Shareholders is required.
ARTICLE X
INDEMNIFICATION
---------------
10.1 A. The obligation of CIC to reimburse, indemnify and hold harmless
the Buyer (collectively, the "Indemnification Obligations") shall be as set
forth in this Section 10.1. From and after the Closing Date, CIC shall
reimburse, indemnify and hold buyer harmless against and in respect of any and
all damage, loss, liability or deficiency (including without limitation all
reasonable legal expenses and other costs incurred by Buyer in connection with
any and all actions, suits, proceedings, demands, investigations, judgment or
settlements relating thereto) resulting from, arising out of or relating to:
(a) Any misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of CIC and/or Company in this Agreement or
any misrepresentation in or omission from the Schedule or any written
statements, list certificate or other instrument furnished by CIC to Buyer
pursuant to this Agreement, and
(b) Any and all due and unpaid state, federal or local income or
other taxes assessed against Buyer, or the Company in connection with the
operation of the business of the Company prior to the Closing Date and any civil
penalties or other adverse governmental action resulting from or relating to
taxes; and
21
(c) Any claim by any person, firm or corporation for brokerage or
other commission or similar fees relative to this Agreement insofar as such
claims are alleged to be based on arrangements made by Company or CIC; and
(d) Any civil penalties or other adverse governmental action
resulting from any failure of the Company to qualify to do business under
applicable state law or to meet any other applicable state law requirement prior
the Closing Date; and
(e) Any claim, demand, proceeding or suit against Company claiming
prior to the Closing Date:
(i) breach of fiduciary duty;
(ii) sex discrimination or harassment under state or federal
law;
(iii) wage and hour law violation;
(iv) age discrimination;
(v) unlawful practice of law
(vi) transaction of insurance by an unauthorized carrier or
unlicensed agent;
(vii) violation of state insurance trade practices law or laws
rules or regulations affecting securities salespersons or
broker/-dealers
(viii) fraud, deceit, misrepresentation or other tort in
connection with the sale of insurance or securities;
(ix) oral contracts to pay bonuses or additional compensation
to present or former employees, agents, directors,
brokers, or officers;
(x) violation of state or federal securities laws or rules or
regulations promulgated thereunder.
22
(f) Any debts or liabilities of Company incurred prior to the Closing
Date, whether known or unknown, absolute, contingent, matured or unmatured, the
amount, nature or basis for which are not disclosed on the Schedule, and which
result in loss, cost or expense to buyer, except as disclosed in the Schedule;
and
(g) Any other claim whatsoever against buyer as the successor to the
business of Seller which is incurred prior to Closing Date.
B. CIC acknowledges that (i) the Indemnification Obligations are and
will be their valid and binding obligations notwithstanding any investigation
by or opportunity to investigate afforded to buyer and (ii) all
representations, warranties, covenants, statements and other undertakings made
by CIC in this Agreement, the Schedule or in any certificate, statement or
other document furnished or to be furnished in connection with this Agreement
shall survive the Closing Date and remain in effect under this Agreement until
terminated in accordance with CIC acknowledges that (i) the Indemnification
Obligations are and the provisions of this Agreement.
C. The Indemnification Obligations of CIC shall terminate as
hereinafter set forth:
(i) Except as provided in subsection C (ii) of this Section
10.1, the Indemnification Obligations of CIC shall terminate on the fifth
anniversary of the Closing Date (except with respect to tax matters which said
Indemnification Obligations of CIC shall terminate at the expiration of the
period of the statute of limitations applicable to such claims.
(ii) The Indemnification Obligations of Seller in respect of any
claim or demand which is included in a claim notice sent or delivered by Buyer
prior to the date that the Indemnification Obligations of CIC with respect
thereto would otherwise terminate and
23
which has not been finally determined and paid prior to such date (a "Pending
Claim") shall extend to the final determination and payment of the Pending
Claim.
(iii) If Buyer discovers a possible third-party claim which has
not been asserted or sought to be collected by said third party, Buyer may
notify CIC of said possible claim and the time period provided in (1) above
shall be extended for one year unless the third-party claim has matured into a
Pending Claim within said one year period of time.
D. All disputes, controversies or differences between Buyer,
Company, and CIC which arise under this Section 10.1 or are related to this
Agreement (including, without limitation, the construction, performance or
breach of any agreement) upon which an amicable understanding cannot be reached
within 30 days shall, upon the written request of either party, be settled and
determined by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment upon the award entered by the
arbitrators may be entered in any court having jurisdiction of these matters.
The Court of Arbitrators shall consist of three arbitrators other than
employees, agents, director, or stockholders who hold over 5% of the stock of
Buyer, CIC, and/or Company. The parties agree that this Court of Arbitrators, if
implemented under this Agreement, shall be held at a mutually agreed upon
location.
The parties agree to arbitrate within ninety (90) days following the
transmittal of written demand of either party to arbitrate any dispute
arbitrable under this Agreement. Each of the parties shall appoint an
arbitrator within thirty (30) days following notice of written demand to
arbitrate, notifying the other party of the name and address of such arbitrator.
The two arbitrators so appointed shall thereupon select the third arbitrator.
If either party shall fail to
24
appoint an Arbitrator as herein provided, or should the two arbitrators so named
fail to select the third arbitrator within thirty (30) days of this appointment,
the, in either event, the president of the American Arbitration Association or
its successor shall appoint such third arbitrator. The three arbitrators so
selected shall constitute the Court of Arbitrators.
A decision of a majority of the Court of Arbitrators shall be provided
within twenty days of the applicable hearing and shall be final and binding and
there shall be no appeal therefrom. The Court of Arbitrators shall not be bound
by legal rules of procedures and may receive evidence in such a way as to do
justice between the parties. The court of Arbitrators shall promptly enter an
award which shall do justice between the parties and the award shall be
supported by a written opinion.
The cost of arbitration, including the fees of the arbitrators, shall be
borne by the losing party unless said Court of Arbitrators shall decide
otherwise.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Entire Agreement. All prior or contemporaneous agreements and
----------------
representations between the parties hereto and made by any agents or
representatives thereof are merged into this Agreement, which, together with the
Exhibits hereto and the Schedule and other documents referred to herein as
having been furnished to Buyer and CIC, constitute the entire contract between
the parties. No amendment or modification hereof shall be of any force or effect
unless in writing and signed by the party or parties hereto against whom such
amendment or modification is sought to be enforced.
25
11.2 Remedies. Except as otherwise provided herein, nothing herein,
--------
express or implied, is intended, or shall be construed to confer upon or give to
any person, firm or corporation other than the signatories hereto and their
respective legal representatives, in the case of CIC and Buyer, any rights or
remedies under or by reason of this Agreement.
11.3 Counterparts. This Agreement may be executed by the parties in one or
------------
more identical counterparts, each of which shall constitute an original. Each
such counterpart shall become effective when one counterpart has been signed by
each party hereto. The parties agree that they must mutually agree on any public
or other announcement respecting this Agreement.
11.4 Governing law. This Agreement shall be government by and construed
-------------
and enforced in accordance with the laws of the State of Texas. It is agreed
that the provisions of this Agreement relating to arbitration of disputes
hereunder shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1
et. seq. and to the extent not in conflict with the Federal Arbitration Act, by
the Commercial Arbitration Rules of the American Arbitration Association.
11.5 Amendments. The parties hereto may amend, modify, supplement or
----------
interpret this Agreement to the fullest extent permitted by law, in such manner
as may be mutually agreed upon between them in writing at any time.
11.6 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given at the time delivered or if
mailed by first class mail, postage prepaid, at the time mailed, as follows:
(a) If to CIC: 1812 University Boulevard
Tuscaloosa, Alabama 35410
(b) If to Buyer: 1900 Crestwood Boulevard
Birmingham, Alabama 35210
26
(c) If to Company: 6044 Gateway East
El Paso, Texas
11.7 Binding. This Agreement shall be binding upon and inure to the
-------
benefit of the parties hereto and their respective successors and assigns in the
case of Buyer, or the Company and their heirs and personal representatives, in
the case of CIC, but the Agreement and the respective rights and obligations of
the parties hereto shall not be assignable by any party hereto without prior
written consent of the other parties hereto.
11.8 Unenforceability. Any term or provisions of this Agreement that is
----------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction, and if any term
or provision of this Agreement is held by any court of competent jurisdiction to
be void, voidable, invalid or unenforceable in any given circumstance or
situation, then all of its other terms and provisions, being severable, shall
remain in full force and effect in such circumstance or situation and the said
term or provision shall remain valid and in effect in any other circumstances or
situations
11.9 Pronouns. Use of the masculine pronoun herein shall be deemed to
--------
refer, as applicable, to the feminine and neuter genders, and use of singular
reference shall be deemed to include the plural and vice versa, as appropriate.
IN WITNESS WHEREOF, each of the corporate parties hereto has caused this
instrument to be executed in its name and on its behalf, and attested and its
corporate seal to be affixed, by its officers thereunto duly authorized, all as
of the day and year first above written.
27
ATTEST: BUYER: New South Bancshares, Inc.
/s/ Hope A. Howe By /s/ Robert M. Couch
- ----------------------------------- ------------------------------------
Title Executive Vice President
------------------------------
ATTEST: CIC: Collateral Investment Corp.
/s/ Janet C. Brown By /s/ David W. Whitehurst
- ----------------------------------- -------------------------------------
Title Executive Vice President
------------------------------
ATTEST: COMPANY: Collateral Agency of
Texas, Inc.
/s/ Janet C. Brown By /s/ David W. Whitehurst
- ----------------------------------- -------------------------------------
Title President
------------------------------
28