EXHIBIT 10.32
STOCK PURCHASE AGREEMENT
by and among
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AND
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
AS SELLERS
AND
▇▇▇▇▇▇ CAPITAL GROUP, INC.
PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP TRUST,
AS BUYER
AND
▇▇▇▇▇▇ CAPITAL GROUP, INC.
DATED AS OF NOVEMBER 25, 1998
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") dated November 25,
by and among (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, (the "Sellers"), (ii)
▇▇▇▇ ▇▇▇▇▇▇ Bank, not in its corporate capacity, but solely as trustee (the
"Trustee") of the ▇▇▇▇▇▇ Capital Group, Inc. Profit Sharing and Employee Stock
Ownership Trust (the "Trust" or "Buyer"), which implements and forms a part of
the ▇▇▇▇▇▇ Capital Group, Inc. Employee Stock Ownership Plan (the "Plan") (the
Plan and Trust are collectively referred to as the "ESOP"), and (iii) ▇▇▇▇▇▇
Capital Group, a Delaware corporation (the "Company").
WHEREAS, the Sellers desire to sell collectively 24,000 shares
of the Company's common stock, $.01 par value (the "Common Shares") to the Buyer
and the Buyer desire to purchase the Common Shares from the Sellers; and
WHEREAS, the Company and will make a loan to the Buyer in
order to permit the Buyer to purchase shares of Company Stock;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual agreements, covenants, representations and warranties hereinafter
contained, the parties hereby agree as follows:
SECTION 1. Purchase and Sale of Common Shares.
Subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 3 hereof), each of the Sellers will sell to the
Buyer, and the Buyer will purchase from the Sellers the number of Common Shares,
as defined in the recitals, set forth opposite such Seller's name in Schedule 1,
attached hereto.
SECTION 2. Purchase Price and Payment.
In full consideration of the Sellers' sale, conveyance,
transfer and delivery to the Buyer of the Common Shares at the Closing, the
Buyer shall pay the aggregate purchase price for the Common Shares (the
"Purchase Price") of Five Hundred Seventy-Six Thousand Dollars ($576,000),
payable to each Seller by delivery of separate certified or cashier's check to
her order, or by wire transfer to an account designated by such Seller, in the
amount set forth opposite each Seller's name in Schedule 1.
SECTION 3. Closing.
3.1 Time and Place. The documents to be transferred and the
payments to be made on the Closing shall be transferred and made at the offices
of the Company ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 9:00 a.m., on
November 25, 1998, or at such other time as shall be mutually agreed upon by the
parties. However, as used herein, the term "Closing" shall
mean the date on which the Common Shares are delivered to Buyer and the Purchase
Price is paid to the Sellers.
3.2 Deliveries. At or prior to the Closing: (i) each Sellers
shall deliver, or previously have delivered, to the Buyer certificates
representing the number of Common Shares set forth opposite such Seller's name
in Schedule 1, which certificates shall be duly endorsed to the Buyer or
accompanied by duly executed stock powers, in transferable form, accompanied by
all documentation required for transfer; and (ii) the Buyer shall deliver to the
Sellers the Purchase Price as described in Section 2. On the Closing, and from
time to time thereafter, the Sellers shall, at the request of the Buyer, take
all action necessary to put the Buyer in actual possession and control of the
Common Shares and shall execute and deliver such further instruments of transfer
and conveyance and take such other actions as the Buyer may reasonably request,
in order more effectively to transfer and convey the Common Shares to the Buyer,
to confirm the title of the Buyer to the Common Shares, and to assist the Buyer
in exercising any rights with respect thereto. Notwithstanding any provision in
this Agreement to the contrary, Buyer's obligation to consummate the Closing is
conditioned on the Trustee's receipt of a favorable opinion from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
& Co. ("Sheshunoff") that the Purchase Price does not exceed "Adequate
Consideration" (as defined in Section 3(18) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")).
SECTION 4. Representations and Warranties of the Sellers.
Each Seller severally and not jointly represents and warrants
to the Buyer as follows only with respect to himself or herself and only with
respect to his or her Shares:
4.1 Title to Common Shares. Each Seller is the lawful record
and beneficial owners of their Common Shares, free and clear of any security
interest, claim, lien, pledge, option, encumbrance or restriction (on
transferability or otherwise) whatsoever in law or at equity, and the delivery
of the Common Shares by each Seller to the Buyer pursuant to this Agreement will
convey to the Buyer lawful, valid and indefeasible title thereto, free and clear
of any security interest, claim, lien, pledge, option, encumbrance or
restriction whatsoever.
4.2 Necessary Authority. The Seller has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Seller and constitutes the legal, valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of creditors' rights generally now or
hereafter in effect, and subject to the availability of equitable remedies. The
Seller's execution and performance of this Agreement, as well as the
consummation of the transactions contemplated hereby will not result in a breach
or violation of any of the terms and provisions of any agreement or instrument
to which the Seller is a party or by which the Common Shares are bound.
4.3. No Bankruptcy, etc. There has not been filed any petition
or application, or any proceedings commenced, by or against, or with respect to
any assets of the Seller under Title 11 of the United States Code or any other
law, domestic or foreign, relating to bankruptcy,
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reorganization, compromise, arrangement, insolvency, readjustment of debt or
creditors' rights, and the Seller has not made any assignment for the benefit of
creditors.
4.4 Legal Proceedings. There is no action, suit, proceeding or
investigation pending (or, to the knowledge of the Seller, threatened) affecting
the right of the Seller to sell the Seller's shares pursuant to this Agreement
or otherwise to carry out the provisions of this Agreement and the transactions
contemplated hereby, in any court, at law or in equity, or before or by any
Federal, state, local or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or before any arbitrator
of any kind.
4.5 No Conflicts. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (i) any indenture, mortgage, deed
of trust, instrument, order, arbitration award, judgment or decree to which the
Seller is a party or by which the Seller is bound, or (ii) any statute, rule or
regulation of any federal, state or local government or agency applicable to the
Seller or his or her assets or properties.
4.6 Required Consents. No consent, approval or authorization
of, or declaration, filing or registration with any governmental or regulatory
authority is required to be obtained by the Seller in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
SECTION 5. Representations and Warranties of the Sellers and the Company.
The Sellers and the Company represent and warrant to the Buyer
as follows.
5.1 Necessary Authority. The Company has all requisite
corporate power and authority to enter into, deliver and perform this Agreement
and to consummate the transactions contemplated herein. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary action on the
part of the Company. This Agreement has been duly executed and delivered by the
Company and constitutes its valid and legally binding obligation, enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally, now or hereafter in effect, and
subject to the availability of equitable remedies.
5.2 No Conflicts. The execution, delivery and performance of
this Agreement by the Company and its consummation of the transactions
contemplated herein, do not and will not (i) require the consent, approval,
authorization, order, filing, registration or qualification of or with any
court, governmental authority or third person which has not been obtained, (ii)
conflict with or result in any violation of or default under any provision of
the Certificate of Incorporation or Bylaws of the Company or of any mortgage,
indenture, lease, agreement or other instrument, permit, concession, grant,
franchise or license to which the Company is a party or by which it or its
properties are bound, (iii) violate any law, ordinance,
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rule, regulation, judgment, order or decree applicable to the Company, or (iv)
result in the creation of any security interest, claim, lien, charge or
encumbrance upon any of the Shares (except as otherwise contemplated herein).
5.3 Corporate Organization and Good Standing of the Company.
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as such business is now being conducted.
5.4 Authorized and Outstanding Stock. The Company's authorized
capital stock consists of 7,000,000 shares of common stock, $.01 par value per
share and 3,000,000 shares of preferred stock, $.01 par value per share. The
Common Shares have been duly authorized and are validly issued, fully paid,
nonassessable, free of preemptive rights. There are no liens, charges,
encumbrances, security interests or restrictions agreed to or granted by the
Company as to such Common Shares, and they were issued in full compliance with
all applicable federal and state securities laws. Other than stock options and
shares of restricted stock granted pursuant to the ▇▇▇▇▇▇ Capital Group, Inc.
Incentive Compensation Plan to key employees and directors of the Company, there
are no options, warrants or rights to acquire, or securities convertible into or
exchangeable for shares of the Company's capital stock which were issued or
granted by the Company.
5.5 Ownership of Subsidiaries. The Company's only material
subsidiary is ▇▇▇▇ ▇▇▇▇▇▇ Bank (the "Subsidiary").
5.6 Financial Statements.
(a) True and complete copies of the annual reviewed
consolidated financial statements of the Company and the Subsidiary for the
years ended December 31, 1995 through December 31, 1997, and the interim
statement for the period ending October 31, 1998 (collectively and including any
notes thereto, the "Financial Statements") have been delivered to Sheshunoff.
(b) To the knowledge of the Company and the Sellers, the
Financial Statements: (i) are true and correct in all material respects, are in
accordance with the books and records of the Company and the Subsidiary, present
fairly the financial condition and results of operations of the Company and the
Subsidiary at and for the periods indicated, and (ii) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis.
(c) To the knowledge of the Company and the Sellers and except
as would not have a material adverse effect on the financial condition of the
Company, the Company and the Subsidiary have no liabilities, commitments or
obligations of any nature whether absolute, accrued, contingent, known or
unknown, due or to become due or otherwise, except: (i) as reflected in the
Financial Statements and not heretofore discharged, (ii) as otherwise disclosed
in the SEC Reports (as defined in Section 6.4, and (iii) as incurred as a result
of the normal and ordinary course of business since the date of such Financial
Statements.
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5.7 Taxes.
(a) The Company and the Subsidiary have duly filed all
federal, state, local and foreign tax returns necessary to be filed (all such
returns being true and correct in all material respects) and has duly paid or
made provisions for the payment of all taxes (including any interest or
penalties) which are due or payable pursuant to such returns or pursuant to any
assessment with respect to taxes, whether or not in conjunction with such
returns.
(b) To the knowledge of the Company and the Sellers, the
liability for taxes reflected in the most recent balance sheet(s) of the Company
and the Subsidiary included within the Financial Statements is sufficient for
the payment of all unpaid federal, state, local and foreign taxes (including
interest and penalties), whether or not disputed, for all years and periods
ended prior thereto.
(c) Except as would not have a material adverse effect on the
financial condition of the Company or the Subsidiary, proper amounts have been
withheld by the Company and the Subsidiary from its employees for all prior
periods in compliance with the tax withholding provisions of all applicable
federal, state, local and other laws. Accurate and complete federal, state,
local and other returns have been filed by the Company and the Subsidiary for
all periods for which returns were due with respect to income tax withholding,
social security and unemployment taxes and the amounts shown on such returns to
be due and payable have been paid in full or adequate provision therefor has
been included by the Company and the Subsidiary in the Financial Statements.
5.8 No Violation. To the knowledge of the Company and the
Sellers, except as disclosed in the SEC Reports (as defined in Section 6.4) and
except as would not have a material adverse effect on the Company, neither the
Company nor the Subsidiary is in violation of, or under investigation with
respect to, nor has it been formally charged with or been given notice of any
violation of, any applicable law, statute, order, rule, regulation, policy or
guideline promulgated, or judgment entered, by any federal, state, local or
foreign court or governmental authority relating to or affecting the Company or
the Subsidiary, the businesses or properties of the Company or the Subsidiary,
including without limitation, any immigration law, zoning, building, health or
safety, or noise reduction law or ordinance.
5.9 Title to and Condition of Assets.
(a) The Company and the Subsidiary have good and valid title
to all of their real and personal property and leasehold interests including,
but not limited to, the property and assets reflected in the Financial
Statements (other than property and assets disposed of in the ordinary course of
business since such date) free and clear of all title defects and all liens,
pledges, claims, charges, security interests, and other encumbrances and (in the
case of real property) rights of way, building or use restrictions, exceptions,
variances, reservations or limitations of any nature whatsoever, except, with
respect to all mortgages and liens securing debt which is reflected as a
liability in the Financial Statements. There are no existing claims adverse or
challenges to the title or ownership of any property of the Company or the
Subsidiary.
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(b) All personal property material to the condition (financial
or otherwise), operations, business or prospects of the Company and the
Subsidiary, and all buildings, structures and fixtures used by the Company in
the conduct of its business are, considering their ages and uses, in good
operating condition (subject to normal maintenance and repair).
5.10 Contracts. To the knowledge of the Company and the
Sellers, the Company and the Subsidiary are not in material violation of, or in
default in respect of, any contract, lease, agreement, instrument, arrangement
or understanding, to which it is a party, and there are no facts or
circumstances which would reasonably indicate that the Company or the Subsidiary
will be in violation of or in default in respect of any such contract, lease,
agreement, instrument, arrangement or understanding subsequent to the date
hereof.
5.11 Litigation and Compliance with Governmental Rules. Except
as described in Schedule 5.11 or the SEC Reports there are no actions, suits,
proceedings, arbitrations or investigations pending, or to the best of the
Company's and Sellers' knowledge, threatened, in any court or before any
governmental agency or instrumentality or arbitration panel or otherwise, or
judgments, orders, decrees, or governmental restrictions, against, by or
affecting the Company which would interfere with the transactions contemplated
by this Agreement or which have or, if adversely determined would have, a
materially adverse effect on the financial condition, assets, liabilities,
business, operations or prospects of the Company or the Subsidiary.
5.12 Insurance. The insurance maintained by the Company with
respect to its property and the conduct of its business is adequate for the
risks facing the Company and has not been and will not be canceled, terminated
or allowed to lapse through the Closing Date. The insurance coverage provided by
such policies of insurance will not in any respect be affected by, and will not
terminate or lapse by reason of, the transactions contemplated by this
Agreement.
5.13 Plan Compliance. The Plan in form and in operation, to
the knowledge of the Company and Sellers, satisfies the requirements to be
qualified under Section 401(a) of the Code and constitutes an employee stock
ownership plan within the meaning of Section 4975(e)(7) of the Code, and the
Buyer is exempt from taxation under Section 501(a) of the Code.
SECTION 6. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Sellers as follows,
which representations and warranties shall continue in full force and effect to
and including the Closing and shall survive the Closing:
6.1 Necessary Authority. The Buyer has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, reorganization or other
laws
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affecting the enforcement of creditors' rights generally now or hereafter in
effect, and subject to the availability of equitable remedies.
6.2 No Conflicts. The execution, delivery and performance of
this Agreement by the Buyer and the consummation of the transactions
contemplated herein do not and will not: (i) require the consent or approval of,
or filing with, any person or public authority or (ii) constitute or result in
the breach of any provision of, or constitute a default under, the ESOP or any
agreement indenture or other instrument to which the ESOP is a party or by which
it or its assets may be bound.
6.3 Shares Not Registered. Buyer acknowledges that the Common
Shares are not registered under the provisions of the Securities Act of 1933.
6.4 Securities Law Representations.
(a) Buyer is an "accredited investor" as such term is defined
in Regulation D promulgated under the Securities Act. Buyer has
received a copy of (i) the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 and (ii) Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998, June 30, 1998 and September 30,
1998 (collectively, the "SEC Reports").
(b) Buyer (i) has been provided the opportunity to ask
questions of and receive answers from the Company and Sellers, or their
respective representatives, concerning the operations, business and
financial condition of the Company, and all such questions have been
answered to Buyers full satisfaction and any information necessary to
verify such responses has been made available to Buyer; (ii) confirms
that Buyer has carefully read and understands the SEC Reports and is
relying on the accuracy and completeness of the SEC Reports without
independent certification thereof; (iii) confirms that the Common
Shares have not been offered to him by any means of general
solicitation or general advertising; (iv) has such knowledge and
experience in financial and business matters that Buyer is capable of
evaluating the merits and risks of an investment in the Common Shares;
(v) is acquiring the Common Shares for its own account, for investment
purposes only, and not with a view towards the sale or other
distribution thereof, in whole or in part; and (vi) understands that
there are restrictions on the transferability of the Common Shares.
(c) Buyer agrees with the Company and Sellers that the Common
Shares will not be sold or otherwise disposed of except pursuant to (i)
an exemption or exclusion from the registration requirements under the
Securities Act of 1933, as amended (the "Securities Act"), which does
not require the filing by the Company with the Commission of any
registration statement, offering circular or other document, in which
case Buyer shall first supply to the Company an opinion of counsel
(which opinion and counsel shall be reasonably satisfactory to the
Company) that such exemption or exclusion is available, (iii) a
registration statement filed by the Company with the Commission under
the Securities Act.
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(d) Buyer agrees that the certificates for the Common Shares
shall bear the following legend:
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT; (ii) PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, PROVIDED THAT AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, HAS BEEN GIVEN BY COUNSEL SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED; or (iii) IN ACCORDANCE WITH THE TERMS OF
THE ▇▇▇▇▇▇ CAPITAL GROUP, INC., PROFIT SHARING AND
EMPLOYEE STOCK OWNERSHIP PLAN.
SECTION 7. Closing Conditions for the Benefit of the Buyer
Each and every obligation of the Buyer under this Agreement
shall be subject to the satisfaction, on or prior to the Closing, of each of the
following conditions, any of which may be waived in writing by the Trustee on
behalf of the Buyer (except that the conditions set forth in Sections 7.5 and
7.6 shall not be waived by the Buyer):
7.1 Representations and Warranties True. The representations
and warranties of the Sellers and the Company contained in this Agreement shall
be true, correct and complete in all material respects as of the date hereof and
shall be deemed to have been made again at and as of the Closing and shall then
be true in all material respects (except as otherwise contemplated by this
Agreement).
7.2 Performance. Each of the obligations of the Sellers and
the Company to be performed by them on or before the Closing pursuant to the
terms hereof shall have been duly performed and complied with in all material
respects by the Closing.
7.3 Opinion of Valuation Consultants. The Trustee shall have
been furnished with an opinion of Sheshunoff to the effect that the Purchase
Price to be paid by the Buyer for the Shares is not in excess of "Adequate
Consideration" within the meaning of Section 3(18)(B) of ERISA, and such opinion
shall remain in effect and shall not have been withdrawn by such valuation
consulting firm prior to the Closing.
7.4 Trustee Approval. The Trustee shall not have determined
that the purchase of the Common Shares is imprudent or that such purchases would
result in a prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code or otherwise violate the provisions of applicable law.
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7.5. ESOP Loan Agreement. The Company and the Buyer shall have
entered into the ESOP Loan and Pledge Agreement dated as of the date hereof and
the Buyer shall have received the proceeds of such loan extended to Buyer
pursuant thereto.
7.6 Deliveries by Sellers. The Sellers shall have made the
deliveries required by Section 3.2.
SECTION 8. Closing Conditions for the Benefit of the Selling Stockholder
and the Company
Each and every obligation of the Sellers and the Company under
this Agreement shall be subject to the satisfaction, on or prior to the Closing,
of each of the following conditions, any of which may be waived in writing by
the Selling Stockholder and the Company:
8.1 Representations and Warranties True. The representations
and warranties of the Trustee on behalf of the Buyer contained in this Agreement
shall be true and correct in all material respects as of the date hereof and
shall be deemed to have been made again at and as of the Closing and shall then
be true in all material respects (except as otherwise contemplated by this
Agreement).
8.2. The Buyer's Performance. Each of the obligations of the
Trustee on behalf of the Buyer to be performed by it on or before the Closing
pursuant to the terms hereof shall have been duly performed and complied with in
all material respects by the Closing.
8.3 ESOP Loan Agreement. The Company and the Buyer shall have
entered into the ESOP Loan and Pledge Agreement and the Buyer shall have
received the proceeds of the loan extended thereunder.
8.4 Deliveries by the Buyer. The Buyer shall have made the
deliveries required by Section 3.2.
SECTION 9. Restriction on the Disposition of the Common Shares.
Until such time as the Common Shares are registered pursuant
to the provision of the 1933 Securities Act, any certificate or certificates
representing the Common Shares delivered pursuant to Section 3.2, or thereafter
upon transfer, exchange or substitution, will bear a legend in substantially the
following form:
"THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT; (ii) PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933,
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PROVIDED THAT AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER, HAS BEEN GIVEN
BY COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED; or (iii) IN
ACCORDANCE WITH THE TERMS OF THE ▇▇▇▇▇▇ CAPITAL
GROUP, INC., PROFIT SHARING AND EMPLOYEE STOCK
OWNERSHIP PLAN."
SECTION 10. Survival of Representations and Warranties; Indemnification
10.1 Survival of Representations and Warranties. The
representations and warranties made under this Agreement shall survive the
Closing for a period of two years from the date hereof.
10.2 Indemnification. The Sellers agree to defend, indemnify
and hold Buyer harmless against and shall reimburse Buyer for any actions,
claims, proceedings, losses, liabilities and damages, including reasonable
attorneys' fees) (collectively, "Damages") incurred by the Buyer on or after the
Closing Date arising out of the breach of any representation, warranty,
covenant, or agreement of the Company and the Sellers pursuant to this
Agreement. Notwithstanding anything contained in this Agreement or in this
Section 10.2 to the contrary, the liability of Sellers for any action pertaining
to the breach of any covenant, representation or warranty or for any action for
indemnification with respect to any of the foregoing under this Agreement shall
be strictly limited to the Purchase Price paid by the Buyer hereunder.
10.3 Third Party Claims. With respect to claims or demands by
third parties, whenever the Company or the Buyer shall have received notice that
such a claim or demand has been asserted or threatened, which, if valid, would
be subject to indemnity under this Section 10, the Buyer or the Company shall,
as soon as possible, and in any event within thirty (30) days of receipt of such
notice, give written notice to the Sellers of such claim or demand and of all
relevant facts within its knowledge which relate thereto; provided, however,
that the failure to give timely notice hereunder shall not relieve the Sellers
of his or her obligations under this Section 10 unless, and only to the extent
that, such failure prejudiced the Sellers. The Sellers shall have the right at
his or her expense to undertake the defense of any such claims or demands
utilizing counsel selected by the Sellers. In the event that the Sellers should
fail to give notice of her intention to undertake the defense of any such claim
or demand within sixty (60) days after receiving notice that it has been
asserted or threatened, the Buyer or the Company shall have the right to satisfy
and discharge the same by payment, compromise or otherwise. In such case, the
Buyer and/or the Company shall give written notice to the Sellers of its
satisfaction or discharge of the claim or demand by payment, compromise or
otherwise.
SECTION 11. General.
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11.1 Actions After the Closing. After the date of Closing, the
parties shall execute and deliver such other and further instruments and perform
such other and further acts as may reasonably be required fully to consummate
the transactions contemplated hereby.
11.2 Execution of Counterparts. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
11.3 Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if delivered personally or by registered or certified
mail, postage prepaid to the address indicated on the signature page.
11.4 Assignment, Successors and Assigns. This Agreement shall
be binding upon the parties hereto, their heirs, personal representatives,
successors and assigns.
11.5 Applicable Laws. This Agreement shall be construed and
governed by the internal laws, and not the law of conflicts, of the State of
Illinois applicable to agreements made and to be performed in Illinois, to the
extent that such laws are not preempted by Federal law.
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11.6 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto, and no party hereto shall be bound by any
communications between them on the subject matter hereof unless such
communications are in writing and bear a date contemporaneous with or subsequent
to the date hereof. Any prior written agreements or letters of intent among the
parties shall, upon the execution of this Agreement, be null and void.
11.7 Reliance by the Buyer Upon Representations and
Warranties. The parties mutually agree that, notwithstanding any right of the
Buyer to fully investigate the affairs of the Sellers and notwithstanding any
knowledge of facts determined or determinable by the Buyer pursuant to such
investigation or right of investigation, the Buyer has the right to fully rely
upon the representations and warranties of the Sellers contained in this
Agreement and on the accuracy of any document or certificate given or delivered
to the Buyer pursuant to this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the day and year first above written.
COMPANY: BUYER:
▇▇▇▇▇▇ CAPITAL GROUP, INC. THE ▇▇▇▇▇▇ CAPITAL GROUP, INC.
PROFIT SHARING AND EMPLOYEE STOCK
OWNERSHIP TRUST
By: /s/ J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇▇▇▇▇▇ Bank,
------------------------
Title: CFO Not in its corporate capacity but solely
------------------------ as Trustee of The ▇▇▇▇▇▇ Capital Group,
Inc. Profit Sharing and Employee
Stock Ownership Trust
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ------------------------
Title: Trustee of ESOP
------------------------
Attention: Secretary Address:
▇▇▇▇ ▇▇▇▇▇▇ Bank
with a copy to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇ Attn:
Suite 4400 ----------
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SELLERS:
/s/
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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SCHEDULE 1
Name of No. of Shares Allocation
Stockholder of Common Stock to be Sold of Purchase Price
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 10,000 $240,000
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 14,000 $336,000
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SCHEDULE 5.11
Litigation
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board and Chief Executive Officer of the
Company, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President of the Company, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, related trusts and a related partnership
(collectively, the "▇▇▇▇▇▇ Family") have been named as defendants in the
lawsuits described below relating to (1) the Split-Off Transactions and (2) the
financial and public reporting of Reliance. Certain of the lawsuits also named
other current or former officers and directors of the Company and Reliance,
other stockholders of the Company, Reliance's public accountants at the time of
the Split-Off Transactions, Reliance and the Company as additional defendants.
The filing dates of these lawsuits range from October, 1997 to September, 1998.
The Split-Off Transactions were a series of transactions completed on February
12, 1997 in accordance with the Share Exchange Agreement, dated June 12, 1997
(the "Share Exchange Agreement") between Reliance and the ▇▇▇▇▇▇ Family, which
owned approximately 25% of the outstanding common stock of Reliance prior to the
Split-Off Transactions. Pursuant to the Split-Off Transactions, the ▇▇▇▇▇▇
Family and certain other stockholders of Reliance exchanged all of their common
stock of the Company. On February 9, 1998, Reliance filed a voluntary petition
under Chapter 11 of the Bankruptcy code.
In September, 1998, five class actions, brought on behalf of current and former
stockholders of Reliance and pending in Delaware Chancery Court, were
consolidated into one class action. The consolidated class action alleges that
the ▇▇▇▇▇▇ Family, certain directors and officers of the Company, and certain
other defendants breached their fiduciary duties in connection with disclosures
made to the stockholders prior to the vote which approved the Split-Off
Transactions. The case seeks relief in the form of unspecified damages,
attorneys' fees and recission of the Split-Off Transactions. On September 9,
1998 the Delaware Chancery Court stayed this consolidated class action
indefinitely pending resolution of the consolidated class action in Texas that
is described below.
In August, 1998, nine class actions, brought on behalf of current and former
stockholders of Reliance and pending in the United States District court for the
Western District of Texas, were consolidated into one class action. One class
action, brought on behalf of current and former stockholders of Reliance, is
pending in the Northern District of Illinois. These cases allege that the ▇▇▇▇▇▇
Family, certain directors and officers of the Company, and certain other
defendants violated the federal securities laws and breached common law
fiduciary duties. In addition, the cases allege that the Company and certain
other defendants violated ERISA and breached certain fiduciary duties including
fiduciary duties owed to a subclass consisting of participants in Reliance's
ESOP and 401(k) Profit Sharing Plan. The Texas and Illinois cases seek
unspecified damages and attorney's fees. ▇▇▇▇ ▇▇▇▇▇▇ Bank is named as an
additional defendant in the Illinois action. A motion is pending to transfer the
Texas case to Illinois, and a motion is pending to transfer the Illinois case to
Texas.
On August 19, 1998, ▇▇▇▇▇ ▇▇▇▇ and other members of his family, who collectively
owned approximately 25% of the outstanding common stock of Reliance prior to the
Split-Off Transactions, brought suit in Delaware Chancery Court against members
of the ▇▇▇▇▇▇ Family, the Company, other current and/or former officers and
directors of Reliance and the company, and other stockholders of the Company.
The suite alleges that the ▇▇▇▇▇▇ Family, certain directors and officers of the
Company, and certain other defendants breached their fiduciary duties, committed
fraud and/or engaged in self-dealing in connection with the operation of
Reliance and the Split-Off Transactions. The lawsuit seeks unspecified damages,
attorneys' fees and requests that the Court place all of the shares of the
Company held by the ▇▇▇▇▇▇ Family in a constructive trust.
On October 5, 1998, the United States Bankruptcy Court of the District of
Delaware (the "Bankruptcy Court") entered an order preliminarily enjoining the
plaintiffs in most of the above lawsuits from prosecuting their cases on account
of the pending adversary proceedings by the Reliance Estate Representative that
are described below. The Company expects that
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the Bankruptcy court's order will be amended in the near future to preliminarily
enjoin the remaining plaintiffs from prosecuting their cases.
On July 6, 1998, the Bankruptcy Court entered a confirmation order that
discharged the liability of Reliance and its subsidiaries in connection with all
of the lawsuits described above and permanently enjoined the filing of similar
new suits against them. The Bankruptcy Court also appointed an Estate
Representative (the "Estate representative") for the Post-Confirmation chapter
11 Estate of Reliance and its subsidiaries. On September 4, 1998, the Estate
Representative filed two adversary proceeding complaints which named as
defendants members of the ▇▇▇▇▇▇ Family, certain other directors and officers of
the Company, one of Reliance's former legal counsel and Reliance's former public
accountants (both of whom continue to serve the Company), the Company and ▇▇▇▇
▇▇▇▇▇▇ Bank, as trustee. The complaints allege fraudulent conveyance and
breaches of fiduciary duties and contract with respect to the ▇▇▇▇▇▇ family, the
Company, and ▇▇▇▇ ▇▇▇▇▇▇ Bank, as trustee. The complaints charge certain of the
other defendants with alleged breaches of fiduciary duty, breaches of contract,
malpractice and negligent misrepresentation and aiding and abetting the ▇▇▇▇▇▇
Family's and the Company's alleged breaches. These complaints seek unspecified
damages and attorneys' fees and avoidance of the Split-Off Transactions by the
transfer to the Estate Representative of either the assets exchanged in the
Split-Off Transactions or the value of such assets. One of the complaints
demands monetary damages pursuant to the ▇▇▇▇▇▇ Family's obligation under the
Share Exchange Agreement to indemnify Reliance for certain losses resulting from
the Split-Off Transactions, and asks the court to disallow any claims for
indemnification that any of the defendants have against Reliance or, in the
alternative equitably subordinate such claims to all other creditor claims
against Reliance.
In accordance with the terms and conditions of the Share Exchange Agreement
relating to the Split-Off Transactions, the ▇▇▇▇▇▇ Family has agreed to
indemnify Reliance for certain loses incurred by Reliance, including certain
losses relating to the Split-Off Transactions ("▇▇▇▇▇▇ Family Indemnification
Obligations"). In accordance with the terms of an agreement dated February 6,
1997 between the ▇▇▇▇▇▇ Family and the Company, the Company agreed to indemnify
the ▇▇▇▇▇▇ Family for certain losses that the ▇▇▇▇▇▇ Family may incur as a
result of the Split-Off Transactions, including a portion of the ▇▇▇▇▇▇ Family
Indemnification Obligations under the Share Exchange Agreement. The Company is
unable at this time to predict the extent to which it will be required to pay
amounts under its indemnification obligation to the ▇▇▇▇▇▇ Family. The Company
and its subsidiaries have paid and may continue to pay defense and other legal
costs of the lawsuits described above that are not otherwise advanced by
insurance carriers on behalf of the ▇▇▇▇▇▇ family and other directors, officers
and stockholders of the Company who are defendants in these lawsuits.
The Company believes that it has meritorious defenses to all of the actions
against the Company, and the company intends to defend itself and its
subsidiaries vigorously. However, the Company is unable to predict, at this
time, the potential impact of the litigation, the indemnification obligations
and the payment of legal fees described above on the management, business,
financial condition, liquidity and operating results of the Company. Even if the
▇▇▇▇▇▇ Family, the Company and the other defendants are successful in defending
themselves in the lawsuits, the Company will incur significant costs with
respect to such lawsuits.
The Company is from time to time a party to various other legal actions arising
in the normal course of business. Management knows of no such other threatened
or pending legal actions against the Company that are likely to have a material
adverse impact on the financial condition of the Company.
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