EXHIBIT 10n
ASSET PURCHASE AGREEMENT
This is an ASSET PURCHASE AGREEMENT, dated as of April 1,
1996 (the "Agreement"), among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇.
▇▇▇▇, INC., a Colorado corporation ("Buyer"), HEALTH CARE
INSURERS, INC., a Colorado corporation ("Seller"), ▇▇▇ & ▇▇▇▇▇,
INC., a Florida corporation ("Parent"), ▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇")
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇").
BACKGROUND
Seller is engaged primarily in the insurance agency business
and wishes to sell substantially all of its assets relating to
its insurance agency business to Buyer. Buyer desires to acquire
such assets upon the terms and conditions expressed in this
Agreement. Parent owns all of the capital stock of Seller and is
entering into this Agreement to provide to, and receive from,
Buyer, certain assurances regarding the conduct of their
respective businesses following the closing. ▇▇▇▇ and Greenwood
(collectively, the "Shareholders") own all of the outstanding
capital stock of Buyer and are entering into this Agreement to
provide certain assurances to Seller and Parent as an inducement
for Seller and Parent to enter into this Agreement.
THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein, the parties agree as follows:
ARTICLE 1
The Acquisition
Section 1.1 Covenants of Sale and Purchase. At the Closing
(as defined in Section 2.1), and upon and subject to the terms
and conditions of this Agreement, Seller will sell, convey, and
assign to Buyer all right, title, and interest in and to the
Acquired Assets (as defined in Section 1.2) free and clear of all
liens, claims, pledges, security interests, charges,
restrictions, or encumbrances of any nature whatsoever, and Buyer
will purchase the Acquired Assets from Seller in exchange for the
Purchase Price (as defined in Section 1.4).
Section 1.2 The Acquired Assets. In this Agreement, except
as set forth in Section 1.3 below, the phrase "Acquired Assets"
means and shall include all goodwill, properties, and rights of
Seller used directly or indirectly in the conduct of, or
constituting the insurance agency business of, Seller, and
includes, without limitation, the following:
(a) Purchased Book of Business. All of the insurance
agency business of Seller, including but not limited to the
professional health care liability and property insurance
business and renewals and expirations thereof, together with all
written or otherwise recorded documentation, data or information
relating to Seller's insurance agency business, including but not
limited to: (i) lists of insurance companies and records
pertaining thereto; (ii) customer lists, prospect lists, policy
forms, and/or rating information, expiration dates, information
on risk characteristics, information concerning insurance markets for
large or unusual risks, and all other types of written or otherwise recorded
information customarily used by Seller or
available to Seller, including all other records of and
pertaining to the accounts and customers of Seller, past and
present, including, but not limited to, the active insurance
customers of Seller, all of whom are listed on Schedule 1.2(a)
(the "Purchased Book of Business"). Schedule 1.2(a) lists only
those accounts from which Seller derived revenues from insurance
carriers from the placement of business with such carriers in
1995 or 1996.
(b) General Intangibles. All of the following
intangible personal property used in connection with Seller's
insurance agency business or pertaining to the Acquired Assets:
(i) all of those licenses, permits, and
authorizations granted by any governmental authority in
connection with the operation of Seller's insurance agency
business that are transferable;
(ii) all right, title, and interest in and under
the contracts, leases and agreements listed in Schedule
1.2(b)(ii);
(iii) all of Seller's business records
necessary to enable Buyer to operate the Purchased Book of
Business;
(iv) the goodwill of Seller's insurance agency
business, including the right to use the name "Health Care
Insurers, Inc." and any other fictitious names and trade names
which are currently in use by Seller, telephone listings, post
office box, mailing address, and advertising signs and materials;
and
(v) any assignable covenants not to compete made
by employees of Seller and all other assignable covenants not to
compete in favor of Seller.
(c) Tangible Personal Property. All tangible personal
property now located at the business premises of Seller and used
in the operation of Seller's insurance agency business, including
office supplies, software, manuals, furniture, fixtures and
equipment, the principal items of which are set forth on Schedule
1.2(c).
(d) Miscellaneous Items. All other assets of Seller
relating or pertaining to the Purchased Book of Business,
including proprietary rights and information, trade secrets,
computer disks, software, data bases whether in the form of
computer tapes or otherwise, related object and source codes, and
associated manuals, and any other records or media of storage or
programs for retrieval of information pertaining to the Purchased
Book of Business, and all supplies and materials, including
promotional and advertising materials, brochures, plans, supplier
lists, manuals, handbooks, and related written data and
information.
Section 1.3 Exclusions and Exceptions. Notwithstanding the
foregoing, Seller does not agree to sell or assign, and Buyer
does not agree to purchase or assume, the following:
(a) any prepaid expenses, cash in hand or in banks,
notes receivable, money market certificates, stocks, or bonds; or
(b) any trade accounts receivable or other receivables
described in Sections 1.5(a), (c) and (f).
Section 1.4 The Purchase Price.
(a) As consideration for the Acquired Assets and the
other covenants of Seller herein, Buyer shall pay to Seller the
following (collectively, the "Purchase Price"):
(i) On the Closing Date (as defined in Section
2.1), Buyer shall pay $1,020,000 to Seller by wire transfer of
immediately available funds.
(ii) On or before May 1, 1997 (the "Second Payment
Date"), Buyer shall pay to Seller, in cash or immediately
available funds, a sum equal to 15% of the amount, if any, by
which Buyer's total revenues from the operation of Seller's
former insurance agency business during the twelve-month period
beginning on April 1, 1996 and ending on March 31, 1997 (the
"Earn Out Period"), exceeds $900,000 (15% of such excess is
herein referred to as the "Earn Out Amount"). For purposes of
this Section 1.4(a)(ii), the term "revenues" shall mean all
commissions, contingent commissions, interest income, and all
other revenues related to Buyer's insurance agency business after
the Closing, less brokerage fees payable on commissions. Buyer
agrees to operate the business in the ordinary course during the
Earn Out Period, substantially in accordance with the policies
and practices followed by Seller on a consistent basis prior to
the Closing Date.
(b) Buyer shall prepare its financial statements in
accordance with generally accepted accounting principles applied
on a consistent basis, and such financial statements shall be the
basis for determining the Earn Out Amount. Copies of Buyer's
financial statements for the Earn Out Period shall be promptly
furnished by Buyer to Seller or Parent. Seller and Parent shall
have the right, within 30 days of receipt of such financial
statements, to question and receive answers from Buyer's
executive officers and audit the financial books and records of
Buyer for the purpose of determining the accuracy of Buyer's
calculation of the Earn Out Amount and Buyer's compliance with
the terms of this Section 1.4.
(c) The parties will attempt in good faith to
resolve any disputes regarding the determination of the Earn Out
Amount by negotiations between executives of Buyer and Parent.
In the event the parties are unable to resolve any such dispute,
the dispute shall be resolved by informal arbitration before a
single arbitrator, who shall be an independent certified public
accountant chosen by mutual agreement of the parties. The
arbitrator shall determine the items in dispute in accordance
with this Agreement, and his or her determination shall be
conclusive, final, and binding for all purposes under this
Agreement. The fees of the arbitrator and the expenses of the
arbitration shall be borne by the non-prevailing party in the
arbitration proceeding.
(d) For federal income tax and other purposes, the
Purchase Price shall be allocated among the Acquired Assets by
each of the parties as follows:
(i) Fixed assets and other tangible property:
$35,000;
(ii) Purchased Book of Business: $900,000; and
(iii) Goodwill: $85,000 plus the Earn Out
Amount.
Section 1.5 Commissions Collected. It is understood and
agreed as follows:
(a) All commissions on agency billed policies or
endorsements effective (whether new business or renewal business)
prior to the Effective Date, excluding any installments due on or
after the Effective Date, shall be the property of Seller
regardless of whether commissions for such polices are collected
before or after the Effective Date, and Seller (with Buyer's
assistance, as described in Section 1.5(g)) shall be responsible
for paying all premiums due the respective insurance companies
relative to such policies or endorsements. Buyer shall use its
best efforts to assist Seller in the collection and delivery to
Seller of all receivables due to Seller after the Effective Date.
(b) All commissions on agency billed policies or
endorsements effective (whether new business or renewal business)
on or after the Effective Date, including any installments due on
or after the Effective Date related to policies effective prior
to the Effective Date, shall be the property of Buyer, regardless
of whether commissions for such policies are collected before or
after the Effective Date, and Buyer shall be responsible for
paying all premiums due the respective insurance companies
relative to such policies or endorsements.
(c) Commission income related to any and all direct
▇▇▇▇ policies, endorsements, cancellations, and audits receivable
before the Effective Date, but entered and received on or after
the Effective Date, shall be the property of Seller, whether
credit or debit, and regardless of effective date.
(d) Commission income related to all direct ▇▇▇▇
policies, endorsements, cancellations, and audits receivable on
or after the Effective Date shall be the property of Buyer,
whether credit or debit, and regardless of effective date.
(e) Each of the parties will be responsible for
brokerage fees due on the respective commissions to which they
are entitled.
(f) Any and all contingent commissions related to
business placed in 1995 received prior to, on or after the
Effective Date shall be the property of Seller.
(g) Buyer shall assume responsibility for continuing
the business of Seller after the Closing, and shall take all
actions necessary or appropriate to assist Seller in fulfilling
its responsibilities with respect to currently unissued
policies, such as remitting premiums received that are payable to
insurance companies, paying any refunds due to insureds from cash
received from such insureds, and similar tasks with respect to
insurance accounts acquired from Seller.
Section 1.6 Expenses.
(a) All taxes, utilities, and expenses related to
Seller's insurance agency business shall be prorated as of the
Effective Date, with Seller responsible for the portions of such
items accruing before the Effective Date and Buyer responsible
for the portions of such items accruing on and after the
Effective Date.
(b) In connection with Buyer's assumption of the lease
for Seller's business premises, Buyer shall promptly refund to
Seller, upon Buyer's receipt thereof, the rent deposit made by Seller with
respect to such lease, and Buyer shall also promptly
refund to Seller the amount of any prepaid utilities and other
prepaid items made by Seller prior to the Closing Date.
Section 1.7 Sales Taxes. To the extent they relate to the
Acquired Assets, all sales taxes due as a result of the transfer
of the Acquired Assets shall be paid by Buyer.
Section 1.8 Assumed Liabilities. On the Closing Date,
Seller shall deliver the Acquired Assets to Buyer, free and clear
of any and all liens and encumbrances, and Buyer shall assume all
obligations of Seller under the contracts and agreements assumed
by Buyer pursuant to Section 1.2(b)(ii); provided, however, that
except as contemplated by Section 6.7, Buyer shall not assume or
be deemed to have assumed (i) any obligations incurred by Seller
under the assumed contracts and agreements prior to the Effective
Date, (ii) any obligations of Seller under the provisions of
Sections 1.5 or 1.6, or (iii) any other liability or obligation
of Seller whatsoever.
ARTICLE 2
Closing, Items To Be Delivered,
Further Assurances, And Effective Date
Section 2.1 Closing. The consummation of the purchase and
sale of assets under this Agreement (the "Closing") will take
place at 10:30 a.m. on April 10, 1996 (the "Closing Date"), at
the offices of ▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is
agreed to in writing by the parties hereto.
Section 2.2 Conveyance and Delivery by Seller. On the
Closing Date, Seller will surrender and deliver possession of the
Acquired Assets to Buyer and take such steps as may be required
to put Buyer in actual possession and operating control of the
Acquired Assets, and in addition shall deliver to Buyer such ▇▇▇▇
of sale and assignments and other good and sufficient instruments
and documents of conveyance, in form reasonably satisfactory to
Buyer and its counsel, as shall be necessary and effective to
transfer and assign to, and vest in, Buyer all right, title, and
interest in and to the Acquired Assets free and clear of any
lien, charge, pledge, security interest, restriction or
encumbrance of any kind.
Section 2.3 Wire Transfer by Buyer. On the Closing Date,
Buyer will wire transfer to Seller $1,020,000 in immediately
available funds, representing the portion of the Purchase Price
to be paid at Closing.
Section 2.4 Prepaid Expenses. Within three days after the
Closing Date, Buyer shall deliver a check to Seller representing
payment of all prepaid expenses of Seller. To the extent that
certain prepaid expenses are unknown at such time, Buyer will pay
Seller the amount of such additional expenses promptly upon their
determination.
Section 2.5 Mutual Performance. At or prior to the
Closing, the parties hereto shall also deliver to each other the
agreements, opinions, certificates, and other documents and
instruments referred to in Article 8 of this Agreement.
Section 2.6 Third Party Consents. To the extent that
Seller's rights under any agreement or other Acquired Asset to be
assigned to Buyer hereunder may not be assigned without the consent of
another person which has not been obtained, Buyer will
use its best efforts to obtain such consents, and Seller shall
cooperate with Buyer to obtain any such required consents as
promptly as possible.
Section 2.7 Change in Name. Immediately after the Closing
Date, Seller shall execute and file all documents required to
change Seller's name to another name bearing no similarity to
Health Care Insurers, Inc. Neither Seller, Parent nor any of
their respective subsidiaries or affiliates shall use the name
"Health Care Insurers, Inc." (or any derivative name) after the
Closing Date.
Section 2.8 Further Assurances. From time to time after
the Closing, Seller, at Buyer's request, will execute,
acknowledge and deliver to Buyer such other instruments of
conveyance and transfer and will take such other actions and
execute and deliver such other documents, certificates and
further assurances as Buyer may reasonably require in order to
vest more effectively in Buyer, or to put Buyer more fully in
possession of, any of the Acquired Assets. Each of the parties
will cooperate with the other and execute and deliver to the
other party such other instruments and documents and take such
other actions as may be reasonably requested from time to time as
necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
Section 2.9 Effective Date. The Effective Date of the
Agreement and all related instruments executed at the Closing
shall be April 1, 1996 unless otherwise specified.
ARTICLE 3
Representations And Warranties Of Seller And Parent
Seller and Parent represent and warrant to Buyer as follows:
Section 3.1 Organization. Each of Seller and Parent is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation
and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease, and operate its
properties and to carry on its business as now being conducted
except where failure to be so organized, valid, or active would
not, in the aggregate, have a material adverse effect on Seller.
Seller is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned,
leased, or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and be in
good standing would not in the aggregate have a material adverse
effect on Seller.
Section 3.2 Authority. Each of Seller and Parent has the
requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this
Agreement has been duly authorized by all necessary corporate
action and no other corporate proceedings on the part of Seller
or Parent are necessary to authorize this Agreement. This
Agreement has been duly executed and delivered by Seller and
Parent and, assuming this Agreement constitutes a valid and
binding obligation of Buyer, constitutes the legal, valid, and
binding obligation of Seller and Parent, enforceable against them
in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, or similar laws from time to time in
effect which offset creditors' rights generally and general
equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or in
law).
Section 3.3 Consents and Approvals; No Violations. Except
as set forth in Schedule 3.3, neither the execution, delivery, or
performance of this Agreement by Seller or Parent nor the
consummation by them of the transactions contemplated hereby nor
compliance by them with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of their
Articles of Incorporation or Bylaws, (ii) require any filing
with, or authorization, consent, or approval of, any court,
arbitral tribunal, administrative agency or commission, or other
governmental or other regulatory authority or agency (a
"Governmental Entity"), (iii) result in a violation or breach of,
or constitute a default under, any of the terms, conditions, or
provisions of any agreement or other instrument or obligation to
which Seller or Parent is a party or by which Seller or Parent or
any of their respective properties or assets are bound, or
(iv) violate any order, writ, injunction, decree, statute, rule,
or regulation applicable to Seller or Parent or any of their
respective properties or assets, except in the case of (iii) or
(iv) for violations, breaches, or defaults that would not,
individually or in the aggregate, have a material adverse effect
on Seller or Parent.
Section 3.4 Financial Statements. Seller has delivered to
Buyer true and complete copies of (i) the unaudited balance sheet
of Seller at December 31, 1995 and the related statement of
income for the fiscal year then ended, and (ii) the unaudited
balance sheet of Seller at February 29, 1996 and the related
statement of income for the two months then ended, each of which
has been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved. Such balance sheets fairly present the financial
position, assets, and liabilities of Seller at the dates
indicated and such statements of income fairly present the
results of operations for the periods then ended.
Section 3.5 Absence of Certain Changes. Except as
disclosed in Schedule 3.5 and in the unaudited balance sheet and
statement of income for the period ended February 29, 1996, to
the knowledge of Seller and Parent, since December 31, 1995,
there have been no events or changes having a material adverse
effect on Seller or the Acquired Assets.
Section 3.6 Acquired Assets. Seller owns and holds, free
and clear of any lien, charge, pledge, security interest,
restriction or encumbrance, sole and exclusive right, title, and
interest in and to the Acquired Assets, including but not limited
to the customer expiration records therefor, together with the
exclusive right to use such records and all customer accounts,
dailies, copies of insurance policies and contracts in force and
all files, invoices and records pertaining to the customers,
their contracts and insurance policies, and all other information
comprising the Purchased Book of Business.
Section 3.7 Litigation. Except as disclosed in Schedule
3.7, there is no suit, claim, action, proceeding, or
investigation pending or, to the best knowledge of Seller and
Parent, threatened, against Seller. Except as disclosed in
Schedule 3.7, to the knowledge of Seller and Parent, Seller is
not subject to any outstanding order, writ, injunction, or decree
which, insofar as can be reasonably foreseen, individually or in
the aggregate, in the future would have a material adverse effect
on Seller or the Acquired Assets or would prevent Seller from
consummating the transactions contemplated hereby.
Section 3.8 Compliance with Applicable Law. Seller holds
all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful
conduct of the insurance agency business (the "Permits"), except
for failures to hold such permits, licenses, variances,
exemptions, orders, and approvals that would not, individually or
in the aggregate, have an adverse effect on Seller. Seller is in
compliance with the terms of the Permits, except where the
failure so to comply would not have an adverse effect on Seller.
As of the date of this Agreement, no investigation or review
by any Governmental Entity with respect to Seller is pending or
threatened, nor has any Governmental Entity indicated an
intention to conduct the same, other than, in each case, those
the outcome of which, as far as reasonably can be foreseen, in
the future will not have a material adverse effect on Seller or
the Acquired Assets.
Section 3.9 Tax Returns and Audits. Seller has timely
filed all federal, state, local, and foreign tax returns required
to be filed by it or has paid or made provision for the payment
of any penalty or interest arising from the late filing of any
such return, has correctly reflected all taxes required to be
shown thereon, and has fully paid or made adequate provision for
the payment of all taxes that have been incurred or are due and
payable pursuant to such returns or pursuant to any assessment
with respect to taxes in such jurisdictions, whether or not in
connection with such returns.
Section 3.10 Errors and Omissions. To the knowledge of
Seller and Parent, except as disclosed on Schedule 3.10, Seller
has not incurred any liability or taken or failed to take any
action that will result in a liability for errors or omissions in
the conduct of its insurance agency business, except such
liabilities as are covered by insurance. To the knowledge of
Seller and Parent, Seller now has adequate errors and omission (E
& O) insurance coverage in force under policies covering Parent
and its subsidiaries.
Section 3.11 Defaults Under Contracts. To the knowledge of
Seller and Parent, no party is in default under any of the
contracts and agreements listed in Schedule 1.2(b)(ii).
Section 3.12 No Misrepresentations. None of the
representations and warranties set forth in this Article 3
contains any untrue statement of a material fact or omits the
statement of any material fact necessary to render the statements
made not misleading.
ARTICLE 4
Representations And Warranties Of Buyer
Buyer represents and warrants to Seller as follows:
Section 4.1 Organization. Buyer is a corporation
organized, validly existing, and in active status under the laws
of Colorado and has all requisite corporate power and authority
and all necessary governmental approvals to own, lease, and
operate its properties and to carry on its business as now being
conducted and as proposed to be conducted, except where failure
to be so organized, valid, or active would not, in the aggregate,
have a material adverse effect on Buyer. Buyer is duly qualified
or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased, or operated by
it or the nature of the business conducted by it or as proposed
to be conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or
licensed and be in good standing would not in the aggregate have
a material adverse effect on Buyer.
Section 4.2 Authority. Buyer has the requisite corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement, and the consummation
of the Agreement and the other transactions contemplated hereby,
have been duly authorized by all necessary corporate action on
the part of Buyer and no other corporate proceeding on the part
of Buyer is necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by Buyer, and, assuming this
Agreement constitutes a valid and binding obligation of
Seller, constitutes a valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization or similar laws from time
to time in effect which offset creditors' rights generally and
general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or in
law).
Section 4.3 Consents and Approvals; No Violations. Neither
the execution, delivery, or performance of this Agreement by
Buyer nor the consummation by Buyer of the transactions
contemplated hereby nor compliance by Buyer with any of the
provisions hereof will (i) conflict with or result in any breach
of any provision of the Articles of Incorporation or the Bylaws
of Buyer, (ii) require any filing with, or authorization,
consent, or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation, or acceleration)
under, any of the terms, conditions, or provisions of any
agreement or other instrument or obligation to which Buyer is a
party or by which Buyer or its properties or assets may be bound,
or (iv) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to Buyer or any of its properties
or assets, except in the case of (iii) or (iv) for violations,
breaches, or defaults that would not, individually or in the
aggregate, have a material adverse effect on Buyer.
Section 4.4 Litigation. There is no suit, claim, action,
proceeding, or investigation pending or, to the best knowledge of
Buyer, threatened against Buyer or its affiliates before any
Governmental Entity that is reasonably likely to have a material
adverse effect on Buyer or would prevent Buyer from consummating
the transactions contemplated by this Agreement.
Section 4.5 Compliance with Applicable Law. Buyer holds
all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful
conduct of the insurance agency business of Seller being acquired
by Buyer, except for failures to hold such permits, licenses,
variances, exemptions, orders, and approvals that would not have
a material adverse effect on Buyer.
Section 4.6 Contracts with Third Parties. Buyer and its
affiliates have no contract, agreement or understanding with any
third party concerning a potential sale of Seller's insurance
agency business following the Closing.
Section 4.7 No Misrepresentations. None of the
representations and warranties set forth in this Article 4
contains any untrue statement of a material fact, or omits the
statement of any material fact necessary to render the statements
made not misleading.
ARTICLE 5
Covenants Of Seller And Parent
Section 5.1 Operation of Business. During the period
through the Closing Date, Seller agrees that (except as expressly
contemplated or permitted by this Agreement or to the extent that
Buyer otherwise consents in writing):
(a) Ordinary Course. Seller shall carry on its
business in the usual, regular, and ordinary course in
substantially the same manner as heretofore conducted and shall
use all reasonable efforts to preserve intact its present
business, keep available the services of its present employees, and
preserve its relationships with customers, suppliers, vendors
and others having business dealings with it to the end that the
goodwill, the ongoing business, and the Acquired Assets shall not
be impaired in any material respect at the Closing Date.
(b) No Dispositions. Other than (i) as may be
required by law to consummate the transactions contemplated
hereby, or (ii) sales or licenses of products or technology in
the ordinary course of business consistent with prior practice,
Seller shall not sell, lease, license, encumber, or otherwise
dispose of, or agree to sell, lease, license, encumber, or
otherwise dispose of, any of its assets that are material,
individually or in the aggregate.
(c) No Acquisitions. Seller shall not acquire or
agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial
portion of the assets of, or by any manner, any business or any
corporation, partnership, or other business organization or
division thereof, or otherwise acquire or agree to acquire any
property or assets not in the ordinary course of business.
(d) Indebtedness and Leases. Seller shall not incur
any indebtedness for borrowed money, guarantee any such
indebtedness, issue or sell any debt securities, warrants, or
rights to acquire any of its debt securities, or guarantee any
debt securities of others or enter into any material contracts,
leases, agreements or transactions other than, in each case, in
the ordinary course of business consistent with prior practice.
Seller shall not enter into any material leases.
(e) Employee Benefits. Seller will not, except as
expressly agreed by Buyer, (i) enter into, adopt, amend (except
as may be required by law), or terminate any employee benefit
plan, or any agreement, arrangement, plan, or policy between it
and one or more of its employees except in the ordinary course of
business consistent with past practice that, in the aggregate, do
not result in a material increase in benefits or compensation
expense, increase the compensation or fringe benefits of any
director, officer, or employee, (iii) pay any benefit not
required by any plan or arrangement as in effect as of the date
hereof, or (iv) enter into any contract, agreement, commitment,
or arrangement to do any of the foregoing.
Section 5.2 Access to Information. Upon reasonable notice,
Seller shall afford to the officers, employees, accountants,
counsel, and other authorized representatives of Buyer access
during normal business hours in the period prior to the Closing
Date, to its properties, books, contracts, commitments, records,
and senior management. Unless otherwise required by law, Buyer
will hold any such information which is nonpublic in confidence,
will not use such information in its business if the transaction
does not close and will return such information if the
transaction does not close.
Section 5.3 Covenant Against Solicitation. For a period of
three years following the Closing Date, each of Seller and Parent
agrees not to (and Parent shall cause each of its affiliates not
to) solicit, divert, accept business from, nor service, directly
or indirectly, as insurance solicitor, insurance agent, insurance
broker, or otherwise, for its account or the account of any other
agent, broker, or insurer, either as owner, shareholder,
promoter, consultant, manager, or otherwise, in any area of the
United States, any insurance account that is part of the
Purchased Book of Business identified in Schedule 1.2(a). This
Section 5.3 shall not prohibit Seller or Parent or their
respective subsidiaries and affiliates from (i) maintaining
business relationships with, or placing business through or for
insurance agents utilized by Buyer, so long as such business does
not relate to the insurance accounts identified in Schedule
1.2(a), or (ii) marketing the accounts listed in Schedule 5.3
that Parent or any of its affiliates has placed with Seller
(and which will be acquired by Buyer hereunder) through agents or
brokers other than Buyer and/or to different insurance carriers
upon any renewal of such accounts, provided that any movement of
such accounts will be as a result of the availability of more
favorable policy terms and conditions.
Section 5.4 Covenant Not to Interfere. For a period of
three years following the Closing Date, each of Seller and Parent
agrees not to (and Parent shall cause each of its subsidiaries
and affiliates not to) hire or directly or indirectly solicit any
of Buyer's employees to work for Seller, Parent or any of their
respective subsidiaries or affiliates.
Section 5.5 Confidentiality. Each of Seller and Parent,
for a period of three years following the Closing Date, agrees
that it will not (and Parent shall cause each of its subsidiaries
and affiliates not to) disclose confidential information
concerning the Acquired Assets to any person, firm, corporation,
or entity for any reason without the prior written approval of
Buyer, which shall not be unreasonably withheld. The term
"confidential information" shall mean written documentation
related to the Acquired Assets known by Seller or Parent as of
the Closing Date, including (i) lists of Seller's customers and
companies and records pertaining thereto, (ii) customer lists,
prospect lists, policy forms, rating information, expiration
dates, information on risk characteristics, and other types of
written information customarily used by Seller. This Section 5.5
shall not apply to any confidential information that is or
becomes generally available to the public other than as a result
of a disclosure by Seller, Parent, or their respective
affiliates. This Section 5.5 shall also be inoperable to the
extent that Seller, Parent, or their respective affiliates
reasonably deems it necessary to disclose such information to
legal counsel, in connection with obtaining reasonably necessary
legal advice, or to the extent that Seller, Parent or their
respective affiliates become legally compelled to disclose such
information.
Section 5.6 Remedy for Breach of Covenants. In the event
of a breach of the provisions of Sections 5.3, 5.4 or 5.5, Buyer
shall be entitled to injunctive relief as well as any other
applicable remedies at law or in equity. Should a court of
competent jurisdiction declare any of the covenants set forth in
Sections 5.3, 5.4 or 5.5 unenforceable due to an unreasonable
restriction, duration, geographical area or otherwise, each of
the parties agrees that such court shall be empowered and shall
grant each injured party injunctive relief to the extent
reasonably necessary to protect its interests.
Section 5.7 Successor Rights. The covenants contained in
Sections 5.3, 5.4 and 5.5 shall inure to the benefit of any
successor in interest of Buyer by way of merger, consolidation,
sale or other succession.
ARTICLE 6
Covenants of Buyer And Shareholders
Section 6.1 Covenant Against Solicitation. For a period of
three years following the Closing Date, Buyer agrees, and, for
the period (not to exceed three years following the Closing Date)
that such Shareholder remains a shareholder of Buyer, each of the
Shareholders agrees, not to solicit, divert, accept business
from, nor service, directly or indirectly, as insurance
solicitor, insurance agent, insurance broker, or otherwise, for
its or his account or the account of any other agent, broker, or
insurer, either as owner, shareholder, promoter, consultant,
employee, manager, or otherwise, any insurance account serviced
by Parent or any of its subsidiaries or affiliates in any area of
the United States or Puerto Rico as of the Closing Date (other
than those accounts constituting the Purchased Book of Business
identified in Schedule 1.2(a)). This Section 6.1 shall not
prohibit Buyer or the Shareholders from maintaining business
relationships with, or placing business through or for insurance
agents utilized by Parent or its
affiliates, so long as such business does not relate to any insurance
account serviced by Parent or any of its subsidiaries or affiliates as
of the Closing Date.
Section 6.2 Covenant Not to Interfere. For a period of
three years following the Closing Date, Buyer agrees not to hire
or directly or indirectly solicit any employees of Seller,
Parent, or their respective affiliates, to work for Buyer, any of
its affiliates, or any company that competes with Parent or its
affiliates.
Section 6.3 Remedy for Breach of Covenants. In the event
of a breach of the provisions of Sections 6.1 or 6.2, Seller
and/or Parent shall be entitled to injunctive relief as well as
any other applicable remedies at law or in equity. Should a
court of competent jurisdiction declare any of the covenants set
forth in Sections 6.1 or 6.2 unenforceable due to an unreasonable
restriction, duration, geographical area or otherwise, each of
the parties agrees that such court shall be empowered and shall
grant each injured party injunctive relief to the extent
reasonably necessary to protect its interests.
Section 6.4 Successor Rights. The covenants contained in
Sections 6.1 and 6.2 shall inure to the benefit of any successor
in interest of either Seller or Parent by way of merger,
consolidation, sale or other succession.
Section 6.5 Offers of Employment. All employees of Seller
who are actively employed on the business day immediately
preceding the Effective Date shall be offered employment with the
Buyer as of the Effective Date. Buyer shall also offer
employment to each employee that is temporarily absent on the
business day immediately preceding the Effective Date from active
employment, and who has rights of re-employment, upon termination
of such employee's temporary absence. Each offer of employment
shall be at the same position, location and rate of salary as of
the last day of his or her active employment immediately
preceding the Effective Date, except in the case of any such
employee who upon returning after a period of sickness or other
disability is not fully capable of performing all the essential
functions of his or her former position. Subject to applicable
laws, Buyer shall have the right to dismiss any or all of such
employees at any time, and to change the terms and conditions of
employment for such employees. To the extent permitted by
applicable law and the terms and conditions of Buyer's plans,
from and after the Effective Date, Buyer shall credit to such
employees, for eligibility and vesting purposes under all benefit
plans, benefit arrangements and compensation policies and
practices of Buyer, all previous service recognized for such
purposes by Seller under similar plans, arrangements, policies
and practices on the business day immediately preceding the
Effective Date. Buyer shall make available to all employees
comprehensive health and medical insurance coverage within 30
days after the Closing Date.
Section 6.6 Advise of Changes. From the Closing Date
through the Second Payment Date, Buyer shall confer on a regular
and frequent basis with Parent, report on operational matters,
and promptly advise Parent of any change or event having or
which, insofar as can reasonably be foreseen, could have, a
material adverse effect on Buyer's financial condition or results
of operations.
Section 6.7 Payment of Remaining Obligations. Following
the Closing, Buyer shall promptly pay, when due, the stipulated
percentage of commissions received by Buyer that is payable to
Insurance Marketing Enterprises, Inc. ("IME") under the terms of
the IME contract described in Schedule 1.2(b)(ii).
Section 6.8 Covenants of Shareholders. Each of the
Shareholders hereby agrees that, if he terminates his status as a
shareholder of Buyer within three years after the Closing Date,
he will not, during a three-year period commencing on the date
such Shareholder liquidates his equity interest in
Buyer, solicit, divert, accept business from, nor service, directly or
indirectly, as insurance solicitor, insurance agent, insurance
broker, or otherwise, for his account or the account of any other
agent, broker, or insurer, either as owner, shareholder,
promoter, employee, consultant, manager or otherwise, any
insurance account placed by Parent or any of its subsidiaries
with Seller (before the Closing) or Buyer (after the Closing)
that is serviced by Buyer on the date such Shareholder liquidates
his equity interest in Buyer.
ARTICLE 7
Mutual Covenants
Section 7.1 Expenses. Whether or not the transaction is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
Section 7.2 Brokers or Finders. Each of Seller, Buyer and
Parent represents, as to itself and its affiliates, that no
agent, broker, investment banker, financial advisor, or other
firm or person is or will be entitled to any broker's or finder's
fee or any other commission or similar fee in connection with the
transactions contemplated by this Agreement, and each of Buyer,
Seller and Parent agrees to indemnify and hold the other parties
harmless from and against any and all claims, liabilities, or
obligations with respect to any other fees, commissions, or
expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its
affiliate
Section 7.3 Preferred Agent Status. The parties agree that
Parent will continue to represent Buyer in a "Preferred Agent"
capacity following the Closing for a minimum of two years on
terms and conditions no less favorable than the most favorable
terms and conditions afforded to other agents. Buyer further
agrees to assist in any other placement needs reasonably
requested by Parent.
ARTICLE 8
Conditions
Section 8.1 Conditions to Each Party's Obligation To Effect
the Asset Purchase. The respective obligations of each party to
effect the transaction shall be subject to the satisfaction prior
to the Closing Date of the following conditions:
(a) Approvals. All authorizations, consents, orders, or
approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity, the failure
to obtain which would have a material adverse effect on Seller or
Buyer, shall have been filed, occurred, or been obtained.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other
order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
transaction shall be in effect, and no action, suit, or
proceeding shall be pending before any court or judicial or
administrative agency wherein an unfavorable judgment, order,
decree, stipulation or charge would prevent consummation of the
transactions contemplated by this Agreement or cause such
transactions to be rescinded following consummation.
(c) Opinion of Buyer's Counsel. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
as counsel to Buyer, shall have delivered to Buyer and Seller a
written opinion dated as of the Closing Date in the form attached
hereto as Exhibit 8.1(c) with only such changes as shall be in
form and substance reasonably satisfactory both to Seller and
Buyer.
Section 8.2 Conditions to Obligations of Buyer. The
obligation of Buyer to effect this acquisition are subject to the
satisfaction of the following conditions, unless waived by Buyer:
(a) Representations and Warranties. The
representations and warranties of Seller set forth in this
Agreement shall be true and correct as of the Effective Date and
(except to the extent such representations and warranties speak
as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, and Buyer shall have received a
certificate signed on behalf of Seller to such effect.
(b) Performance of Obligations by Seller. Seller
shall have performed all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and
Buyer shall have received a certificate signed on behalf of
Seller to such effect.
(c) Opinion of Seller's Counsel. Parent's general
counsel, as counsel to Seller, shall have delivered to Buyer a
written opinion dated as of the Closing Date in the form attached
hereto as Exhibit 8.2(c) with only such changes as shall be in
form and substance reasonably satisfactory to Buyer and its
counsel.
Section 8.3 Conditions to Obligations of Seller. The
obligation of Seller to effect this transaction is subject to the
satisfaction of the following conditions, unless waived by
Sellers:
(a) Representations and Warranties. The
representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and Seller
shall have received a certificate signed on behalf of Buyer by an
executive officer of Buyer to such effect.
(b) Performance of Obligations by Buyer. Buyer shall
have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the
Closing Date, and Seller shall have received a certificate signed
on behalf of Buyer by an executive officer of Buyer to such
effect.
(c) Third Party Consents and Amendments. Seller and
its affiliates shall have received any required consents and
approvals under their respective agreements governing outstanding
indebtedness.
ARTICLE 9
Termination and Amendment
Section 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date:
(a) by mutual consent of Buyer, Seller and Parent;
(b) by Buyer, Seller or Parent if there shall have
been a material breach of any representation, warranty, covenant,
or agreement on the part of the other party set forth in this
Agreement which breach shall not have been cured, in the case of
a representation or warranty, prior to the Closing or, in the
case of a covenant or agreement, within two business days
following receipt by the breaching party of notice of such
breach; or
(c) by either Buyer, Seller or Parent if any permanent
injunction or other order of a court or other competent authority
preventing the consummation of the acquisition shall have become
final and nonappealable.
Section 9.2 Effects of Termination. In the event of a
termination of this Agreement by either party as provided in
Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of any party, or
any of their respective officers or directors, except to the
extent that such termination results from the willful breach by a
party hereto of any of its representations, warranties,
covenants, or agreements set forth in this Agreement.
Section 9.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 9.4 Extension; Waiver. At any time prior to the
Closing Date, the parties may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party.
ARTICLE 10
Indemnification
Section 10.1 Indemnification Provisions for Benefit of
Buyer. Seller and Parent, jointly and severally, agree to
indemnify and hold Buyer harmless from and against any Adverse
Consequences (as defined below) Buyer may suffer or incur
resulting from or arising out of the breach of any of the
representations, warranties or covenants of Seller and Parent
contained herein. The phrase "Adverse Consequences" means
damages, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, losses, and fees, including all attorneys'
fees and court costs, both at the trial and the appellate level.
Section 10.2 Indemnification Provisions for the Benefit of
Seller and Parent. Buyer agrees to indemnify and hold Seller,
Parent, and their respective subsidiaries and affiliates harmless
from and against any Adverse Consequences any of such parties may
suffer or incur resulting from or arising out of the breach of
any of Buyer's representations, warranties, or covenants
contained herein.
Section 10.3 Matters Involving Third Parties. If any third
party shall notify any party hereto (the "Indemnified Party")
with respect to any matter that may give rise to a claim for
indemnification against another party (the "Indemnifying Party")
under this Article 10, then the Indemnified Party shall notify
the Indemnifying Party promptly; provided, however, that no delay
on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any
liability or obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is damaged. The
Indemnifying Party shall have the right, within fifteen days
after the Indemnified Party has given notice of the matter, to
assume the defense of any such claim, provided that the
Indemnifying Party admits in writing its indemnification
obligations hereunder. If the Indemnifying Party does not assume
the defense of any such claim, the Indemnified Party may defend
against or enter into any settlement with respect to, the matter
in any manner it may reasonably deem appropriate.
Section 10.4 Limitation. No party shall have the right to
make a claim for indemnification under this Article 10 unless and
until the aggregate amount of Adverse Consequences incurred by
such party exceeds $5,000, at which point the Indemnifying Party
shall be responsible for the entire amount of any such Adverse
Consequences, including the initial $5,000 thereof.
ARTICLE 11
Miscellaneous
Section 11.1 Survival of Representations, Covenants,
Warranties, and Agreements. Unless a specific term is set forth
elsewhere in this Agreement, all representations, warranties,
covenants, and indemnities made by the parties in this Agreement
shall be deemed made for the purpose of inducing the others to
enter into this Agreement, and shall survive the Closing and
remain operative and in full force and effect for a period of one
year following the Closing Date.
Section 11.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (if confirmed), or mailed by
registered or certified mail (return receipt requested) to the
parties at the following addresses or at such other address for a
party as shall be specified by like notice):
If to Seller or Parent, to
▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Buyer, to
Health Care Insurers, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.3 Counterparts. This Agreement may be executed
in two or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 11.4 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership. This Agreement (including
the documents and instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
Section 11.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Florida without regard to any applicable conflicts of
law.
Section 11.6 Publicity. Except as otherwise required by
law or the rules of The Nasdaq Stock Market, neither Seller,
Parent nor Buyer shall issue or cause the publication of any
press release or other public announcement with respect to the
transactions contemplated by this Agreement prior to the Closing
without the consent of the other parties, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, Parent
and its affiliates may respond to routine inquiries from
securities analysts in connection with the transactions
contemplated hereby.
Section 11.7 Assignment. Neither this Agreement nor any of
the rights, interests, or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by
the parties and their respective successors and assigns.
Section 11.8 Arbitration. Any dispute arising under this
Agreement that is not resolved by discussions among the parties
hereto shall be submitted to arbitration proceedings in Tampa,
Florida, to be conducted in accordance with the rules and
procedures of the American Arbitration Association (the "AAA").
The parties shall select an arbitrator that is a member of the
AAA to arbitrate the dispute. If the parties are unable to agree
upon such an arbitrator, each party shall select an arbitrator
that is a member of the AAA, and those arbitrators shall select a
third arbitrator, who is a member of the AAA, who shall serve as
the sole arbitrator in the proceeding.
IN WITNESS WHEREOF, the parties have signed or caused this
Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
HEALTH CARE INSURERS, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
▇▇▇ & ▇▇▇▇▇, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_______________________________
Title: Vice President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ ▇. ▇▇▇▇, INC.
a Colorado corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
________________________________
Title: President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
LIST OF EXHIBITS AND SCHEDULES
SCHEDULE 1.2(a): Purchased Book of Business
SCHEDULE 1.2(b)(ii): List of Material Contracts
SCHEDULE 1.2(c): List of Tangible Personal Property
SCHEDULE 3.3: Exceptions to Section 3.3 Representations
SCHEDULE 3.5: List of Material Changes
SCHEDULE 3.7: List of Lawsuits and Claims
SCHEDULE 3.10: List of E&O Claims
SCHEDULE 5.3: Accounts Placed by Parent with Seller
EXHIBIT 8.1(c): Opinion of Buyer's Counsel
EXHIBIT 8.2(c): Opinion of Seller's Counsel