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EXHIBIT 10.19 STOCK PURCHASE AGREEMENT BY AND AMONG SECOND BANCORP INCORPORATED,
WILLIAM R. HERZOG AND GEORGE E. STOUFFER, JR.
DATED AS OF AUGUST 16, 2002
1. DEFINITIONS......................................................... 1
2. SALE AND TRANSFER OF SHARES; CLOSING................................ 6
2.1 Shares............................................................ 6
2.2 Purchase Price.................................................... 6
2.3 Closing........................................................... 7
2.4 Closing Obligations............................................... 7
2.5 Purchase Price Adjustment Procedure and Amount.................... 8
3. REPRESENTATIONS AND WARRANTIES OF SELLERS........................... 8
3.1 Organization and Good Standing.................................... 8
3.2 Authority; No Conflict............................................ 9
3.3 Capitalization.................................................... 10
3.4 Financial Statements.............................................. 10
3.5 Books and Records................................................. 10
3.6 Title to Properties; Encumbrances................................. 10
3.7 Condition and Sufficiency of Assets............................... 11
3.8 Accounts Receivable............................................... 11
3.9 Company Appointments and Licensing................................ 11
3.10 No Undisclosed Liabilities........................................ 11
3.11 Taxes............................................................. 12
3.12 No Material Adverse Change........................................ 12
3.13 Employee Benefits................................................. 12
3.14 Compliance with Legal Requirements, Governmental Authorizations... 13
3.15 Legal Proceedings, Orders......................................... 14
3.16 Absence of Certain Changes and Events............................. 15
3.17 Contracts; No Defaults............................................ 16
3.18 Insurance......................................................... 18
3.19 Absence of Environmental Liabilities.............................. 19
3.20 Employees......................................................... 19
3.21 Labor Relations; Compliance....................................... 20
3.22 Intellectual Property............................................. 20
3.23 Certain Payments.................................................. 20
3.24 Disclosure........................................................ 20
3.25 Relationships with Related Persons................................ 21
3.26 Investment Matters................................................ 21
3.27 Brokers or Finders................................................ 22
3.28 Bank Accounts..................................................... 22
4. REPRESENTATIONS AND WARRANTIES OF BUYER............................. 22
4.1 Organization and Good Standing.................................... 22
4.2 Authority; No Conflict............................................ 22
4.3 Investment Intent................................................. 23
4.4 Certain Proceedings............................................... 23
4.5 Brokers or Finders................................................ 23
4.6 Status of Buyer Stock............................................. 23
4.7 SEC Compliance.................................................... 23
4.8 Buyer Intentions.................................................. 23
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE.......................... 24
5.1 Access and Investigation.......................................... 24
5.2 Operation of the Business of the Company.......................... 24
5.3 Negative Covenant................................................. 24
5.4 Required Approvals................................................ 24
5.5 Notification...................................................... 24
5.6 Payment of Indebtedness by Related Persons........................ 25
5.7 No Negotiation.................................................... 25
5.8 Redemption of Shares.............................................. 25
5.9 Liabilities and Expenses.......................................... 25
5.10 Best Efforts...................................................... 25
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE............................ 25
6.1 Approvals of Governmental Bodies.................................. 25
6.2 Best Efforts...................................................... 25
6.3 Stock Plan........................................................ 25
7. CONDITIONS PRESENT TO BUYER'S OBLIGATION TO CLOSE................... 25
7.1 Accuracy of Representations....................................... 25
7.2 Sellers' Performance.............................................. 26
7.3 Consents.......................................................... 26
7.4 Additional Documents.............................................. 26
7.5 No Proceedings.................................................... 26
7.6 No Claim Regarding Stock Ownership or Sale of Proceeds............ 26
7.7 No Prohibition.................................................... 26
7.8 No Material Adverse Change........................................ 27
7.9 Completion of Redemption.......................................... 27
7.10 Resolution of Proceedings......................................... 27
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE................ 27
8.1 Accuracy of Representations....................................... 27
8.2 Buyer's Performance............................................... 27
8.3 Consents.......................................................... 27
8.4 Additional Documents.............................................. 27
8.5 No Injunction..................................................... 27
9. TERMINATION......................................................... 28
9.1 Termination Events................................................ 28
9.2 Effect of Termination............................................. 28
10. INDEMNIFICATION; REMEDIES........................................... 28
10.1 Survival; Right of Indemnification Not Affected By Knowledge...... 28
10.2 Indemnification and Payment of Damages By Seller.................. 28
10.3 Indemnification and Payment of Damages By Buyer................... 29
10.4 Time Limitations.................................................. 29
10.5 Procedure for Indemnification-Third Party Claims.................. 30
10.6 Procedure for Indemnification-Other Claims........................ 31
10.7 Limits on Indemnification......................................... 38
10.8 Other Limitations on Indemnification.............................. 38
11. GENERAL PROVISIONS.................................................. 31
11.1 Expenses.......................................................... 31
11.2 Public Announcements.............................................. 31
11.3 Confidentiality................................................... 32
11.4 Notices........................................................... 32
11.5 Further Assurances................................................ 33
11.6 Waiver............................................................ 33
11.7 Nonsolicitation Covenant.......................................... 33
11.8 Entire Agreement and Modification................................. 33
11.9 Disclosure Schedule............................................... 33
11.10 Assignments, Successors and No Third-Party Rights................. 34
11.11 Severability...................................................... 34
11.12 Section Headings, Construction.................................... 34
11.13 Time of Essence................................................... 34
11.14 Governing Law..................................................... 34
11.15 Jurisdiction, Waiver of Jury Trial................................ 34
11.16 Counterparts...................................................... 35
Page 1
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
August 16, 2002 (the "Effective Date"), by and among SECOND BANCORP
INCORPORATED, an Ohio corporation ("Buyer"), WILLIAM R. HERZOG, an individual
("Herzog") and GEORGE E. STOUFFER, JR., an individual ("Stouffer" and, together
with Herzog, collectively referred to as "Sellers").
RECITALS
WHEREAS, Sellers are the owners of all of the issued and outstanding
shares (the "SH Insurance Shares") of the capital stock of Stouffer-Herzog
Insurance Agency, Inc., an Ohio corporation ("SH Insurance"), and all of the
issued and outstanding shares (the "SH Financial Shares and, together with the
SH Insurance Shares, collectively referred to as the "Shares") of the capital
stock of Stouffer-Herzog Financial Services Agency, Inc., an Ohio corporation
("SH Financial" and, together with SH Insurance, collectively referred to as the
"Company" or the "Companies"); and
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, the
Shares for the consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. DEFINITIONS
The following terms when used in this Agreement shall, except where the
context otherwise requires, have the following respective meanings:
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section 3.8.
"APPLICABLE CONTRACT" means any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become subject to any
obligation or liability, or (c) by which the Company or any of the assets is or
may become bound.
"BALANCE SHEET" shall have the meaning set forth in Section 2.4.
"BEST EFFORTS" means the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible.
"BREACH" means (a) any inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim (by any Person) or other occurrence or circumstance
that is or was inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any such inaccuracy,
breach, failure, claim, occurrence or circumstance.
"BUILDING" shall mean the building located at 4230 Lake Avenue, Ashtabula, Ohio.
"BUYER" shall have the meaning set forth in the first paragraph of this
Agreement.
"BUYER STOCK" means no par value, voting common stock of Buyer, valued at its
average closing price for the twenty trading days immediately preceding the ten
calendar days before the Effective Date of this Agreement.
Page 2
"CLOSING" shall have the meaning set forth in Section 2.3.
"CLOSING DATE," means the date and time as of which the Closing actually takes
place.
"COMPANY" shall have the meaning set forth in the Recitals of this Agreement.
"COMPETING BUSINESS" shall have the meaning set forth in Section 3.25.
"CONSENT," means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" means all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery and performance of the Employment
Agreements;
(c) the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise
of control over the Company.
"CONTRACT" means any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DAMAGES" shall have the meaning set forth in Section 10.2.
"DISCLOSURE SCHEDULE" means the disclosure schedule delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"EFFECTIVE DATE" shall have the meaning set forth in the Recitals of this
Agreement.
"EMPLOYMENT AGREEMENTS" shall have the meaning set forth in Section 2.4(a)(iii).
"ENCUMBRANCE" means any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"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.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"FACILITIES" means any real property, leaseholds or other interests currently or
formerly owned or operated by the Company and any buildings, plants, structures,
or equipment (including motor vehicles) currently or formerly owned, occupied or
operated by the Company.
Page 3
"GAAP" means generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared and which shall
be, unless otherwise specified herein, the accounting standards of Buyer.
"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:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"HOLDBACK PORTION" shall have the meaning set forth in Section 2.2.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED PERSONS" shall have the meaning set forth in Section 10.2.
"INSURANCE RELATIONSHIPS" shall have the meaning set forth in Section 3.9(a).
"INTELLECTUAL PROPERTY" means all patents, copyrights (published or
unpublished), registered trademarks, service marks, applications for any of the
foregoing, trade names, logos, know-how, trade secrets, confidential
information, customer identities and lists, revenues from customers' accounts,
customer risk requirements and characteristics, key contact personnel, financial
data and performance, payroll, policy expiration dates, policy terms, conditions
and rates, information about prospective customers, information about methods of
soliciting business and marketing programs, information about specialized
insurance markets, software, technical information, data, process technology,
plans, drawings, and blue prints owned, used, or licensed by the Company as
licensee or licensor.
"IRC" 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.
"IRS" means the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE" means actual awareness of such fact or other matter or reasonably
should have been after reasonable investigation and inquiry into the matter in
question. Knowledge of a corporation shall include Knowledge of any director,
officer or managerial employee of Company, but not of any other person.
Page 4
"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.
"LICENSES" shall have the meaning set forth in Section 3.9(b).
"MARSH" means Marsh, Berry & Company, Inc.
"NET WORTH ADJUSTMENT" shall have the meaning set forth in Section 2.5(b).
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"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.
"ORDINARY COURSE OF BUSINESS" with respect to action taken by a Person means:
(a) such action consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action that is not required to be authorized by the board
of directors of such Person (or by any Person or group of
Persons exercising similar authority) and is not required to
be specifically authorized by the parent company (if any) of
such Person; and
(c) such action that is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising
similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same
line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" means:
(a) the articles or certificate of incorporation and the bylaws of
a corporation;
(b) the partnership agreement and any statement of partnership of
a general partnership;
(c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership;
(d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and
(e) 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.
"PLAN" shall have the meaning set forth in Section 3.13.
Page 5
"PROCEEDING," means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Person, Governmental Body or arbitrator.
"PROPRIETARY RIGHTS AGREEMENT" shall have the meaning set forth in Section
3.20(b).
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"REDEMPTION" shall have the meaning set forth in Section 5.8.
"RELATED PERSON" with respect to a particular individual means:
(a) each other member of such individual's family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's family;
(c) any Person in which such individual or members of such
individual's family hold (individually or in the aggregate) a
material interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's family serves as a director,
officer, partner, executor, or trustee (or in a similar
capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by or is directly or indirectly under
common control with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves
as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "FAMILY" of an individual includes (i)
the individual, (ii) the individual's spouse (and former spouses), (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "MATERIAL INTEREST" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities
or other voting interests representing at least 10% of the outstanding voting
power of a Person or equity securities or other equity interests representing at
least 10% of the outstanding equity securities or equity interests in a Person.
"REPRESENTATIVE" means, with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor or other representative of such
Person, including legal counsel, accountants and financial advisors.
"SEC DOCUMENTS" shall have the meaning set forth in Section 4.7.
Page 6
"SECURITIES ACT" means the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" shall have the meaning set forth in the first paragraph of this
Agreement.
"SHARES" shall have the meaning set forth in the Recitals of this Agreement.
"SUBSIDIARY" means, with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"TANGIBLE NET WORTH" means total assets excluding total intangible assets minus
total liabilities, determined in accordance with GAAP and in a manner consistent
with the Balance Sheet.
"TAX RETURN" means any return (including any information return), report,
statement, schedule, notice, form, 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.
"THREATENED" means a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares. Subject to the terms and conditions of this Agreement, at
the Closing, Sellers shall sell and transfer the Shares to Buyer free and clear
of all Encumbrances, and Buyer shall purchase the Shares from Sellers.
2.2 Purchase Price.
(a) The purchase price (the "PURCHASE PRICE") for the Shares will
be __________ shares of Buyer Stock representing a value of
$1,931,157.59, payable as follows: (i) _____________ shares of
Buyer Stock at Closing; (ii) ____________ shares of Buyer
Stock on the first anniversary of the Closing; (iii)
____________ shares of Buyer Stock on the second anniversary
of the Closing; and (iv) _____________ shares of Buyer Stock
on the third anniversary of the Closing (the amounts referred
in paragraphs (ii), (iii) and (iv) above are collectively
referred to as the "HOLDBACK PORTION"). Sellers shall be
entitled to receive dividends, participate in
recapitalizations, vote and realize appreciation on the
Holdback Portion. In the event either Seller voluntarily
resigns or retires from the Company prior to the third
anniversary date of this Agreement, such Seller shall
immediately forfeit his proportionate share of the
undistributed amount of the Holdback Portion, without
proration for any partial year. In the event of death,
disability or termination by the Company for any reason other
than "Cause" (as defined in the Employment Agreements) prior
to the third anniversary date of this Agreement, such Seller
shall remain entitled to receive all of his undistributed
portion of the Holdback Portion. Notwithstanding anything
herein to the contrary, payments of the Holdback Portion shall
be subject to Section 7.10 of the Agreement.
Page 7
(b) The shares of Buyer Stock to be issued to Sellers pursuant to
Section 2 shall be characterized as "restricted securities"
for purposes of Rule 144 under the Securities Act, and any
certificate representing any such shares shall bear a legend
identical or similar in effect to the following legend
(together with any other legend or legends required by
applicable state securities laws or otherwise):
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, IN
RELIANCE UPON CERTAIN EXEMPTIVE PROVISIONS OF SAID ACTS. SAID SECURITIES
CANNOT BE SOLD OR TRANSFERRED WITHOUT SUCH REGISTRATION UNLESS, IN THE
OPINION OF COUNSEL TO THE ISSUER, AN EXEMPTION FROM SUCH REGISTRATION IS
THEN AVAILABLE."
(c) Notwithstanding any other provision of this Agreement, each
Seller who would otherwise have been entitled to receive a
fraction of a share of Buyer Stock (after taking into account
all certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Buyer Stock. No such holder
will be entitled to dividends, voting rights or any other
rights as a shareholder in respect of any such fractional
shares.
2.3 Closing. The purchase and sale (the "CLOSING") provided for in this
Agreement will take place at the offices of Buyer's counsel at 2100 Bank One
Center, 600 Superior Avenue E., Cleveland, Ohio, at 10:00 a.m. (local time) on
August 30, 2002 or such other time and location as the parties may designate.
Subject to the provisions of Section 9, failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section 2.3 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
2.4 Closing Obligations. At the Closing:
(a) Sellers shall deliver to Buyer:
(i) certificates representing the Shares, duly endorsed
(or accompanied by duly executed stock powers) for
transfer to Buyer;
(ii) each of the Consents identified in Schedule 3.2 of
the Disclosure Schedule;
(iii) employment agreements in the form of Exhibit
2.4(a)(iii), executed by Sellers and each of the
persons set forth on Schedule 2.4 of the Disclosure
Schedule (collectively, "EMPLOYMENT AGREEMENTS");
(iv) a certificate executed by Sellers, dated the Closing
Date, certifying as to matters set forth in Sections
7.1, 7.2 and 7.8 (giving full effect to any
supplements to the Disclosure Schedule that were
delivered by Sellers to Buyer prior to the Closing
Date in accordance with Section 5.5);
Page 8
(v) the articles of incorporation and bylaws of each of
the Companies, certified by the Secretary or
Assistant Secretary of each of the Companies (dated
as of the Closing Date);
(vi) a Certificate of Good Standing for each of the
Companies from the State of Ohio (dated as of a
recent date); and
(vii) each of the documents identified in Section 7.4.
(b) Buyer shall deliver to Sellers:
(i) certificates representing the Buyer Stock, delivered
in a whole number of shares as follows:
Herzog ___________ shares
Stouffer ___________ shares
(ii) the Employment Agreements, executed by the Company;
(iii) a certificate executed by Buyer, dated the Closing
Date, certifying as to matters set forth in Sections
8.1 and 8.2; and
(iv) each of the documents identified in Section 8.4.
2.5 Purchase Price Adjustment Procedure and Amount.
(a) Prior to the Effective Date, Sellers shall have delivered an
unaudited balance sheet of each of the Companies dated as of
July 31, 2002 (including the notes thereto, collectively the
"BALANCE SHEET"), the form of which shall be subject to
Buyer's prior review and approval, showing the Companies'
aggregate Tangible Net Worth to be at least $108,100.00. The
Balance Sheet will be used in computing the Net Worth
Adjustment.
(b) The Purchase Price shall be adjusted by the Net Worth
Adjustment. The Net Worth Adjustment (which may be a positive
or negative number) will be equal to (i) the Company's
Tangible Net Worth, minus (ii) $108,100.00. The Net Worth
Adjustment shall reflect any and all costs paid by the Company
in connection with the consummation of the Contemplated
Transactions (including, without limitation, any and all
legal, accounting and other fees, all plan termination costs,
all broker costs, and all other costs of any nature incurred
to allow Sellers to consummate these transactions).
(c) Following the final determination of any Net Worth Adjustment
and on the Closing Date (i) Buyer shall issue additional
shares of Buyer Stock equivalent to the value of the Net Worth
Adjustment if the Net Worth Adjustment is a positive number;
or (ii) withhold shares of Buyer Stock equivalent to the value
of the Net Worth Adjustment if the Net Worth Adjustment is a
negative number.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant, jointly and severally, to Buyer as
follows:
3.1 Organization and Good Standing.
Page 9
(a) Each of the Companies is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Ohio, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, and to
perform all its obligations under Applicable Contracts. Each
of the Companies is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of
the activities conducted by it, requires such qualification.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of the Company as currently in effect.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of Sellers, enforceable against Sellers in
accordance with its terms. Upon the execution and delivery by
Sellers of the Employment Agreements, the Employment
Agreements will constitute the legal, valid, and binding
obligations of Sellers, enforceable against Sellers in
accordance with their respective terms. Sellers have the
absolute and unrestricted right, power, authority and capacity
to execute and deliver this Agreement and the Employment
Agreements and to perform their obligations under this
Agreement and the Employment Agreements.
(b) Except as set forth in Schedule 3.2 of the Disclosure
Schedule, neither the execution and delivery of this Agreement
nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents
of the Company, or (B) any resolution adopted by the
board of directors or the stockholders of the
Company;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to
which the Company or either Seller, or any of the
assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the
Company or that otherwise relates to the business of,
or any of the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or
to become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or
other Governmental Body;
(vi) 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
Applicable Contract; or
Page 10
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets
owned or used by the Company.
(c) Except as set forth in Schedule 3.2 of the Disclosure
Schedule, no Seller or the Company is or will 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 Contemplated
Transactions.
3.3 Capitalization. The authorized equity securities of SH Insurance
consist of Two Hundred Fifty (250) shares of common stock, no par value, of
which One Hundred (100) shares are issued and outstanding and constitute the SH
Insurance Shares. After giving effect to the transactions contemplated in
Section 5.8, the number of issued and outstanding shares of SH Insurance shall
equal Ninety (90) shares. The authorized equity securities of SH Financial
consist of Seven Hundred Fifty (750) shares of common stock, no par value, of
which Fifty (50) shares are issued and outstanding and constitute the SH
Financial Shares. Sellers are and will be on the Closing Date the record and
beneficial owners and holders of the Shares, free and clear of all Encumbrances.
Other than a legend with respect to restrictions on transfer under the
Securities Act, no legend or other reference to any purported Encumbrance
appears upon any certificate representing equity securities of the Company. All
of the Shares have been duly authorized and validly issued and are fully paid
and nonassessable. Other than the Shares, there are no issued or outstanding
equity or other securities of the Company. There are no Contracts relating to
the issuance, sale or transfer of any equity securities, warrants, options or
other rights or securities of the Company. None of the Shares or any other
securities of the Company were issued in violation of the Securities Act or any
other Legal Requirement. The Company does not own, nor do they have any Contract
to acquire, any equity securities or other securities of any Person or any
direct or indirect equity or ownership interest in any other business.
3.4 Financial Statements. Sellers have delivered to Buyer unaudited
balance sheets of the Companies as of December 31 in each of the years 1999,
2000 and 2001, and for July 31, 2002, and the related unaudited and consolidated
statements of income, changes in stockholders' equity, and cash flows for each
of the calendar years then ended, together with the reports thereon. Such
financial statements are complete and correct and fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flows of the Companies as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP. The
financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. With respect to
each Company, no financial statements of any Person other than the Company are
required by GAAP to be included in the consolidated financial statements of the
Company.
3.5 Books and Records. The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Buyer, are complete and accurate and have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of the
Exchange Act, as amended (regardless of whether or not the Company are subject
to that Section), including the maintenance of an adequate system of internal
controls. The minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Company,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Company.
3.6 Title to Properties; Encumbrances. Schedule 3.6 of the Disclosure
Schedule contains a complete and accurate list of all real property, leaseholds,
or other interests therein owned by the Company. The Company owns (with good and
marketable title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that it purports to
own, including all of the properties and assets reflected in the Balance Sheet
(except for assets held under capitalized leases disclosed or not required to be
disclosed in Schedule 3.6 of the Disclosure Schedule). All material properties
and assets reflected in the Balance Sheet are free and clear of all Encumbrances
and are not, in the case of real property,
Page 11
subject to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Balance
Sheet as securing specified liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) liens for current taxes not yet due, and (c) with respect
to real property, (i) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of the Company, and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto.
3.7 Condition and Sufficiency of Assets. To the best of Sellers'
knowledge, the buildings, plants, structures, and equipment of the Company are
structurally sound, are in good operating condition and repair, and are adequate
for the uses to which they are being put, and none of such buildings, plants,
structures, or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The building, plants, structures and equipment of the Company are
sufficient for the continued conduct of the Company's businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 Accounts Receivable. All accounts receivable of the Company that
are reflected on the Balance Sheet or on the accounting records of the Company
as of the Closing Date (collectively, the "ACCOUNTS RECEIVABLE") represent or
will represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Balance
Sheet or on the accounting records of the Company as of the Closing Date (which
reserves are adequate and calculated consistent with past practice and, in the
case of the reserve as of the Closing Date, will not represent a material
adverse change in the composition of such Accounts Receivable in terms of
aging). Subject to such reserves, each of the Accounts Receivable either has
been or will be collected in full, without any set-off, within ninety days after
the day on which it first becomes due and payable. There is no contest, claim or
right of set-off, other than returns in the Ordinary Course of Business, under
any Contract with any obligor of an Accounts Receivable relating to the amount
or validity of such Accounts Receivable. Schedule 3.8 of the Disclosure Schedule
contains a complete and accurate list of all Accounts Receivable as of the date
of the Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 Company Appointments And Licensing
(a) Schedule 3.9(a) of the Disclosure Schedule sets forth all
insurance companies for which the Company within the past
three years has acted as agent or broker, whether such
relationship is active or inactive, and whether the Company
acts as agent or broker (the "INSURANCE RELATIONSHIPS"). No
Insurance Relationship through which the Company placed over
Fifty Thousand Dollars ($50,000.00) of premium dollars in the
most recent calendar year has been terminated or has been
Threatened to be terminated.
(b) Schedule 3.9(b) of the Disclosure Schedule sets forth all
resident and nonresident licenses to act as insurance agents,
brokers, risk managers or consultants held by the Company and
its employees, listed by jurisdiction (the "LICENSES"). The
Licenses are current and no License of material importance to
the operation of the Company has been Threatened to be
terminated.
3.10 No Undisclosed Liabilities. Except as set forth in Schedule 3.10
of the Disclosure Schedule, the Company has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the Balance Sheet date.
Page 12
3.11 Taxes.
(a) The Company has filed or caused to be filed (on a timely basis
since December 31, 1998) all Tax Returns that are or were
required to be filed by or with respect to any of them, either
separately or as a member of a group of corporations, pursuant
to applicable Legal Requirements. Sellers have delivered or
made available to Buyer copies of all such Tax Returns
relating to income or franchise taxes filed since December 31,
1998. The Company has paid, or made provision for the payment
of, all Taxes that have or may have become due pursuant to
those Tax Returns or otherwise, or pursuant to any assessment
received by Sellers or the Company, except such Taxes, if any,
as are listed in Schedule 3.11 of the Disclosure Schedule and
are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet.
(b) The charges, accruals and reserves with respect to Taxes on
the respective books of the Company are adequate (determined
in accordance with GAAP) and are at least equal to the
Company's liability for Taxes. There exists no proposed tax
assessment against the Company except as disclosed in the
Balance Sheet or in Schedule 3.11 of the Disclosure Schedule.
Except as set forth in Schedule 3.11 of the Disclosure
Schedule, there is no pending or Threatened audit of the Tax
Returns. All Taxes that the Company is or was required by
Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been
paid to the proper Governmental Body or other Person.
(c) All Tax Returns filed by (or that include on a consolidated
basis) the Company are true, correct and complete. There is no
tax sharing agreement that will require any payment by the
Company after the date of this Agreement.
3.12 No Material Adverse Change. Since December 31, 2001, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse change.
3.13 Employee Benefits. Schedule 3.13 of the Disclosure Schedule lists
each employee benefit plan subject to ERISA, maintained by the Company or to
which the Company contributes.
(a) ERISA Compliance. Each such employee benefit plan (and each
related trust, insurance contract, or fund) complies in form
and in operation in all material respects with the applicable
requirements of ERISA, the Code and other applicable laws.
(b) Reporting Compliance. All required reports and descriptions
have been filed or distributed appropriately with respect to
each such employee benefit plan.
(c) Payment Compliance. All contributions (including all employer
contributions and employee salary reduction contributions),
which are due, have been paid to each such employee benefit
plan, which is an employee pension benefit plan (within the
meaning of Section 3 of ERISA). Each such plan meets the
requirements of a "qualified plan" under Code Sec. 401(a) and
has received a favorable determination letter from the
Internal Revenue Service.
Page 13
(d) Plan Documentation. Sellers have furnished to Buyer correct
and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such employee benefit plan.
(e) No Prohibited Transactions. Neither any such employee benefit
plan, nor any trust created thereunder, nor any trustee or
administrator thereof, has engaged in a transaction which
might subject any of such plans, any such trust, or any
trustee or administrator thereof, or any party dealing with
such plans or any such trust, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code,
or to a penalty imposed by Title I, Schedule 5 of ERISA.
(f) No Multi-Employer Plans. The Company has never contributed,
nor has it ever been required to contribute to any
multi-employer Plan, nor does the Company have any material
liability under any multi-employer Plan.
3.14 Compliance with Legal Requirements, Governmental
Authorizations.
(a) Except as set forth in Schedule 3.14 of the Disclosure
Schedule:
(i) the Company is, and at all times since December 31,
1998 has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership
or use of any of its assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may
constitute or result in a violation by the Company
of, or a failure on the part of the Company to comply
with, any Legal Requirement, or (B) may give rise to
any obligation on the part of the Company to
undertake, or to bear all or any portion of the cost
of, any remedial action of any nature;
(iii) the Company has not received, at any time since
December 31, 1998, any notice or other communication
(whether oral or written) from any Governmental Body
or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B)
any actual, alleged, possible, or potential
obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iv) neither of the Sellers, nor any insurance agent
employed by the Company, have, at any time in the
past five (5) years, had any license denied,
suspended or revoked or had imposed upon him any
fine, penalty or other disciplinary action.
(b) Each Company holds all Governmental Authorizations necessary
to permit the Company to lawfully conduct and operate its
business in the manner it currently conducts and operates such
business and to permit the Company to own and use its assets
in the manner in which it currently owns and uses such assets.
(i) the Company is, and at all times since December 31,
1998 has been, in full compliance with all of the
terms and requirements of each Governmental
Authorization;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a
violation of or a failure to comply with any term or
requirement of any Governmental
Page 14
Authorization, or (B) result directly or indirectly
in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification
to, any Governmental Authorization;
(iii) the Company has not received, at any time since
December 31, 1998, any notice or other communication
(whether oral or written) from any Governmental Body
or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or
failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of,
or modification to any Governmental Authorization;
and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations have been
duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required
to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis
with the appropriate Governmental Bodies.
3.15 Legal Proceedings, Orders.
(a) Except as set forth in Schedule 3.15 of the Disclosure
Schedule, there is no pending Proceeding:
(v) that has been commenced by or against the Company or
that otherwise relates to or may affect the business
of, or any of the assets owned or used by, the
Company; or
(vi) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated
Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Sellers
have delivered to Buyer copies of all pleadings, correspondence and other
documents relating to each Proceeding listed in Schedule 3.15 of the Disclosure
Schedule. The Proceedings listed in Schedule 3.15 of the Disclosure Schedule
will not have a material adverse effect on the business, operations, assets,
condition or prospects of the Company.
(b) Except as set forth in Schedule 3.15 of the Disclosure
Schedule:
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject;
(ii) neither Seller is subject to any Order that relates
to the business of, or any of the assets owned or
used by, the Company; and
(iii) to the Knowledge of Sellers and the Company, no
officer, director, agent, or employee of the Company
is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or
continuing any conduct, activity, or practice
relating to the business of the Company.
(c) Except as set forth in Schedule 3.15 of the Disclosure
Schedule:
Page 15
(i) the Company is, and at all times since December 31,
1998 has been, in full compliance with all of the
terms and requirements of each Order to which it, or
any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply
with any term or requirement of any Order to which
the Company, or any of the assets owned or used by
the Company, is subject; and
(iii) the Company has not received, at any time since
December 31, 1998, any notice or other communication
(whether oral or written) from any Governmental Body
or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to
comply with, any term or requirement of any Order to
which the Company, or any of the assets owned or used
by the Company, is or has been subject.
3.16 Absence of Certain Changes and Events. Except as set forth in
Schedule 3.16 of the Disclosure Schedule, since the date of the Balance Sheet,
the Company has conducted its businesses only in the Ordinary Course of Business
and there has not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of
capital stock of the Company; issuance of any equity or debt
security; grant of any registration rights; purchase,
redemption, retirement, or other acquisition by the Company of
any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries,
or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or
entry into any employment, severance, or similar Contract with
any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan
for or with any employees of the Company;
(e) damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, materially
and adversely affecting the properties, assets, business,
financial condition, or prospects of the Company, taken as a
whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative agency, joint venture, credit, settlement, or
similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Company of
at least $20,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, dividend, or other disposition of any asset
or property of the Company or mortgage, pledge, or imposition
of any lien or other encumbrance on any material asset or
property of the Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
Page 16
(h) cancellation or waiver of any claims or rights with a value to
the Company in excess of $20,000;
(i) material change in the accounting methods used by the Company;
(j) merger or consolidation with, or any capital investment in,
any loan to, any advance to, or acquisition of the securities
or assets of, any other Person;
(k) cancellation, compromise, waiver or release of any right or
claim (or series of related rights or claims) involving more
than $20,000 and outside the Ordinary Course of Business,
consistent with past practice;
(l) settlement or agreement to settle any Proceeding relating to
the assets or business of the Company, except with respect to
claims having a value of less than $20,000 individually or in
the aggregate; or
(m) agreement, whether oral or written, by the Company to do any
of the foregoing.
3.17 Contracts; No Defaults.
(a) Sellers have delivered or made available to Buyer true and
complete copies of any and all material Contracts. Except as
set forth in Schedule 3.17(a), the Company is not a party to:
(i) any Applicable Contract that involves performance of
services or delivery of goods or materials by the
Company of an amount or value in excess of $10,000
and outside the Ordinary Course of Business;
(ii) any Applicable Contract that involves performance of
services or delivery of goods or materials to the
Company of an amount or value in excess of $10,000
and outside the Ordinary Course of Business;
(iii) any Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves
expenditures or receipts of the Company in excess of
$10,000;
(iv) any licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or
other intellectual property, including agreements
with current or former employees, consultants, or
contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property
Assets;
(v) any collective bargaining agreement and other
Applicable Contract to or with any labor union or
other employee representative of a group of
employees;
(vi) any joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by the Company
with any other Person;
(vii) any Applicable Contract containing covenants that in
any way purport to restrict the business activity of
the Company or any Affiliate of the Company or limit
the freedom of the Company or any Affiliate of the
Company to engage in any line of business or to
compete with any Person;
Page 17
(viii) any Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits,
other than direct payments for goods outside the
Ordinary Course of Business;
(ix) any power of attorney that is currently effective and
outstanding;
(x) any Applicable Contract entered into other than in
the Ordinary Course of Business that contains or
provides for an express undertaking by the Company to
be responsible for consequential damages;
(xi) any Applicable Contract for capital expenditures in
excess of $10,000; and
(xii) any written warranty, guaranty and or other similar
undertaking with respect to contractual performance
extended by the Company other than in the Ordinary
Course of Business.
Schedule 3.17(a) of the Disclosure Schedule sets forth reasonably complete
details concerning such Contracts, including the parties to the Contracts and
the amount of the remaining commitment of the Company under the Contracts.
(b) Except as set forth in Schedule 3.17(b) of the Disclosure
Schedule:
(i) neither Seller (and no Related Person of either
Seller) has or may acquire any rights under, and
neither Seller has or may become subject to any
obligation or liability under, any Contract that
relates to the business of, or any of the assets
owned or used by, the Company; and
(ii) to the Knowledge of Sellers and the Company, no
officer, director, agent, employee, consultant or
contractor of the Company is bound by any Contract
that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor
to (A) engage in or continue any conduct, activity,
or practice relating to the business of the Company,
or (B) assign to the Company or to any other Person
any rights to any invention, improvement, or
discovery.
(c) Each and every material Contract is in full force and effect
and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 3.17(d) of the Disclosure
Schedule:
(i) the Company is, and at all times since December 31,
1998 has been, in compliance with all applicable
terms and requirements of each Contract under which
the Company has or had any obligation or liability or
by which the Company or any of the assets owned or
used by the Company is or was bound;
(ii) to Sellers' and the Company's Knowledge, each other
Person that has or had any obligation or liability
under any Contract under which the Company has or had
any rights is, and at all times since December 31,
1998 has been, in compliance with all applicable
terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may
contravene, conflict with, or result in a violation
or breach of, or give the Company or other 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
Applicable Contract; and
Page 18
(iv) the Company has not given to or received from any
other Person, at any time since December 31, 1998,
any notice or other communication (whether oral or
written) regarding any actual, alleged, possible, or
potential violation or breach of, or default under,
any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or
payable to the Company under any material current or completed
Contracts with any Person and, to the Knowledge of Sellers and
the Company, no such Person has made written demand for such
renegotiation.
(f) The Contracts relating to the sale, design or provision of
products or services by the Company have been entered into in
the Ordinary Course of Business and have been entered into
without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal
Requirement.
3.18 Insurance.
(a) Schedule 3.18 (a) of the Disclosure Schedule provides detailed
summaries of all policies of insurance to which the Company is
a party or under which the Company, or any director of the
Company, is or has been covered at any time within the three
years preceding the date of this Agreement
(b) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance
summarized in Schedule 3.18(a) of the Disclosure
Schedule;
(ii) true and complete copies of all pending applications
for policies of insurance; and
(iii) any statement by the auditor of the Company's
financial statements with regard to the adequacy of
such entity's coverage or of the reserves for claims.
(c) Schedule 3.18(c) of the Disclosure Schedule describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established
thereunder; and
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by
the Company.
(d) Schedule 3.18(d) of the Disclosure Schedule sets forth, by
year, for the current policy year and each of the three
preceding policy years:
(i) a summary of the loss experience under each policy;
and
(ii) a statement describing the loss experience for all
claims that were self-insured, including the number
and aggregate cost of such claims.
(e) Except as set forth on Schedule 3.18(e) of the Disclosure
Schedule:
Page 19
(i) All policies to which the Company is a party that
provide coverage to either Seller, the Company, or
any director, officer or employee of the Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially
sound and reputable;
(C) taken together, provide adequate insurance
coverage for the assets and the operations
of the Company for all risks normally
insured against by a Person carrying on the
same business or businesses as the Company
for all risks to which the Company is
normally exposed;
(D) are sufficient for compliance with all Legal
Requirements and Contracts to which the
Company is a party or by which any of them
is bound;
(E) will continue in full force and effect
following the consummation of the
Contemplated Transactions; and
(F) do not provide for any retrospective premium
adjustment or other experienced-based
liability on the Schedule of the Company.
(ii) Neither Sellers nor the Company has received (A) any
refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (B) any
notice of cancellation or any other indication that
any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of
any policy is not willing or able to perform its
obligations thereunder.
(iii) The Company has paid all premiums due, and has
otherwise performed all of its respective
obligations, under each policy to which the Company
is a party or that provides coverage to the Company
or director thereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
3.19 Absence of Environmental Liabilities. To the best of Sellers'
knowledge, the Company is not in violation of any federal, state or local law,
ordinance or regulation relating to industrial hygiene, worker safety,
environmental hazardous materials or waste or toxic materials on, under or about
any Facility, including soil and waste water conditions, and has not received
any notice of any such violation. The Company has not received from any
Governmental Body or third party any requests for information, notices of claim,
demand letters or other notification relating to any environmental condition.
3.20 Employees.
(a) Schedule 3.20 of the Disclosure Schedule contains a complete
and accurate list of the following information for each
employee or director of the Company, including each employee
on leave of absence or layoff status: employer; name; job
title; current compensation paid or payable and any change in
compensation since December 31, 2001.
(b) No employee or director of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including
any confidentiality, noncompetition, or proprietary rights
agreement, between such employee or director and any Person,
other than the Company ("PROPRIETARY RIGHTS AGREEMENT") that
in any way adversely affects or will affect (i) the
performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its
business, including any Proprietary Rights Agreement with
Sellers or the Company by any such employee or director. To
Sellers'
Page 20
Knowledge, no director, officer or other key employee of the
Company intends to terminate his employment with the Company.
(c) Schedule 3.20 of the Disclosure Schedule also contains a
complete and accurate list of the following information for
each retired employee or director of the Company, or their
dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option
election, retiree medical insurance coverage, retiree life
insurance coverage, and other benefits.
3.21 Labor Relations; Compliance. The Company is not and, since
December 31, 1998, has not been party to any collective bargaining or other
labor Contract. The Company complied with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. The Company is
not liable for the payment of any compensation, damages, taxes, fines, penalties
or other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirement. Except as set forth in Schedule 3.21 of the
Disclosure Schedule, there is no pending or Threatened claim any present or
former employee relating to employment or the terms and conditions thereof.
3.22 Intellectual Property. With respect to Intellectual Property, the
documentation relating to such Intellectual Property is current, accurate, and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any
individual. Seller and the Company have taken all reasonable precautions to
protect the secrecy, confidentiality and value of their Intellectual Property.
The Company has good title and an absolute (but not necessarily exclusive) right
to use, free and clear of all Encumbrances, the Intellectual Property and will
continue to have such rights after consummation of the Contemplated
Transactions. All such Intellectual Property is valid and subsisting. The
Intellectual Property is not part of the public knowledge or literature, and, to
Seller' Knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person or to the detriment of the Company. No Intellectual
Property is subject to any adverse claim or has been challenged or Threatened in
any way.
3.23 Certain Payments. Since December 31, 1998, neither Sellers, the
Company nor any director, officer, agent, or employee of the Company, or to
Sellers' Knowledge any other Person associated with or acting for or on behalf
of the Company, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any Affiliate of the Company, or (iv) in violation of any Legal Requirement, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
3.24 Disclosure.
(a) No representation or warranty of Sellers in this Agreement and
no statement in the Disclosure Schedule omits to state a
material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were
made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to
make the statements therein or in this Agreement, in light of
the circumstances in which they were made, not misleading.
Page 21
(c) There is no fact known to either Seller that has specific
application to either Sellers or the Company (other than
general economic or industry conditions) and that materially
adversely affects or, as far as either Seller can reasonably
foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of
the Company that has not been set forth in this Agreement or
the Disclosure Schedule.
3.25 Relationships with Related Persons. Except as set forth in
Schedule 3.25 of the Disclosure Schedule, no Seller or any Related Person of
Sellers or of the Company has any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Company's businesses. No Seller or any Related Person of Sellers or of the
Company owns an equity interest or any other financial or profit interest in, a
Person that has (i) had business dealings or a material financial interest in
any transaction with the Company other than business dealings or transactions
conducted in the Ordinary Course of Business with the Company at substantially
prevailing market prices and on substantially prevailing market terms, or (ii)
engaged in competition with the Company with respect to any line of the products
or services of the Company (a "COMPETING BUSINESS") in any market presently
served by the Company except for less than one percent of the outstanding
capital stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set forth in
Schedule 3.25 of the Disclosure Schedule, no Seller or any Related Person of
Sellers or of the Company is a party to any Contract with, or has any claim or
right against, the Company.
3.26 Investment Matters.
(a) Sellers hereby acknowledge that Buyer intends the offer and
issuance of the Buyer Stock representing the Purchase Price
payable to Sellers to be exempt from registration under the
Securities Act and applicable state securities laws by virtue
of one or more exemptions from such registration, and that, as
a result, such Buyer Stock cannot be sold without registration
under the Securities Act and applicable state law or an
available exemption, and Sellers understand that only Buyer
can register the Buyer Stock, and Buyer is under no obligation
and does not otherwise plan or propose to do so.
(b) Each Seller hereby represents and warrants that:
(i) Such Seller is acquiring the Buyer Stock for his own
account, for investment, and not with a view for
resale, transfer or further distribution within the
meaning of Section 2(11) of the Securities Act;
(ii) Such Seller either alone or with his business, tax
and/or financial advisor(s) has sufficient knowledge
and experience in financial, tax, and business
matters to enable such Seller to evaluate the merits
and risks of investment in the Buyer Stock, and has
the ability to bear the economic risk of acquiring
the Buyer Stock; and
(iii) Such Seller has been supplied with, or had access to,
information to which a reasonable investor would
attach significance in making an investment decision
to acquire the Buyer Stock including, but not limited
to, the SEC Documents, and such Seller has had an
opportunity to ask questions of, and receive
information and answers from, Buyer concerning Buyer
and the Buyer Stock, and to assess and evaluate any
information supplied to such Seller. All questions
concerning Buyer and Buyer Stock have been answered
and all such information has been provided to the
full satisfaction of Seller.
(c) Each Seller hereby acknowledges that:
Page 22
(i) this Agreement and the Contemplated Transactions
involve complex tax and legal consequences for such
Seller, and such Seller is relying solely on the
advice of his own tax and legal advisors to evaluate
such consequences;
(ii) none of Buyer or its directors, officers, employees
or agents has made (or shall be deemed to have made)
any representations or warranties concerning the tax
or legal consequences of such transaction to such
Seller;
(iii) the Buyer Stock is not, and will not be, registered
under the Securities Act or any state securities laws
and cannot be resold without registration thereunder
or exemption therefrom; and
(iv) the certificates representing the unregistered Buyer
Stock to be delivered at the Closing shall bear
substantially the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE FEDERAL SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE, IN RELIANCE UPON CERTAIN
EXEMPTIVE PROVISIONS OF SAID ACTS. SAID
SECURITIES CANNOT BE SOLD OR TRANSFERRED
WITHOUT SUCH REGISTRATION UNLESS, IN THE
OPINION OF COUNSEL TO THE ISSUER, AN
EXEMPTION FROM SUCH REGISTRATION IS THEN
AVAILABLE."
3.27 Brokers or Finders. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3.28 Bank Accounts. Schedule 3.28 of the Disclosure Schedule sets forth
a complete and accurate list of the names and locations of each Bank or other
financial institution at which the Company has an account (giving the account
numbers) or safe deposit box and the names of all Persons authorized to draw
thereon or have access thereto, and the names of all Persons, if any, now
holding powers of attorney or comparable delegation of authority from the
Company and a summary statement thereof.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Ohio.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance
with its terms. Upon the execution and delivery by Buyer of
the Employment Agreements (collectively, the "BUYER'S CLOSING
DOCUMENTS"), the Buyer's Closing Documents will constitute the
legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms. Buyer
has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
Page 23
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or
performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or
the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which
Buyer may be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be required to
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 Contemplated
Transactions.
4.3 Investment Intent. Buyer is acquiring the Shares for its own
account, for investment, and not with a view to resale, transfer or further
distribution within the meaning of Section 2(11) of the Securities Act.
4.4 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened.
4.5 Brokers or Finders. Buyer and its officers and agents have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement to any Person other than Marsh and will indemnify and hold Sellers
harmless from any such payment alleged to be due by or through Buyer as a result
of the action of Buyer or its officers or agents.
4.6 Status of Buyer Stock. The shares of Buyer Stock to be issued to
Sellers pursuant to this Agreement will, when so issued, be duly and validly
authorized and issued, fully paid and nonassessable.
4.7 SEC Compliance. Buyer has filed with the SEC and has delivered or
made available to each of the Sellers, all forms, reports, schedules, statements
and other documents required to be filed by it since January 1, 2002, under the
Securities Act and the Exchange Act (such documents, as amended from time to
time, being the "SEC DOCUMENTS"). Each SEC Document, including without
limitation any financial statements or schedules included therein, (a) did not,
at the time filed (or, in the case of any SEC Document that has been amended
prior to the date hereof, at the time of the filing of such amendment), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (b) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act.
4.8 Buyer Intentions. Buyer has no plan or intention to reacquire any
of the Buyer Stock issued in this transaction. Buyer has no plan or intention to
liquidate or merge Company, except in the ordinary course of business. Following
the transaction, Buyer presently intends to continue the historic business of
Company.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
Page 24
5.1 Access and Investigation. Between the Effective Date and the
Closing Date, Sellers shall, and shall cause the Company and its Representatives
to, (a) afford Buyer and its Representatives full and free access to the
Company's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data, (b) furnish Buyer and its
Representatives with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (c) furnish
Buyer and its Representatives with such additional financial, operating, and
other data and information as Buyer may reasonably request.
5.2 Operation of the Business of the Company. Between the Effective
Date and the Closing Date, Sellers shall, and shall cause the Company to:
(a) conduct the business of the Company only in the Ordinary
Course of Business;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of
the current officers, employees, and agents of the Company,
and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others
having business relationships with the Company;
(c) confer with Buyer concerning operational matters of a material
nature; and
(d) otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of the Company.
5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers
shall not, and shall cause the Company not to, without the prior consent of
Buyer, take any affirmative action, or fail to take any reasonable action within
their or its control, as a result of which any of the changes or events listed
in Section 3.15 is likely to occur.
5.4 Required Approvals. As promptly as practicable after the date of
this Agreement, Sellers shall, and shall cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Sellers shall, and shall cause the Company to, (a) cooperate with Buyer
with respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in Schedule 4.2.
5.5 Notification. Between the Effective Date and the Closing Date, each
Seller shall promptly notify Buyer in writing if such Seller or the Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any of Sellers' representations and warranties as of the date of this Agreement,
or if such Seller or the Company becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Disclosure Schedule if the
Disclosure Schedule were dated the date of the occurrence or discovery of any
such fact or condition, Sellers shall promptly deliver to Buyer a supplement to
the Disclosure Schedule specifying such change; provided that no information
provided pursuant to this Section 5.5 shall be deemed to cure any breach of any
representation, warranty or covenant made in this Agreement. During the same
period, each Seller will promptly notify Buyer of the occurrence of any Breach
of any covenant of Sellers in this Section 5 or of the occurrence of any event
that may make the satisfaction of the conditions in Section 7 impossible or
unlikely.
Page 25
5.6 Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, Sellers shall cause all indebtedness owed to the
Company by either Seller or any Related Person of either Seller to be paid in
full prior to Closing.
5.7 No Negotiation. Until such time as this Agreement is terminated
pursuant to Section 9, Sellers shall not, and shall cause the Company and each
of its Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company. Sellers shall immediately notify Buyer of any
contact from any Person regarding the foregoing.
5.8 Redemption of Shares. On or before the Closing Date but immediately
prior to the Closing, SH Insurance shall redeem (a) 7.26 shares of SH Insurance
Shares from Sellers in consideration for the transfer of three (3) life
insurance policies of Francis A. Herzog to Sellers, and (b) 2.74 shares of SH
Insurance Shares from Sellers in consideration for the transfer of the Company's
interest in the Building to Sellers (collectively referred to as the
"Redemption").
5.9 Liabilities and Expenses. Between the Effective Date and the
Closing Date, Sellers shall cooperate, upon Buyer's request, to reflect all
liabilities in such a manner as not to effect Buyer's earnings after the
5.10 Best Efforts. Between the Effective Date and the Closing Date,
Sellers shall use their Best Efforts to cause the conditions in Sections 7 and 8
to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Approvals of Governmental Bodies. As promptly as practicable after
the date of this Agreement, Buyer shall, and shall cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by them
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, Buyer shall, and shall cause each Related Person to,
cooperate with Sellers with respect to all filings that Sellers are required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(ii) cooperate with Sellers in obtaining all consents identified in Schedule 3.2
of the Disclosure Schedule; provided that this Agreement will not require Buyer
to dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.2 Best Efforts. Except as set forth in the proviso to Section 6.1,
between the date of this Agreement and the Closing Date, Buyer shall use its
Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
6.3 Stock Plan. Bradley J. Korb shall be eligible to participate in
Buyer's 1997 Restricted Stock Plan, as amended, in accordance with the terms and
conditions contained therein.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived in writing by Buyer, in whole or in part):
7.1 Accuracy of Representations.
Page 26
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these
representations and warranties (considered individually), must
have been accurate in all material respects as of the date of
this Agreement, and must be accurate in all material respects
as of the Closing Date as if made on the Closing Date, without
giving effect to any supplement to the Disclosure Schedule.
(b) Each of Sellers' representations and warranties in Sections
3.3, 3.4, 3.12, and 3.24 must have been accurate in all
respects as of the date of this Agreement, and must be
accurate in all respects as of the Closing Date as if made on
the Closing Date, without giving effect to any supplement to
the Disclosure Schedule.
7.2 Sellers' Performance.
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually),
must have been duly performed and complied with in all
material respects.
(b) Each document and instrument required to be delivered pursuant
to Section 2.4 (a) must have been delivered.
7.3 Consents. Each of the Consents identified in Schedule 3.2 of the
Disclosure Schedule, and each Consent identified in Schedule 4.2, must have been
obtained and must be in full force and effect.
7.4 Additional Documents. Each of the following documents must have
been delivered to Buyer:
(a) an opinion of Andrews & Pontius, LLC, counsel to Sellers,
dated the Closing Date, in the form of Exhibit 7.4(a); and
(b) such other documents as Buyer may reasonably request for the
purpose of (i) evidencing the accuracy of any of Sellers'
representations and warranties, (ii) evidencing the
performance by either Seller of, or the compliance by either
Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iii) evidencing
the satisfaction of any condition referred to in this Section
7, or (iv) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
7.5 No Proceedings. Since the Effective Date, there must not have been
commenced or Threatened against Buyer, or against any Person affiliated with
Buyer, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
7.6 No Claim Regarding Stock Ownership or Sale Proceeds. There must not
have been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, the Company, or (b) is entitled to all or any portion of
the Purchase Price payable for the Shares.
7.7 No Prohibition. Neither the consummation nor the performance of any
of the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
Page 27
7.8 No Material Adverse Change. There shall have been no material
adverse change in the business, operations or prospects of the Company since
December 31, 2001.
7.9 Completion of Redemption. The Redemption identified in Section 5.8
shall have been completed.
7.10 Resolution of Proceedings. The Proceedings identified in Schedule
3.15 of the Disclosure Schedule shall have been resolved and disposed of with
any and all costs and expenses associated therewith paid for by Sellers. In the
event the Sellers have not completed the aforementioned by the Closing, Buyer
shall be entitled to set off against the Holdback Portion any Damages in excess
of Twenty Five Thousand Dollars ($25,000) relating to or arising from the
Proceedings not covered under Sellers' policy or policies of insurance for any
reason whatsoever.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
8.2 Buyer's Performance.
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually),
must have been performed and complied with in all material
respects.
(b) Buyer must have delivered each of the documents and
instruments required to be delivered by Buyer pursuant to
Section 2.4(b).
(c)
8.3 Consents. Each of the Consents identified in Schedule 3.2 of the
Disclosure Schedule must have been obtained and must be in full force and
effect.
8.4 Additional Documents. Buyer must have caused to be delivered to
Sellers such other documents as Sellers may reasonably request for the purpose
of (i) enabling their counsel to provide the opinion referred to in Section
7.4(a), (ii) evidencing the accuracy of any representations or warranties of
Buyer, (iii) evidencing the performance by Buyer of, or the compliance by Buyer
with, any covenant or obligation required to be performed or complied with by
Buyer, (iv) evidencing the satisfaction of any condition referred to in this
Section 8, or (v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the Effective Date.
Page 28
9. TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other
party and such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 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 Buyer to comply with its obligations under this
Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the
conditions in Section 8 has not been satisfied of the Closing
Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and
Sellers have not waived such condition on or before the
Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations
under this Agreement) on or before September 30, 2002 or such
later date as the parties may agree upon.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.1 and 11.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 Survival; Right of Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement, the
Disclosure Schedule, the supplements to the Disclosure Schedule, the certificate
delivered pursuant to Section 2.4(a)(v), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages 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 representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 Indemnification and Payment of Damages by Sellers. Sellers shall
jointly and severally indemnify, defend and hold harmless Buyer, the Company,
and their respective Representatives, stockholders, controlling persons, and
affiliates (collectively, the "INDEMNIFIED PERSONS") for, and shall pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of investigation
and defense and reasonable attorneys' and accountants' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "DAMAGES"),
arising, directly or indirectly, from or in connection with:
Page 29
(a) any Breach of any representation or warranty made by Sellers
in this Agreement, the Disclosure Schedule, the supplements to
the Disclosure Schedule, or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any Breach by Sellers of any covenant or obligation of Sellers
in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person
with either Sellers or the Company (or any Person acting on
their behalf) in connection with any of the Contemplated
Transactions;
(d) any claim by any Person for errors or omissions in the
performance of professional services rendered by the Company
or its Representatives prior to the Effective Date as an
insurance broker or agent;
(e) subject to Section 7.10, Proceedings pending or Threatened
prior to the Effective Date, whether disclosed or not;
(f) any claim in respect of a "company payable" shown on the
financial statements of the Company at December 31, 2001, and
subsequently written off as liabilities by the Company;
(g) any subsequent negative adjustment to the Tangible Net Worth
of the Company as of the Closing Date after the Net Worth
Adjustment has been made; and
(h) any claim rising out of or resulting from the ownership or use
of the Building.
The remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified Persons.
10.3 Indemnification and Payment of Damages by Buyer. Buyer will
indemnify, defend and hold harmless Sellers, and will pay to Sellers the amount
of any Damages arising, directly or indirectly, from or in connection with (a)
any Breach of any representation or warranty made by Buyer in this Agreement or
in any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach
by Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any
claim by any Person for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
such Person with Buyer (or any Person acting on its behalf) in connection with
any of the Contemplated Transactions.
10.4 Time Limitations. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 3.2, 3.3, 3.6, 3.11, 3.13, and
3.19, unless on or before the fourth anniversary of the Closing Date, Buyer
notifies Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer. A claim with respect to
Section 3.11 and 3.13 may be made at any time until thirty (30) days after the
expiration of the applicable statute of limitations (with extensions). A claim
with respect to Section 3.2, 3.3, 3.6, and 3.19, or a claim for indemnification
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than Sections 4.2 and 4.6, unless on or before the fourth
anniversary of the Closing Date, Sellers notify Buyer of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Sellers. A claim with respect to Sections 4.2 and 4.6, or a claim for
indemnification over reimbursement not based on any representation or warranty
or covenant or obligation to be performed or complied with prior to the Closing
Date, may be made at any time.
Page 30
10.5 Procedure for Indemnification - Third Party Claims.
(a) Promptly after receipt by an indemnified party under Section
10.2 or Section 10.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim
is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of
any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is brought
against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a
party to such Proceeding and the indemnified party determines
in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial
capacity to defend such Proceeding and provide indemnification
with respect to such Proceeding), to assume the defense of
such Proceeding with counsel satisfactory to the indemnified
party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will not, as long as
it diligently conducts such defense, be liable to the
indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of
such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such
Proceeding, other than reasonable costs of investigation. If
the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within
the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation
of Legal Requirements or any violation of the rights of any
Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief
provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have
no liability with respect to any compromise or settlement of
such claims effected without its consent. If notice is given
to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of
such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its
affiliates other than as a result of monetary damages for
which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding
so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld).
Page 31
(d) Sellers and Buyer hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought
against any Indemnified Person for purposes of any claim that
an Indemnified Person may have under this Agreement with
respect to such Proceeding or the matters alleged therein, and
agree that process may be served on Sellers with respect to
such a claim anywhere in the world.
10.6 Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10.7 Limits on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement:
(a) no amount shall be payable by an indemnifying party pursuant to
Section 10.2 or Section 10.3 unless the aggregate amount of all claims for
Damages that are indemnifiable pursuant to Section 10.2 or Section 10.3, as
applicable, exceeds Ten Thousand Dollars ($10,000.00); provided, however, that
if claims in excess of such threshold are received by an indemnifying party, the
indemnifying party shall indemnify for the total amount of such claims;
provided, further, that the above minimum threshold shall not apply to claims
for Damages arising out of, resulting from or incident to breaches by Sellers of
their representations and warranties set forth in Sections 3.2, 3.3, 3.6 or
3.11, or by Buyer of its representations and warranties set forth in Sections
4.2 or 4.6, which breaches shall be indemnified against in their entity; and
(b) the maximum aggregate amount of Damages for which indemnity may be
recovered from Sellers or from Buyer pursuant to this Article 10 shall be an
amount equal to the Purchase Price;
10.8 Other Limitations on Indemnifications. Notwithstanding any other
provision of this Agreement to the contrary, no party hereto shall be required
to indemnify or hold harmless any other party hereto or otherwise compensate any
other party hereto for Damages with respect to mental or emotional distress,
exemplary, consequential, special or punitive damages.
11. GENERAL PROVISIONS
11.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. Buyer will pay all finder or
investment banker fees payable to Marsh in connection with this Agreement and
the Contemplated Transactions. Sellers shall be responsible for any taxes
attributable to the sale or transfer of the Shares pursuant to this Agreement.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
11.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by Legal Requirements, prior to the Closing
Sellers shall, and shall cause the Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Sellers and Buyer will consult with each other concerning the means by which the
Company's employees, customers, and suppliers and others having dealings with
the Company will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
Page 32
11.3 Confidentiality. Between the Effective Date of this Agreement and
the Closing Date, Buyer and Sellers will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of Buyer and the
Company to maintain in confidence, and not use to the detriment of another party
or the Company any written, oral, or other information obtained in confidence
from another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request. Whether or not the Closing takes place, Sellers waive, and will upon
Buyer's request cause the Company to waive, any cause of action, right, or claim
arising out of the access of Buyer or its representatives to any trade secrets
or other confidential information of the Company except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information.
11.4 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier or e-mail (with written confirmation of receipt), provided
that a copy is mailed by registered or certified mail, return receipt requested,
or (c) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
Sellers:
William J. Herzog and George E. Stouffer, Jr.
4250 Lake Avenue
P.O. Box 400
Ashtabula, Ohio 44005-0400
With a copy to:
Andrews & Pontius, LLC
4817 State Road, Suite 100
P.O. Box 10
Ashtabula, Ohio 44005
Facsimile No. (440) 992-6336
Attn.: Mark W. Andrews, Esq.
E-mail: mandrews@andrewspontius.com
Buyer:
Second Bancorp, Inc.
108 Main Avenue, S.W.
P.O. Box 1311
Warren, Ohio 44482
Facsimile No. (330) 841 - 0489
Attn.: Christopher Stanitz
E-mail: CStanitz@secondnationalbank.com
Page 33
With a copy to:
McDonald Hopkins Burke & Haber Co., L.P.A.
2100 Bank One Center
600 Superior Avenue
Cleveland, Ohio 44114
Facsimile No. (216) 348-5474
Attn.: Leonard M. Cosentino, Esq.
E-mail: lcosentino@mhbh.com
11.5 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.6 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.7 Nonsolicitation Covenant. Each of the Sellers, by signature
hereto, covenants that he shall not for a period of three (3) years after the
Effective Date, directly or indirectly, except on behalf of Buyer, its
successors or assigns, solicit or accept risk management, insurance or bond
business from any of the customers of the Company as of the moment immediately
preceding the Effective Date. Each of the Sellers, by signature hereto,
acknowledges: (i) that his covenant is ancillary to this Agreement, is integral
hereto and is independent of any other provision herein, (ii) that this covenant
is reasonably necessary for the protection of Buyer's legitimate business
interests; (iii) that this covenant poses no undue hardship on the Sellers and
is reasonably limited as to duration and scope; and (iv) that this covenant is
in addition to any covenants which Sellers may make in any employment or other
agreements executed or to be executed with Buyer. Further, if any part of this
covenant is deemed overbroad or void as against public policy, each of the
Sellers, by signature hereto, acknowledges that such invalid portions shall be
severable from this covenant and specifically requests that, upon such event,
this covenant be reformed ("blue-penciled") to permit Buyer to obtain the
maximum permissible benefit from this covenant.
11.8 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.9 Disclosure Schedule.
Page 34
(a) The disclosures in the Disclosure Schedule, and those in any
supplement thereto, must relate only to the representations
and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or
warranty in this Agreement.
(b) In the event of any inconsistency between the statements in
the body of this Agreement and those in the Disclosure
Schedule (other than an exception expressly set forth as such
in the Disclosure Schedule with respect to a specifically
identified representation or warranty), the statements in the
body of this Agreement will control.
11.10 Assignments, Successors and No Third-Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties except that Buyer may assign any of its rights under this
Agreement to any Subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
11.11 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.12 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number, as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event of any ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring any party by virtue of the authorship of any of the
provisions of this Agreement.
11.13 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.14 Governing Law. This Agreement will be governed by the laws of the
State of Ohio without regard to conflicts of laws principles.
11.15 Jurisdiction, Waiver of Jury Trial.
(a) The parties hereto hereby irrevocably submit to the
jurisdiction of the courts of the sitting in Trumbull County,
Ohio and the federal courts of the United States of America
located in the Northern District of Ohio.
(b) EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH
SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) EACH SUCH
Page 35
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, AND (III) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 11.15.
11.16 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
Page 36
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
BUYER:
SECOND BANCORP INCORPORATED
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SELLERS:
BY:
---------------------------------------
WILLIAM R. HERZOG
BY:
---------------------------------------
GEORGE E. STOUFFER, JR.