Definitive Asset Purchase Agreement dated August 22, 2007 between Savannah Advisors, Inc., a wholly owned subsidiary of The Savannah Bancorp, Inc., and Minis & Co., Inc. ASSET PURCHASE AGREEMENT
Exhibit
1.01
Definitive
Asset Purchase Agreement dated August 22, 2007 between Savannah Advisors,
Inc.,
a wholly owned subsidiary of The Savannah Bancorp, Inc., and Minis & Co.,
Inc.
This
Asset Purchase Agreement (the
"Agreement") is entered into as of August 3, 2007, by and between
Minis & Co., Inc., as seller (hereinafter referred to as
the "Seller"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
III, the sole shareholders of Seller (hereinafter, individually
referred to as a "Selling Shareholder" and collectively as the
"Selling Shareholders"), and The Savannah Bancorp, Inc. ("Parent")
and Savannah Advisors, Inc., the wholly owned subsidiary of
Parent as buyer (hereinafter, the “Sub” or “Buyer”).
Whereas,
Seller owns and operates an investment advisory business, which is registered
under the Investment Advisors Act of 1940, (the "Business") commonly
known as, and operated under the name of "Minis and Company," whose principal
office is located in leased space at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇; and
Whereas,
the Boards of Directors of Parent, Buyer and Seller and the Selling Shareholders
have approved, respectively, the purchase (the “Purchase”) by and sale to
Buyer of substantially all of the business and assets of the Business upon
the
terms and conditions set forth below.
Now,
therefore, in consideration of the premises, the mutual covenants, the
representations and warranties, and the purchase price set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which
is
hereby acknowledged, the parties hereto each agrees as follows:
1. Effective
Time of Closing. The closing of the transactions contemplated
hereby (the “Closing”) will take place on such date and at such time as
shall be mutually agreed upon by the parties hereto, but shall not occur later
than Friday, August 31, 2007. The Closing shall be conducted
at or through the offices of Buyer’s attorney. Notwithstanding anything to the
contrary, the effective time of the purchase and sale contemplated hereby for
purposes of calculating or determining assets and liabilities shall be as of
the
close of all business on Friday, August 31, 2007 (the "Effective
Time").
2. Sale
and Conveyance of Assets.
(a) At
Closing and as of the Effective Time, Seller shall sell, transfer, assign,
convey and deliver to Buyer good and marketable title in and to all tangible
and
intangible assets of the Business, including but not limited to the assets
listed on Schedule 2(a) attached hereto. All items being sold by Seller
to Buyer under this agreement are hereinafter referred to individually and
collectively as the "Assets".
(b) Notwithstanding
anything to the contrary, the "Assets" shall not include, and Seller shall
not
sell hereunder and shall retain those assets listed on Schedule 2(b)
which are hereinafter referred to individually and collectively as the
"Excluded Assets."
(c) At
Closing, Seller shall execute and deliver to Buyer the general warranty ▇▇▇▇
of
sale (the "▇▇▇▇ of Sale") in the form attached hereto as Schedule
2(c) which conveys to Buyer good and marketable title in and to the Assets,
free and clear of all liens, security interests, mortgages, pledges, covenants,
assessments, title defects, claims, encumbrances, recorded or unrecorded leases,
easements or licenses, taxes, claims, options, liabilities, commitments,
charges, restrictions, and other obligations of any nature whatsoever
(hereinafter, all such liens, security interests, mortgages,
A-1
etc.
are referred to collectively and individually as the "Encumbrances") and
Parent and Buyer shall deliver to Seller the Purchase Price as hereinafter
defined and set forth below.
3. Liabilities
Assumed/Not Assumed by Buyer. Notwithstanding anything in this
agreement to the contrary, Buyer, except for the liabilities set forth and
itemized on Schedule 3 (hereinafter, the "Assumed Liabilities"),
shall assume no liability or obligation of Seller of any nature whatsoever,
including but not limited to any liens, fines, penalties, judgments, costs,
expenses, payables, contractual obligations or duties, litigation, liabilities
or obligations of any kind or nature, whether or not existing as of the
Effective Time or attributable to or arise from, in any way, the acts,
omissions, business or operations of Seller prior to the Effective Time or
the
ownership or operation or use of any of the Assets or Business prior to the
Effective Time. Seller shall continue to be liable and responsible
for all of its liabilities which are not expressly assumed hereunder by
Buyer.
4. Purchase
Price. The purchase price (“Purchase Price”) to be paid
for the Assets shall be an amount calculated as follows:
(a) the
sum of Three Million Seven Hundred-fifty Thousand Dollars ($3,750,000.00) which
shall be paid at Closing in a combination of cash and common voting stock
(“Common Stock”) of Parent (the "Closing Component") in the proportions
set forth in Item 5 below.
(b) plus,
in addition thereto, an earn-out component to be paid in cash after Closing
based on the cumulative revenue from the Business for the thirty four (34)
month
period immediately ensuing following the Closing Date (the "Earn-out
Component");
(c) plus
or minus, as the case may be, an amount, the "Working Capital Adjustment"
(defined below) determined as provided in Item 7 below, should "Working Capital"
(defined below) be greater than or less than zero at Closing.
5. Payment
of the Closing Component.
(a) The
Closing Component shall be paid to Seller at Closing as follows: (i) an amount
(the "Stock Component") equal to the product of seventy-one thousand
71,000 multiplied by the "Average Closing Price" (defined below) shall be
paid by delivery of seventy-one thousand (71,000) shares of the Common Stock
of
Parent; and (ii) the difference of $3,750,000.00 minus the Stock Component,
shall be paid to Seller in immediately available certified funds. The
"Average Closing Price" shall be the average closing price of the Common Stock
on the NASDAQ (x) on the day immediately preceding the day on which this
transaction is publicly announced and (y) on the day on which this transaction
is publicly announced (the "Announcement Date"). The
transaction will be announced publicly by Buyer on the first business day
immediately following the date of this Agreement in the form attached hereto
as
Schedule 5(a).
(b) Within
thirty (30) days following Closing, Parent shall file a registration statement
(the “Registration Statement”) for all of the Common Stock comprising the
Closing Component, under the Securities Act of 1933 (the “33 Act”) on Form S-3
or other applicable form and all amendments thereto and shall exercise its
best
efforts to cause said Registration Statement to become effective as soon
thereafter as possible. Parent shall bear all costs of filing the
Registration Statement, including the registration fee and the costs of filing
all other reports with the Securities and Exchange Commission (the
“Commission”). Following effectiveness of the Registration
Statement all such Common Stock shall be fully tradable by the Selling
Shareholders in the market Subject to the Commission rules
related to trading by affiliates of the Parent.
(c) Parent
shall also take any action required to be taken under applicable blue sky or
securities laws of the states of Georgia and Florida in connection with the
issuance of the
A-2
Parent
Common Stock (provided that Parent shall not be required to qualify as a foreign
corporation or to comply with any requirements reasonably deemed by Parent
to be
unduly burdensome). Parent shall pay the costs of filing under the
blue sky laws or securities laws of the aforesaid states in which Parent’s
Common Stock will be sold.
(d) If,
between the date hereof and the Effective Time, the outstanding shares of Parent
Common Stock shall be changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or if a stock dividend thereon
shall be declared with a record date within such period, the number of shares
of
Parent Common Stock to be issued and delivered to Seller as provided in this
Agreement shall be correspondingly adjusted and any new conversion ratio
resulting from any such adjustment shall be rounded to three decimal
places.
(e) Parent
shall use its best efforts to effect authorization for listing on the NASDAQ
at
Parent’s expense upon official notice of issuance, the additional shares of
Parent Common Stock to be issued pursuant to the Asset Purchase Agreement,
at
Parent’s sole expense.
6. The
Earn-out Component. The Earn-out Component shall be determined as
set forth on Schedule 6 attached hereto and incorporated herein by
reference. Buyer shall pay to Seller the Earn-out Component, if any,
in immediately available certified funds on or before July 31,
2010.
7. Working
Capital Adjustment.
(a) “Working
Capital” shall mean current assets (defined as the sum of cash upon Closing
plus accounts receivable upon Closing) minus current liabilities (defined as
the
sum of accounts payable upon Closing plus unearned revenue upon Closing) of
Seller. The Purchase Price includes all assets and liabilities
comprising Working Capital as of the Closing Date and will be adjusted to the
extent that Working Capital upon Closing is greater than or less than zero.
To
the extent that Working Capital upon Closing is greater than zero on the Closing
Date, the purchase price shall be increased by the amount of the excess, and
Buyer shall promptly pay the amount of such excess to Seller in
cash. To the extent that Working Capital upon Closing is less than
zero on the Closing Date, the purchase price shall be decreased by the amount
of
the deficit, and Seller shall promptly pay the amount of such deficit to Buyer
in cash. The amount of the excess or deficit shall be the "Working
Capital Adjustment."
(b) Seller
shall prepare financial statements ("Closing Financial Statements") of
the Business as of the Effective Time in accordance with generally accepted
accounting principles. Seller shall then determine the Working Capital as of
the
Effective Time minus accruals in accordance with GAAP in respect of liabilities
to be incurred by Buyer after the Effective Time (such difference shall be
referred to as the "Closing Working Capital") based upon the Closing
Financial Statements and using the methodology and form as set forth on
Schedule 7(b). Seller shall deliver the Closing Financial
Statements and its determination of the Closing Working Capital to Buyer within
fifteen (15) days following the Closing Date.
(c) If
within ten (10) days following delivery of the Closing Financial Statements
and
the Closing Working Capital calculation Buyer has not given Seller written
notice of its objection as to the Closing Working Capital calculation (which
notice shall state the specific basis of Buyer’s objection), then the Closing
Working Capital calculated by Seller shall be binding and conclusive on the
parties and shall be used in computing the Working Capital Adjustment
Amount.
(d) If
Buyer timely gives Seller such notice of objection, and if Seller and Buyer
fail
to resolve the issues outstanding with respect to the Closing Financial
Statements and the calculation of the Closing Working Capital within fifteen
(15) days of Buyer's receipt of Seller's objection notice, Seller and Buyer
shall immediately submit the issues remaining in dispute to
A-3
▇▇▇▇▇▇
▇▇▇▇, LLP, independent public accountants whom each party represents and
warrants has not worked for such party within the last three (3) years (the
"Independent Accountants"), for resolution applying the principles,
policies and practices referred to in Schedule 7(b). If issues are
submitted to the Independent Accountants for resolution, (i) Seller and Buyer
shall furnish or cause to be furnished to the Independent Accountants such
work
papers and other documents and information relating to the disputed issues
as
the Independent Accountants may request and are available to that party or
its
agents and shall be afforded the opportunity to present to the Independent
Accountants any material relating to the disputed issues and to discuss the
issues with the Independent Accountants; (ii) the determination by the
Independent Accountants, as set forth in a notice to be delivered to both Seller
and Buyer within forty-five (45) days of the submission to the Independent
Accountants of the issues remaining in dispute, shall be final, binding and
conclusive on the parties and shall be used in the calculation of the Closing
Working Capital; and (iii) Seller, on the one hand, and Buyer, on the other
hand, shall each bear fifty percent (50%) of the fees and costs of the
Independent Accountants for such determination.
(e) The
Working Capital Adjustment, if any, shall be paid as soon as the amount thereof
has been finally determined in accordance with the procedures set forth in
Sections 7(b) – (d) above.
8. Closing
Prorations. Subject to any other provisions of this Agreement,
personal property taxes, utilities and other similar items customarily prorated
at closing and relating to the Business and Assets shall be apportioned between
the Buyer and Seller thereof as of the Effective Time, with any item relating
to
periods ending on or prior to the Effective Time for the account of the Seller
thereof, and any item relating to periods beginning at or after the Effective
Time for Buyer's account. To the extent Seller receives any rent, license,
fee,
royalty or similar payments with respect to Assets being sold hereunder, the
same shall be prorated as of Closing in the same fashion as provided for above
in this paragraph. Final adjustments pursuant to this paragraph which cannot
be
made at Closing, or were not made at Closing, shall be made after Closing within
ten (10) days of written demand therefore by any party.
9. Lease
Agreement; Interim Services Agreement. As a condition
precedent to Parent and Buyer's obligations to close, Buyer and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have executed a lease of ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ in the form attached hereto as Schedule 9
(hereinafter referred to as the "Lease").
10. Restrictive
Covenants. As material inducement for Parent and Buyer entering
into this Agreement and as a condition precedent to, and additional
consideration to Buyer for, Buyer’s consummating the purchases and sales
contemplated hereby, Seller, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, A. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ III and ▇▇▇▇ ▇. ▇▇▇▇▇ shall execute and deliver restrictive covenant
agreements substantially in the form attached hereto as Schedule 10 (the
"Restrictive Covenants Agreements").
11. Employment
Agreements. As a condition precedent to Parent and Buyer's
obligation to close, Buyer and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III and ▇▇▇▇ ▇. ▇▇▇▇▇, respectively, shall have executed
and
delivered employment agreements (the "Employment Agreements") in the
forms for such person attached hereto as Schedule 11.
12. Representations
and Warranties of Seller and its Shareholders. As a material
inducement to Parent and Buyer to enter into this Agreement, the Selling
Shareholders and the Seller, jointly and severally, hereby make to Parent and
Buyer the representations and warranties set forth in this Item 12 as of the
date of this Agreement and as of the Effective Time. If the Closing
occurs, then each of the applicable representations and warranties set forth
in
this item will be
A-4
deemed
to be re-made by Seller and the Selling Shareholders as of the time of the
Effective Time and Closing as an inducement to the Parent and Buyer to
consummate the closing transactions contemplated by this
Agreement. Each of the representations and warranties set forth in
this item shall survive the Effective Time and the Closing of the transactions
contemplated hereby for the time set forth in Item 26(e).
(a) Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Georgia, and Seller has full power and authority
to conduct its business and to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. No filing with or consent
of
any governmental authority or other person is required in connection with the
consummation of the transactions contemplated hereby, except for the directors
and shareholders of Seller. All actions of Seller and of its directors and
shareholders necessary to authorize the execution, delivery and performance
of
this Agreement, and the consummation of the transactions contemplated hereby,
have been taken. This Agreement has been duly executed by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
(b) Neither
the execution, delivery nor performance by Seller of this Agreement nor the
consummation by Seller of the transactions contemplated hereby or thereby,
will
(i) conflict with, or violate, Seller’s articles of incorporation or by-laws or
other similar documents relating to corporate governance, (ii) conflict with,
violate or give rise to a right of termination under, any agreement, contract
or
instrument by which Seller is bound or to which Seller or any of its assets
or
stock are subject, (iii) violate any law, including but not limited to any
laws,
rules, regulations or ordinances applicable to Seller, the Business or the
Assets, (iv) adversely affect any permit, license or authorization relating
to
Seller, the Business or the Assets, or (v) adversely affect any right, title
and
interest in and to the Proprietary Rights (as hereinafter defined) of Seller
or
the ability of the Buyer to use said Proprietary Rights. No consent,
approval or other action by any federal, state, provincial, or local
governmental authority is required in connection with the execution and delivery
by Seller of this Agreement and the consummation of the transactions
contemplated hereby.
(c) Seller
is the sole owner of and has, and will deliver to Buyer at Closing, good and
marketable title in and to all of the Assets, free and clear of all
Encumbrances. All tangible Assets are now in, and at Closing will be in, good
working order, repair and condition.
(d) True
and correct copies of all written contracts, agreements, understandings or
other
arrangements creating, evidencing or setting forth any of those any costs,
expenses, payables or liabilities included in or comprising Assumed
Liabilities, if any, are attached to Schedule 12(d), and
summaries of all oral contracts, agreements, understandings or other
arrangements creating, evidencing or setting forth any of those any costs,
expenses, payables or liabilities listed on said schedule are set forth on
said
schedule. Seller warrants that all of the contracts described in said schedule
are in full force and effect, are current, and are not subject to any defaults
or set-off or to any grounds of which Seller is aware and which may give rise
to
any default or set-off, and that any necessary consents to the assignment of
such contracts which are to be assigned hereunder to Buyer have been
obtained.
(e) There
are no outstanding judgments against or encumbering, or purporting to encumber,
Seller, the Business or any of the Assets. There is no litigation or proceeding
(including but not limited to investigations and inspections) pending or, to
the
knowledge of Seller, threatened against Seller, the Business or the
Assets.
(f) All
taxes of or pertaining to any of Seller, the Business or the Assets required
to
be paid prior to the date hereof have been paid, and all tax or franchise
returns and reports of any
A-5
nature
whatsoever required to be filed by Seller prior to the date hereof have been
filed. All tax or franchise returns, reports and documents required
to be filed by Seller and all taxes required to be paid by Seller prior to
the
Effective Time or Closing shall be paid or filed by Seller on or before such
time. There are no audits or investigations involving Seller, the
Business or the Assets pending or any outstanding agreements or waivers
extending the statutory period of limitations applicable to any federal, state
or local tax or tax return or document for any period. There are no
determined tax deficiencies, proposed tax assessments or tax liens against
any
of Seller, the Business or the Assets.
(g) Seller
has paid in full all required withholding, social security, unemployment
insurance, sales, use, property, and other taxes or assessments, has filed
all
required federal, state, provincial, and local tax returns and has paid all
taxes and assessments due thereunder in a timely manner. Any ad
valorem or property taxes on the Business or Assets not yet due and payable
shall, as of the Effective Time, be prorated between Buyer and Seller, as the
context so requires.
(h) With
respect to the Business, the balance sheets as of December 31, 2006, and June
30, 2007, the accounts receivable aging report as of June 30, 2007, and the
income statements for the one-year period ended December 31, 2006, and the
six-month period ended June 30, 2007, respectively, copies of which are attached
hereto as part of attached Schedule 12(h) (the
“Financial Statements”),
are true, correct and complete in all material respects, are consistent with
the
books and records of Seller which have been maintained by Seller in the ordinary
course of business in accordance with Seller's customary business practice,
present fairly the financial condition and operations of Seller as of the dates
and for the periods represented thereby and have been prepared in accordance
with generally accepted accounting principles, consistently applied, except
as
noted therein. Any other financial statements or other financial information
or
data pertaining to any Seller, the Business, or the Assets, which has been
or
may be provided to Buyer at or prior to Closing, are and will be true and
correct. Since January 1, 2006, Seller has conducted the Business
only in the ordinary course and in accordance with past practices, there has
not
been any material adverse change in the business, operations or condition of
the
Business or the Assets, and there has not been any event which has had or could
reasonably be expected to have a material adverse effect on the business,
operations or condition of the Business or the Assets.
(i) The
accounts receivable shown on any balance sheet, accounts receivable aging report
or other document or report provided to Parent and Buyer in connection with
Parent and Buyer’s consideration of the purchases and sales contemplated hereby,
including but not limited to the Financial Statements described above, represent
valid, bona fide receivables generated in the ordinary course of business from
actual, valid, bona fide transactions payable on ordinary trade terms. Since
January 1, 2006, Seller has billed and collected its accounts receivable only
in
the ordinary course of business. The accounts receivable to be
purchased hereunder by Buyer at Closing will represent valid, bona fide
receivables generated in the ordinary course of business from actual, valid,
bona fide transactions payable on ordinary trade terms and not subject to any
contest, claim, defense or right of setoff. As of Closing, Seller shall have
paid its routine and ordinary accounts payable incurred in connection with
the
Business on a timely basis (subject to the right to contest the same in good
faith), and, after Closing, shall continue to pay all its routine and ordinary
accounts payable incurred in connection with the Business not expressly assumed
hereunder by Buyer on a timely basis (subject to the right to contest the same
in good faith).
(j) Seller,
the operations of the Business, and the Assets each has complied with, is in
compliance with, and will be in compliance with at Closing, all federal, state,
provincial, local and other applicable laws, rules, regulations, orders and
ordinances (including but not limited to those relating to health, safety,
hazardous materials or substances, or the environment)
affecting,
A-6
governing
or applicable to Seller's operation or conduct of the Business or Seller's
ownership or use of the Assets or property leased or licensed in the conduct
of
the Business. Seller has all licenses, permits, authorizations and like items
required or necessary to own or conduct the Business and/or the Assets. Seller,
with respect to its conduct of the Business, has not stored, transported or
disposed of any hazardous materials or
substances regulated by any environmental laws, rules or regulations in a manner
contrary to or in violation of any of such laws, rules or regulations. During
the last two years, Seller, with respect to the Business or its operations,
has
not been and is not now subject to any claim or investigation relating to a
violation or alleged violation of or under any environmental laws, rules or
regulations.
(k) All
files, records and incidental documentation of Seller concerning the Business
and/or the Assets (including, but not limited to, all contracts, computer
records, general ledgers, books and records, accounting and tax records, lists
of past, current and prospective customer lists, lists of current vendors,
contract information, credit records and other information maintained by Seller
concerning the Business) are kept in the ordinary course of business in
accordance with such Seller's customary business practice, are located at
Seller’s principal place of business, and will be delivered to Buyer at
Closing.
(l) Seller
has not used any trade names or any assumed or fictitious names in connection
with the operation of Business during the last five years other than Minis
and
Company. None of the Proprietary Rights (as hereinafter defined) of
Seller included in the Assets conflict with or infringe upon the rights of
any
other person or entity, nor is Seller aware of any claim, whether currently
pending, outstanding or threatened, or of grounds for any claim, by any third
party contesting the validity, enforceability, use or ownership of any of the
Proprietary Rights of Seller. Seller owns and possesses all
right, title and interest in and to any and all of the Proprietary Rights of
Seller necessary for, or now used in, the operation of the Business as currently
conducted, free and clear of all Encumbrances. None of the Proprietary
Rights of Seller included in the Assets is used by Seller under a license or
other similar arrangement. To the best of the knowledge of Seller, no person
or
entity is infringing upon any of the Proprietary Rights of Seller, and the
loss
or expiration of any of the Proprietary Rights used by Seller is not threatened,
pending or reasonably foreseeable.
(m) With
respect to the Business, Seller is not a party to any "Trade
Arrangements," which mean and include all barter arrangements and unexpired
merchandise and other trades for merchandise and services, whether owing to
or
accruing to the benefit of the Seller or owed by or a liability or obligation
of
the Seller. Notwithstanding anything to the contrary in this
Agreement, Buyer is not assuming any liability of Seller for Trade
Arrangements.
(n) Attached
hereto as Schedule 12(n) is a schedule showing (i) each employee of the
Business and (ii) each independent contractor of the Business which regularly
provides services to the Business, and for each employee, such employee’s start
date and current rate of pay and vacation, which schedule Seller represents
and
warrants is complete, true and correct.
(o) Seller
has complied in all material respects with all applicable laws, rules and
regulations (collectively, "Employment Law") relating to employment
practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, and/or occupational safety
and
health. Seller is not liable for the payment of any taxes, fines, penalties,
or
other amounts, however designated, for failure to comply with any of the
foregoing laws. Seller has complied in all material respects with all
laws, rules and regulations relating to any employee benefit plans maintained
by
Seller. Seller has not violated the Worker Adjustment and Retraining
Notification Act or any similar state or local law, rule or regulation. No
current or past employee of
A-7
the
Business or governmental agency has made a claim in the last two years that
Employment Law has been violated with respect to a current or past employee
of
the Business or that unlawful harassment or discrimination has taken place
with
respect to any such employee.
(p) Neither
this Agreement nor any schedule or exhibit attached hereto nor any document
furnished to the Buyer in connection herewith or pursuant hereto contains or
will contain any untrue statement of a material fact, or omits or will omit
to
state any material fact required to make the statements contained herein or
therein not misleading. There is no fact (other than matters of a
general economic or political nature which do not affect the Business uniquely)
known to Seller that has not been disclosed to the Buyer that might reasonably
be expected to have or result in a materially adverse effect to the Business
or
Assets being purchased hereunder. All of the foregoing representations and
warranties are made by Seller with the knowledge and expectation that Buyer
is
placing reliance thereon and is being induced thereby to close the transactions
contemplated by this Agreement.
13. Representations
and Warranties of Parent. As a material inducement to Seller to
enter into this Agreement, Parent represents and warrants to the Company as
follows:
(a) Parent
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Georgia and has full corporate power and authority to
own,
lease and operate its assets and properties and to carry on its business as
it
is now being conducted or presently proposed to be conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing,
in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified will not, in the aggregate, have a material
adverse effect on the financial condition, results of operations, business
or
prospects of Parent and its subsidiaries taken as a whole. True, accurate and
complete copies of Parent’s certificate of incorporation and by-laws, including
all amendments thereto, have heretofore been delivered to the
Company.
(b) The
authorized capital stock of Parent consists of twenty million (20,000,000)
shares of Parent Common Stock. As of July 31, 2007, 5,837,657 shares
of Parent Common Stock were validly issued and outstanding, fully paid and
nonassessable. All of the shares of Parent Common Stock issueable in
payment for the Assets at the Effective Time in accordance with this Agreement
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and free of pre-emptive rights. As of the date hereof,
there are no outstanding options, rights or warrants obligating Parent or any
subsidiary of Parent to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the capital stock of Parent or any subsidiary
of
the Parent or obligating Parent or any subsidiary of Parent to grant, extend
or
enter into any such agreement or commitment (except for Parent’s Employee
Savings Plan, Employee Stock Ownership Plan and Stock Purchase
Plan).
(c) Each
subsidiary material to the business of Parent and its subsidiaries, taken as
a
whole, is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has full corporate
power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted or proposed to be
conducted. Each of such subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of
its
activities make such qualification necessary, except where the failure to be
so
qualified will not, in the aggregate, have a material adverse effect on the
financial condition, results of operations, business or prospects of
Parent. All the outstanding shares of capital stock of such
subsidiaries are validly issued, fully paid, nonassessable and free of
pre-emptive rights and those
A-8
owned
by Parent or by a subsidiary of Parent are owned free and clear of any liens,
claims or encumbrances.
(d) (i) Parent
has full corporate power and authority to enter into this Agreement and to
carry
out its obligations hereunder. The execution and delivery of this Agreement,
the
performance by Parent of its obligations hereunder and the consummation of
the
transactions contemplated hereby have been duly authorized by Parent’s Board of
Directors and no other corporate proceedings on the part of Parent are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent, and
assuming the due authorization, execution and delivery hereof by the Seller,
will constitute the valid and binding agreement of Parent, enforceable in
accordance with its terms, except as may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally, and subject to general
principles of equity.
(ii) The
execution and delivery of this Agreement by Parent does not, and the performance
by Parent and Sub of their respective obligations hereunder and the consummation
of the transactions contemplated hereby will not, violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by,
or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the
properties or assets of Parent or any of its subsidiaries (including Buyer)
under any of the terms, conditions or provisions of (i) the respective charters
or by-laws of Parent of any of its subsidiaries (including Buyer), (ii) subject
to compliance with the statutes and regulations referred to in subsection (c)
of
this Section, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license applicable to Parent or any of its
subsidiaries (including Buyer) or any properties or assets of Parent or any
of
its subsidiaries (including Buyer), or (iii) any note, bond, mortgage,
indenture, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of its
subsidiaries (including Buyer) is now a party or by which Parent or any of
its
subsidiaries (including Buyer) or any of their respective properties or assets
may be bound, excluding from the foregoing clauses (ii) and (iii) violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the financial condition, results
of
operations, business or prospects of Parent and its subsidiaries taken as a
whole.
(iii) Except
for the filing with the Securities and Exchange Commission pursuant to the
’33
Act, as amended and with various blue sky authorities of the Registration
Statement relating to the shares of Parent Common Stock to be issued to Seller
pursuant to this Agreement, the filing of appropriate documents, if any, as
required by the Georgia Law, and any approval required by the Federal Law,
no
filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Parent or Buyer
of
the Purchase or the other transactions contemplated by this Agreement, other
than such filings, registrations, authorizations, consents or approvals as
will
not, in the aggregate, have a material adverse effect on the financial
condition, results of operations, business or prospects of Parent and its
subsidiaries taken as a whole.
A-9
(e) Since
December 31, 2006, Parent and each of its subsidiaries required to make filings
under the ‘33 Act, the Securities Exchange Act of 1934 (the “Exchange
Act”) or any applicable Federal Law, but not including the Investment
Advisors Act of 1940), has filed with the Commission all forms, reports and
documents required to be filed by it under each of the Securities Act, the
Exchange Act and such Federal Law, but not including the Investment Advisors
Act
of 1940, and the respective rules and regulations thereunder, all of which
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. Parent has previously
furnished or made available to the Seller, true and complete copies of its
(a)
Annual Reports on Form 10-K for the five years ended December 31, 2006, as
filed
with the Commission, (b) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2007 and June 30, 2007, (c) proxy statements relating to all meetings
of its stockholders (whether annual or special) during 2002, 2003, 2004, 2005,
2006 and 2007, and (d) all other reports or Registration Statements filed by
Parent with the Commission since December 31, 2001. As of their
respective dates, such reports and statements did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements
of
Parent included in such reports have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may
be
indicated therein or in the notes thereto) and fairly present the financial
position of Parent and its subsidiaries as at the dates thereof and the results
of their operations and changes in financial position for the periods then
ended
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described
therein.
(f) Since
June 30, 2007, except as disclosed in Parent’s Current Report on Form 8-K, and
to the best of Parent’s knowledge and belief, there has not been any material
adverse change in the financial condition or in the results of operations or
the
businesses, properties, assets, liabilities or prospects of Parent and its
subsidiaries, taken as a whole.
(g) Except
as disclosed in Parent’s Annual Report on Form 10-K for the year ended December
31, 2006, its Quarterly Report on Form 10-Q for the quarter ended June 30,
2007,
or its Current Report on Form 8-K, there is no suit, action or proceeding
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its subsidiaries which, if adversely determined, would materially
and
adversely affect the financial condition, business prospects or results of
operations of Parent and its subsidiaries, taken as a whole; nor, to the
knowledge of the Parent, is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against Parent or any of its subsidiaries having,
or
which, insofar as can reasonably be foreseen, in the future may have, any such
effect.
(h) None
of the information to be supplied by Parent or Buyer or their respective
auditors, attorneys, financial advisors or other consultants or advisors for
inclusion in the Registration Statement to be filed with the Commission by
Parent on Form S-3 under the ‘33 Act for the purpose of registering the shares
of Parent Common Stock to be issued in the Purchase will contain, to the
knowledge of the Parent, 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
are
made, not misleading or necessary to correct any statement in any earlier filing
with the Commission of such Registration Statement or any amendment thereto
or
any earlier communication to stockholders of the Company with respect to
the
A-10
Purchase. If
at anytime prior to the Effective Time Parent becomes aware of any event with
respect to Parent, its officers and directors of any of its subsidiaries
(including Buyer) which is or should be described in an amendment of, or a
supplement to, the Registration Statement, such event shall be so described
and
filed as an amendment with the Commission. The representation in such
amendment or supplement of such information will not contain any statement
which, at the time and in light of the circumstances under which it is made,
is
false or misleading with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statement therein, in light of the circumstances under which they were made,
not
false or misleading. The Registration Statement will comply as to
form in all material respects with all applicable laws, including the provisions
of the ‘33 Act and the rules and regulations promulgated
thereunder.
(i) To
the knowledge of Parent, Parent does not have liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature required by
generally accepted accounting principles to be reflected in its corporate
balance sheet, except liabilities, obligations or contingencies which are
accrued or reserved against in Parent’s financial statements or reflected in the
notes thereto or which were incurred after the date of Parent’s balance sheet
dated as of June 30, 2007, and either included in its Form 10-Q as filed with
the Commission, or were incurred in the ordinary course of business and
consistent with past practices except for any such liabilities or obligations
which would not, in the aggregate, have a material adverse effect on the
financial condition, results of operations, businesses or prospects of the
Parent and its subsidiaries taken as a whole.
(j) To
the knowledge of Parent the businesses of Parent and its subsidiaries are not
being conducted in violation of any applicable law, ordinance or regulation
(including, without limitation, any applicable environmental law, ordinance
or
regulation) of any governmental authority, except for violations which in the
aggregate do not and, insofar as reasonably can be foreseen, in the future
will
not have a material adverse effect on the financial condition, results of
operations, businesses or prospects of Parent and its subsidiaries taken as
a
whole. To the knowledge of Parent, no investigation or review by any
governmental authority with respect to Parent or its subsidiaries is pending
or
threatened, nor has any governmental authority indicated an intention to conduct
the same, other than such investigations or review which in the aggregate do
not
and, insofar as reasonably can be foreseen, in the future will not have a
material adverse effect on the financial condition, results of operations,
businesses or prospects of Parent. Except as disclosed in Parent’s
Annual Report on Form 10-K for the year ended December 31, 2006, Parent and
its
subsidiaries have all material permits, licenses and other governmental
authorizations, consents and approvals necessary to conduct their businesses
as
presently conducted and as proposed to be conducted.
(k) To
the knowledge of Parent, Parent and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term
or
provision of, and no event has occurred which, with lapse of time or action
by a
third party, could result in a default under, (i) the respective charter or
by-laws of Parent or any of its subsidiaries or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which Parent or any of its subsidiaries is
a
party or by which any of them is bound or to which any their property is
subject, which defaults, in the case of clause (ii) of this Section, would
have,
in the aggregate, a material adverse effect on the financial condition, results
of operations, businesses or prospects of Parent and its subsidiaries taken
as a
whole.
(l) To
the best of Parent’s knowledge and belief, Parent and each of its subsidiaries
have maintained and are now maintaining with financially responsible
insurance
A-11
companies
insurance on their tangible assets and their businesses in such amounts and
against such risks and losses as Parent has reasonably determined to be
necessary or required.
14. Representations
and Warranties of Buyer. As a material inducement to Seller to
enter into this Agreement, the Buyer hereby makes to Seller the representations
and warranties set forth in this item as of the Effective Time and as of the
Closing. Each of the representations and warranties set forth in this
item shall survive the Effective Time and the Closing of the transactions
contemplated hereby for the time set forth in Item 26(e).
(a) Buyer
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Georgia and is a wholly-owned subsidiary of
Parent. Buyer was organized for purposes of purchasing, owning and
operating the Assets of Seller. Buyer has no assets other than cash
contributed to Buyer by Parent in order to satisfy state minimum capitalization
requirements and to complete this transaction.. Buyer has not
incurred directly or indirectly any liabilities or obligations, except those
incurred in connection with negotiation and consummation of this Agreement
and
the transactions contemplated hereby. Buyer has not engaged directly
or indirectly in any business or activities or any type or kind whatever, and
has not entered into any agreements or arrangements with any person or entity,
and is not subject to or bound by any obligation or undertaking, which is not
contemplated by this Agreement.
(b) The
authorized capital stock of Buyer consists of 1,000 shares of common stock,
no
par value, 1,000 shares of which are validly issued and outstanding, fully
paid
and nonassessable and free of pre-emptive rights and are owned by Parent free
and clear of all liens, claims and encumbrances.
(c) (i) Buyer
has the full corporate power and authority to enter into this Agreement and
to
carry out its obligations hereunder. The execution and delivery of
this Agreement, the performance by Buyer of its obligations hereunder and the
consummation of the transactions contemplated hereby have been duly authorized
by its Board of Directors and sole stockholder, and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement
and
the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer, and assuming the due authorization,
execution and delivery hereof by the Parent and Seller, will constitute the
valid and binding agreement of Buyer, enforceable in accordance with its terms,
except as may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of
creditors’ rights generally, and subject to general principles of
equity.
(ii) Except
for filings required by the Investment Advisory Act of l940 and the filing
by
Parent with the Commission pursuant to the ‘33 Act and with various blue sky
authorities of the Registration Statement relating to the shares of Parent
Common Stock to be issued to Seller, the filing of appropriate documents, if
any, as required by the Georgia Law, any approval required by Federal Law,
and
any other required approvals under Federal or State law, no filing or
registration with, or authorization, consent or approval of, any public body
or
authority is necessary for the consummation by Buyer of the purchase or the
other transactions contemplated by this Agreement, other than nonmaterial
filings, registrations, authorizations, consents or approvals.
15. Conduct
of Business by Parent Pending the Merger. Prior to the Effective
Time, unless the Seller shall otherwise agree in writing, neither Parent nor
any
of its subsidiaries or the officers or directors of any of same will cause
the
representations and warranties contained in herein to be untrue or incorrect
as
of the Effective Time.
16. Conduct
of Business by Buyer Pending the Merger. During the period from
the date of this Agreement to the Effective Time, Buyer (a) will remain a
wholly-owned subsidiary of Parent,
A-12
(b)
will not incur directly or indirectly any liabilities or obligations except
those incurred in connection with consummation of this Agreement and the
transactions contemplated hereby, and (c) will not engage directly or indirectly
in any business or activities of any type or kind whatever and will not enter
into any agreements or arrangements with any person or entity, or be subject
to
or bound by any obligation or undertaking, which is not contemplated by this
Agreement.
17. Additional
Agreements. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make
effective the transactions contemplated by this Agreement, including using
its
best efforts to obtain all necessary waivers, consents and approvals (including,
but not limited to required approvals under the Georgia Banking Act and the
Federal Law to effect all necessary registrations and filings and to lift any
injunction or legal bar to the Purchase (and, in such case, to proceed with
the
Purchase as expeditiously as possible). In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, Parent, Seller and Sub shall use their best efforts
to cause their respective officers or directors to take all such necessary
action.
18. Seller's
Employees. Seller shall take all actions reasonably requested by
Buyer to assist Buyer in hiring any employees employed by Seller in the Business
that Buyer desires to employ. Buyer has no obligation to offer
employment to any of Seller’s employees, but anticipates offering employment to
all of Seller’s full-time employees. Except with respect to the
Selling Shareholders, any employees hired by Buyer shall be employed on an
“at
will” basis under terms and conditions established solely by Buyer pursuant to
Buyer's practices and policies. Seller will be liable for, and will
pay, all wages, severance payments, accrued vacation and sick pay, “COBRA”
(defined below) and similar benefits, and other amounts and benefits, if any,
due to any employees with respect to such employee's employment prior to the
Effective Time, including, but not limited to, any severance payments paid
to
any employee of Seller not hired by Buyer. Seller, and not Buyer,
shall comply, or shall cause Seller’s insurer to comply, with all requirements
under the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended
("COBRA"), in connection with notices of options for continuation of
health care coverage under COBRA with respect to any employee of Seller prior
to
the Effective Time or any qualified beneficiary of such employee, as defined
by
COBRA, and, to the extent applicable, with all requirements of the Employee
Retirement Income Security Act of 1974, as amended, with respect to any and
all
plans or arrangements of Seller.
19. Affirmative
Covenants of Seller Pending Closing. Between the date hereof and the
Effective Time, Seller shall: (a) give the Buyer and its representatives full
access during normal business hours to all of the facilities, properties, books,
records and documents pertaining to the Business and its financial condition
and
results of operations and furnish the Buyer such other information concerning
the contracts, business and operations of the Business as the Buyer may
reasonably request, including general ledgers, books of account, financial
statements and information, licenses, permits, agreements, contracts,
commitments, records and files of every character; (b) maintain in effect
adequate property, casualty and commercial general liability insurance on the
Business and the Assets; (c) provide to Buyer by the 15th day of each
month
financial statements for the Business for the month just ended and for the
year
to date; (d) carry on the Business and keep its books of account, records,
and
files in the ordinary course of business, collect its accounts receivable in
the
ordinary course of business, and pay all accounts payable and other liabilities
on a timely basis when such become due and payable, subject to the right to
contest
A-13
the
same in good faith; (e) maintain the Assets in good operating condition and
repair; and (f) use best efforts to preserve the Business intact, retain as
at
present the Business’ employees and independent contractors, and preserve the
goodwill of the Business' suppliers, customers, vendors, and others having
business relations with the Business.
20. Negative
Covenants of Seller Pending Closing. Between the date hereof and
the Effective Time, without the prior written consent of Parent and Buyer,
Seller shall not, except in the ordinary course of business: (a) enter into
any
new contracts, arrangements or commitments regarding the Business or Assets
outside of the normal, routine and ordinary course of business or permit any
increase or changes in the compensation of any employee other than normal raises
based on standard cost-of-living adjustments or such other raises which may
be
reasonably approved by Buyer; (b) cause or allow to exist any creation,
assumption or guaranty of any pledge or other lien, encumbrance or obligation
or
charge upon or against any of the Assets or the Business; (c) enter into any
sale, assignment, lease, hypothecation or other transfer or disposition by
operation of law or otherwise, of any of the Assets or the Business; (d) engage
in any act outside the normal course of business of Seller, (e) engage in
discussions with any party other than Buyer concerning any possible sale of
the
Business or any of the Assets; or (f) permit or cause any material adverse
change in the Business or any of the Assets which may be considered materially
adverse to the Buyer hereunder.
21. Conditions
Precedent to the Buyers' Obligation to Close. Notwithstanding any
other provision of this Agreement to the contrary, the obligations of the Buyer
hereunder are, at the option of the Buyer, subject to the satisfaction or
fulfillment of each of the following conditions precedent at or prior to the
Closing: (a) Seller shall have performed and complied with all agreements,
obligations and covenants required by this Agreement, and all of Seller’s
representations and warranties shall be true and correct; (b) Seller shall
own
and be able to transfer its Assets free and clear of all Encumbrances; (c)
the
property and assets comprising the Assets shall remain in substantially the
same
condition as on the date hereof and there shall have been no material adverse
change in the Business or the Assets; (d) with respect to all contracts and
agreements which Buyer is acquiring hereunder from Seller, Buyer has agreed
in
writing to assume, and whose terms require consent for assignment and/or
assumption, Seller shall have obtained from all other parties to such agreements
written consents to such assignment to and/or assumption by Buyer and delivered
same to Buyer, and, with respect to each such agreement and at Buyer's option,
Seller shall have delivered to Buyer after Buyer's request an estoppel
certificate executed by the other party to the agreement which provides that
no
default, or basis for default, to the agreement exists; (e) the shareholders
and
directors of Seller shall have taken all action required by or under applicable
law, the Seller’s articles of incorporation and bylaws, and other applicable
agreements to properly approve this Agreement and authorize the officers and
directors to close all transactions contemplated by this Agreement in accordance
herewith; (f) Buyer's Board of Directors shall have approved this Agreement
and
the transactions contemplated hereby; (g) the Lease, Restrictive Covenants,
and
Employment Agreements shall have been executed and delivered; (h) the Buyer
shall have received written approval from the Atlanta Federal Reserve to engage
in this transaction, which approval has already been requested by Buyer; and
(i)
if required, the Buyer has been licensed by the Securities and Exchange
Commission, Georgia Securities Commission, and any other applicable governmental
authority, to act as a registered investment advisor.
22. Conditions
Precedent to Seller’s Obligations to Close. Notwithstanding any
other provision of this Agreement to the contrary, the obligations of the Seller
hereunder are, at the option of Seller, subject to the satisfaction or
fulfillment of each of the following conditions precedent: (a) Parent and Sub
shall have performed in all material respects their agreements contained in
this
A-14
Agreement
required to be performed on or prior to the Effective Time and the
representations and warranties of Parent and Sub contained in this Agreement
shall be true and correct in all material respects on and as of the date of
this
Agreement and on and as of the Effective Time as if made on and of such date,
except as contemplated or permitted by this Agreement, and Seller shall have
received a certificate of the President or a Vice President of Parent to that
effect; (b) Seller shall have inspected the definitive stock certificates to
be
delivered by Parent along with a copy of Parent’s letter of instruction for the
registration of such shares in such denominations and names as Seller shall
have
designated to Parent; (c) all of Parent and Buyer's representations and
warranties shall be true and correct in all respects as of the date hereof
and
on the Effective Date; and (d) Seller shall have received an opinion from
Messr’s Ellis, Painter, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP, counsel to Parent, dated the
Effective Time, substantially to the effect provided in Schedule 22(d)
hereto.
23. Documents
to be Delivered at Closing.
(a) At
Closing, Seller shall deliver the following items to Buyer: (i) Settlement
Statement; (ii) a general warranty ▇▇▇▇ of sale to the Assets; (iii) such other
customary closing documents as needed for the sale of Assets; (iv) consents to
assignments and estoppel certificates relating to any contracts to be assigned
and assumed in a mutually agreeable form; (v) an assignment and assumption
agreement with respect to any contracts to be assumed in a form reasonably
acceptable to Buyer; (vi) corporate resolutions of the shareholders and
directors authorizing the sale contemplated hereby; (viii) a closing certificate
certifying compliance and/or satisfaction of all items set forth in Item 22(a),
(b) and (e); and (ix) an opinion of Messr’s Bouhan, ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel to Seller, in the form attached hereto as Schedule 23(a).
(b) At
Closing, Parent and Buyer shall execute and/or deliver to Seller the following
items: (i) Settlement Statement; (ii) a closing certificate certifying
compliance and/or satisfaction of all items set forth in Item 23; (iii) the
shares of Common Stock of Parent comprising the Closing Component registered
in
the denominations and names designated by Seller; (iv) a copy, if available,
of
the Registration Statement on Form S-3 for filing for such shares with the
Commission pursuant to the ’33 Act and copies of filings under applicable state
blue sky or securities laws of the states of Georgia and Florida in connection
with the issuance of Parent’s said Common Stock; and an opinion of Messr’s
Ellis, Painter, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to Parent and Buyer in the
form attached hereto as Schedule 22(d).
24. Further
Assurances; Time of the Essence; Transition. From time to time
prior to, at and after the Closing, each party hereto will execute all such
instruments and take all such actions as another party, being advised by
counsel, shall reasonably request in connection with carrying out and
effectuating the intent and purpose hereof and all transactions and things
contemplated by this Agreement, including, without limitation, the execution
and
delivery of any and all confirmatory instruments, cancellations, assignments,
consents, deeds, bills of sale, and other instruments in addition to those
to be
delivered at Closing, and any and all actions which may reasonably be necessary
or desirable to complete, evidence or document the transactions contemplated
hereby. Time is of the essence of this Agreement.
25. Post-Closing
Matters.
(a) Adjustment
for Uncollectible Accounts Receivable. If Buyer is unable to
collect in full an account receivable purchased hereunder within one hundred
twenty days (120) after Closing, Buyer may thereafter elect to sell and assign
to Seller the uncollected portion of such account receivable without discount
for a purchase price equal to such uncollected portion, in which case Seller
shall re-purchase the uncollected portion of such account receivable within
ten
days after Buyer provides written notice of such election to
Seller.
A-15
(b) Payment
of Pro Rata Portion of Employee Bonuses and Retirement Plan
Contributions. On or before Friday, December 28, 2007, Seller (i)
shall pay at least 8/12ths of Seller’s normal annual incentives/bonuses to each
of its employees who were employed immediately preceding the Closing and (ii)
with respect to each of such employees shall pay at least 8/12ths of Seller's
normal profit-sharing contributions to Seller's retirement or profit-sharing
plan on behalf of each of such employees .
(c) Name
Change. Immediately upon the Closing, Seller will change its
corporate name to a name which is not similar to "Minis & Co., Inc." and
does not includes the word "Minis" and will provide Buyer with such written
consents as may be required by the Georgia Secretary of State for Buyer to
change its name to “Minis and Company,” “Minis & Co., Inc.,” or a name
similar thereto. In order to effectuate the foregoing, Seller agrees to provide
to Buyer at Closing articles of amendment to Seller's articles of incorporation
to effectuate Seller's name change and such above-referenced consents as may
be
reasonable requested by Buyer, so that Buyer may submit simultaneously in the
same filing package Seller's name change application documents to the Georgia
Secretary of State along with Buyer's name change application documents
immediately upon Closing.
26. Indemnification.
(a) Seller
and the Selling Shareholders, jointly and severally, shall indemnify, defend,
and hold Buyer harmless from and against any and all damages, claims, suits,
losses, expenses, costs, obligations, judgments, and liabilities including,
but
not limited to, reasonable attorneys' fees and expenses of litigation generally
(court costs, costs of experts and court reporters, etc.) at trial and on appeal
(hereinafter, all such damages, claims, suits, losses, expenses, costs,
obligations, judgments and liabilities are referred to collectively and
individually as the "Losses and Expenses"),
suffered or incurred by, or brought against, Buyer by reason of, or arising
out
of, (1) any breach of representation or warranty made by Seller or the Selling
Shareholders in or under this Agreement, (2) any failure of Seller to perform
or
fulfill any of its covenants or agreements set forth in this Agreement, (3)
any
liability of Seller, regardless of when incurred or arising, which is not
expressly assumed by Buyer under this Agreement; and/or (4) any litigation,
proceeding, or claim by any third party relating to the business, ownership
or
operations of Seller, any of the Assets or the Business prior to the Effective
Time.
(b) Parent
and Buyer agree that they, jointly and severally, shall indemnify, defend,
and
hold Seller and the Selling Shareholders harmless from and against any and
all
Losses and Expenses suffered or incurred by, or brought against, Seller by
reason of, or arising out of, (1) any breach of representation or warranty
made
by Parent or any said Shareholder or Buyer pursuant to this Agreement, (2)
any
failure by Parent or Buyer to perform or fulfill any of its covenants or
agreements set forth in this Agreement, (3) any liability of Seller expressly
assumed by Buyer under this Agreement, and (4) any litigation, proceeding,
or
claim by any third party relating to Buyer’s operation of the Business or Assets
purchased hereunder after the Effective Time.
(c) If
any party to this Agreement believes that it has suffered or incurred any Losses
and Expenses, such party shall notify the other parties promptly in writing
describing such Losses and Expenses, the amount thereof, if known, and the
method of computation of such Losses and Expenses, all with reasonable
particularity and containing a reference to the provisions of this Agreement
in
respect of which such Losses and Expenses shall have occurred. If any action
at
law or suit in equity is instituted by a third party with respect to which
any
of the parties intends to claim any liability or expense as Losses and Expenses,
or the right to indemnification, under this Item 26, such party shall promptly
notify in writing the indemnifying party or parties of such action or
suit.
A-16
(d) The
indemnifying party shall have the right to conduct and control, through counsel
of its own choosing, any third party claim, action, or suit, but the indemnified
party may, at its election, participate in the defense of any such claim,
action, or suit at its sole cost and expense; provided that if the indemnifying
party shall fail to defend any such claim, action, or suit, then the indemnified
party may defend, through counsel of its own choosing, such claim, action,
or
suit and (so long as it gives the indemnifying party at least thirty (30) days'
notice of the terms of the proposed settlement thereof and permits the
indemnifying party to then undertake the defense thereof) settle such claim,
action, or suit, and to recover from the indemnifying party the amount of such
settlement or of any judgment and the costs and expenses of such
defense. Neither the indemnified party nor the indemnifying party
shall compromise or settle any third party claim, action, or suit without the
prior written consent of the other party, which consent will not be unreasonably
withheld or delayed.
(e) Notwithstanding
anything herein to the contrary, all representations, warranties, agreements,
covenants and obligations made or undertaken by Parent, Buyer or Seller in
this
Agreement or in any document or instrument executed and delivered pursuant
hereto shall survive the Closing hereunder; provided, however that
representations and warranties made by Parent, Buyer, Seller, or the Selling
Shareholders, shall survive the Closing hereunder only for a period of
thirty-six (36) months after the Closing hereunder, except with respect to
claims based on fraud or willful misrepresentation, in which case said 36-month
time period shall be extended for the full period of the applicable statute
of
limitations. The total, aggregate liability of Parent, Seller or
Buyer under this Item 26 for breaches of representations or warranties shall
not
exceed the total purchase price paid by Parent and Buyer under this Agreement,
except that such limitation shall not be applicable in the event of fraud or
willful intentional misconduct.
27. Confidentiality/Press
Release. No party hereto shall disclose to third parties (other
than accountants, lawyers, surveyors, environmental consultants, and like
advisors who have a need to know in order to effectuate the terms of this
Agreement) the terms or existence of this Agreement or any information
designated as confidential and received from the other party or its agents
in
the course of investigating, negotiating, and completing the transactions
contemplated by this Agreement. Neither Parent, Buyer nor Seller
shall issue any press or other public release after Closing, which has not
been
previously agreed to in writing by all parties. Notwithstanding the
foregoing, the parties acknowledge that Buyer is the wholly-owned subsidiary
of
Parent, a public company required by applicable laws and regulations to make
certain filings and disclosures, and it is agreed that Parent and/or Buyer
may
make such filings and disclosures before and after Closing provided the same
are
made for the purpose of complying with applicable laws and regulations
only.
28. Allocation. The
purchase price shall be allocated to the Assets as set forth on Schedule
28, and the parties shall file all relevant income tax returns, including
but not limited to Internal Revenue Service Form 8594, in accordance with said
allocation, and shall not take any position inconsistent therewith.
29. Brokers. Parent
and Buyer represent and warrant to Seller and the Selling Shareholders that
Buyer has not employed or used the services of a broker, finder or agent with
respect to the transaction contemplated hereby and that neither Parent or Buyer
has any obligation for any broker's/finder's fee or sales commission due to
any
person or entity resulting from acts or omissions of Parent or
Buyer. Seller represents and warrants to Parent and Buyer that Seller
has not employed or used the services of a broker, finder or agent with respect
to the transaction contemplated hereby and that Seller has no obligation for
any
broker's/finder's fee or sales commission due to any person or entity resulting
from acts or omissions of Seller.
A-17
30. Expenses
and Taxes. Any bulk sales, transfer, documentary, stamp, sales
and/or use taxes relating to the sale and/or transfer of the Assets shall be
paid solely by Seller. The Buyer shall pay all filing, recording and
vehicle registration fees payable as a result of the transfer of the
Assets. Seller each shall furnish such information and execute such
certificates and other documents as the Buyer may reasonably determine, and
take
such other actions as the Buyer may reasonably request, prior to and after
the
Closing, in order to obtain any tax clearance certificates and/or otherwise
effectuate the conveyances contemplated hereby. Except as otherwise
set forth in this Agreement, all other costs and expenses incurred in connection
with this Agreement or the transactions contemplated hereby (including, but
not
limited to, any broker's or finder's fees) shall be paid by the party incurring
such costs and expenses; provided, however, that Parent shall pay all costs
and
expenses of preparing and filing the Registration Statement on Form S-3 under
the ’33 Act, including the filing fee, as well as all charges and expenses of
complying with the blue sky laws or the securities laws of the states of Georgia
and Florida in which Parent’s Common Stock is to be registered. To
the extent any costs or expenses are to be paid by Seller the Assets shall
not
be used or reduced in connection with the payment of such costs or
expenses.
31. Bulk
Sales Law. Buyer waives compliance with the provisions of any
applicable bulk transfer laws. Accordingly, Seller covenants that all
debts, obligations, and liabilities relating to Seller and its business that
are
not expressly assumed by Buyer in writing will be promptly paid and discharged
by Seller as and when they become due and payable, and, notwithstanding anything
in this Agreement to the contrary, Seller will defend, indemnify and hold Buyer
harmless from and against all suits, claims, costs, expenses and liabilities,
including reasonable attorneys fees, with respect to any non-compliance with
any
bulk transfer law, including but not limited to claims made by
creditors.
32. Proprietary
Rights. For purposes hereof, "Proprietary Rights" means all of
the following which are used in the conduct of the Business: (i) all rights
in
patents, patent applications, patent disclosures and inventions, (ii) all rights
in trademarks, service marks, trade dress, masts, morgues, trade names
(including the name "Minis and Company") and corporate names and registration
and applications for registration thereof, (iii) all rights in copyrights
(registered or unregistered) and registrations and applications for registration
thereof, (iv) all rights in computer software, data, databases and
documentation, (v) all rights in trade secrets and other confidential
information (including, but not limited to, ideas, formulas, compositions,
inventions (whether patentable or unpatentable) and whether or not reduced
to
practice), know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial and marketing plans
and advertiser and subscriber lists and information, (vi) all rights in other
intellectual property rights and (vii) all copies and tangible embodiments
of
any of the foregoing (in whatever form or medium). The Proprietary
Rights owned or held by Seller (individually and collectively) are sometimes
referred to in this Agreement individually and collectively as the “Proprietary
Rights”.
33. Entire
Agreement; Modification. All exhibits, schedules and documents
attached hereto and all documents and instruments executed pursuant to this
Agreement at Closing are hereby incorporated into this Agreement by this
reference and shall be deemed part of this Agreement for all purposes; provided,
however, that the provisions of this Agreement shall control over any
conflicting provision contained in any such exhibit, schedule, document,
instrument or agreement. This Agreement, along with all of the
exhibits, documents, instruments and agreements incorporated herein, constitutes
the entire and complete agreement between the parties hereto and supersedes
any
A-18
prior
oral or written agreement between the parties with respect to the obligations
and covenants contemplated hereunder. It is expressly agreed that
there are no verbal understandings or agreements which in any way change the
terms, covenants, and conditions set forth in this Agreement and that no
modification of this Agreement and no waiver of any of its terms and conditions
shall be effective unless made in writing and duly executed by all parties
hereto.
34. Assignments;
Binding effect. This Agreement may not be assigned by any party
without the prior written consent of all other parties; provided, however,
that
Parent or Buyer may assign this Agreement prior to Closing without consent
to an
entity controlled directly or indirectly by Parent, in which case the assignee
shall assume all obligations of Buyer hereunder; provided, however, that Parent
shall thereafter nonetheless remain liable for Parent and Buyer's obligations
under this Agreement. This Agreement shall inure to the benefit of
and be binding upon the heirs, estates, personal and legal representatives,
successors and permitted assigns of the parties hereto.
35. Governing
Law; Jurisdiction; Service of Process. The terms and provisions
of this Agreement will be governed by and construed under the laws of the State
of Georgia without regard to conflicts of laws principles. Any action
or proceeding seeking to enforce any provision of, or based on any right arising
out of this Agreement may be brought against any of the parties in the courts
of
the State of Georgia, County of Chatham, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District
of
Georgia, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding
and
waives any objection to venue laid therein. Process in any action or
proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
36. Severability;
Construction. Whenever possible, each provision of this Agreement
shall be interpreted so as to be valid and effective under applicable law,
but
if any provision of this Agreement shall be prohibited or invalid under
applicable law, that provision shall be ineffective only to the extent of the
prohibition or invalidity, without invalidating the remainder of that provision
or the remaining provisions of this Agreement. This Agreement is the
product of the joint drafting of all parties and shall not be construed against
any party hereto as the drafter of this Agreement.
37. Notices. All
notices and other communications required or permitted to be given hereunder
or
by reason of this Agreement shall be in writing and shall be deemed to have
been
properly given when delivered in person or by overnight courier to the person
to
whom such notice is directed, or three (3) days after deposited in the U.S.
Mail, Certified Mail, Return Receipt Requested, postage prepaid, to the parties
addressed as follows:
|
(a) if
to Buyer:
|
The
Savannah Bancorp, Inc.
|
|
|
Attn: ▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇
|
||
|
▇.▇.
▇▇▇ ▇▇▇
|
||
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
with
a copy required to be sent to:
|
||
|
▇▇▇▇▇
▇▇▇▇▇, Esq.
|
||
|
Ellis,
Painter, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
|
||
|
▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
(b) if
to Seller:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
|
|
▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
A-19
| with a copy required to be sent to: | ||
| ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq. | ||
| Bouhan, ▇▇▇▇▇▇▇▇ & Levy | ||
| ▇.▇. ▇▇▇ ▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||
40. Multiple Counterpart/Facsimile Delivery. This Agreement may be executed in any number of identical counterparts, and each counterpart hereof shall be deemed to be an original instrument, but all counterparts hereof taken together shall constitute but a single instrument. If executed in identical counterparts, this Agreement shall not become effective until all parties hereto have effectively executed their respective counterpart. This Agreement may be executed and delivered by facsimile transmission, and a facsimile copy of an executed counterpart shall be deemed and considered for all purposes as an original executed counterpart, in which case the parties then shall immediately circulate original documents for execution by all parties.
41. Waivers. No
waiver or release of any obligation or right of any party hereto shall be valid
and enforceable unless made in writing and duly executed by all parties
hereto.
42. Survival. Notwithstanding
anything to the contrary contained in this Agreement, the terms, conditions,
covenants, representations and warranties contained in this Agreement, in the
schedules, documents and exhibits attached hereto, and in the documents and
other instruments delivered at Closing, shall survive the execution hereof
and
the closing of the transactions contemplated hereby.
43. Time
of the Essence. Time is of the essence with respect to this
Agreement and the closing of the purchase and sale contemplated
hereby.
44. Headings. The
paragraph headings or captions appearing in this Agreement are for convenience
only, are not part of this Agreement and are not to be considered in
interpreting this Agreement.
45. Termination. This
Agreement may be terminated at any time prior to the Effective
Time:
(a) by
mutual consent of the Board of Directors of Parent and the Board of Directors
of
Seller; or
(b) by
either Parent or the Seller if the Purchase shall not have been consummated
on
or before September 30, 2007; provided however, that the right to terminate
this
Agreement under this Item 45(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of,
or
resulted in, the failure of the Effective Time to occur on or before such date;
and provided, further, that the parties agree to consider in good faith a
reasonable extension of such date if the conditions to closing which remain
unsatisfied and unwaived as of such date are being pursued with
diligence.
46 Effect
of Termination. In the event of termination of this Agreement by
either Parent or Seller, as provided in Item 45, this Agreement shall forthwith
become void and there shall be not liability on the part of either Parent or
Buyer or their respective officers or directors and the parties or Selling
Shareholders shall bear their own respective costs and expenses as set forth
herein.
[SIGNATURES
ON FOLLOWING PAGE]
A-20
In
witness whereof, the undersigned
each have caused this Agreement to be executed under seal individually or by
their duly authorized officers as of the date first set forth
above:
PARENT:
The Savannah Bancorp, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ II___________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, President
SELLER:
BUYER:
Minis
& Co.,
Inc.
Savannah Advisors, Inc.
By:
/s/ ▇▇▇▇▇▇▇ ▇.
Carpenter_______ By:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ II___________
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇,
President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, President
SELLING
SHAREHOLDERS:
/s/
▇▇▇▇▇▇▇ ▇.
Carpenter_________
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
/s/
▇. ▇▇▇▇▇▇▇▇
Smith__________
▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/
A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
III_________
A.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
/s/
▇▇▇▇ ▇.
Allen______________
▇▇▇▇
▇. ▇▇▇▇▇
A-21
SCHEDULE
LIST
|
Schedule
2 (a)
|
Assets
|
||
|
Schedule
2(b)
|
*
|
Excluded
Assets
|
|
|
Schedule
2(c)
|
*
|
▇▇▇▇
of Sale
|
|
|
Schedule
3
|
*
|
Assumed
Liabilities
|
|
|
Schedule
5(a)
|
*
|
Form
of Press Release
|
|
|
Schedule
6
|
Earn-Out
Component
|
||
|
Schedule
7(b)
|
*
|
Closing
Working Capital Methodology
|
|
|
Schedule
9
|
*
|
Lease
|
|
|
Schedule
10
|
*
|
Restrictive
Covenants Agreement
|
|
|
Schedule
11
|
*
|
Employment
Agreements
|
|
|
Schedule
12(d)
|
*
|
Copies
of All Contracts
|
|
|
Schedule
12(h)
|
*
|
Financial
Statements
|
|
|
Schedule
12(n)
|
*
|
Employee
and Vendor List
|
|
|
Schedule
22(d)
|
*
|
Opinion
Letter – Parent and Buyer’s Counsel
|
|
|
Schedule
23(a)
|
*
|
Opinion
Letter – Seller’s Counsel
|
|
|
Schedule
28
|
*
|
Purchase
Price Allocation
|
* Note
to Form S-3 Filing Content – These selected exhibits have been excluded from the
public filing due to the confidential nature of their content as related to
non-executive officers and their immaterial amount in relation to the assets,
income and equity of The Savannah Bancorp, Inc.
A-22
SCHEDULE
2(a)
List
of Assets Being Purchased
The
Assets include but are not limited to the following:
|
·
|
The
specific items of material, tangible personal property listed on
Exhibit A attached hereto;
|
|
·
|
Accounts
receivable
|
|
·
|
The
Clients and Customer Contract List listed on Exhibit B attached
hereto.
|
|
·
|
Goodwill
|
|
·
|
Security
deposits, if any, listed on Exhibit C attached
hereto.
|
|
·
|
Internet
domain names and registrations, websites, web pages and related content
and code; logos, trade names, trademarks, service marks, copyrights
and
all other "Proprietary Rights" (defined in Item
28)
|
|
·
|
Books
of account
|
|
·
|
Furniture,
fixtures, computer hardware and equipment listed on Exhibit D
attached hereto.
|
|
·
|
Leasehold
improvements
|
|
·
|
Computer
software and files
|
|
·
|
Supplies
|
|
·
|
Records
of the Business, including but not limited to customer lists, advertiser
lists, vendor lists, correspondence and
files
|
|
·
|
Subject
to Item 3 regarding which liabilities of Seller the Buyer is assuming
under this Agreement, all contract rights and all contracts, arrangements
and agreements with, vendors, suppliers, and
customers;
|
|
·
|
To
the extent assignable, all permits, licenses, authorizations and
other
like items used in or required for the operation of the
Business.
|
A-23
Schedule
6
Earn-out
Component Computation Methodology
The
amount of the contingent Earn-out Component shall be determined by the
independent certified public accountants of Buyer in the following
manner:
1. The
"Total Revenue" of the "Existing Portfolio Accounts" (defined below)
shall be determined for the period beginning September 1, 2007 and ending June
30, 2010, and such total revenue shall be referred to as the "Actual Total
Revenue"). The "Existing Portfolio Accounts" shall be Seller's client
accounts existing at Closing (the "Existing Accounts") as well as those
new accounts established after Closing by the principals of the Selling
Shareholders, by persons related by blood or marriage to such Selling
Shareholders, or by entities controlled by such the Selling Shareholders. "Total
Revenue" for a period shall equal the result of (i) unearned revenue as of
the
beginning of such period, (ii) minus accounts receivable as of the beginning
of
such period, (iii) plus revenue actually collected and received during such
period, (iv) minus unearned revenue as of the end of such period, (v) plus
accounts receivable as of the end of such period.
2. If
the Actual Total Revenue is equal to or greater than $6,052,000.00, then the
Earn-out Component shall be $2,210,00.00 (calculated as the $2,000,000 base
amount multiplied by a 1.105 "interest" multiplier which takes into account
the
fact that the payment is to be made on or before July 31, 2010).
3. If
the Actual Total Revenue is less than $6,052,000.00, then the Earn-out Component
shall be an amount equal to the product of (i) 1.105 times (ii) the difference
of $2,000,00.00 minus the "Reduction Amount"; provided, however,
that, notwithstanding anything to the contrary, if the Actual Total Revenue
is
less than or equal to $4,236,400.00, then the Earn-out Component shall be zero
dollars ($0.00).
The
"Reduction
Amount" shall be an amount equal to product of (a) $2,000,000 times (b) the
"Reduction Multiplier." The "Reduction Multiplier" is the product of (c)
2.0 times (d) the quotient of (xx) the difference of $6,052,000.00 minus Actual
Total Revenue divided by (yy) $6,052,000.00.
An
example of the above calculation
methodology is as follows:
|
Example
Calculation
|
Total
|
|||
|
Target
Revenue
|
6,052,000
|
|||
|
Actual
Total Revenue
|
(5,300,000 | ) | ||
|
Revenue
Shortfall
|
752,000
|
|||
|
Multiplier
|
2.0
|
|||
|
Percentage
Shortfall
|
x 0.124256
|
|||
|
Reduction
Multiplier
|
0.248512
|
|||
|
Maximum
Payout
|
2,000,000
|
|||
|
Reduction
Amount
|
(497,026 | ) | ||
|
1,502,974
|
||||
|
Multiplier
|
x 1.105
|
|||
|
Earn-out
Component
|
1,660,786
|
|||
A-24