Exhibit 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
TRUSTWAY INSURANCE AGENCIES, LLC,
ASSURANCEAMERICA CORPORATION,
THOMAS-COOK HOLDING COMPANY
AND
JAMES C. COOK
DATED: JULY 20, 2004
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 - DEFINITIONS................................................ 1
ARTICLE 2 - SALE OF ASSETS............................................. 5
2.1 Sale of Assets; Assumption of Liabilities..................... 5
2.2 Purchase Price; Payment....................................... 8
2.3 Conveyance and Transfer, Assumption........................... 8
2.4 Closing Date.................................................. 9
2.5 Further Assurances............................................ 9
2.6 Allocation of Purchase Price.................................. 9
2.7 Taxes......................................................... 9
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER................... 9
3.1 Authority, No Violation....................................... 9
3.2 Title to Assets............................................... 10
3.3 Existence, Good Standing and Authority........................ 10
3.4 Investments................................................... 10
3.5 Financial Statements.......................................... 10
3.6 No Material Changes........................................... 10
3.7 Real Property and Leases...................................... 11
3.8 Material Contracts............................................ 12
3.9 No Conflict................................................... 14
3.10 Litigation.................................................... 14
3.11 Tax Returns and Payments...................................... 14
3.12 Liabilities................................................... 15
3.13 Insurance..................................................... 15
3.14 Compliance with Laws, Governmental Authorizations............. 15
3.15 Employees..................................................... 16
3.16 Labor Relations............................................... 16
3.17 Employee Benefit Plans........................................ 16
3.18 Broker's or Finder's Fees..................................... 18
3.19 Environmental and Health and Safety Matters................... 18
3.20 Relationships with Related Persons............................ 19
3.21 Accuracy...................................................... 19
ARTICLE 4 - REPRESENTATIONS OF PURCHASER............................... 19
4.1 Existence and Good Standing of Purchaser...................... 19
4.2 Power and Authority........................................... 19
4.3 Broker's or Finder's Fees..................................... 20
4.4 No Conflict................................................... 20
4.5 Litigation.................................................... 20
4.6 Representations and Warranties of Purchaser................... 20
4.7 Covenants of Purchaser........................................ 20
ARTICLE 5 - PRE-CLOSING COVENANTS...................................... 21
5.1 Full Access................................................... 21
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5.2 Best Efforts.................................................. 21
5.3 Notices, Consents and Approvals............................... 21
5.4 Operation of the Business..................................... 21
5.5 Notice of Developments........................................ 23
5.6 Exclusivity................................................... 24
5.7 Cooperation................................................... 24
5.8 Publicity..................................................... 24
ARTICLE 6 - POST-CLOSING COVENANTS..................................... 24
6.1 Cooperation................................................... 24
6.2 Employees..................................................... 25
6.3 Non-Competition............................................... 26
6.4 Confidentiality............................................... 26
6.5 Retained Liabilities; Assumed Contracts....................... 26
6.6 Tax Matters................................................... 27
6.7 Books and Records............................................. 27
6.8 Preparation of Tax Returns.................................... 27
ARTICLE 7 - CONDITIONS TO PURCHASER'S OBLIGATIONS...................... 27
7.1 Truth of Representations and Warranties....................... 27
7.2 Covenants and Agreements of Seller............................ 27
7.3 Good Standing and Tax Certificates............................ 27
7.4 Secretary's Certificate....................................... 28
7.5 No Litigation Threatened...................................... 28
7.6 Approvals, Filings............................................ 28
7.7 Opinion of Counsel............................................ 28
7.8 Lease Assignments............................................. 28
7.9 Sale and Assignment Documents, Etc............................ 28
7.10 Material Contract Consents.................................... 28
7.11 Required Governmental Consents................................ 29
ARTICLE 8 - CONDITIONS TO SELLER'S OBLIGATIONS......................... 29
8.1 Truth of Representations and Warranties....................... 29
8.2 Covenants and Agreements of Purchaser......................... 29
8.3 Good Standing Certificates.................................... 29
8.4 Secretary's Certificate....................................... 29
8.5 No Litigation Threatened...................................... 29
8.6 Approvals; Filings............................................ 29
8.7 Opinion of Counsel............................................ 30
8.8 Promissory Note............................................... 30
8.9 Employment Agreement.......................................... 30
8.10 Deliveries.................................................... 30
ARTICLE 9 - INDEMNIFICATION, REMEDIES.................................. 30
9.1 Survival; Right to Indemnification Not Affected by Knowledge.. 30
9.2 Definitions................................................... 30
9.3 Indemnification by Seller..................................... 31
9.4 Indemnification by Purchaser.................................. 31
9.5 Defense of Third Party Actions................................ 32
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9.6 Miscellaneous................................................. 32
9.7 Time Limitations; Limitations on Seller....................... 32
9.8 Limitations on Amount-Seller.................................. 33
9.9 Procedure for Indemnification-Other Claims.................... 33
9.10 Exclusivity................................................... 33
9.11 Set-off....................................................... 33
ARTICLE 10 - MISCELLANEOUS............................................. 34
10.1 Termination................................................... 34
10.2 Expenses...................................................... 34
10.3 Arbitration................................................... 34
10.4 Governing Law................................................. 35
10.5 Enforcement; Remedies......................................... 35
10.6 Captions; References.......................................... 35
10.7 Variation in Pronouns, Etc.................................... 35
10.8 Notices....................................................... 35
10.9 Parties in Interest........................................... 36
10.10 Counterparts.................................................. 36
10.11 Entire Agreement.............................................. 36
10.12 Amendments.................................................... 37
10.13 Severability.................................................. 37
10.14 Third Party Beneficiaries..................................... 37
10.15 Joint Preparation............................................. 37
10.16 Publicity and Disclosures..................................... 37
10.17 Waiver........................................................ 37
10.18 Bulk Sales Law................................................ 37
10.19 Guarantee by Purchaser's Parent............................... 37
EXHIBITS AND SCHEDULES
Exhibit A Equipment
Exhibit B Excluded Assets
Exhibit C Assumed Contracts
Exhibit D Form of Promissory Note
Exhibit E Form of Bill of Sale, Assignment and Assumption Agreement
Exhibit F Form of Purchase Price Allocation
Exhibit G Form of Opinion of Seller's Counsel
Exhibit H Form of Lease Assignment
Exhibit I Form of Opinion of Purchaser's Counsel
Schedule 3.2 Title to Assets; Inventory
Schedule 3.4 Investments
Schedule 3.6 No Material Change
Schedule 3.7(b) Real Property Leases
Schedule 3.8 Material Contracts
Schedule 3.9 Contract Consents
Schedule 3.10 Litigation
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Schedule 3.12 Liabilities
Schedule 3.13 Insurance
Schedule 3.14 Required Governmental Authorizations
Schedule 3.15 Employees
Schedule 3.17 Employee Benefit Plans
Schedule 3.19(c) Environmental and Health and Safety Matters
Schedule 3.20 Relationships with Related Persons
Schedule 4.4(b) Consents
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of July 20,
2004, by and among TRUSTWAY INSURANCE AGENCIES, LLC, a Delaware limited
liability company ("Purchaser"), THOMAS-COOK HOLDING COMPANY, a Georgia
corporation, ("Seller"), JAMES C. COOK, an individual resident of the State of
Georgia ("Seller's Principal"), and ASSURANCEAMERICA CORPORATION, a Nevada
corporation ("Purchaser's Parent").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business of operating an insurance
agency (including the representation of the Smart Choice Agents Program of
Georgia) (the "Business"), through the office (the "Office") located at 6165
Barfield Road, Suite 100, Atlanta, Georgia.
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, substantially all of the assets, properties, and rights of
the Business.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements of the parties hereinafter
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
"Accounts" means all accounts receivable of the Business, inclusive of future
premium income and finance charges, arising from the operation of the Business
in the ordinary course.
"Acquisition Documents" means this Agreement, all exhibits and schedules hereto,
and all agreements contemplated herein.
"Affiliate" is used in this Agreement to indicate a relationship with one or
more persons and when used shall mean any corporation, limited liability company
or other organization of which such person is an executive officer, manager,
director, member or partner or is directly or indirectly the beneficial owner of
five percent (5%) or more of any class of equity securities or financial
interest therein; or a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified.
"Agreement" means this Asset Purchase Agreement.
"Assets" means all of the assets, tangible and intangible, owned by Seller
including, but not limited to, Equipment and rights in the Assumed Contracts,
used in or associated with the Business.
"Assumed Contracts" has the meaning set forth in Section 2.1(c)(i).
"Business" has the meaning set forth in the recitals.
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"Business Employees" has the meaning set forth in Section 3.15(a).
"Carrier Contracts" has the meaning set forth in Section 3.8.
"Carriers" has the meaning set forth in Section 3.8.
"Claim" or "Claims" have the meanings set forth in Section 2.1(c)(ii).
"Claim Notice" has the meaning set forth in Section 9.9.
"Closing" has the meaning set forth in Section 2.5.
"Closing Balance Sheet" has the meaning set forth in Section 2.1(a)(i).
"Closing Date" has the meaning set forth in Section 2.4.
"Closing Payment" has the meaning set forth in Section 2.2(b).
"COBRA" has the meaning set forth in Section 3.19(f).
"Code" means the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"Competing Business" has the meaning set forth in Section 3.20.
"Contract" means any agreement, contract, instrument, obligation, promise,
commitment or undertaking (whether written or oral and whether express or
implied) that is legally binding.
"Contract Consents" has the meaning set forth in Section 3.9(b).
"Employee Benefit Plans" shall have the meaning set forth in Section 3.17(a).
"Encumbrance" means any charge, claim, community property interest, condition,
covenant, equitable interest including any equitable servitude, lien, option,
pledge, security interest, right of first refusal, defect in title, or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership.
"Environmental and Safety Requirements" means all federal, state, provincial and
municipal statutes, regulations, common law and similar provisions having force
or effect of law, all orders, permits, licenses and approvals with respect to
environmental, public health and safety, occupational health and safety, product
liability and transportation including, without limitation, all such standards
of conduct or bases of obligations relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, control or
cleanup of any contaminant, waste, hazardous materials, substances, chemical
substances or mixtures, pesticides, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation.
"Equipment" has the meaning set forth in Section 2.1(a)(iii).
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"ERISA" means the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Excluded Assets" has the meaning set forth in Section 2.1(b).
"Governmental Authorization" means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any federal, state, provincial, local, municipal,
foreign, or other government or jurisdiction (including any governmental agency,
branch, department, official, or entity and any court or other tribunal).
"Historical Financial Statements" has the meaning set forth in Section 3.5
"Indemnification Cap" has the meaning set forth in Section 9.8(a).
"Indemnified Person" has the meaning set forth in Section 9.2
"Indemnifying Person" has the meaning set forth in Section 9.2.
"Insurance Policies" has the meaning set forth in Section 3.13.
"IRS" means the Internal Revenue Service.
"Knowledge" means (i) with respect to an individual, such individual has actual
personal knowledge of the matter of fact in question, (ii) with respect to
Seller or Purchaser, a member of senior management has actual personal knowledge
of such matter or fact or a member of senior management has information from
which a person of reasonable intelligence would reasonably infer that the matter
or fact exists or (iii) with respect to the Seller who are trusts, the trustees
and beneficiaries of such trusts who have personal knowledge of the matter or
fact in question.
"Lease" or "Leases" have the meanings set forth in Section 3.7(b).
"Lease Assignment" has the meaning set forth in Section 7.8.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty relating to
the operation of the Business.
"Losses" has the meaning set forth in Section 9.2.
"Material Adverse Effect" means, with respect to either of the Seller or
Purchaser or any other entity, any event, condition or change which materially
and adversely affects or may materially and adversely affect the business,
financial condition, prospects, assets or results of operations of such company.
"Material Contract Consents" has the meaning set forth in Section 7.10.
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"Office" has the meaning set forth in the recitals.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Organizational Documents" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
"Person" means any individual, corporation (including any non profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Promissory Note" has the meaning set forth in Section 2.2(b)(i).
"Promissory Note Amount" has the meaning set forth in Section 2.2(b)(i).
"Purchased Assets" has the meaning set forth in Section 2.1(a).
"Purchase Price" has the meaning set forth in Section 2.2(a).
"Purchaser" has the meaning set forth in the heading of this Agreement.
"Purchaser's Indemnified Persons" has the meaning set forth in Section 9.2.
"Required Governmental Authorizations" has the meaning set forth in Section
3.14.
"Retained Liabilities" has the meaning set forth in Section 2.1(c)(ii).
"Schedule" or "Schedules" mean any schedule(s) delivered by Seller, or Purchaser
pursuant to, and referred to in, Article III or IV of this Agreement.
"Seller" has the meaning set forth in the heading of this Agreement.
"Seller's Indemnified Persons" has the meaning set forth in Section 9.2.
"Severance and Change in Control Payments" means the aggregate amount of cash
payments required to satisfy in full Seller's obligations under any severance,
employment, consulting, change in control or similar agreement in force as of
the date hereof upon the consummation of the transactions contemplated hereby.
"Tax" or "Taxes" means any federal, state, provincial, local or foreign income
tax including, without limitation, any tax on gross income, net income,
franchise, gross receipts, royalty, capital gains, value added, sales, goods and
services, commodity, harmonized, use, health, education, social service, excise,
property, ad valorem, transfer, license, use, profits, windfall profits,
environmental, withholding on amounts paid to or by Seller, payroll, employment,
disability, employee's income withholding, workers' compensation, employment
insurance, unemployment insurance, social insurance, health insurance, social
security, excise, severance, stamp,
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occupation, premium, gift or estate, levy, assessment, tariff, duty, deficiency,
or other fee, and any related charge or amount (including any fine, penalty,
interest, or addition to tax), imposed, assessed, or collected by or under the
authority of any Governmental Body or payable pursuant to any tax sharing
agreement or any other Contract relating to the sharing or payment of any such
tax, levy, assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return), declaration
report, statement, schedule, notice, form, claim for refund, or other document
or information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Third Party Action" has the meaning set forth in Section 9.2.
ARTICLE 2 - SALE OF ASSETS
2.1 Sale of Assets; Assumption of Liabilities.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Closing (as defined in Section 2.4 below), Seller shall
sell, assign, transfer and convey to Purchaser, and Purchaser shall
purchase, acquire and accept from Seller, the Business as a going concern,
including all of Seller's assets of every kind and description, other than
the Excluded Assets (as defined in subsection (b) below) (the "Purchased
Assets"), and subject only to the liabilities and obligations of Seller
which are defined in subsection (c) as the "Assumed Contracts". The
Purchased Assets shall include, without limitation, the following assets
and properties of the Business:
(i) all assets used in the Business on the Closing Date and
reflected on the balance sheet of the Business dated as of June 30,
2004 (the "Closing Balance Sheet"), with only such changes therein
as have occurred in the ordinary course of the Business since the
date of such balance sheet;
(ii) the rights of Seller under the Assumed Contracts;
(iii) the machinery, equipment, equipment leases, fixtures and
furniture, and office supplies related to the Business listed on
Exhibit A (the "Equipment");
(iv) All leasehold interests used in the Business;
(v) subject to the Contract Consents and the Lease
Assignments, all rights and interests of Seller in and to any
Contracts, including Carrier Contracts, contracts for the purchase
of materials, supplies and services and the sale of products and
services, equipment leases and any other contract related to the
Business;
(vi) all of Seller's books, records and other data relating to
its Business;
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(vii) all of the Business' goodwill, dealer and customer
lists, sales and marketing information, and all know how,
technology, drawings, software and other intangible assets of the
Business;
(viii) all permits, licenses, and approvals of all federal,
state, local or foreign governmental or regulatory authorities or
industrial bodies which are related to the Business, to the extent
the same are transferable;
(ix) all rights of Seller to causes of action, lawsuits,
judgments, claims and demands of any nature related to the Business;
(x) all present and future insurance proceeds of Seller
related to the Business which may be payable under the Insurance
Policies listed on Schedule 3.13 attached hereto; and
(xi) except for Excluded Assets, all other items of property,
real or personal, tangible or intangible, including without
limitation all computer programs, tapes and discs and other
intellectual property owned, used by or accruing to the benefit of
the Business.
(b) Notwithstanding any provision contained herein to the contrary,
the Purchased Assets shall not include, and Seller will retain ownership
of, the following assets (collectively, the "Excluded Assets"):
(i) all cash, cash equivalents, and securities;
(ii) Seller's minute and stock record books, journals, ledgers
and books of original entry; provided, however, that Seller shall
provide Purchaser prior to, and following, the Closing with access
to each of the foregoing;
(iii) all premiums, trade and other accounts receivable and
other indebtedness related to the Business, and including the
benefit of all collateral, security, guaranties, and similar
undertakings received or held in connection therewith, on the
Closing Date (the "Accounts");
(iv) the corporate name Thomas-Cook Holding Company;
(v) Seller's 2002 BMW X5;
(vi) Bonuses earned by Seller with respect to the Business
during the 2004 calendar year;
(vii) One computer, one computer monitor, one office chair and
personal items of the employees of Seller located at the Office of
Seller;
(viii) Seller's rights under this Agreement; and
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(ix) those assets of Seller unrelated to the Business set
forth on Exhibit B.
(c) (i) Purchaser does not and shall not assume or agree to assume
the liabilities and obligations of Seller of any nature, direct,
contingent or otherwise, except all liabilities and obligations with
respect to the performance under the Contracts assumed by Purchaser listed
on Exhibit C (the "Assumed Contracts") at the Closing from and after the
Closing Date.
(ii) Except for the Assumed Contracts, Purchaser shall not
assume or be bound by any obligations or liabilities of Seller of
any kind or nature, known, unknown, accrued, absolute, contingent or
otherwise, whatsoever, all of which shall be retained by Seller (the
"Retained Liabilities"). Except for the Assumed Contracts, Seller
shall be responsible for and pay any and all losses, damages,
obligations, liens, assessments, judgments, fines, disposal and
other costs and expenses, liabilities and claims, including, without
limitation, interest, penalties and fees of counsel, as the same are
incurred, of every kind or nature whatsoever (all the foregoing
being a "Claim" or the "Claims"), made by or owed to any person to
the extent any of the foregoing relates to the Retained Liabilities
which shall include, without limitation, claims relating to (A)
Seller's operations and assets unrelated to the Business, (B) the
Excluded Assets, (C) any employees or Employee Benefit Plans of
Seller, except for liabilities and obligations arising solely out of
the employment of such persons by Purchaser after the Closing Date
or (D) any Taxes of Seller arising out of or relating to any period
on or prior to the Closing Date or any activity of Seller prior to
or after the Closing Date, (E) any indebtedness for borrowed money
of Seller, and (F) the operations or assets of the Business arising
in connection with or on the basis of events, acts, omissions,
conditions or any other state of facts occurring or existing prior
to or on the Closing Date (including, in each case, without
limitation, any Claim relating to or associated with product
liability matters, tax matters, pension and benefit matters, any
failure to comply with applicable laws and/or permitting or
licensing requirements, personal injury and property damage matters
and environmental and worker health and safety matters).
(iii) The assumption of the Assumed Contracts by Purchaser
hereunder shall be treated as independent of Purchaser's existing
business and shall not enlarge any rights of third parties under
contracts or arrangements with Purchaser or Seller or any of their
respective affiliates or subsidiaries. Nothing herein shall prevent
Purchaser from contesting in good faith any of the Assumed
Contracts; provided, however, no such contest by Purchaser shall
relieve Purchaser of its indemnification obligations under Section
9.4 hereof. Nothing herein shall prevent Seller from contesting in
good faith any of the Retained Liabilities; provided, however, no
such contest by Seller shall relieve Seller of its indemnification
under Section 9.3 hereof.
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2.2 Purchase Price; Payment.
(a) As consideration for the purchase of the Purchased Assets,
Purchaser shall pay to Seller, the aggregate sum (the "Purchase Price") of
Two Million, Two Hundred Thousand U.S. Dollars ($2,200,000) allocated as
follows:
(i) $1,300,000.00 for the portion of the Business known as
"Insurance Market" and
(ii) $900,000.00 for the portion of the Business known as
"Smart Choice Agents Program of Georgia".
(b) At the Closing,
(i) Purchaser shall deliver:
(A) by check, the amount of four hundred sixty two
thousand U.S. Dollars ($462,000) (the "Closing Payment") to
Seller.
(B) its promissory note in substantially the form of
Exhibit D attached hereto (carrying an interest rate equal to
eight percent (8%) per annum (the "Promissory Note") in the
amount of One Million, Seventy Eight Thousand U.S. Dollars
($1,078,000) (the "Promissory Note Amount"). The Promissory
Note will be payable over a three-year period. Interest to be
paid quarterly and principal annually.
(ii) Balance of the Purchase Price to be paid with 1,320,000
shares of AssuranceAmerica Corporation common stock (the "Common
Stock") issued to Seller at the Closing.
(iii) Notwithstanding the foregoing, in the event that
Worldwide Insurance Network, Inc. exercises its right of refusal to
purchase the portion of the Business known as "Smart Choice Agents
Program of Georgia," the Seller shall not be obligated to sell such
portion of the Business to Purchaser and the Purchase Price shall be
reduced to $1,300,000 with the Closing Payment reduced to $273,000,
the Promissory Note reduced to $637,000 and the Common Stock reduced
to 780,000 shares.
2.3 Conveyance and Transfer, Assumption. At the Closing, and subject to
the terms and conditions hereof, Seller hereby agrees that it will execute and
deliver to Purchaser, and Purchaser will execute and deliver to Seller a Bill of
Sale, Assignment and Assumption Agreement, in the form of Exhibit E hereto, and
such other bills of sale, deeds, endorsements, assignments, releases, and other
good and sufficient instruments of transfer, assignment, and conveyance, in form
reasonably satisfactory to Purchaser and its counsel, as shall be effective to
convey to Purchaser good and merchantable title in and to the Purchased Assets.
Simultaneously
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with such delivery, Seller will take all steps necessary to put Purchaser in
actual possession of the Purchased Assets.
2.4 Closing Date. The Closing under this Agreement (the "Closing") shall
be held on July 31, 2004 or such other date as Purchaser and Seller may agree to
in writing, at the offices of Womble Carlyle Sandridge & Rice, PLLC, 3500 One
Atlantic Center, 1201 West Peachtree Street, Atlanta, Georgia, and shall be
effective as of July 31, 2004; such effective date is herein referred to as the
"Closing Date."
2.5 Further Assurances. Seller hereby agrees that, from time to time, at
Purchaser's request and without further consideration, Seller will execute and
deliver to Purchaser such other and further instruments of conveyance,
assignment and transfer and take such other action as Purchaser may reasonably
require to more effectively convey, transfer, and assign to Purchaser, and to
put Purchaser in possession of, the Purchased Assets.
2.6 Allocation of Purchase Price.
(a) The Purchase Price allocated to the Purchased Assets shall be
allocated among the Purchased Assets in accordance with the methodology
set forth on Exhibit F.
(b) Seller and Purchaser shall be bound by such allocations for all
purposes and to account for and report the purchases and sales
contemplated hereby for all financial, accounting and Tax purposes in
accordance with such allocations.
2.7 Taxes. Notwithstanding anything in this Agreement to the contrary,
Purchaser shall not have any liability or responsibility for any Tax of any kind
relating to or arising out of the transactions contemplated by this Agreement
and Seller shall be solely responsible for the payment of Tax of any kind,
arising out of the sale, transfer, and assignment of the Purchased Assets.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Seller's Principal represent and warrant to Purchaser as
follows:
3.1 Authority, No Violation. Seller has all requisite power and authority
to enter into the Acquisition Documents to which Seller is a party and to carry
out the transactions contemplated thereby. The execution, delivery and
performance of the Acquisition Documents to which Seller is a party have been
duly and validly authorized and approved by all necessary action by Seller. Each
of the Acquisition Documents to which Seller is a party constitutes the legal
and binding obligation of Seller, enforceable against it in accordance with
their respective terms, subject to applicable laws of bankruptcy, insolvency,
moratorium and other laws affecting the rights of creditors generally and to
general principles of equity. The entering into of the Acquisition Documents to
which Seller or Seller's Principal are a party does not, and the consummation by
Seller and Seller's Principal of the transactions contemplated thereby,
including specifically the transfer of the Purchased Assets to Purchaser by
Seller, will not violate the provisions of (a) any applicable Legal Requirement,
(b) Seller's Organizational Documents, or (c) any provision of, or result in a
default or acceleration of any obligation under, or result in any change in the
rights or obligations of Seller under, any Encumbrance, agreement, license,
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instrument, indenture, order, arbitration award, judgment, or decree to which
Seller is a party or by which any of them is bound, or to which any property of
Seller is subject.
3.2 Title to Assets. Seller has good and marketable title to, or a valid
leasehold interest in, all of the Purchased Assets, free and clear of all
Encumbrances and the sale and delivery of the Purchased Assets by Seller to
Purchaser pursuant hereto shall vest in Purchaser good and marketable title
thereto, free and clear of any and all Encumbrances on any of the Purchased
Assets, other than as disclosed in Schedule 3.2 hereto or as may be created by
Purchaser. Seller shall, prior to the Closing, use its best efforts to cure at
its expense any Encumbrance identified by Purchaser. There is no material asset
used or required by Seller in the conduct of the Business which is not included
in the Purchased Assets or licensed or leased to it pursuant to one of the
Contracts assigned to Purchaser hereunder.
3.3 Existence, Good Standing and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation. Seller has the power to own its properties and to
carry on its business as now being conducted. Seller is duly qualified to do
business in all jurisdiction(s) in which the character or location of the
properties owned or leased by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to so qualify would
not have a Material Adverse Effect. Exhibit A sets forth each operating location
of the Business. Seller has provided to Purchaser true and complete copies of
all of the Organizational Documents of Seller.
3.4 Investments. Other than as disclosed in Schedule 3.4, Seller does not
own, directly or indirectly, any capital stock or other equity, ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity.
3.5 Financial Statements. Seller has heretofore furnished Purchaser with
the following financial statements of the Business: (i) unaudited balance sheets
dated as of December 31, 2002 and December 31, 2003 and the related statements
of operations and income statements for the years then ended, and (ii) the
unaudited interim balance sheets of June 30, 2004 (collectively, the "Historical
Financial Statements"). The Historical Financial Statements are true and correct
in all material respects and fairly present the financial position of the
Business at the respective dates thereof.
3.6 No Material Changes.
(a) Except as set forth on Schedule 3.6 or the Historical Financial
Statements, since June 30, 2004 there has not been:
(i) any material adverse change in the business, operations,
properties, assets or condition (financial or other), of the
Business or any event which has had or could reasonably be expected
to have a Material Adverse Effect on the business, operations,
properties, assets or condition (financial or other), results of
operations, prospects of the Business and, to Seller's Knowledge, no
factor or condition exists which could reasonably be expected to
result in any such material adverse change (provided that seasonal
fluctuations consistent with the Business' past results shall not be
deemed to be a material adverse change);
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(ii) any damage, destruction or similar loss, whether or not
covered by insurance, materially adversely affecting the Business or
the Purchased Assets;
(iii) any material change in business policies or practices or
accounting methods, conventions, principles or assumptions of the
Business except as relates to the transactions contemplated herein;
or
(iv) any material adverse change in the nature of the business
relationships of the Business with any of its customers or
suppliers.
(b) Since June 30, 2004, except as otherwise permitted or
contemplated in this Agreement or as set forth on Schedule 3.6, Seller has
not, with respect to the Business:
(i) entered into any material transaction other than in the
ordinary course of business and consistent with past practices or
conducted the Business other than in its usual manner;
(ii) incurred any material obligation or liability (including
any guaranty, indemnity, agreement for or with respect to any
obligation or liability of another person) or paid, satisfied or
discharged any material obligation or liability prior to the due
date or maturity thereof, except current obligations and liabilities
in the ordinary course of business and consistent with past
practice, other than non recurring liabilities and those obligations
and liabilities which will be paid at Closing;
(iii) sold, assigned, pledged, mortgaged, leased or
transferred any of the Assets or any interest therein, or created,
incurred, assumed, granted or suffered to exist any Encumbrance
(which remains in existence on the Closing Date) on any of the
Purchased Assets or any interest therein, except, in each case, in
the ordinary course of business and consistent with past practice;
(iv) waived any right of value or canceled, forgiven or
discharged any debt owed to it or claim in its favor except in the
ordinary course of business and consistent with past practice;
(v) increased the compensation or fringe benefits payable to
any of its employees in a manner which is inconsistent with past
practice; or
(vi) entered into any agreement to do any of the foregoing.
3.7 Real Property and Leases.
(a) The Purchased Assets do not include any owned real property.
(b) Schedule 3.7(b) contains a true and complete list of all real
property leases and subleases (each a "Lease", and collectively, the
"Leases") (i) to which Seller is a party or (ii) to be acquired by or
assigned to Purchaser prior to the Closing Date, in each case specifying
the name of the lessor or sublessor, the lease term, the basic annual
rental
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and other amounts paid or payable with respect thereto and any purchase
options exercised or exercisable by Seller. Except as set forth on
Schedule 3.7(b), with respect to each Lease:
(i) correct and complete copies thereof have been delivered to
Purchaser;
(ii) the Lease is legal, valid, binding, enforceable, and in
full force and effect and will continue to be so on identical terms
following the consummation of the transactions contemplated hereby;
(iii) no party to the Lease is in breach or default, and no
event has occurred which, with notice or lapse of time or both,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder or which would prevent the
exercise by the Seller of any right to renew or extend such lease;
(iv) no party to the Lease has repudiated any provision
thereof, and there are no disputes, oral agreements, or forbearance
programs in effect as to the Lease;
(v) with respect to each sublease, the representations and
warranties set forth in subsections (ii), (iii) and (iv) above are
true and correct with respect to the underlying lease;
(vi) Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(vii) Seller has received no notice regarding violations of
any Legal Requirements on any property subject to a Lease; and
(viii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities.
Subject to receipt of any required consents or approvals, the consummation of
the transactions contemplated by this Agreement will not result in the
termination of any Lease, and immediately after the Closing, all Leases will
continue in full force and effect without the imposition of any additional
burdensome condition or obligation on Purchaser resulting from the consummation
of the transactions contemplated hereby.
3.8 Material Contracts.
(a) Set forth on Schedule 3.8, is a complete list of all of the
following Contracts relating to the Business which Seller is a party or by
which it is bound:
(i) all Contracts relating to the employment of any person,
and all bonus, deferred compensation, pension, profit sharing, stock
option, employee
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stock purchase, phantom stock, retirement, severance benefits
retirement, stock appreciation and other employee benefit plans;
(ii) all Contracts relating to capital expenditures;
(iii) all loan agreements, indentures, notes, bonds,
debentures or any other document or agreement evidencing a
capitalized lease obligation or indebtedness to any Person and all
loans, advances to, and investments in, any other Person, and all
Contracts relating to the making of any such loan, advance or
investment;
(iv) all guarantees and other contingent liabilities with
respect to any indebtedness or obligation of any other Person (other
than the endorsement of negotiable instruments for collection in the
ordinary course of business);
(v) all management services, consulting and any other similar
type contracts;
(vi) all leases of personal property;
(vii) all Contracts limiting the freedom of Seller to engage
in any line of business or to compete with any other Person;
(viii) all Contracts not entered into in the ordinary course
of business;
(ix) all Contracts which involve the receipt of or expenditure
by Seller of more than $25,000 in any one year;
(x) any license agreement (as licensor or licensee);
(xi) any Contract with any shareholder, manager, director,
officer or employee of Seller;
(xii) All contracts ("Carrier Contracts") between Seller and
insurance carriers ("Carriers") relating to Seller operating as an
agent for a Carrier relating to the Business; and
(xiii) all other Contracts material to the operation of the
Business or the Purchased Assets.
(b) Each Contract set forth on Schedule 3.8 is a valid and binding
agreement of Seller and, to Seller's Knowledge, of all other parties
thereto and is in full force and effect and enforceable in accordance with
its terms. Seller has not violated any of the terms or conditions of any
of the Contracts set forth on Schedule 3.8, and, to the Knowledge of
Seller, all of the terms and conditions to be performed by any party
thereto other than Seller have been fully performed. There exists no
default or event of default under any of the Contracts set forth on
Schedule 3.8 or event, occurrence, condition or act (including the
purchase of the Purchased Assets hereunder) which, with the giving of
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notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder. True and
complete copies of all such Contracts have been made available to
Purchaser by Seller.
3.9 No Conflict.
(a) Neither the execution and delivery of this Agreement nor the
consummation or performance of the transactions contemplated herein will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of Seller;
(ii) contravene, conflict with, or result in a violation of,
any Legal Requirement, Governmental Authorization, or any Order to
which Seller or any of the Purchased Assets are bound or subject;
(iii) Except as provided in Schedule 3.9, contravene, conflict
with, or result in a violation or breach of any provision of, or to
accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Contract; or
(iv) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Purchased Assets.
(b) Except as set forth on Schedule 3.9, Seller is not required to
give any notice to or obtain any consent (the "Contract Consents") from
any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the transactions contemplated
hereby.
3.10 Litigation. Except as set forth on Schedule 3.10, there is no
proceeding, investigation or litigation by any Person, or by or before any
Governmental Body, pending or, to the Knowledge of Seller, threatened, against
or affecting (i) Seller, the Business or the Purchased Assets, or (ii) the
transactions contemplated hereby. Seller is not subject or a party to any Order.
3.11 Tax Returns and Payments.
(a) All of the Tax Returns of Seller required by law to be filed on
or before the date hereof have been duly and timely filed, and all Taxes
owed by Seller (whether or not shown on such Tax Return) have been paid.
All such Tax Returns were correct and complete in all material respects.
No claim has ever been made by an authority in a jurisdiction where Seller
does not file Tax Returns that the Business is or may be subject to the
imposition of any Tax by that jurisdiction. There are no Encumbrances on
any of the assets of Seller that arose in connection with any failure (or
alleged failure) to pay any Tax.
(b) There are in effect no waivers of any applicable statute of
limitations in respect of Taxes nor any extensions of time with respect to
a Tax assessment or deficiency.
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(c) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, consultant, independent contractor, creditor, stockholder, or
other third party.
(d) Seller is not a party to any Tax allocation or sharing
agreement. Seller (i) has not been a member of an Affiliated Group (as
defined by Section 1504 of the Code) filing a consolidated federal income
Tax Return or (ii) has no liability for the Taxes of any Person under
Treas. Reg. Section 1.1502 6 (or any similar provision of state, local, or
foreign law), as a transferee or successor by contract or otherwise.
(e) No liability for any Tax will be imposed upon the Purchased
Assets or Seller or its other assets with respect to any period before the
Closing Date. Seller is not subject to any open audit in respect of its
Taxes, no deficiency assessment or proposed adjustment for Taxes is
pending, and Seller has no Knowledge of any liability, whether or not
proposed, for any Tax with respect to any period through the date hereof
to be imposed upon any of the Seller's properties or assets. Seller is not
aware of any dispute or claim concerning any liability for Taxes of
Seller.
3.12 Liabilities. Except as set forth on Schedule 3.12, Seller has no, and
none of the Purchased Assets is subject to, any outstanding claims, liabilities
or indebtedness, accrued, contingent or otherwise, and whether due or to become
due, relating to the Business. Seller is not in default in respect of the terms
or conditions of any indebtedness, nor does Seller have Knowledge of any facts
which, with the passage of time, would result in any such default. Seller has no
Knowledge of any basis for the assertion against Seller of any such liability.
3.13 Insurance. Seller has maintained, and as of the date hereof has in
effect, such policies of motor vehicle, property, casualty, workers'
compensation, general liability and other insurance as are required by law and
are adequate and appropriate with respect to the Business. Set forth on Schedule
3.13 is a complete list, with a summary thereof, of all insurance policies
("Insurance Policies") which Seller maintains with respect to the Business and
its properties or employees, which Insurance Policies are legal, valid, binding,
enforceable and in full force and effect and which will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms for
at least sixty (60) days immediately following the consummation of the
transactions contemplated hereby. Seller has not violated any of the terms or
conditions of the Insurance Policies and is not otherwise in default thereof.
All of the terms and conditions to be performed by the issuers of the Insurance
Policies have been fully performed and the Insurance Policies are free from any
right of termination, modification or acceleration on the part of the issuers
thereof. No party to any of the Insurance Policies has repudiated any provision
thereof.
3.14 Compliance with Laws, Governmental Authorizations. Seller is in
material compliance with all Legal Requirements, including, but not limited to,
all employment related Legal Requirements and all Environmental and Safety
Requirements. Seller has not received any notice of any asserted present or past
failure of Seller to comply with any of such Legal Requirements. All
Governmental Authorizations required for operation of the Business or the
Purchased Assets ("Required Governmental Authorizations") are set forth on
Schedule 3.14.
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3.15 Employees.
(a) Schedule 3.15 contains a complete and accurate list of the
following information for each employee, officer, manager or director of
each of the Business, including each employee on leave of absence or
layoff status (the "Business Employees"): name; job title; date of hire;
current compensation; vacation accrued; sick and/or personal pay accrued;
and service credited for purposes of vesting and eligibility to
participate under the Business' pension, retirement, profit-sharing,
thrift savings, deferred compensation, stock bonus, stock option, cash
bonus, employee stock ownership (including investment credit or payroll
stock ownership), severance pay, insurance, medical, welfare, or vacation
plan, or any other Employee Benefit Plan.
(b) To Seller's Knowledge, no employee, officer, manager or director
the Business is a party to, or is otherwise bound by, any agreement or
arrangement, including, without limitation, any confidentiality,
noncompetition, or proprietary rights agreement, between such employee,
officer, manager or director and any other Person that in any way will
adversely affect the performance of his duties as an employee of Purchaser
or Seller after consummation of the transaction contemplated herein.
3.16 Labor Relations. Seller is not, nor ever has been, a party to any
collective bargaining or other labor Contract. There is not presently pending or
existing, and to Seller's Knowledge, there is not threatened, any strike,
slowdown, picketing, work stoppage, or employee grievance process relating to
the Business. To Seller's Knowledge, no event has occurred or circumstance
exists that could provide the basis for any work stoppage or other labor dispute
relating to the Business.
3.17 Employee Benefit Plans.
(a) List of Plans. Set forth on Schedule 3.17 is a complete and
accurate list of all Employee Benefit Plans established, maintained or
contributed to by Seller with respect to the Business (including, without
limitation, for this purpose and for the purpose of all of the
representations in this Section 3.17, all entities (whether or not
incorporated) which by reason of common control or affiliation are treated
together with Seller as a single employer within the meaning of Section
414(b), (c), (m) or (o) of the Code) at any time during the five (5) year
period ending on the Closing Date. For purposes of this Agreement, the
term "Employee Benefit Plans" means (A) all employee benefit plans within
the meaning of ERISA Section 3(3), whether or not any such employee
benefit plans are exempt from the provisions of ERISA; and (B) all stock
option plans, bonus or incentive award plans, severance pay policies or
agreements, parachute payment arrangements, deferred compensation
agreements, supplemental income arrangements, vacation plans, accrued sick
days and any personal time off, and all other employee benefit plans,
agreements and arrangements not described in (A) above.
(b) Status of Plans. Seller does not take part in or is a party to,
or has ever taken part in or been a party to, (i) maintaining or
contributing to any Employee Benefit Plan subject to ERISA which is not in
compliance with ERISA and the Code, (ii) maintaining or contributing to,
at any time, a defined benefit plan within the meaning of
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Section 3(35) of ERISA, (iii) maintaining or contributing to, at any time,
a multiemployer plan within the meaning of Section 3(37) of ERISA, or (iv)
maintaining or contributing to any employee benefit plans other than those
listed on Schedule 3.17. The assets of the Employee Benefit Plans are
adequate to pay all debts, liabilities and claims with respect to such
plan to the extent that claims have been made on or prior to the Closing
Date. No Employee Benefit Plan ever maintained by Seller has ever provided
health care or any other non pension benefits to any employees of the
Business after their employment was terminated (other than as required by
COBRA) or has ever promised to provide such post termination benefits.
There are no promised increases in benefits (whether expressed, implied,
oral or written) under any Employee Benefit Plan maintained by Seller, nor
are there any obligations, commitments or understandings to continue any
such Employee Benefit Plans (whether expressed, implied, oral or written),
except as required by COBRA. Each Employee Benefit Plan maintained by
Seller as of the Closing Date is subject to termination by Seller without
any further liability or obligation on the part of Seller to make further
contributions to any such plan following such termination, and the
termination of any Employee Benefit Plan would not accelerate or increase
any benefits payable under such Employee Benefit Plan. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment to be made
by Seller (including, without limitation, severance, unemployment
compensation, golden parachute (defined in Section 280G of the Code), or
otherwise) becoming due to any employee, director or consultant, or (ii)
increase any benefits otherwise payable under any Employee Benefit Plan.
(c) Tax Qualification and Employee Benefits. Each Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code has been
determined to be so qualified by the IRS and nothing has occurred since
the date of the last such determination which resulted or is likely to
result in the revocation of such determination. Full payment has been made
of all amounts which Seller is required, under applicable law or under any
Employee Benefit Plan or any agreement relating to any Employee Benefit
Plan to which Seller is a party, to have paid as contributions thereto as
of the Closing Date. Seller has made adequate provision for reserves to
meet contributions that have not been made because they are not yet due
under the terms of any Employee Benefit Plan or related agreements.
Benefits under all Employee Benefit Plans are as represented and have not
been increased subsequent to the date as of which documents have been
provided.
(d) Transactions. Seller has not engaged in any transaction with
respect to the Employee Benefit Plans which would subject Seller to a tax,
penalty or liability for prohibited transactions under ERISA or the Code.
No litigation, claim, arbitration, governmental proceeding, audit, or
investigation or other proceeding (other than those relating to routine
claims for benefits) is pending or threatened with respect to any Employee
Benefit Plan.
(e) Documents. Seller has delivered or caused to be delivered to
Purchaser and its counsel true and complete copies of (i) all Employee
Benefit Plans as in effect for the Business, as well as the latest IRS
determination letter obtained with respect to any such Employee Benefit
Plan qualified under Section 401 or 501 of the Code, (ii) Form
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5500 for the three (3) most recent completed fiscal years for each
Employee Benefit Plan required to file such form, including audited
financial statements, (iii) a current Summary Plan Description for each
Employee Benefit Plan, together with any summary of material modifications
thereto, (iv) any insurance or annuity policy (including any fiduciary
liability insurance policy) related to any Employee Benefit Plan, and (v)
the three (3) most recent Summary Annual Reports provided to participants
for each Employee Benefit Plan.
(f) COBRA. Seller has complied with the Consolidated Omnibus Budget
Reconciliation Act of 1984, as amended, and all applicable state laws
governing continuation coverage ("COBRA"), and all of the rules and
regulations promulgated thereunder.
(g) Accrued Vacation and Sick Leave Benefits. Seller has no accrued
vacation or sick leave benefits relating to any years other than the
current fiscal year.
3.18 Broker's or Finder's Fees. Seller has not engaged an investment
banker in connection with this Agreement. No other agent, broker, investment
banker, person, or firm acting on behalf of any of the Seller, or any person
affiliated with any of them, or under their authority, is or will be entitled to
a financial advisory fee, brokerage commission, finders fee or other like
payment in connection with this Agreement or the transactions contemplated
hereby.
3.19 Environmental and Health and Safety Matters. To Seller's Knowledge,
(a) Seller has not received any notice, report or information
regarding any liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), or any corrective, investigatory or remedial
obligations, arising under Environmental and Safety Requirements, with
respect to the past or present operations or properties of its business.
(b) Seller has obtained, and is in compliance with all terms and
conditions, including all permits, licenses and other authorizations
required under Environmental and Safety Requirements for the occupation of
the properties of the Business and the conduct of its operations.
(c) Except as set forth on Schedule 3.19(c), none of the following
exists at any property owned or occupied by Seller: asbestos containing
material in any form or condition; polychlorinated biphenyl containing
materials or equipment; or underground storage tanks.
(d) No facts, events or conditions relating to the past or present
properties or operations of the business of Seller or properties
contiguous thereto, will (x) prevent, hinder or limit continued compliance
by Purchaser or Seller with Environmental and Safety Requirements, (y)
give rise to any corrective, investigatory or remedial obligations on the
part of Purchaser or Seller pursuant to Environmental and Safety
Requirements, or (z) give rise to any liabilities on the part of Purchaser
or Seller (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including,
without limitation, those liabilities relating to on site or off site
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hazardous substance releases, personal injury, property damage or natural
resources damage.
(e) Seller has not assumed any liabilities or obligations of any
third party under Environmental and Safety Requirements.
3.20 Relationships with Related Persons. Except as set forth on Schedule
3.20, neither Seller nor any Affiliate of Seller has, or has had, any interest
in any property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to the Business. Seller has not, and no
Affiliate of Seller is, or has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
(i) had business dealings (including being a party to a Contract) or a material
financial interest in any transaction with Seller other than business dealings
or transactions conducted in the ordinary course of business with Seller at
substantially prevailing market prices and on substantially prevailing market
terms, or (ii) engaged in the business of operating insurance agencies
("Competing Business") in any market presently served by the Business (except
for the ownership of less than two percent (2%) of the outstanding capital stock
of any company that is publicly traded on any recognized exchange or in the
over-the-counter market).
3.21 Accuracy. No representation, warranty, covenant or statement by the
Seller in this Agreement, the Schedules attached hereto or the certificates
furnished or to be furnished to the Purchaser pursuant hereto, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein in light of the circumstances under which
they were made, not false or materially misleading.
ARTICLE 4 - REPRESENTATIONS OF PURCHASER
Purchaser hereby represents and warrants for Seller as follows:
4.1 Existence and Good Standing of Purchaser. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware.
4.2 Power and Authority. Purchaser has the legal right, corporate power
and authority to make, execute, deliver and perform each of the Acquisition
Documents to which it is a party. Each of the Acquisition Documents to which
Purchaser is a party has been duly authorized and approved by all required
action of Purchaser. Purchaser has taken, or will take before the Closing Date,
all actions required by law, Purchaser's Certificate of Formation, Operating
Agreement, or otherwise, to authorize the execution and delivery of each of the
Acquisition Documents to which Purchaser is a party, and the performance of its
obligations thereunder. This Agreement has been duly executed and delivered by
Purchaser and, upon the execution and delivery of the remaining Acquisition
Documents by a duly authorized officer of Purchaser, the remaining Acquisition
Documents will have been duly executed and delivered by Purchaser, and this
Agreement is, and such other Acquisition Documents will be, upon due execution
and delivery thereof, the legal, valid, and binding obligations of Purchaser
enforceable against it in accordance with the respective terms thereof, subject
to applicable laws relating to bankruptcy,
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insolvency, moratorium or other laws relating to creditors' rights generally and
to general principles of equity.
4.3 Broker's or Finder's Fees. Purchaser represents that it has not
engaged an investment banker in connection with this Agreement. No other agent,
broker, investment banker, person, or firm acting on behalf of the Purchaser, or
any person affiliated with it, or under its authority, is or will be entitled to
a financial advisory fee, brokerage commission, finders fee or other like
payment in connection with this Agreement or transactions contemplated hereby.
4.4 No Conflict. Neither the execution and delivery of each of the
Acquisition Documents to which Purchaser is a party nor the consummation or
performance of any of the transactions contemplated thereby will, directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of Purchaser;
(b) contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated hereby or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which Purchaser is a
party or subject; or
(c) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Contract to which Purchaser is
a party.
(d) Except as set forth on Schedule 4.4(b), Purchaser is not
required, and will not be required, to give any notice to or obtain any
consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the
transactions contemplated hereby.
4.5 Litigation. There is no litigation or other proceeding by any Person,
pending, or to the Knowledge of Purchaser threatened, against or affecting the
transactions contemplated by this Agreement or Purchaser's ability to consummate
such transactions.
4.6 Representations and Warranties of Purchaser. Purchaser warrants and
represents to Seller and to Seller's Principal that the Common Stock to be
delivered to Seller hereunder has been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable and will not be issued in violation of any
preemptive rights, rights of first refusal or similar rights.
4.7 Covenants of Purchaser. Purchaser covenants and agrees that, for so
long as Purchaser is subject to the reporting requirements of Section 13 or 15
of the Exchange Act and the Common Stock is not freely tradable pursuant to Rule
144 or otherwise, Purchaser will use its best efforts to file the reports
required to be filed by it under the Securities Act of 1933 (the "Securities
Act") and Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations
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adopted by the Securities and Exchange Commission (the "SEC") thereunder, or, if
it ceases to be so required to file such reports, it will (i) make publicly
available such information as is necessary to permit sales of its securities
pursuant to Rule 144 under the Securities Act and (ii) take such further action
that is reasonable in the circumstances, in each case, to the extent required
from time to time to enable Seller to sell its shares of Common Stock without
registration under the Securities Act within the limitation provided by Rule 144
under the Securities Act, as such rule may be amended from time to time or any
similar rules or regulations hereinafter adopted by the SEC.
ARTICLE 5 - PRE-CLOSING COVENANTS
The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
5.1 Full Access. Between the date hereof and the Closing Date, Seller will
permit the Purchaser and its employees, attorneys, accountants and other
representatives to inspect the Purchased Assets and the records relating to the
Business, and the Seller will supply any information and copies of records
reasonably requested by the Purchaser or its representatives; provided, however,
that such inspection shall not interfere with the operation of the Business.
5.2 Best Efforts. Each of Purchaser and Seller will use its or their best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Articles VII and VIII below) and will take no action which would cause
its representations and warranties to be untrue or inaccurate in any material
respect on the Closing Date.
5.3 Notices, Consents and Approvals. Seller shall give any notices to
third parties, and Seller shall use its best efforts to obtain any third-party
consents that the Purchaser may request in connection with the matters referred
to in Section 3.9 above. Each of Purchaser and Seller will give any notices to,
make any filings with, and use their best efforts to obtain any authorizations,
consents and approvals of governments and governmental agencies in connection
with the transactions contemplated by this Agreement.
5.4 Operation of the Business. From the date hereof until the Closing
Date, Seller covenants that the Business will not enter into any transaction not
in the ordinary course of business and Seller will continue to conduct the
Business in the ordinary course, carry on its business in a good and diligent
manner consistent with its prior practice and in its normal and customary
manner. Without limiting the generality of the foregoing, Seller shall cause the
Business to:
(a) maintain the Purchased Assets in normal operating repair and
condition, subject to normal wear and tear and make repairs and
replacements in accordance with prior practices;
(b) collect its accounts receivable in the normal course of
business;
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(c) continue to pay and satisfy its liabilities in the ordinary
course of business, paying such liabilities when due and taking advantage
of any discounts for early payment in accordance with its prior practices;
(d) continue to maintain in full force and effect or renew or
replace all policies of insurance now in effect which cover the Purchased
Assets or the Business and give all notices and present all claims under
all policies of insurance in due and timely fashion;
(e) not make any capital expenditures in excess of $10,000 or take
any other action which would materially impact current or future
operations, except those expenditures required by this Agreement or
approved by Purchaser;
(f) not enter into any leases or contracts for the purchase of raw
materials, supplies or other products, utilities, services, repairs or
construction except those made in the ordinary course of business or which
may be canceled without liability upon not more than thirty (30) days'
notice;
(g) encourage the employees of the Business to accept or continue
employment with Purchaser, after the Closing Date, if the same is offered
by Purchaser;
(h) preserve the business organization intact of the Business, keep
available to Purchaser the services of the Business' present employees and
representatives and preserve for Purchaser the goodwill of Business'
employees, suppliers, customers and other persons with whom the Business
has business relations;
(i) not enter into or amend any employment agreement with or
commitment to any employee, not enter into any contract, agreement or
understanding with any labor union or other association representing any
employee, not enter into, amend or terminate, fully or partially, any
benefit plan, or withdraw any funds from any benefit plan or trust or
other funding arrangement maintained pursuant thereto;
(j) except for annual merit increases awarded to non-officer
employees in the ordinary course of its business consistent with past
business practices, not authorize or grant any wage or salary increase or
bonus, or otherwise directly or indirectly increase compensation to or for
any employee, or agree in any manner to any such increase; authorize or
grant any loan or other advance of funds to any employee or any
shareholder; or authorize, grant or agree in any manner to pay any
severance or termination pay to any such employee;
(k) not increase its current level of indebtedness for borrowed
money, not create or incur any indebtedness for borrowed money or assume
directly or indirectly any debt, obligation, or liability (whether
absolute or contingent, whether directly or as surety or guarantor, and
whether or not currently due or payable);
(l) not make any material change in the accounting methods,
practices, policies, principles, or procedures of the Business;
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(m) not terminate any of the Business' employees, except with
consent of Purchaser or for good cause;
(n) not materially change any of its business policies relating to
the Business, including, without limitation, advertising, marketing,
pricing, production, research and development, technology, purchasing,
personnel, budget, or acquisition policies;
(o) not enter into any lease, sublease, or contract, regarding the
acquisition, leasing or occupancy of any real estate relating to the
Business;
(p) not sell, convey, lease, abandon or otherwise dispose of, or
grant, suffer or permit any Encumbrance upon, any of the Purchased Assets,
except for the routine arm's length sales of merchandise and provision of
services in the ordinary course of business and for prices consistent with
its past business practices including, without limitation, those in effect
immediately prior to the date hereof (other than the sale of slow moving
or obsolete inventory which do not affect pricing levels);
(q) not enter into or modify in any manner any material Contract to
which it is a party or by which the Purchased Assets or the Business are
bound including, without limitation, contracts relating to the purchase or
acquisition of any material assets or properties and Leases;
(r) maintain its equipment in good operating repair during the
period from the date of execution of this Agreement to the Closing Date;
(s) keep its business and properties to be transferred hereunder
substantially intact, including its present operations, physical
facilities (normal wear and tear expected), working conditions and
relationships with lessors, licensors, suppliers, customers and employees;
(t) accrue and/or pay all withholding and other Taxes on a timely
basis;
(u) not enter into any new arrangement with a related party and to
cause all indebtedness to or from a related party to be repaid prior to
the Closing;
(v) not take any action which would cause a breach of a
representation and warranty or a covenant herein or the failure of a
condition to the closing of the transactions contemplated hereby; and
(w) use its best efforts to obtain (or use its best efforts to
assist Purchaser to obtain) all Material Contract Consents (as such term
is defined in Section 7.10 herein) and the transfer or reissuance of all
Required Governmental Authorizations.
5.5 Notice of Developments. Each of Purchaser and Seller will give prompt
written notice to the other of any material adverse development causing a breach
of any representations and warranties in Articles III or IV above. No disclosure
by any party pursuant to this Section 5.5 shall, however, be deemed to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
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5.6 Exclusivity. Seller shall not (a) solicit, initiate or encourage the
submission of any proposal or offer from any person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets of the Business (including any acquisition structured as a merger,
consolidation or share exchange); or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. Seller will notify the Purchaser
immediately if any person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
5.7 Cooperation. Purchaser and Seller shall cooperate with each other and
take such steps as are reasonably necessary such that Purchaser shall obtain,
prior to Closing, such licenses, permits and approvals as are necessary for
Purchaser's and Seller's continued use and operation, uninterrupted, of the
Purchased Assets and the Business as currently used and operated by the Seller.
In furtherance of the foregoing, (i) All significant company communications
related to the transaction contemplated hereby or the ownership transition to
customers and employees will be mutually coordinated between Seller and
Purchaser, (ii) Seller's senior management will be made available on a
reasonable basis to coordinate transition issues with the Purchaser and, (iii)
Seller will inform the Purchaser on the Business' financial performance and
material events and issues on a regular basis. Such cooperation may also
include, without limitation, Purchaser conducting, at its expense, environmental
assessment and testing of Seller's leased real estate and the improvements and
systems located thereon. The Purchaser and Seller may jointly contact any
regulatory agencies having jurisdiction over the Business and solicit from such
agencies the Business' history of compliance with applicable laws. Seller shall
fully cooperate with Purchaser in all such matters. After the Closing, Seller
will permit Purchaser and its employees, attorneys, accountants and other
representatives reasonable access to Seller's business records relating to the
Purchased Assets.
5.8 Publicity. Unless the parties mutually agree in advance or are
required by Legal Requirements, prior to the Closing, each of the parties shall
keep the terms of this Agreement strictly confidential and may not make any
disclosure of the terms of this Agreement or the transactions contemplated
hereby to any Person unless required by Legal Requirements, any public
announcement or similar publicity with respect to this Agreement or the
transactions contemplated hereby after the Closing will be issued, if at all, at
such time, with such content and in such manner as Purchaser and Seller
determine.
ARTICLE 6 - POST-CLOSING COVENANTS
The parties hereto agree as follows with respect to the period following
Closing:
6.1 Cooperation. Seller will cooperate with and provide such further
assurances to Purchaser as are reasonably necessary and requested to perfect (of
record or otherwise) and effectively vest Purchaser's or Seller's title to or
interest in the Purchased Assets, assist Purchaser in exercising rights with
respect to the Purchased Assets, aid in the prosecution, defense or other action
regarding litigation of any rights arising therefrom or affecting the same and
assist in making a smooth transition in ownership from Seller to Purchaser.
Seller will provide Purchaser, at all reasonable times, with access to and
copies of all books, papers and records pertaining to the Purchased Assets and
the Business before the Closing Date, including
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records pertaining to the Business' employees who are hired by Purchaser. No
consideration will be paid for the foregoing unless the acts required are
unrelated to a representation, warranty or covenant herein and are unreasonably
burdensome to Seller, in which case reimbursement therefor will be made at a
reasonable rate. After Closing, Seller, upon reasonable notice, shall be
permitted to have access during regular business hours upon two (2) business
days' prior notice, to Seller's records transferred to Purchaser as provided in
this Agreement.
6.2 Employees.
(a) In the event Seller terminates employment of an employee prior
to the Closing Date in the ordinary course of the Business (other than as
a result of unsatisfactory performance of his or her duties), Seller shall
pay severance benefits to such employee in accordance with the severance
benefit policy set forth on Schedule 3.17. In the event Seller terminates
employment of an employee prior to the Closing Date not in the ordinary
course of the Business and at the request of Purchaser (other than as a
result of unsatisfactory performance of his or her duties), the Seller
shall pay severance benefits to such employee in accordance with the
severance benefit policy set forth on Schedule 3.17.
(b) Purchaser will not be obligated to offer employment to or hire
or retain, as applicable, any of the Business' employees; provided,
however, that it is Purchaser's intent to hire and/or retain the great
majority of such employees. As to employees of the Business which
Purchaser offers employment, Seller shall use its best efforts to
transition such employees to employment with Purchaser. With regard to
employees of the Business who are hired or retained by Purchaser after
Closing, except as may be specifically required by applicable Legal
Requirements or by any contract, Purchaser shall not be obligated to
continue any employment relationship with any employee for any specific
period of time and all such employees shall be "at will" employees.
(c) Seller shall be responsible for and shall pay all wages,
salaries and benefits owing or payable to such employees according to
Seller's policies or otherwise required by law through the Closing Date.
Commencing on the day following the Closing Date, Purchaser shall be
responsible for and shall pay all wages, salaries and benefits (under
plans adopted by Purchaser as of the Closing Date) owing or payable to
such of Seller's employees as are hired by Purchaser which accrue after
the Closing Date. Seller agrees not to solicit any of such former
employees who become employees of Purchaser, as a result of this
transaction during such employment. In the event that Purchaser hires or
retains any of the Business' employees, and if any such employee has
accrued vacation or sick leave benefits relating to the then current
fiscal year (but excluding any other benefits), Purchaser will be
responsible for payment of such accrued unused benefits, based upon the
employment year applicable to each employee. Seller shall be solely
responsible for any other benefits or damages accruing to such employees
by reason of their employment by, or termination from, the Business prior
to and including the Closing Date or by reason of the consummation of
transactions described herein including, but not limited to, wages,
payroll taxes, sick leave, vacation pay, severance pay, pension and
retirement plans and medical or life insurance. Purchaser shall not be
responsible for Seller's employee benefit plans and Seller shall be
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responsible for addressing such plans after the Closing Date. Seller shall
indemnify, defend and hold harmless Purchaser from and against any and all
liability and claims for benefits under such plans or other employment
loss of employment by an employee before and after the Closing Date.
(d) The foregoing undertakings are made solely for the benefit of
Purchaser and no employee of the Business shall be deemed to be a third
party beneficiary of any of the provisions of this Section of this
Agreement in any respect.
6.3 Non-Competition. Seller agrees that the Purchase Price was fixed on
the basis that the transfer of the Purchased Assets to Purchaser would provide
Purchaser with the full benefit and goodwill of the Business as it existed on
the Closing Date. Seller acknowledges that it is proper for Purchaser to have
assurance that the value of the Purchased Assets or the Business will not be
diminished by acts of Seller after the Closing Date. Accordingly, Seller
covenants and agrees that, commencing on the Closing Date and ending on the
second anniversary of the Closing Date, it will not, and shall cause its
Affiliates not to, (i) directly or indirectly compete with, or own, manage,
operate or control or participate in ownership, management, operation or control
of, or provide consulting services or financial resources to, or act as
guarantor for, any business, firm, corporation, partnership, person,
proprietorship or other entity which is engaged in a Competing Business in the
State of Georgia, (ii) directly or indirectly solicit to leave his or her
employment or engagement with Purchaser or any of its Affiliates any of its
respective employees, consultants, agents or independent contractors (for this
purpose, the terms "employees", "consultants" "agents" and "independent
contractors" shall include any person having such status with regard to a
company at any time during the six (6) months preceding any solicitation in
question) or (iii) solicit, interfere with or endeavor to entice away from
Purchaser or the Business or any of its Affiliates for itself or on behalf of
any Person, any customer or supplier of the Purchaser or the Business or any of
its Affiliates. The foregoing provisions shall not apply to investments in
shares of stock of a corporation traded on a national securities exchange or on
the national over-the-counter market which shall constitute less than two
percent (2%) of the outstanding shares of such stock of such corporation. If any
provisions of this Agreement, and specifically this Section 6.3, is deemed
invalid by a court of competent jurisdiction, the covenants contained herein
shall be applicable and enforceable for such lesser period of time, within such
more limited geographical area and for such lesser activity as such court may
then or thereafter determine to be reasonable and proper under the
circumstances.
6.4 Confidentiality. Before and after the Closing, Seller shall, and shall
cause its representatives and Affiliates to, hold in strict confidence and not
use or disclose to any other party without the prior written consent of
Purchaser, all confidential information obtained from Purchaser in connection
with the transactions contemplated hereby and all information relating to the
Purchased Assets and the Business; provided, however, that such information may
be used or disclosed (i) when required by Legal Requirements, (ii) if it is
publicly available other than as a result of a breach of this Agreement, or
(iii) if it is otherwise expressly provided for herein.
6.5 Retained Liabilities; Assumed Contracts.
(a) From and after the date hereof through to the Closing Date and
following the Closing, Seller agrees to promptly pay, perform and fully
discharge all of the
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Retained Liabilities as they come due, including, without limitation,
product liability and warranty claims arising out of operation of its
Business prior to the Closing Date; provided, however, that Seller shall
have the right to contest and defend any disputed claims relating to the
Retained Liabilities. From and after the date hereby through to the
Closing Date, Seller agrees to promptly pay, perform and fully discharge
all of the Assumed Contracts as they come due.
(b) From and after the date hereof through to the Closing Date and
following the Closing, Purchaser agrees to promptly pay, perform and fully
discharge all of the Assumed Contracts as they come due, including,
without limitation, product liability and warranty claims arising out of
operation of the Business prior to the Closing Date; provided, however,
that Purchaser shall have the right to contest and defend any disputed
claims relating to the Assumed Contracts.
6.6 Tax Matters. Seller shall be responsible for and shall cause to be
prepared and duly filed all tax returns relating to Taxes of Seller. Seller
shall be responsible for and shall, indemnify and hold harmless Purchaser with
respect to all Taxes of Seller.
6.7 Books and Records. For a period of six (6) years commencing on the
Closing Date, or for such longer period as may be required by applicable law,
Seller shall be permitted to store all books and records not included as part of
the Purchased Assets on the premises of Purchaser's business at no charge (with
Purchaser being permitted access thereto) and such books and records shall be
available for inspection and copying by Seller and its representatives during
regular business hours upon two (2) business days' prior notice.
6.8 Preparation of Tax Returns. Seller agrees to prepare and execute
applicable tax returns for Seller for any interim or stub period.
ARTICLE 7 - CONDITIONS TO PURCHASER'S OBLIGATIONS
Subject to the provisions of Section 10.1, all obligations of Purchaser to
be discharged under this Agreement at the Closing are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
unless waived in writing by Purchaser prior to or at the Closing:
7.1 Truth of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement or in any Schedule delivered
pursuant hereto shall be true and correct in all material respects when made and
as of the Closing Date, and Seller shall have delivered to Purchaser a
certificate, dated as of the Closing Date, to such effect.
7.2 Covenants and Agreements of Seller. Seller shall have caused all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by Seller prior to or at the Closing to be so performed or
complied with, and Seller shall have delivered to Purchaser a certificate, dated
as of the Closing Date, to such effect.
7.3 Good Standing Certificates. Seller shall have delivered to Purchaser
(a) copies of Seller's Organizational Documents including all amendments
thereto, certified by the appropriate authority in Seller's jurisdiction of
organization, and (b) certificates as to the
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existence, corporate good standing and authorization to do business of Seller
certified by the appropriate authority in each jurisdiction in which Seller is
organized or qualified to do business.
7.4 Secretary's Certificate. Seller shall deliver a certificate signed by
Seller's Secretary certifying (a) the truth and correctness of the bylaws of
Seller, (b) the truth and correctness of resolutions of the directors and
shareholders of Seller authorizing the entry by Seller into the Acquisition
Documents and consummation of the transactions contemplated thereby and (c) the
incumbency and genuineness of signatures of all officers of Seller executing the
Acquisition Documents.
7.5 No Litigation Threatened. No proceedings have been instituted or, to
the Knowledge of Seller, threatened, which could reasonably be deemed to have a
material impact on the substance of the transaction contemplated hereby.
7.6 Approvals, Filings. All consents necessary to permit the consummation
of the transactions contemplated hereby shall have been received. All filings
and notices (other than those, if any, which may be required to be filed, given,
obtained or taken solely by Purchaser) shall have been duly filed, given,
obtained or taken on or prior to the Closing Date and will be in full force and
effect on the Closing Date.
7.7 Opinion of Counsel. Seller shall have furnished Purchaser with a
favorable opinion, dated the Closing Date, of Rock, Leitz, Fink and Kaye in
substantially the form of Exhibit G attached hereto.
7.8 Lease Assignment. The existing lease of the Business shall have been
assigned to Purchaser, with the written consent of the landlord as required, as
set forth in the Lease Assignment in the form of Exhibit H hereto (the "Lease
Assignment").
7.9 Sale and Assignment Documents, Etc. Seller shall deliver or cause to
be delivered to the Purchaser:
(a) such deeds, bills of sale, endorsements, assignments and other
good and sufficient instruments of conveyance and transfer as shall be
effective to vest in Purchaser all of Seller's right, title and interest
in and to the Purchased Assets;
(b) such supplemental and updated Schedules, documents and other
information as are necessary (A) to prevent the information previously
furnished to Purchaser from being misleading, (B) to comply with the
representations, certifications or disclosures which Seller is required to
provide at Closing; and (C) to fully vest in Purchaser full legal,
equitable and beneficial title to the Purchased Assets as contemplated
herein;
(c) any required consents to the assignment, conveyance, sale or
transfer of any of the Purchased Assets to Purchaser by lessors, lenders
or others needed to prevent breaches of any contracts, agreements or
leases to which Seller is a party;
7.10 Material Contract Consents. Seller shall have obtained and Purchaser
shall have received the Contract Consent which have been designated as
"material" by Purchaser (the
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"Material Contract Consent" on Schedule 3.9 with respect to the assignment of
such Contracts to Purchaser.
7.11 Required Governmental Consents. Purchaser shall have received
assignments or reissuances of the Required Governmental Authorizations allowing
it to operate the Business after the Closing Date.
7.12 Receipt of Schedules. Purchaser shall have obtained the Exhibits and
Schedules to this Agreement from Seller on or before July 28, 2004.
ARTICLE 8 - CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller to be discharged under this Agreement at the
Closing are subject to the fulfillment, in all material respects, prior to or at
the Closing, of each of the following conditions, unless waived in writing by
Seller prior to or at the Closing:
8.1 Truth of Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects when made and as of the Closing Date, and Purchaser shall
have delivered to Seller a certificate, signed by its President, dated the
Closing Date, to such effect.
8.2 Covenants and Agreements of Purchaser. Purchaser shall have caused all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by it in all material respects prior to or at the Closing to be
so performed or complied with. Purchaser shall have executed and delivered to
Seller a certificate, signed by its President, dated the Closing Date, to such
effect.
8.3 Good Standing Certificates. Purchaser shall have delivered to Seller
(a) a copy of its Certificate of Formation certified by the Secretary of State
of the State of Delaware and (b) a certificate as to the existence and corporate
good standing of Purchaser certified by the Secretary of State of the State of
Delaware.
8.4 Secretary's Certificate. Purchaser shall deliver a certificate signed
by its Secretary certifying (a) the truth and correctness of resolutions of
Purchaser authorizing the entry by Purchaser into the Acquisition Documents to
which it is a party and the consummation of the transactions contemplated
hereby, and (b) the incumbency and genuineness of signatures of all officers of
Purchaser executing the Acquisition Documents to which it is a party.
8.5 No Litigation Threatened. No order shall exist and no proceeding shall
have been instituted or, to the Knowledge of Purchaser, threatened before a
court or other government body or by any public authority to restrain or
prohibit any of the transactions contemplated hereby.
8.6 Approvals; Filings. All consents, if any, necessary to permit the
consummation of the transactions contemplated hereby shall have been received.
All filings (other than those, if any, which may be required to be filed, given,
obtained or taken solely by Seller) shall have been duly filed, given, obtained
or taken on or prior to the Closing Date and will be in full force and effect on
the Closing Date.
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8.7 Opinion of Counsel. Purchaser shall have furnished Seller with a
favorable opinion, dated the Closing Date, of Womble Carlyle Sandridge & Rice,
PLLC, substantially the form of Exhibit I attached hereto.
8.8 Promissory Note. The Purchaser shall have executed and delivered the
Promissory Note to Seller.
8.9 Employment Agreement. The Purchaser shall have executed and delivered
to Seller's Principal an employment agreement satisfactory to Purchaser and
Seller's Principal.
8.10 Deliveries. Purchaser shall have delivered or caused to be delivered
to Seller:
(a) payment as required by Section 2.2 herein; and
(b) such agreements and instruments as shall be effective for
Purchaser to assume the Assumed Contracts.
ARTICLE 9 - INDEMNIFICATION, REMEDIES
9.1 Survival; Right to Indemnification Not Affected by Knowledge. Except
as otherwise expressly provided herein and subject to the time period
limitations set forth in Section 9.7, all representations, warranties, covenants
and obligations in this Agreement and the Schedules attached hereto, and the
certificates delivered pursuant to this Agreement, shall survive the Closing.
The right of any party hereto to indemnification, payment of Losses or other
remedy based on such representations, warranties, covenants and obligations will
not be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representations,
warranty, covenant or obligation.
9.2 Definitions. For purposes of this Article IX.
"Losses" means all losses, damages, liabilities, payments and
obligations, and all expenses related thereto. Losses shall include any
reasonable legal fees and costs incurred by any of the Indemnified Persons
subsequent to the Closing in defense of or in connection with any alleged
or asserted liability, payment or obligation, whether or not any liability
or payment, obligation or judgment is ultimately imposed against the
Indemnified Persons and whether or not the Indemnified Persons are made or
become parties to any such action; provided that Losses shall include
punitive and consequential damages only with respect to third party
actions.
"Indemnified Person" means any person entitled to be indemnified
under this Article IX.
"Indemnifying Person" means any person obligated to indemnify
another person under this Article IX.
"Seller's Indemnified Persons" means the Seller and any Affiliates
of Seller.
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"Purchaser's Indemnified Persons" means the Purchaser and any
Affiliates of Purchaser.
"Third Party Action" means any written assertion of a claim, or the
commencement of any action, suit or proceeding, by a third party as to
which any person believes it may be an Indemnified Person hereunder.
9.3 Indemnification by Seller. Seller agrees to defend, indemnify and hold
harmless Purchaser's Indemnified Persons from and against all Losses directly or
indirectly incurred by any of them:
(a) resulting from or arising out of any breach of any of the
representations or warranties made by Seller in or pursuant to this
Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing;
(b) resulting from or arising out of any breach of any covenant or
agreement made by Seller in or pursuant to this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto
or in connection with the Closing;
(c) in respect of any Retained Liability (including, without
limitation, in accordance with Section 6.5(a));
(d) resulting from or arising out of any liability, payment or
obligation in respect of any Taxes owing by Seller of any kind or
description (including interest and penalties with respect thereto);
(e) resulting from or arising out of the Business prior to the
Closing Date other than with respect to the Assumed Contracts (solely to
the extent provided in Section 2.1(c) hereof);
(f) resulting from or arising out of Seller's failure to comply with
the applicable bulk sales laws notwithstanding Purchaser's waiver of
Seller's compliance therewith pursuant to this Agreement;
(g) in accordance with Section 6.2; and/or
(h) in accordance with Section 6.6.
9.4 Indemnification by Purchaser. From and after the Closing Date,
Purchaser shall indemnify and hold harmless Seller's Indemnified Persons from
any and all Losses directly or indirectly incurred by them:
(a) resulting from or arising out of any breach of any of the
representations or warranties made by Purchaser, in or pursuant to this
Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing;
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(b) resulting from or arising out of any breach of any covenant or
agreement made by Purchaser in or pursuant to this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto
or in connection with the Closing;
(c) resulting from or arising out of the operation of the Business
or the use of the Purchased Assets by Purchaser on or after the Closing
Date; and/or
(d) in respect of the Assumed Contracts (solely to the extent
provided in Section 2.1(c) hereof) (including, without limitation, in
accordance with Section 6.5(b)).
9.5 Defense of Third Party Actions.
(a) Promptly after receipt of notice of any Third Party Action, any
person who believes he, she or it may be an Indemnified Person shall give
notice to the potential Indemnifying Person of such action. The omission
to give such notice to the Indemnifying Person will not relieve the
Indemnifying Person of any liability hereunder unless it was materially
prejudiced thereby.
(b) By written notice within forty five (45) days after receipt of a
notice of a Third Party Action, an Indemnifying Person may elect to assume
control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person. The Indemnifying
Persons shall not in the defense of the Third Party Action enter into any
settlement which does not include as a term thereof the giving by the
third party claimant of an unconditional release of the Indemnified
Person, or consent to entry of any judgment, except with the consent of
the Indemnified Person, which consent shall not be unreasonably withheld.
(c) Upon assumption of control of the defense of a Third Party
Action under paragraph (b) above, the Indemnifying Person will not be
liable to the Indemnified Person hereunder for any legal or other expenses
subsequently incurred in connection with the defense of the Third Party
Action.
(d) Any person who has not assumed control of the defense of any
Third Party Action shall have the duty to cooperate with the party which
assumed such defense.
9.6 Miscellaneous. If any Loss is recoverable under more than one
provision hereof, the Indemnified Person shall be entitled to assert a claim for
such Loss until the expiration of the longest period of time within which to
assert a claim for Loss under any of the provisions which are applicable.
9.7 Time Limitations; Limitations on Seller. If the Closing occurs, Seller
shall have no liability with respect to any representation or warranty (other
than those in the first and second sentences of Section 3.1 and Section 3.2, or
Sections 3.11 and 3.19), unless on or before eighteen (18) months from the
Closing Date, Purchaser notifies Seller of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Purchaser;
provided, however, a claim with respect to Section 3.11 may be made by Purchaser
at any time prior to thirty (30) days following the expiration of the applicable
statute of limitations, including any extension thereof, a claim under Section
3.19 may be made at any time prior to six (6) years after
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the Closing Date and a claim with respect to the first and second sentences of
Section 3.1 and Section 3.2 may be made at any time. If the Closing occurs,
Purchaser will have no liability with respect to any representation or warranty,
unless on or before eighteen (18) months from the Closing Date, Seller notifies
Purchaser of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Seller.
9.8 Limitations on Amount-Seller.
(a) Notwithstanding anything in Section 9.3 to the contrary,
Seller's indemnification liability hereunder with respect to claims for
breaches of the representations or warranties of Seller contained in
Article III shall in the aggregate not exceed an amount equal to the
Purchase Price (the "Indemnification Cap"), exclusive of claims for
breaches of the first and second sentences of Sections 3.1 and Sections
3.2, or Sections 3.11 and 3.19.
(b) Neither Purchaser nor any of the other Indemnified Persons shall
be entitled to seek indemnification under this Article IX with respect to
a claim for a breach of any representation or warranty contained in
Article III (other than the representations or warranties of Seller
contained in the first and second sentences of Sections 3.1 and Sections
3.2 and Sections 3.11 and 3.19) until the aggregate amount of all such
Damages to which all of the Indemnified Persons are entitled to
indemnification hereunder exceeds Ten Thousand U.S. Dollars ($10,000), at
which time the Indemnified Persons shall be entitled to the amount of such
Damages in excess of such U.S. $10,000. The foregoing shall not apply to
claims under the first and second sentences of Sections 3.1 and Section
3.2, or Sections 3.11 and 3.19.
(c) Notwithstanding the foregoing, the limitations in Sections
9.8(a) and 9.8(b) will not apply to any claims or losses arising from
fraud, willful misfeasance or intentional misconduct committed by Seller
or Purchaser.
9.9 Procedure for Indemnification-Other Claims. A claim for
indemnification for any matter not involving a third party claim may be asserted
by delivering, with reasonable promptness, written notice ("Claim Notice") to
the party from whom indemnification is sought. If, within sixty (60) days after
delivery of the Claim Notice, the party from whom indemnification is sought does
not dispute the claim in the Claim Notice, the Damages claimed in the Claim
Notice shall be conclusively deemed a liability of the indemnifying party and
such party shall pay the amount of the Damages to the indemnified party on
demand.
9.10 Exclusivity. If the Closing occurs, a claim for Losses pursuant to
this Article IX shall be the Indemnified Persons' sole and exclusive remedy for
an item described in Section 9.3 or 9.4; provided, however, that the Indemnified
Persons shall retain their legal and equitable remedies with respect to
covenants and agreements to be performed and complied with by the Indemnifying
Persons subsequent to the Closing Date.
9.11 Set-off. In addition to any other remedies it may have hereunder or
otherwise, Purchaser may set-off any amounts due to it under this Article IX
against any payments to be made to the Seller following the Closing Date, under
this Agreement and the Promissory Note.
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ARTICLE 10 - MISCELLANEOUS
10.1 Termination.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(i) by the mutual written agreement of Purchaser and Seller;
(ii) by either Purchaser or Seller, if a material breach of
any provision of this Agreement has been committed by the other
party and such breach has not been waived or cured within ten (10)
business days of written notice from the other party; provided,
however, that, notwithstanding such a breach by Seller, Purchaser
shall be required to close the transactions contemplated herein with
a reduction to the Purchase Price and the Closing Payment in an
amount equal to the amount required to cure such breach unless such
amount exceeds the Indemnification Cap;
(iii) (A) by Purchaser, if any of the conditions contained in
Article VII has not been satisfied as of the Closing Date, or if
satisfaction of such a condition is or becomes impossible (other
than through the failure of Purchaser to comply with its obligations
under this Agreement), and Purchaser has not waived such condition
on or before July 31, 2004; provided, however that Purchaser shall
be required to close the transactions contemplated herein with a
reduction to the Purchase Price and the Closing Payment in an amount
equal to the amount required to satisfy such condition, unless such
amount exceeds the Indemnification Cap, or (B) by Seller, if any of
the conditions in Article VIII has not been satisfied as of the
Closing Date, or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Seller to comply with
their obligations under this Agreement), and Seller has not waived
such condition on or before July 31, 2004; or
(iv) if the Closing shall not have occurred (other than
through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) as of
July 31, 2004, or such later date as the parties may agree upon in
writing.
10.2 Expenses. Each party to this Agreement will pay its or his own
respective expenses, costs and fees (including attorneys' and accountants' fees)
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement and the consummation of the transactions contemplated by this
Agreement.
10.3 Arbitration. Any dispute among the parties under this Agreement,
including a dispute concerning the obligation of any party to indemnify another
party hereunder or an adjustment to the Purchase Price and the Closing Payment
pursuant to Section 10.1(a)(ii) or (a)(iii)(A), shall be determined by a single
arbitrator in an arbitration conducted in Fulton County, Georgia. A dispute
shall be submitted to arbitration upon the written demand for arbitration by
either party. The arbitrator shall be selected under the Commercial Arbitration
Rules of the American Arbitration Association and the arbitration shall be
conducted under such
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rules. Any award or determination in such arbitration shall be final, binding
and conclusive except as otherwise provided by law and may be entered as a final
judgment in any court having jurisdiction. The arbitrator in any arbitration may
assess the costs of arbitration against either party or against both parties and
may award attorneys fees to the prevailing party. Each party shall have the
right to conduct reasonable discovery pursuant to the Georgia Civil Practice
Act.
10.4 Governing Law. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). SUBJECT TO SECTION 10.3, EACH OF
THE PARTIES HERETO AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE THE
RIGHTS OR OBLIGATIONS OF ANY PARTY HERETO UNDER THIS AGREEMENT MAY BE COMMENCED
AND MAINTAINED IN ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF
GEORGIA, AND THAT THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
GEORGIA SHALL HAVE NON EXCLUSIVE JURISDICTION OVER ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT BY ANY OF THE PARTIES HERETO. EACH OF THE PARTIES HERETO
FURTHER AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 10.8 HEREOF,
AND CONSENTS TO THE EXERCISE OF JURISDICTION OVER THEM AND THEIR PROPERTIES WITH
RESPECT TO ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OF ANY
RIGHTS UNDER THIS AGREEMENT.
10.5 Enforcement; Remedies. If Seller commits a breach, or threatens to
commit a breach, of any of the provisions of Article V or VI, Purchaser shall
have the right and remedy, in addition to any others, to have the provisions of
Article V or VI, as the case may be, specifically enforced by any court having
equity jurisdiction, together with an accounting therefor, it being acknowledged
and understood by Seller that any such breach or threatened breach will cause
irreparable injury to Purchaser and that money damages will not provide an
adequate remedy therefor. The court may assess the costs of legal proceedings
against either party or against both parties and may award attorneys' fees to
the prevailing party.
10.6 Captions; References. The Article and Section captions used herein
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
10.7 Variation in Pronouns, Etc. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the Person or Persons may require.
10.8 Notices. Any notice or other communications required or permitted
hereunder shall be in writing and, unless otherwise provided herein, shall be
deemed to have been duly
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given upon delivery in person, by facsimile, by overnight courier or by
certified or registered mail, return receipt requested, as follows:
If to Seller: Thomas-Cook Holding Company
6165 Barfield Road, NE
Suite 100
Atlanta, Georgia 30328
Facsimile: (404) 252-1156
With a copy to: Rock, Leitz, Fink & Kaye
2985 Piedmont Road, NE
Atlanta, Georgia 30305
Attn: Barry Leitz, Esq.
Facsimile: (404) 264-0432
If to Purchaser: Trustway Insurance Agencies, LLC
River Edge One
5500 Interstate North Parkway
6th Floor
Atlanta, Georgia 30328
Facsimile: (770) 984-0173
With a copy to: Womble Carlyle Sandridge & Rice, PLLC
3500 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attn: G. Donald Johnson, Esq.
Facsimile: (404) 888-7490
or at such other address or telecopy number as shall have been furnished in
writing by any such party in the manner set forth herein. Each such notice or
other communication shall be effective (i) when received, if hand delivered,
(ii) upon confirmation of receipt, if by facsimile, (iii) one day following
deposit, if sent by overnight courier, or (iv) on the third business day
following the date on which such communication is posted, if sent by certified
or registered mail.
10.9 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and its respective successors and
permitted assigns. This Agreement may not be transferred, assigned, pledged or
hypothecated by any party hereto without the prior consent of the other parties
hereto; provided that Purchaser may assign its rights hereunder, including the
right to purchase the Purchased Assets, to a wholly-owned subsidiary of
Purchaser.
10.10 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
10.11 Entire Agreement. This Agreement, including the other documents
referred to herein which form a part hereof or any other written agreements that
the parties enter into pursuant to or relating to the transactions contemplated
by this Agreement, contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and
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therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter. All Exhibits and
Schedules referred to herein and attached hereto are incorporated herein by
reference.
10.12 Amendments. This Agreement may not be changed or modified orally,
but only by an agreement in writing signed by Seller and Purchaser.
10.13 Severability. Any term or provision of this Agreement (including any
provision of Section 6.3) which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.14 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
10.15 Joint Preparation. This Agreement has been prepared by the joint
efforts of the respective attorneys to each of the parties. No provision of this
Agreement shall be construed on the basis that such party was the author of such
provision.
10.16 Publicity and Disclosures. Subject to their respective legal
obligations, neither party will issue a news release, public announcement,
notice to customers or any other announcement concerning this Agreement or the
transactions provided for herein without the prior written consent of the other
(such consent not to be unreasonably withheld).
10.17 Waiver. Except to the extent that a party may have otherwise agreed
in writing, no waiver (including proceeding to the Closing) by such party of any
breach by any other party of any such other party's representations, warranties,
obligations, agreements or covenants hereunder will be deemed to be a waiver of
any subsequent breach of the same or any other representations, warranties,
obligations, agreements or covenants. No forbearance by a party to seek a remedy
for any breach by any other party will be deemed a waiver of its rights or
remedies with respect to such breach, except to the extent that such party
otherwise agrees in writing. The consummation of the transactions described
herein by any party shall not constitute a waiver of any known breaches of any
other party's representations, warranties, obligations, agreements or covenants
unless the same are expressly waived in writing.
10.18 Bulk Sales Law. Purchaser and Seller waive compliance with the
provisions of any applicable bulk sales, fraudulent conveyance or other law for
the protection of creditors, and Seller agrees to indemnify, defend and hold the
Purchaser harmless from, and to reimburse the Purchaser for any loss, cost,
expense, liability or damage (including reasonable counsel fees, disbursements
and expenses) which the Purchaser suffers or incurs by virtue of noncompliance
with such laws.
10.19 Guarantee by Purchaser's Parent. In order to induce Seller to enter
into this Agreement and in recognition of the benefits flowing to
AssuranceAmerica Corporation from the
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consummation of the transactions contemplated hereby, AssuranceAmerica
Corporation hereby agrees to guarantee, assume and discharge any and all
liabilities, obligations, duties and covenants of Purchaser hereunder, as if
such liabilities, obligations, duties and covenants were expressly required to
be performed or discharged by AssuranceAmerica Corporation hereunder.
IN WITNESS WHEREOF, Purchaser, and Seller have executed this Agreement to
be effective as of the day and year first above written.
TRUSTWAY INSURANCE AGENCIES,
LLC
By: /s/ Guy W. Millner
----------------------------------
Name: Guy W. Millner
Title: Chairman
ASSURANCEAMERICA CORPORATION
By: /s/ Guy W. Millner
----------------------------------
Name: Guy W. Millner
Title: Chairman
THOMAS-COOK HOLDING COMPANY
By: /s/ James C. Cook
----------------------------------
Name: James C. Cook
Title: President
/s/ James C. Cook
--------------------------------------
James C. Cook
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