EXHIBIT 2(a)
============================================================================
PURCHASE AGREEMENT
by and among
Hallmark Financial Services, Inc.,
Millers American Group, Inc.,
and
Trilogy Holdings, Inc.
dated as of December 6, 2002
============================================================================
This Agreement is subject to arbitration under
the rules and regulations of the American
Arbitration Association as provided
in Article X hereof.
TABLE OF CONTENTS
Page
----
ARTICLE I. TERMS OF THE PURCHASE AND SALE........................ 1
Section 1.1 Sale of Shares ................................ 1
Section 1.2 Purchase Price ................................ 1
Section 1.3 Effective Date of Sale ........................ 1
ARTICLE II. CLOSING.............................................. 2
Section 2.1 Closing ....................................... 2
Section 2.2 Deliveries by the Sellers ..................... 2
Section 2.3 Deliveries by Purchaser ....................... 3
Section 2.4 Simultaneous Deliveries ....................... 3
Section 2.5 Sales and Transfer Taxes ...................... 3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLERS........... 3
Section 3.1 Seller Organization; Good Standing ............ 3
Section 3.2 Title to Shares ............................... 3
Section 3.3 Power and Authority ........................... 4
Section 3.4 Authorization, Execution and Validity ......... 4
Section 3.5 No Conflict; Consents ......................... 4
Section 3.6 Company Organization; Good Standing; Delivery
of Charter Documents .......................... 4
Section 3.7 Power and Authority ........................... 4
Section 3.8 Authorization, Execution and Validity ......... 4
Section 3.9 No Conflict; Consents ......................... 4
Section 3.10 Capitalization ................................ 5
Section 3.11 No Undisclosed Liabilities .................... 5
Section 3.12 Sufficiency and Condition of and Title to the
Company Assets................................. 5
Section 3.13 Personal Property. ............................ 5
Section 3.14 Compliance with Laws .......................... 6
Section 3.15 Insurance ..................................... 6
Section 3.16 Contracts ..................................... 6
Section 3.17 Litigation; Orders ............................ 7
Section 3.18 Permits ....................................... 7
Section 3.19 Intangible Assets. ............................ 7
Section 3.20 Employees. .................................... 7
Section 3.21 Employee Benefits. ............................ 8
Section 3.22 Taxes. ........................................ 9
Section 3.23 Bank Accounts; Powers of Attorney ............. 10
Section 3.24 Affiliated Transactions ....................... 10
Section 3.25 Books and Records ............................. 10
Section 3.26 Full Disclosure ............................... 10
Section 3.27 Brokers ....................................... 10
Section 3.28 Absence of Sensitive Payment .................. 10
Section 3.29 Liabilities ................................... 11
Section 3.30 Real Property ................................. 11
Section 3.31 Reinsurance Transactions ...................... 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......... 11
Section 4.1 Organization; Good Standing ................... 11
Section 4.2 Power and Authority ........................... 12
Section 4.3 Authorization; Execution and Validity ......... 12
Section 4.4 No Conflict; Purchaser Consents ............... 12
Section 4.5 Full Disclosure ............................... 12
Section 4.6 Brokers ....................................... 12
ARTICLE V. COVENANTS OF SELLERS.................................. 12
Section 5.1 Cooperation of the Sellers .................... 12
Section 5.2 Pre-Closing Access to Information ............. 12
Section 5.3 Conduct of Business ........................... 13
Section 5.4 Supplements to Schedules ...................... 13
Section 5.5 Standstill .................................... 13
Section 5.6 Discharge of Encumbrances ..................... 13
Section 5.7 Non-Disclosure; Non-Competition;
Non-Solicitation............................... 14
ARTICLE VI. COVENANTS OF PURCHASER............................... 15
Section 6.1 Cooperation by Purchaser ...................... 15
ARTICLE VII. MUTUAL COVENANTS.................................... 15
Section 7.1 Governmental Consents ......................... 15
Section 7.2 Consents to Assign Leases and Contracts. ...... 15
Section 7.3 Permits. ...................................... 16
Section 7.4 Books and Records. ............................ 16
Section 7.5 Further Assurances ............................ 17
Section 7.6 Supplemental Document and Consents ............ 17
Section 7.7 Tax Matters. .................................. 17
Section 7.8 Employee Matters. ............................. 19
ARTICLE VIII. CONDITIONS PRECEDENT TO CLOSING.................... 19
Section 8.1 Conditions Precedent to Purchaser's Obligations 19
Section 8.2 Conditions Precedent to the Sellers'
Obligations.................................... 20
Section 8.3 If Conditions Not Satisfied ................... 21
ARTICLE IX. TERMINATION PRIOR TO CLOSING......................... 21
Section 9.1 Termination of Agreement ...................... 21
Section 9.2 Procedure Upon Termination .................... 21
ARTICLE X. ARBITRATION AND EQUITABLE REMEDIES.................... 22
Section 10.1 Settlement Meeting ........................... 22
Section 10.2 Arbitration Proceedings ...................... 22
Section 10.3 Place of Arbitration ......................... 22
Section 10.4 Discovery .................................... 23
Section 10.5 Equitable Remedies ........................... 23
Section 10.6 Exclusive Jurisdiction ....................... 23
Section 10.7 Judgments .................................... 23
Section 10.8 Expenses ..................................... 23
Section 10.9 Cost of the Arbitration ...................... 23
Section 10.10 Exclusivity of Remedies ...................... 23
ARTICLE XI. MISCELLANEOUS........................................ 23
Section 11.1 Amendment .................................... 23
Section 11.2 Counterparts ................................. 24
Section 11.3 Entire Agreement ............................. 24
Section 11.4 Expenses ..................................... 24
Section 11.5 Governing Law ................................ 24
Section 11.6 Consent to Service of Process ................ 24
Section 11.7 No Assignment ................................ 24
Section 11.8 No Third Party Beneficiaries ................. 25
Section 11.9 Notices ...................................... 25
Section 11.10 Public Announcements.......................... 25
Section 11.11 Representation by Legal Counsel............... 25
Section 11.12 Schedules..................................... 25
Section 11.13 Severability.................................. 26
Section 11.14 Specific Performance.......................... 26
Section 11.15 Successors.................................... 26
Section 11.16 Time of the Essence........................... 26
Section 11.17 Waiver........................................ 26
SCHEDULES
Schedule 3.9 Consents
Schedule 3.10 Capitalization
Schedule 3.13(a) Owned Personal Property
Schedule 3.13(b) Leased Personal Property
Schedule 3.15 Insurance
Schedule 3.16 Contracts
Schedule 3.17 Litigation; Orders
Schedule 3.18 Permits
Schedule 3.19(a) Owned Intangible Assets
Schedule 3.19(b) Licensed Intangible Assets
Schedule 3.20(a) Employees
Schedule 3.20(b) Employment Agreements
Schedule 3.21(a) Identification of Seller Plans
Schedule 3.21(d) Welfare Plan Exceptions
Schedule 3.21(e) Employee Benefit Plan Consequences
Schedule 3.22(c) Taxes
Schedule 3.23 Bank Accounts; Powers of Attorney
Schedule 3.24 Affiliated Transactions
Schedule 3.29 Liabilities
Schedule 3.30 Leased Real Property
Schedule 3.31(a) Reinsured Business Agreements and Arrangements
Schedule 3.31(b) Ceded Business Agreements and Arrangements
Schedule 3.31(c) Terminated Reinsured Business and Ceded
Business Agreements and Arrangements
Schedule 3.31(d) Continuing Reinsured Business and Ceded
Business Agreements and Arrangements
Schedule 7.2(b) Pre-Closing; Required Consents
Schedule 7.3(b) Pre-Closing; Required Permits
Schedule 7.8(a) Assumed Plans
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated as of December 6,
2002 (the "Signing Date"), is made by and among Hallmark Financial Services,
Inc., a Nevada corporation ("Purchaser"), Millers American Group, Inc., a
Texas corporation ("MAG"), and Trilogy Holdings, Inc., a Nevada corporation
("Trilogy", and together with MAG, the "Sellers").
PRELIMINARY STATEMENTS
A. Trilogy owns all of the issued and outstanding shares of the
common stock (the "Common Stock") of Phoenix Indemnity Insurance Company, an
Arizona insurance company (the "Company"), which shares constitute all of
the issued and outstanding securities of the Company.
B. Purchaser, the Company and the Sellers are sometimes collectively
referred to as the "Parties," and individually referred to as a "Party."
C. Trilogy desires to sell, and Purchaser desires to purchase, all of
Trilogy's shares of the Common Stock on the terms and subject to the
conditions set forth in this Agreement.
D. Capitalized terms used in this Agreement are defined or indexed in
Appendix A for the convenience of the reader and in order to eliminate the
need for cross-references. Appendix A is incorporated herein by this
reference.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to
be legally bound, hereby agree as follows:
ARTICLE I.
TERMS OF THE PURCHASE AND SALE
Section 1.1 Sale of Shares. Subject to the terms and conditions and
in reliance upon the representations and warranties set forth in this
Agreement, at the Closing Trilogy shall sell and assign to Purchaser, and
Purchaser shall purchase and acquire from Trilogy, 500,000 shares of Common
Stock (the "Shares") free and clear of all Encumbrances, other than
Permitted Encumbrances, for the Purchase Price set forth in Purchase Price
hereof.
Section 1.2 Purchase Price. The total consideration paid by
Purchaser for the Shares shall be $7,000,000 (the "Purchase Price"). On the
Closing Date (as defined below), as payment in full for the Shares, the
outstanding principal amount due under that certain Amended and Restated
Note, dated November 1, 2002, by MAG in favor of Purchaser (the "Note") on
such date shall be decreased by the Purchase Price.
Section 1.3 Effective Date of Sale. The parties hereto agree that
the effective date for the sale of the Shares shall be January 1, 2003 (the
"Effective Date").
ARTICLE II.
CLOSING
Section 2.1 Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on the first business day following the date on
which all of the conditions set forth in Article VIII, to the extent not
waived, are satisfied. The Closing may be postponed to such other date as
the Parties may mutually agree. The date on which the Closing actually
occurs is hereinafter referred to as the "Closing Date."
Section 2.2 Deliveries by the Sellers. At the Closing, the Sellers
or each Seller, as the case may be, shall deliver the following:
(a) the closing certificates referred to in Closing Certificate.
An executive officer of each Seller shall have delivered to Purchaser a
certificate confirming (i) the satisfaction of the conditions set forth in
Sections of and Warranties. representations and warranties made by each
Seller in this Agreement shall have been true and complete as of the Signing
Date and as of the Closing Date as though made as of the Closing Date,
except to the extent such representations or warranties made as of a
specific date shall have been correct and complete as of the specified
date., of Covenants. The Company and each Seller shall have performed and
complied with all agreements, covenants and obligations required by this
Agreement to be performed by such party prior to or at the Closing. and
Material Adverse Change. The Company has not undergone any Material Adverse
Change since the Signing Date. and (ii) the continuing force and effect of
the Required Consents and Required Permits.;
(b) a certificate or certificates representing the Shares
endorsed in blank or together with duly executed stock transfer powers in
favor of Purchaser dated the Effective Date;
(c) a certificate dated within ten business days of the Closing
from the Secretary of State of such Seller's jurisdiction of formation (or
other proper state official) certifying as to the Seller's good standing in
such state;
(d) a certificate executed by the secretary or an assistant
secretary of such Seller certifying as to (i) the resolutions in which such
Seller's board of directors approved this Agreement and the transactions
contemplated hereby, and (ii) the incumbency of such Seller's officers who
execute any documents on behalf of such Seller in connection with this
Agreement;
(e) the recorded Charter Document of the Company, recently
certified by the Secretary of State (or other proper state official) of the
State of Arizona;
(f) a certificate of existence and good standing (or the
functional equivalents) for the Company dated within ten business days of
the Closing Date issued by the Secretary of State (or other proper state
official) of the State of Arizona;
(g) all Books and Records of the Company;
(h) executed counterparts of all Required Consents and Required
Permits;
(i) a cross-receipt evidencing the delivery of the Shares and the
reduction in the outstanding principal amount due under the Note by the
Purchase Price;
(j) the document referred to in . (a) At or prior to the
Closing, the applicable Parties shall execute the following document (the
"Supplemental Document"):, executed by both of the Sellers;
(k) each of the consents referred to in Prior to the Closing, the
Sellers shall obtain the following consents from the following Parties:; and
(l) all other previously undelivered documents, instruments and
writings required to be delivered by each Seller and the Company to
Purchaser at or prior to the Closing pursuant to this Agreement and such
other documents, instruments and certificates as Purchaser may reasonably
request in connection with the transactions contemplated by this Agreement.
Section 2.3 Deliveries by Purchaser. At the Closing, Purchaser
shall deliver, or cause to be delivered, to the Sellers the following:
(a) the closing and secretary's certificates referred to in
Sections 0 and Certificate. Purchaser shall have delivered to the Company
and each Seller a certificate executed by the secretary or an assistant
secretary of Purchaser certifying as to (i) the resolutions in which
Purchaser's board of directors approved this Agreement and the transactions
contemplated hereby, and (ii) the incumbency of Purchaser's officers who
execute any documents on behalf of Purchaser in connection with this
Agreement.;
(b) a cross-receipt evidencing the delivery of the Shares and the
reduction in the outstanding principal amount due under the Note by the
Purchase Price; and
(c) all other previously undelivered documents, instruments and
writings required to be delivered by Purchaser to the Sellers at or prior to
the Closing pursuant to this Agreement and such other documents, instruments
and certificates as the Sellers may reasonably request in connection with
the transactions contemplated by this Agreement.
Section 2.4 Simultaneous Deliveries. The delivery of the documents
required to be delivered at the Closing pursuant to this Agreement shall be
deemed to occur simultaneously. No delivery shall be effective until each
Party has received, or waived receipt of, all the documents that this
Agreement entitles such Party to receive.
Section 2.5 Sales and Transfer Taxes. Any Taxes and any transfer,
recording or similar fees and charges arising out of or in connection with
the transactions contemplated by this Agreement shall be borne by the
Sellers. The Sellers and Purchaser will cooperate to obtain all available
exemptions from the foregoing Taxes.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, jointly and severally, hereby represents and warrants to
Purchaser that the statements made in this Article III are true, correct and
complete.
Section 3.1 Seller Organization; Good Standing. Each Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the state in which such Seller is incorporated. Each Seller is duly
qualified or licensed as a foreign corporation in each jurisdiction in which
the nature of such Seller's business makes such qualification or licensing
necessary.
Section 3.2 Title to Shares. Trilogy is the record and beneficial
owner of the Shares, free and clear of all Encumbrances, other than
Permitted Encumbrances. At the Closing, Trilogy will transfer to Purchaser
its entire right, title and interest in and to the Shares free and clear of
all Encumbrances, other than Permitted Encumbrances.
Section 3.3 Power and Authority. Each Seller has the requisite
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby, including the execution, delivery and performance of all of the
Transaction Documents to which such Seller is a party.
Section 3.4 Authorization, Execution and Validity. Each of the
Transaction Documents, when executed by each Seller and delivered to
Purchaser, will be duly authorized (where appropriate), executed and
delivered, and will constitute a valid, legal and binding obligation of such
Seller, enforceable against such Seller in accordance with the terms of such
Transaction Document, subject to any Law Affecting Creditors' Rights.
Section 3.5 No Conflict; Consents. The execution, delivery and
performance by each Seller of each Transaction Document will not (a) violate
any Law, (b) violate any Charter Document of such Seller (if applicable),
(c) violate any Order to which such Seller is a party or by which such
Seller or its assets is bound, (d) result in the creation of any Encumbrance
on any of the Shares, or (e) require any Consent from any Person that will
not be obtained and delivered on or before the Closing Date.
Section 3.6 Company Organization; Good Standing; Delivery of Charter
Documents. The Company is a property and casualty insurance company duly
organized, validly existing and in good standing under the laws of the State
of Arizona. The Company is duly qualified or licensed as a foreign
insurance company in each jurisdiction in which the nature of the Company's
business makes qualification or licensing necessary. Prior to the Signing
Date, the Company has delivered, or caused to be delivered, to Purchaser
true and complete copies of the Charter Documents of the Company as in
effect on the Signing Date.
Section 3.7 Power and Authority. The Company has all requisite
corporate power and authority necessary to execute and deliver any
Transaction Document to which the Company is a party, to perform its
obligations thereunder and to consummate the transactions contemplated
thereby. The Company has all the requisite corporate power and authority
necessary to own, operate and lease its assets and to carry on its business
as and where conducted.
Section 3.8 Authorization, Execution and Validity. Each of the
Transaction Documents to which the Company is a party, when executed by the
Company and delivered to Purchaser, will be duly authorized, executed and
delivered, and will constitute a valid, legal and binding obligation of the
Company, enforceable against the Company in accordance with the terms of
such Transaction Document, subject to any Law Affecting Creditors' Rights.
Section 3.9 No Conflict; Consents. The execution, delivery and
performance by the Company of each Transaction Document to which the Company
is a party will not (a) violate any Law, (b) violate any Charter Document of
the Company, (c) violate any Order to which the Company is a party or by
which the Company or its assets is bound, (d) breach any Material Contract,
(e) result in the creation of any Encumbrance on any assets of the Company,
other than Permitted Encumbrances, or (f) require any Consent from any
Person, except as set forth on Schedule 3.9.
Section 3.10 Capitalization. Schedule 3.10 lists the total number of
authorized, issued and outstanding shares of capital stock of the Company.
All the shares of the Company have been duly authorized and validly issued
and are fully paid and nonassessable. There are no issued and outstanding
shares of capital stock of the Company other than such shares. There is no
authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement (each, a "Subscription Right") obligating the
Company to issue or sell any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock. None
of the Shares were issued or will be transferred pursuant to this Agreement
in violation of any preemptive or preferential rights or rights of first
refusal of any Person. The Company has no subsidiaries and owns no shares
of capital stock, partnership interests or other beneficial ownership
interests in any other Person.
Section 3.11 No Undisclosed Liabilities. To the Sellers' knowledge,
(i) none of the assets or the business of the Company is subject to any
Claim of any nature, absolute or contingent, except for the Claims described
on Schedule 3.17, and (ii) no events have occurred or circumstances exist
that could give rise to any future Claim that could have a Material Adverse
Effect on the assets or the business of the Company.
Section 3.12 Sufficiency and Condition of and Title to the Company
Assets.
(a) Sufficiency of the Company Assets. The assets reflected on
the Books and Records of the Company (collectively, the "Company Assets")
constitute all the assets, properties, licenses and other arrangements which
are presently being used or are reasonably related to the business of the
Company, and are sufficient to operate such business in a manner consistent
with past practice and historic capacity.
(b) Condition of the Company Assets. Each of the Company Assets
complies with Law and is in good and normal operating condition and repair,
structurally sound with no known defects (ordinary wear and tear excepted),
and suitable for its intended use.
(c) Title to the Company Assets. At the Closing, the Company
will hold good, valid and indefeasible title to, or a valid leasehold
interest in, each of the Company Assets, free and clear of all Encumbrances,
other than Permitted Encumbrances.
(d) No Transfers. During the six month period preceding the
Closing Date, the Company has not transferred any Company Assets to a Seller
or affiliate of any Seller and the Company has not made any distribution of
cash to any Seller or affiliate of any Seller.
Section 3.13 Personal Property.
(a) Owned Personal Property. Schedule 3.13(a) lists, as of the
Signing Date, all of the personal property (including all machinery,
equipment, vehicles, structures, fixtures and furniture) owned by the
Company and used in the business of the Company, located on its premises or
acquired after the date thereof.
(b) Leased Personal Property. Schedule 3.13(b) lists, as of the
Signing Date, all the leases of personal property to which the Company is a
party. All of the leases on Schedule 3.13(b) and any leases of personal
property entered into after the Signing Date in accordance with Conduct of
Business (collectively, the "Personal Property Leases") are or when entered
into will be, as applicable, valid, binding and in full force and effect.
Neither the Company nor, to the Sellers' Knowledge, any other Person is in
default under any Personal Property Lease, nor is there any event which with
notice or lapse of time, or both, would constitute a default thereunder by
the Company or any other Person. True and complete copies of all the
Personal Property Leases, and any amendments thereto, have been provided to
Purchaser prior to the Signing Date.
Section 3.14 Compliance with Laws. The Company has complied with all
Laws in the conduct of its business. The Company has not received any
notice from any Governmental Authority or other Person asserting that the
Company has violated any Law. No events have occurred or, to Sellers'
Knowledge, circumstances exist that could cause the Company to violate any
Law in the future.
Section 3.15 Insurance. Schedule 3.15 lists, as of the Signing Date,
all insurance policies which insure the business of the Company or any of
the assets of the Company against loss (collectively, the "Insurance
Policies"), including each insurer's name, coverage deductible and limit,
expiration date and current premium. Each Insurance Policy is in full force
and effect, all premiums with respect thereto have been paid to the extent
due, and no notice of cancellation or termination has been received with
respect to any such policy, other than any policy that will be replaced or
is intended to be replaced prior to the expiration thereof by policies
providing substantially the same coverage from an insurer that is
financially sound and reputable. The Insurance Policies provide the Company
with adequate insurance coverage against the risks involved in the conduct
of the business of the Company and ownership of the assets of the Company.
The coverage provided by the Insurance Policies will not in any way be
affected by, or terminate or lapse by reason of, the consummation of the
transactions contemplated by this Agreement. True and complete copies of
all Insurance Policies have been provided to Purchaser.
Section 3.16 Contracts. Schedule 3.16 lists, as of the Signing Date,
all the contracts relating to the business and assets of the Company or by
which any of the assets of the Company is bound, pursuant to which the
obligations of any party thereto are, or are contemplated to be, with
respect to any such contract (a) in excess of $10,000 during any twelve
month period during the term thereof, (b) not terminable prior to 90 days
after the Signing Date, or (c) otherwise material to the business of the
Company. All of the contracts listed on Schedule 3.16 and any contracts
entered into after the Signing Date in accordance with Conduct of Business
(collectively, the "Material Contracts") are or when entered into will be,
as applicable, valid and binding and in full force and effect, subject to
Laws Affecting Creditors' Rights. Neither the Company nor, to the Sellers'
Knowledge, any other Person is in default under any Material Contract, nor
is there any event which with notice or lapse of time, or both, would
constitute a default thereunder by the Company or any other Person. Other
than the Material Contracts, the Company is not a party to any contract
which (x) requires the Consent of any Person in order to consummate the
transactions contemplated by this Agreement, (y) is in excess of the normal,
ordinary and usual requirements of the business of the Company, or (z) is
excessive in price or quantity. True and complete copies of all the
Material Contracts have been provided to Purchaser.
Section 3.17 Litigation; Orders. Schedule 3.17 lists and describes
all Actions pending, or to the Sellers' Knowledge, threatened against or
affecting the Company, its business or any of its assets as of the Signing
Date. There is no other Action pending or, to the Sellers' Knowledge,
threatened in writing affecting the Company, its business or any of its
assets which, if adversely determined, would have, individually or in the
aggregate, a Material Adverse Effect. The Company is not subject to any
Order. True and complete copies of all material pleadings in the Actions
listed on Schedule 3.17 have been provided to Purchaser.
Section 3.18 Permits. Schedule 3.18 lists all the Permits related to
the assets of the Company or operation of the business of the Company, and
indicates those Permits for which the Consent of any Person is required to
assign such Permit. The Company has obtained, maintains in effect, and
complies with the terms and conditions of all Permits required by Law.
There is no Action pending or, to the Sellers' Knowledge, threatened in
writing to revoke or limit any Permit listed on Schedule 3.18.
Section 3.19 Intangible Assets.
(a) Owned Intangible Assets. Schedule 3.19(a) lists all the
Intangible Assets owned by the Company as of the Signing Date. With respect
to the Intangible Assets listed on Schedule 3.19(a) and all the Intangible
Assets obtained or developed prior to the Closing, (i) the Company owns all
right, title and interest in and to such Intangible Assets free and clear of
all Encumbrances, (ii) the Company has not sold, transferred, licensed, sub-
licensed or conveyed any interest in any of such Intangible Assets, and
(iii) to Sellers' Knowledge, no Person has infringed upon or misappropriated
any of such Intangible Assets.
(b) Licensed Intangible Assets. Schedule 3.19(b) lists all
licenses and contracts related to any Intangible Asset used by the Company
as of the Signing Date. Each license or contract listed on Schedule 3.19(b)
and each license or contract related to an Intangible Asset which is entered
into after the Signing Date in accordance with Conduct of Business is valid,
binding and in full force and effect. The Company has not infringed upon or
misappropriated any Intangible Asset owned by another Person.
Section 3.20 Employees.
(a) Employees. Schedule 3.20(a) lists the name, job title, date
of employment and current annual compensation (salary, bonus and
participation in any non-qualified deferred or incentive compensation
arrangement) for each employee of the Company employed as of the Signing
Date (collectively, the "Employees"). All Employees are either United
States citizens or otherwise authorized to engage in employment in the
United States in accordance with all Laws. All sums due for Employee
compensation and benefits and all vacation time owing to any Employee
(including all persons whose employment by the Company was terminated prior
to the Signing Date) have been duly and adequately accrued on the accounting
Books and Records of the Company.
(b) Contracts. Except as set forth on Schedule 3.20(b), the
Company is not a party to (i) any contract for employment between the
Company and an Employee of the Company that cannot be terminated at will
without cost, or (ii) any collective bargaining agreement or other contract
to or with any labor union, Employee representative or group of Employees.
The Company's employment of each of its Employees is terminable at will
without any penalty or severance obligation of any kind on the part of the
Company.
(c) Compliance with Labor Laws. The Company has complied and is
presently complying with all Laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours, and is
not engaged in any unfair labor practice or unlawful employment practice.
Section 3.21 Employee Benefits.
(a) Identification of Seller Plans. Schedule 3.21(a) sets forth
a list of all Employee Benefit Plans which provide compensation or benefits
to employees, officers, directors or consultants of the Company, including,
without limitation, all Employee Benefit Plans and all employment or
executive compensation agreements (collectively, the "Seller Plans"). The
Sellers have delivered to Purchaser true and complete copies of: (i) each of
the Seller Plans and any related funding agreements thereto (including
insurance contracts) including all amendments, all of which are legally
valid and binding and in full force and effect and there are no defaults
thereunder, (ii) the currently effective Summary Plan Description pertaining
to each of the Seller Plans, (iii) the three most recent annual reports for
each of the Seller Plans, (iv) the most recent IRS determination letter for
each Seller Plan which is intended to constitute a qualified plan under
Section 401 of the Code, and (v) financial statements for each funded Seller
Plan. Notwithstanding any statement or indication in this Agreement to the
contrary, except as disclosed in Schedule 3.21(a), there are no Seller Plans
which the Sellers or Purchaser will not be able to terminate (or in which
the Sellers or Purchaser will not be able to terminate the participation of
their employees) immediately after the Closing in accordance with their
terms and ERISA, and without incurring any expenses (including, but not
limited to, loads or termination charges imposed with respect to insurance
policies or mutual funds used to fund such Seller Plans), other than
administrative expenses in connection with such termination and benefits
accrued as of the date of such termination.
(b) Compliance with Applicable Laws. All Seller Plans comply
with and are and have been operated in material compliance with each
applicable provision of ERISA, the Code, other federal statutes, state Law
(including, without limitation, state insurance Law) and the regulations and
rules promulgated pursuant thereto or in connection therewith. Neither
Sellers, nor any member of the same controlled group of businesses as
Sellers within the meaning of Section 4001(a)(14) of ERISA (an "ERISA
Affiliate") has failed to make any material contributions or to pay any
material amounts due and owing as required by the terms of any Seller Plan.
Other than routine claims for benefits under the Seller Plans, there are no
pending, or, to the best knowledge of the Sellers, threatened
investigations, proceedings, claims, lawsuits, disputes, actions, audits or
controversies involving the Seller Plans or the fiduciaries, administrators,
or trustees of any of the Seller Plans or Sellers or any ERISA Affiliate of
either as the employer or sponsor under any Seller Plan, with any of the
IRS, the Department of Labor, the Pension Benefit Guaranty Corporation, any
participant in or beneficiary of any Seller Plan or any other Person
whomsoever. The Sellers have no knowledge of any reasonable basis for any
such claim, lawsuit, dispute, action or controversy.
(c) Pension Benefit Plans. Neither Sellers nor any ERISA
Affiliate is or ever was a sponsor or obligated to contribute to any plan
covered by Title IV of ERISA or Section 412 of the Code (other than the Cash
Balance Plan), or any "multiemployer plan," within the meaning of Section
3(37) of ERISA. Each of the Seller Plans which is intended to be a
qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and has been operated substantially in
accordance with its terms and with the provisions of the Code.
(d) Welfare Benefit Plans. Each Seller Plan which is required to
comply with the provisions of Part 6 of Title I of ERISA, Section 601 et
seq., and Code Section 4980B and the provisions of Part 7 of Title I of
ERISA, Section 701 et seq., and Code Section 4980D has complied in all
material respects. Except as required by such Sections of the Code, no
Seller Plan which is a Welfare Benefit Plan provides for post-employment
benefits other than the Seller Plans listed on Schedule 3.21(d).
(e) Effect of Consummation. Except as set forth on Schedule
3.21(e), the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee of the Company or any
other individual to a bonus, severance pay, unemployment compensation or
similar payment by the Company, (ii) otherwise accelerate the time of
payment or vesting, or increase the amount of any compensation due to any
current or former employee of the Company, (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available or (iv) in any way result in any
liability of the Company with respect to any Employee Benefit Plan of any
Person other than any adjustments related to the ongoing funding obligations
under the Cash Balance Plan. None of Sellers or the Company is a party or
subject to any agreement, contract or other obligation which would require
the making of any payment, other than payments as contemplated by this
Agreement, to any employee of the Company, Sellers or to any other Person as
a result of the consummation of the transactions contemplated herein.
Section 3.22 Taxes.
(a) Tax Returns. All Tax returns (including amended returns and
claims for refund), reports, and declarations of estimated Tax
(collectively, "Returns") which were required to be filed by the Company
with any Governmental Authority have been timely filed. All Returns are
true and correct and accurately reflect the Tax liabilities of the Company.
All Taxes shown to be due pursuant to such Returns have been paid.
(b) Statute of Limitations and Tax Actions. The Company has not
executed any presently effective waiver or extension of any statute of
limitations against assessments and collection of Taxes. There are no
pending or, to the Sellers' Knowledge, threatened Claims, assessments,
notices, proposals to assess, deficiencies or audits with respect to Taxes.
(c) Miscellaneous Tax Representations. Proper and accurate
amounts have been withheld and remitted by the Company from and with respect
to all Persons from whom it is required by applicable law to withhold for
all periods in compliance with the tax withholding provisions of all Laws.
Neither the Company nor, to the Sellers' Knowledge, any other corporation
has filed an election under Section 341(f) of the Code that is applicable to
the Company or any of the assets of the Company. Except as listed on
Schedule 3.22(c), the Company is not a party to any tax sharing agreement.
There is no contract, plan or arrangement covering any Person that,
individually or collectively, would give rise to the payment of any amount
that would not be deductible by the Company by reason of Section 162(m) or
Section 280G of the Code. The Company is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code. Except as listed on
Schedule 3.22(c), the Company has never been a member of any group that
filed a consolidated federal income tax return.
Section 3.23 Bank Accounts; Powers of Attorney. Schedule 3.23 lists
the names of (a) each bank, trust company and stock or other broker with
which the Company has an account, credit line or safe deposit box or vault,
or otherwise maintains relations (the "Bank Accounts"), (b) all Persons
authorized to draw on, or to have access to, each of the Bank Accounts, and
(c) all Persons authorized by proxies, powers of attorney or other like
instruments to act on behalf of the Company in any matter concerning the
business of the Company. Each of the Bank Accounts has a positive cash
balance. No proxies, powers of attorney or other like instruments are
irrevocable.
Section 3.24 Affiliated Transactions. Except as set forth on
Schedule 3.24, there are no outstanding loans or other transactions between
the Company and any officer, director, shareholder or affiliate of the
Company or any spouse or child of any such person. No officer, director,
shareholder or affiliate of the Company nor any spouse or child of any such
person owns or has any interest in, directly or indirectly, any real or
personal property owned by or leased to the Company.
Section 3.25 Books and Records. The Books and Records of the
Company, all of which have been made available to Purchaser prior to the
Signing Date, are true, correct and complete and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls.
Section 3.26 Full Disclosure. No representation or warranty of any
Seller made in this Agreement, nor any written statement furnished to
Purchaser pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact which affects the business or financial condition of the
Company, or omits or will omit to state a material fact necessary to make
the statements or facts contained herein or therein not misleading.
Section 3.27 Brokers. No Person is or will become entitled to
receive any brokerage or finder's fee, advisory fee or other similar payment
for the transactions contemplated by this Agreement by virtue of having been
engaged by or acted on behalf of any Seller or the Company.
Section 3.28 Absence of Sensitive Payment. The Company has not made
or maintained (i) any contributions, payments or gifts of its funds or
property to any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift was or is
illegal under the laws of the United States or any state thereof, or any
other jurisdiction (foreign or domestic); or (ii) any contribution, or
reimbursement of any political gift or contribution made by any other
person, to candidates for public office, whether federal, state, local or
foreign, where such contributions by the Company were or would be a
violation of applicable law.
Section 3.29 Liabilities. The Liabilities of the Company set forth
in Schedule 3.29 are the only Liabilities of the Company as of the Signing
Date. None of the Liabilities set forth on Schedule 3.29 resulted from or
relate to any breach of contract, breach of warranty, tort, infringement, or
breach of any Law, or arose out of any Action or Order.
Section 3.30 Real Property.
(a) Schedule 3.30 contains a complete and accurate list of all
real property leased by the Company (the "Company Real Property"). The
Company does not own any real property.
(b) Except as set forth in Schedule 3.30, there are no existing
leases, subleases, tenancies, licenses, contracts or other agreements
relating to the Company Real Property to which the Company is a party (the
"Leases"). The Company has delivered to Purchaser true and complete copies
of all of the Leases involving the Company Real Property.
(c) Each of the Leases involving the Company Real Property is
valid and binding, and neither the Company, nor to the best knowledge of the
Sellers and the Company, any other party thereto, is in default thereunder,
nor is there any event which with notice or lapse of time, or both, would
constitute an event of default thereunder by the Company or, to the best
knowledge of the Sellers or the Company, any other party thereto and the
Company has not received notice that any party to any Lease intends to
cancel, terminate or refuse to renew the same or to exercise or decline to
exercise any option or other right thereunder.
Section 3.31 Reinsurance Transactions. Schedule 3.31(a) lists each
reinsurance agreement or arrangement pursuant to which the Company reinsures
business (collectively, the "Reinsured Business") written by another
company. Schedule 3.31(b) lists each reinsurance agreement or arrangement
pursuant to which the Company cedes business written by the Company to any
reinsurer (the "Ceded Business"). The Company is not a party to any
reinsurance agreement or fronting arrangement not listed on Schedule 3.31(a)
or 3.31(b). The Sellers have provided to Purchaser all reinsurance or
fronting agreements relating to the Reinsured Business and the Ceded
Business and all schedules, reconciliations and other records relating to
the Reinsured Business and the Ceded Business, including, but not limited
to, all information documenting the type of Reinsured Business and the Ceded
Business, character of premiums, cash flow losses and underwriting results.
Neither the Company nor any party to any reinsurance agreement listed on
Schedule 3.31(a) or 3.31(b) is in default or violation of such reinsurance
agreement. Schedule 3.31(c) lists each reinsurance agreement that will be
terminated by the Company without cost or penalty on or before the Closing
Date. Schedule 3.31(d) lists each new or surviving reinsurance agreement to
be effective on and after the Closing Date.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers that the
statements set forth in this Article IV are correct and complete.
Section 4.1 Organization; Good Standing. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Purchaser is duly qualified as a foreign corporation in
the State of Texas.
Section 4.2 Power and Authority. Purchaser has all requisite
corporate power and authority necessary to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby, including the execution, delivery and
performance of all of the Transaction Documents to which Purchaser is a
party.
Section 4.3 Authorization; Execution and Validity. Each of the
Transaction Documents, when executed and delivered by Purchaser, will be
duly authorized, executed and delivered, and will constitute a valid, legal
and binding obligation of Purchaser, enforceable against Purchaser in
accordance with the terms of such Transaction Document, subject to any Law
Affecting Creditors' Rights.
Section 4.4 No Conflict; Purchaser Consents. The execution,
delivery and performance by Purchaser of each Transaction Document to which
it is a party will not (a) violate any Law, (b) violate any Charter Document
of Purchaser, (c) violate any Order to which Purchaser is a party or by
which Purchaser or its assets is bound, or (d) require any Consent from any
Person.
Section 4.5 Full Disclosure. No representation or warranty of
Purchaser made in this Agreement, nor any written statement furnished to the
Sellers pursuant hereto or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact
which affects the business or financial condition of Purchaser, or omits or
will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
Section 4.6 Brokers. No Person is or will become entitled to
receive any brokerage or finder's fee, advisory fee or other similar payment
for the transactions contemplated by this Agreement by virtue of having been
engaged by or acted on behalf of Purchaser.
ARTICLE V.
COVENANTS OF SELLERS
Section 5.1 Cooperation of the Sellers. From the Signing Date
through the Closing Date, each Seller shall use all reasonable efforts (a)
to take all actions and to do all things necessary or advisable to
consummate the transactions contemplated by this Agreement, (b) to cooperate
with Purchaser in connection with the foregoing, including using reasonable
efforts to obtain all of the Consents, and (c) subject to the other terms
and conditions of this Agreement, to cause all the conditions set forth in
Conditions Precedent to Purchaser's Obligations, the satisfaction of which
is in the reasonable control of the Company or such Seller, to be satisfied
on or prior to Closing.
Section 5.2 Pre-Closing Access to Information. From the Signing
Date through the Closing Date, each Seller shall afford to Purchaser and its
Representatives access to the properties and the Books and Records of the
Company.
Section 5.3 Conduct of Business. From the Signing Date through the
Closing Date, each Seller shall cause the Company to use all reasonable
efforts to (i) preserve substantially the relationships with its
Representatives, suppliers and customers, (ii) perform its obligations under
all contracts, leases and Permits in all material respects, (iii) comply
with all Laws, (iv) confer with Purchaser regarding operational matters of a
material nature, (v) report periodically to Purchaser regarding the status
of its business and the results of its operations, and (vi) conduct its
business in the ordinary course and consistent with past practices.
Notwithstanding anything to the contrary in this Agreement, from the Signing
Date through the Closing Date, without Purchaser's prior written consent,
the Company shall not enter into any Personal Property Lease, Material
Contract or other agreement pursuant to which, when aggregated with all
other such agreements entered into after the Signing Date and prior to the
Closing Date, the obligations of the Company are, or are contemplated to be,
in excess of $5,000 during any twelve month period during the term of such
agreement.
Section 5.4 Supplements to Schedules. If, between the Signing Date
and the Closing Date, any Seller becomes aware that any of its
representations and warranties in this Agreement or the schedules to this
Agreement was inaccurate when made or if during such period any event occurs
or condition changes that causes any of such representations and warranties
to be inaccurate, then such Party shall notify Purchaser thereof in writing
and supplement the schedules hereto to account for any such inaccuracy,
event or change. Any such supplement to the schedules shall not be deemed
to have been disclosed, as of the Signing Date, or to have cured any breach
of a representation and warranty made in this Agreement, unless so agreed to
in writing by Purchaser.
Section 5.5 Standstill. Until the earlier to occur of the Closing
or the termination of this Agreement pursuant to Article IX, the Company and
each Seller shall not, nor shall each Seller permit the Company or any of
their Representatives to, (a) directly or indirectly, encourage, solicit,
initiate or participate in discussions or negotiations with, or provide any
information or assistance to, any Person (other than Purchaser and its
Representatives) concerning any merger, sale of securities, sale of
substantial assets, investment proposals or similar transaction involving
the Company or any Seller, (b) entertain or discuss any acquisition or
investment proposals whatsoever, (c) except as required by law after not
less than five days notice to Purchaser, disclose to any third party any
non-published information concerning the Company or such Seller, the
business of the Company or such Seller or the Company's or such Seller's
financial condition, or (d) withdraw Trilogy's intention to sell its Shares
to Purchaser. The Company and each Seller shall promptly notify Purchaser
if it receives any such proposal or offer or any inquiry or contact with
respect thereto. Until termination of this Agreement, no Seller will,
directly or indirectly, (i) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Shares, or (ii)
grant any proxies, deposit any Shares into a voting trust or enter into a
voting agreement with respect to the Shares.
Section 5.6 Discharge of Encumbrances. The Company and each Seller
shall take all actions and do all things necessary to cause all Encumbrances
other than Permitted Encumbrances on any of its assets to be terminated or
otherwise discharged at or prior to the Closing.
Section 5.7 Non-Disclosure; Non-Competition; Non-Solicitation.
(a) Non-Disclosure Agreement. Each Seller acknowledges that it
has and may have access to Confidential Information and that such
Confidential Information does and will constitute valuable, special and
unique property of Purchaser. At no time shall such Seller or its
Representatives (i) use any Confidential Information in any manner adverse
to the business interests of Purchaser, or (ii) disclose any such
Confidential Information to any Person for any reason or purpose whatsoever,
except as required by law after not less than five days prior notice to
Purchaser. Upon the request of Purchaser, each Seller shall deliver to
Purchaser all letters, notes, computer disks, software, notebooks, reports
and other materials which contain Confidential Information and which are in
the possession or under the control of such Seller.
(b) Work Product. All records and documents embodying any
Confidential Information or pertaining to the existing or contemplated scope
of the Company's business, which have been conceived, prepared or developed
by a Seller in connection with its direct or indirect ownership interest in
the Company, use by the Company or otherwise, either alone or with others
(herein called "Work Product"), shall be the sole property of the Company.
Upon request of the Company, such Seller shall deliver all Work Product to
the Company.
(c) Non-Competition Agreement. Each Seller agrees not to
conduct, either directly or indirectly, the business conducted by the
Company prior to the Signing Date for a period equal to 24 months after the
Closing Date. Purchaser acknowledges that nothing herein shall be deemed to
preclude Sellers from marketing insurance products written by the Sellers
through general agents so long as Sellers are not in violation of this Non-
Disclosure; Non-Competition; Non-Solicitation..
(d) Non-Solicitation Agreement. For a period equal to 36 months
after the Closing Date, each Seller shall not, either on its own behalf or
on behalf of any business competing with Purchaser, directly or indirectly
to the extent that such Seller is prohibited in engaging in such business
pursuant to this Section, (i) solicit or induce, or in any manner attempt to
solicit or induce any person employed by, or an agent of, the Company or
Purchaser to terminate such person's employment or agency, as the case may
be, with such entity, or (ii) solicit, divert, or attempt to solicit or
divert, or otherwise accept as a supplier or customer, any Person which
sells any products and services of the Company, furnishes products or
services to, or receives products and services from, Purchaser, nor will
such Seller attempt to induce any such supplier or customer to cease being
(or any prospective supplier or customer not to become) a supplier or
customer of the Company or Purchaser.
(e) Independent Covenants. The covenants set forth in this
Section are independent and separate, and in the event that any provision
contained herein is declared invalid or illegal, the other provisions hereof
shall not be affected or impaired thereby and shall remain valid and
enforceable.
(f) Injunctive Relief. In the event of a breach or threatened
breach by any Seller of any provision of this Section, the Company and
Purchaser shall be entitled to an injunction to prevent irreparable injury
to such entity. Nothing herein shall be construed as prohibiting the
Company or Purchaser from pursuing any other remedies available to such
entity for such breach or threatened breach, including the recovery of
damages from such Seller.
(g) Acknowledgments of Sellers. Each Seller acknowledges that
(i) any public disclosure of the Confidential Information will have an
adverse effect on the Company, Purchaser and the business of the Company,
(ii) the Company and Purchaser would suffer irreparable injury if a Seller
breaches any of the terms of this Section, (iii) the Company and Purchaser
will be at a substantial competitive disadvantage if such entity fails to
acquire and maintain exclusive ownership of the Confidential Information or
to abide by the restrictions provided for in this Section, (iv) the scope of
the protective restrictions provided for in this Section are reasonable when
taking into account (A) the negotiations between the Parties and (B) that
the Sellers are the direct beneficiary of the Purchase Price paid pursuant
to this Agreement, (v) the consideration being paid to the Sellers pursuant
to this Agreement is sufficient inducement for the Sellers to agree to the
terms hereof, (vi) the provisions of this Section are reasonable and
necessary to protect the business of the Company, to prevent the improper
use or disclosure of the Confidential Information and to provide the Company
and Purchaser with exclusive ownership of all such Confidential Information
and (vii) the terms of this Section preclude the Sellers from engaging in
the conduct of the business of the Company.
(h) Release. Each Seller, in the capacity as a direct or
indirect shareholder of the Company, hereby agrees to execute and deliver on
the Closing Date a release of the Company from any and all claims resulting
from or related to any matter arising prior to the Closing Date, except as
provided in this Agreement.
ARTICLE VI.
COVENANTS OF PURCHASER
Section 6.1 Cooperation by Purchaser. From the Signing Date through
the Closing Date, Purchaser shall use all reasonable efforts (a) to take all
actions and to do all things necessary or advisable to consummate the
transactions contemplated by this Agreement, (b) to cooperate with the
Company and each Seller in connection with the foregoing, including using
reasonable efforts to obtain all of the Consents and the Releases, and (c)
subject to the other terms and conditions of this Agreement, to cause all
the conditions set forth in Conditions Precedent to the Sellers'
Obligations, the satisfaction of which is in the reasonable control of
Purchaser, to be satisfied on or prior to Closing.
ARTICLE VII.
MUTUAL COVENANTS
Section 7.1 Governmental Consents. Promptly after the Signing Date,
each Party shall take all actions and do all things necessary to obtain all
Consents required by any Governmental Authority to consummate the
transactions contemplated hereby.
Section 7.2 Consents to Assign Leases and Contracts.
(a) Cooperation and Reasonable Efforts. Each Party hereby agrees
to use reasonable efforts, to take reasonable actions (including Purchaser's
delivery to third parties of its audited financial statements) and to
cooperate with each other as may be necessary to obtain Consents to any
deemed transfer or assignment of the Encumbered Instruments as a result of
the transactions contemplated by this Agreement. Except as expressly
provided herein, no Party shall be required to pay any sum, to incur any
obligation or to agree to any amendment of any Encumbered Instrument in
order to obtain any such Consent.
(b) Pre-Closing; Required Consents. Schedule 7.2(b) lists the
Encumbered Instruments under which a Consent to any deemed transfer or
assignment must be obtained from the appropriate third party prior to
Closing (collectively, the "Required Consents"). Except for the Required
Consents, the obtaining of any Consents related to the Encumbered
Instruments shall not be a condition to Closing, and Closing shall occur
irrespective of whether any such Consent has been obtained.
Section 7.3 Permits.
(a) Cooperation and Reasonable Efforts. Each Party hereby agrees
to use reasonable efforts, to take reasonable actions and to cooperate with
each other as may be necessary to transfer to Purchaser, or assist Purchaser
in obtaining, all Permits required to conduct the business of the Company.
On or as soon as practicable after the Signing Date, each Party shall file,
separately or jointly with any other Party, as the case may be, all
applications necessary to transfer or obtain the Permits. Each Party shall
use reasonable efforts to resolve such objections, if any, as may be
asserted by any Governmental Authority with respect to the applications
contemplated hereby. The Sellers, as a group, and Purchaser shall each pay
one-half of the fees and expenses incurred in connection with transferring
or obtaining all Permits.
(b) Pre-Closing; Required Permits. Schedule 7.3(b) lists the
Permits which must be transferred to or obtained by Purchaser prior to
Closing (the "Required Permits"). Except for the Required Permits, the
transfer or issuance to Purchaser of any Permit shall not be a condition to
Closing, and Closing shall occur irrespective of whether any such Permit has
been transferred or obtained.
Section 7.4 Books and Records.
(a) Access. For a period of six years after Closing, each Party
shall provide the other Parties with reasonable access during normal
business hours to its Books and Records (other than books and records
protected by the attorney-client privilege) to the extent that they relate
to the Company prior to Closing and are requested by such Party to prepare
its Returns, to respond to third party Claims or for any other legitimate
purpose specified in writing. Each Party shall have the right, at its own
expense, to make copies of any such Books and Records.
(b) Destruction. No Party shall dispose of or destroy any Books
and Records to the extent that they relate to the Company prior to the
Closing without first offering to turn over possession thereof to the other
Parties by written notice at least 30 days prior to the proposed date of
disposition or destruction.
(c) Confidentiality. Each Party may take such action as it deems
reasonably appropriate to separate or redact unrelated information from
documents and other materials requested and made available pursuant to this
Section and may condition the other Parties' access to documents and other
materials that it deems confidential to the execution and delivery of an
agreement by the other Parties not to disclose or misuse such information.
(d) Assistance. Each Party shall, upon written request, make
personnel available to assist in locating and obtaining any Books and
Records to the extent that they relate to the Company prior to Closing and
make personnel available whose assistance, participation or testimony is
reasonably required in anticipation of, preparation for or the prosecution
or defense of, any third party Claim in which the other Parties do not have
any adverse interest.
Section 7.5 Further Assurances. Subject to the other terms and
conditions of this Agreement, at any time and from time to time, whether
before or after Closing, each Party shall execute and deliver all
instruments and documents and take all other action that the other Parties
may reasonably request to consummate or to evidence the consummation of the
transactions contemplated by this Agreement.
Section 7.6 Supplemental Document and Consents.
(a) At or prior to the Closing, the applicable Parties shall
execute the following document (the "Supplemental Document"):
(i) the Seller releases required pursuant to Release. Each
Seller, in the capacity as a direct or indirect
shareholder of the Company, hereby agrees to execute and
deliver on the Closing Date a release of the Company
from any and all claims resulting from or related to any
matter arising prior to the Closing Date, except as
provided in this Agreement..
(b) Prior to the Closing, the Sellers shall obtain the following
consents from the following Parties:
(i) the consent of the Arizona Department of Insurance in
form and substance reasonably satisfactory to Purchaser.
(ii) the consent of Metropolitan Life Insurance Company, the
landlord under that certain Office Lease Agreement,
dated January 6, 2000, between the Company and
Metropolitan Life Insurance Company.
Section 7.7 Tax Matters.
(a) Apportionment of Income and Loss. For purposes of
apportioning taxable income or loss relating to any taxable period that ends
on the day immediately preceding the Effective Date ("Short Tax Period") and
for that portion of any taxable year that includes (but that does not end
on) the day immediately preceding the Effective Date (a "Partial Tax
Period"), such taxable income or loss shall be determined by reference to
the operations of the Company through the day immediately preceding the
Effective Date as though it were the last day of a taxable year under
Treasury Regulation Section 1.1502-76(b). If required, appropriate
elections shall be made with applicable taxable authorities to accomplish
such result.
(b) Liability For Short Period Tax. Any taxable income or loss
with respect to a Short Tax Period shall be included in the Company's
federal income Tax Return, and, if applicable, consolidated, unitary or
combined state income Tax Returns filed on behalf of the Company in all
jurisdictions to which the Company is subject to income Tax (together with
the United States Federal Return, the "Subject Jurisdictions"). Any income
tax payable with respect to such Short Tax Period shall be borne by the
Sellers, as a group, and Purchaser as hereinafter provided; provided,
however, that any tax liability arising from an election made under Section
338 of the Code shall be borne solely by Purchaser.
(c) Liability For Partial Period Tax. With respect to income Tax
Returns filed in Subject Jurisdictions that include a Partial Tax Period,
income taxes attributable to such Partial Tax Periods shall be computed
according to the apportionment rule of subsection 0 above. Any income tax
payable with respect to any such Partial Tax Period shall be borne by the
Sellers, as a group, and Purchaser as hereinafter provided; provided,
however, that any tax liability arising from an election made under Section
338 of the Code shall be borne solely by Purchaser.
(d) Payment of Short Period Taxes. With respect to each Tax
Return covering a Short Tax Period that is required to be filed in a Subject
Jurisdiction after the Effective Date for, by or with respect to a Company,
the Sellers shall cause such Tax Return to be prepared, shall cause to be
included in such Tax Return all items of income, gain, loss, deduction and
credit or other items (collectively "Tax Items") required to be included
therein, and shall deliver the original of such Tax Return to Purchaser,
with copies of work papers that will permit Purchaser to review and
substantiate the accuracy of such Tax Return, at least 45 days prior to the
due date (including extensions) of such Tax Return. The Sellers, severally,
shall pay to Purchaser (for payment to the applicable taxing authority) not
less than 2 days prior to the due date (including extensions) of a Tax
Return to be filed in a Subject Jurisdiction for a Short Tax Period the
amount of tax shown to be due on such Tax Return (except that any tax
liability arising from an election made under Section 338 of the Code shall
be borne solely by Purchaser).
(e) Payment of Partial Period Tax. With respect to each Tax
Return to be filed in a Subject Jurisdiction covering a Partial Tax Period
by or with respect to the Company, Purchaser shall cause such Tax Return to
be prepared and shall cause to be included in such Tax Return all Tax Items
required to be included therein. Purchaser shall determine (by an interim
closing of the books as of the day immediately preceding the Effective Date,
except for ad valorem Taxes and franchise Taxes based on capital which shall
be prorated on a daily basis) the portion, if any, of the Tax due with
respect to the period covered by such Tax Return to be filed in a Subject
Jurisdiction which is attributable to the Company with respect to the
Partial Tax Period after giving effect to any credits for the amount of such
Tax, if any, paid on or prior to the Effective Date. At least 45 days prior
to the due date (including extensions) of such Tax Return, Purchaser shall
deliver to the Sellers a copy of such Tax Return with copies of work papers
which will permit the Sellers to review and substantiate the accuracy of
such Returns. The Sellers, severally, shall pay to Purchaser (for payment
to the applicable taxing authority) the amount of Tax due in the Subject
Jurisdictions determined to be attributable to the Partial Tax Period
(except that any tax liability arising from an election made under Section
338 of the Code shall be borne solely by Purchaser) not less than 2 days
prior to the due date (including extensions) of such Tax Return.
(f) Appointment of Independent Person. If Purchaser and the
Sellers fail to agree by the day which is 30 days prior to the due date
(including extensions) of a Tax Return due pursuant to this Section, the
matters in dispute (but no other matters) will be submitted to a firm of
independent certified accountants mutually acceptable to Purchaser, on the
one hand, and the Sellers, on the other hand (the "Independent Person"),
which firm will make a final and binding determination as to the matters in
dispute within 15 days after its appointment. The Independent Person will
send its written determination, at which point the determination of the
Independent Person will be binding on Purchaser and the Sellers, absent
fraud or manifest error. The fees and expenses of the Independent Person
will be borne one-half by the Purchaser, on the one hand, and one-half by
the Sellers, on the other hand.
(g) Consistency. Any Tax Return to be prepared pursuant to the
provisions of this Section shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax Returns,
except for changes required by applicable law.
(h) Tax Audits. Whenever any Taxing Authority asserts a claim,
makes an assessment, or otherwise disputes the amount of Taxes of the
Company for which the Sellers are or may be liable under this Agreement,
Purchaser will promptly notify the Sellers and the Sellers shall fully
cooperate with Purchaser and the Company in connection with any disputes,
proceedings or determinations relating to any Taxes to the extent such
proceedings or determinations affect the amount of Taxes for which the
Sellers are liable under this Agreement.
(i) Section 338(h)(10) Election. If requested by Purchaser,
Purchaser and the Sellers shall join in an election to have the provisions
of Section 338(h)(10) of the Code apply to the acquisition of the Company.
Purchaser shall be responsible for, and control, the preparation and filing
of such election. The allocation of purchase price among the assets of the
Company shall be made in accordance with Code Sections 338 and 1060 and any
other comparable provisions of state, local or foreign law, as appropriate.
Purchaser and the Sellers agree to file all Returns and other documents as
may be required by any Taxing Authority in a manner that is consistent with
such allocation.
Section 7.8 Employee Matters.
(a) Employee Benefit Plans. From and after the Effective Date,
the Company shall elect to continue as a participating employer in the
Seller Plans listed on Schedule 7.8(a) (the "Assumed Plans") and the
coverage of the Employees under all the Assumed Plans shall remain in effect
in accordance with the terms of the Assumed Plans. Effective as of the
Effective Date, one or more affiliates of Purchaser will assume sponsorship
of the Assumed Plans and such sponsors shall maintain and administer the
Assumed Plans in accordance with applicable Law and in a manner designed to
maintain the tax qualified status of the Assumed Plans under any applicable
provisions of the Code. Purchaser or its affiliate may elect in its sole
discretion at any time prior to the Effective Date to become the plan
administrator and sponsoring employer with the sole authority to designate
the plan administrator or amend or terminate any Assumed Plan.
(b) No Representations. Without the consent of Purchaser,
Sellers will not make any promises or commitments to any employee of the
Company or Sellers with regard to his or her employment status with
Purchaser or the terms or conditions upon which such employment might occur
or be continued.
ARTICLE VIII.
CONDITIONS PRECEDENT TO CLOSING
Section 8.1 Conditions Precedent to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following conditions,
any of which may be waived in writing by Purchaser.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by each Seller in this Agreement shall
have been true and complete as of the Signing Date and as of the Closing
Date as though made as of the Closing Date, except to the extent such
representations or warranties made as of a specific date shall have been
correct and complete as of the specified date.
(b) Performance of Covenants. The Company and each Seller shall
have performed and complied with all agreements, covenants and obligations
required by this Agreement to be performed by such party prior to or at the
Closing.
(c) No Material Adverse Change. The Company has not undergone
any Material Adverse Change since the Signing Date.
(d) Consents. The Company and each Seller, as the case may be,
shall have received and delivered to Purchaser all the Required Consents and
the Required Permits, each in form and substance satisfactory to Purchaser,
and shall have given all notices required to be given to any Persons prior
to the consummation of the transactions contemplated by this Agreement.
(e) Closing Certificate. An executive officer of each Seller
shall have delivered to Purchaser a certificate confirming (i) the
satisfaction of the conditions set forth in Sections of Representations and
Warranties. The representations and warranties made by each Seller in this
Agreement shall have been true and complete as of the Signing Date and as of
the Closing Date as though made as of the Closing Date, except to the extent
such representations or warranties made as of a specific date shall have
been correct and complete as of the specified date., of Covenants. The
Company and each Seller shall have performed and complied with all
agreements, covenants and obligations required by this Agreement to be
performed by such party prior to or at the Closing. and Material Adverse
Change. The Company has not undergone any Material Adverse Change since the
Signing Date. and (ii) the continuing force and effect of the Required
Consents and Required Permits.
(f) Secretary's Certificate. The Company shall have delivered to
Purchaser a certificate executed by the secretary or an assistant secretary
of the Company certifying as to (i) the Company's Charter Documents, (ii)
the Company's good standing, (iii) the resolutions in which the Company's
board of directors approved the Transaction Documents to which Company is a
party and the transactions contemplated thereby, and (iv) the incumbency of
the Company's officers who execute any documents on behalf of the Company in
connection with this Agreement.
(g) Deliveries. The Company and each Seller, as the case may be,
shall have delivered the documents required by Deliveries by the Sellers and
such other documents as Purchaser may reasonably require.
(h) No Order or Action. No Order shall be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No
Action shall be pending or threatened before any court or other Governmental
Authority seeking to enjoin the Closing or seeking damages against Purchaser
or any of its Representatives as a result of any of the transactions
contemplated by this Agreement, provided that neither Purchaser nor any of
its affiliates instituted such Action.
(i) Stop Loss Indemnity. Sellers shall have delivered
confirmation satisfactory to Purchaser that the stop loss indemnity
insurance coverage applicable with respect to Sellers' medical benefits plan
prior to the Closing shall continue to remain in force and applicable to the
Employees through the expiration date of such policy, provided that if the
Employees are otherwise covered by an insured medical benefit plan at such
time, the Sellers shall not be required to deliver such confirmation.
Section 8.2 Conditions Precedent to the Sellers' Obligations. The
obligation of each Seller to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction of the following
conditions, any of which may be waived in writing by the Sellers.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement shall
have been true and complete as of the Signing Date and as of the Closing
Date as though made as of the Closing Date, except to the extent such
representations or warranties made as of a specific date shall have been
correct and complete as of the specified date.
(b) Performance of Covenants. Purchaser shall have performed and
complied with all agreements, covenants and obligations required by this
Agreement to be performed by Purchaser prior to or at the Closing.
(c) Closing Certificate. An executive officer of Purchaser shall
have delivered to the Company and each Seller a certificate confirming the
satisfaction of the conditions set forth in Sections of Representations and
Warranties. The representations and warranties made by Purchaser in this
Agreement shall have been true and complete as of the Signing Date and as of
the Closing Date as though made as of the Closing Date, except to the extent
such representations or warranties made as of a specific date shall have
been correct and complete as of the specified date. and of Covenants.
Purchaser shall have performed and complied with all agreements, covenants
and obligations required by this Agreement to be performed by Purchaser
prior to or at the Closing..
(d) Secretary's Certificate. Purchaser shall have delivered to
the Company and each Seller a certificate executed by the secretary or an
assistant secretary of Purchaser certifying as to (i) the resolutions in
which Purchaser's board of directors approved this Agreement and the
transactions contemplated hereby, and (ii) the incumbency of Purchaser's
officers who execute any documents on behalf of Purchaser in connection with
this Agreement.
(e) Deliveries. Purchaser shall have delivered the documents
required by Deliveries by Purchaser and such other documents as the Sellers
may reasonably require.
(f) No Order or Action. No Order shall be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No
Action shall be pending or threatened before any court or other Governmental
Authority seeking to enjoin the Closing or seeking damages against the
Company or any Seller or any of their Representatives as a result of any of
the transactions contemplated by this Agreement, provided that neither the
Company nor any Seller nor any of their affiliates instituted such Action.
Section 8.3 If Conditions Not Satisfied. In the event that any of
the conditions set forth in this Article VIII are not satisfied, and the
Parties nevertheless consummate the transactions contemplated by this
Agreement to take place at the Closing, the Parties shall not be deemed to
have waived any Claim for damages or other relief arising from or in
connection with such non-satisfaction.
ARTICLE IX.
TERMINATION PRIOR TO CLOSING
Section 9.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of Purchaser and the Sellers;
(b) by Purchaser at any time after the occurrence of a Material
Adverse Change in the Company; or
(c) by Purchaser or any Seller at any time on or after December
31, 2002 if any of the conditions provided for in Conditions Precedent to
Purchaser's Obligations or Precedent to the Sellers' Obligations,
respectively, shall not have been met or waived in writing prior to such
date.
Section 9.2 Procedure Upon Termination. In the event of termination
pursuant to Termination of Agreement, written notice thereof shall be
immediately given to the other Parties and the transactions contemplated by
this Agreement shall be terminated, without any further action by any Party.
If the transactions contemplated by this Agreement are terminated as
provided herein:
(a) each Party shall return all documents, work papers and other
materials of the other parties, whether obtained before or after the
execution hereof, to the party furnishing the same; and
(b) such termination shall not in any way limit, restrict or
relieve any Party of liability for any breach of this Agreement.
ARTICLE X.
ARBITRATION AND EQUITABLE REMEDIES
Section 10.1 Settlement Meeting. The Parties shall attempt in good
faith to resolve promptly through negotiations any Claim or dispute under
this Agreement. If any such Claim or dispute should arise, the Parties
shall meet at least once to attempt to resolve the matter (the "Settlement
Meeting"). Any Party may request the other Parties to attend a Settlement
Meeting at a mutually agreed time and place within ten days after delivery
of a notice of a Claim or dispute. The occurrence of a Settlement Meeting
with respect to a Claim or dispute shall be a condition precedent to seeking
any arbitration or judicial remedy, provided that if a Party refuses to
attend a Settlement Meeting the other Parties may proceed to seek such
remedy.
Section 10.2 Arbitration Proceedings. If the Parties have not
resolved a monetary Claim or dispute at the Settlement Meeting any Party may
submit the matter to arbitration. A panel of three arbitrators shall
conduct the arbitration proceedings in accordance with the provisions of the
Federal Arbitration Act (99 U.S.C. Section 1 et seq.) and the Commercial
Arbitration Rules of the American Arbitration Association (the "Arbitration
Rules"). The decision of a majority of the panel shall be the decision of
the arbitrators.
(a) Arbitration Notice. To submit a monetary Claim or dispute to
arbitration, a Party shall furnish the other Parties and the American
Arbitration Association with a notice (the "Arbitration Notice") containing
(i) the name and address of such Party, (ii) the nature of the monetary
Claim or dispute in reasonable detail, (iii) the Party's intent to commence
arbitration proceedings under this Agreement, and (iv) the other information
required under the Federal Arbitration Act and the Arbitration Rules.
(b) Selection of Arbitrators. Within ten days after delivery of
the Arbitration Notice, Purchaser and Sellers, as a group, shall each select
one arbitrator from the list of the American Arbitration Association's
National Panel of Commercial Arbitrators. Within ten days after the
selection of the last of those two arbitrators, those two arbitrators shall
select the third arbitrator from such list. If the first two arbitrators
cannot select a third arbitrator within such ten day period, the American
Arbitration Association shall select such third arbitrator from the list.
Each arbitrator shall be an individual not subject to disqualification under
Rule No. 19 of the Arbitration Rules with experience in settling complex
litigation involving mergers and acquisitions.
(c) Arbitration Final. The arbitration of the matters in
controversy and the determination of any amount of damages or
indemnification shall be final and binding upon the Parties to the maximum
extent permitted by Law, provided that any Party may seek any equitable
remedy available under Law as provided in this Agreement. This agreement to
arbitrate is irrevocable.
Section 10.3 Place of Arbitration. Any arbitration proceedings shall
be conducted in Dallas, Texas or at such other location as the Parties may
agree. The arbitrators shall hold the arbitration proceedings within 60
days after the selection of the third arbitrator.
Section 10.4 Discovery. During the period beginning with the
selection of the third arbitrator and ending upon the conclusion of the
arbitration proceedings, the arbitrators shall have the authority to permit
the Parties to conduct such discovery as the arbitrators consider
appropriate.
Section 10.5 Equitable Remedies. Notwithstanding anything else in
this Agreement to the contrary, after the Settlement Meeting a Party shall
be entitled to seek any equitable remedies available under Law, including an
injunction prohibiting a breach of the provisions of Non-Disclosure; Non-
Competition; Non-Solicitation. or an Order requiring a Seller to perform
this Agreement. Any such equitable remedies shall be in addition to any
damages or indemnification rights that such Party may assert in an
arbitration proceeding.
Section 10.6 Exclusive Jurisdiction. The Parties agree that any
claim for equitable relief relating to this Agreement shall be instituted in
a federal or state court sitting in Dallas, Texas, which courts and their
respective appellate courts shall be the exclusive venue for any such claim.
Each Party waives any objection that it may have to the laying of such
venue, and irrevocably submits to the jurisdiction of any such court with
respect to any such claim. Any service of process and other notice in any
such case shall be effective against a Party when transmitted in accordance
with Notices, provided that a Party also may serve process in any manner
permitted by Law.
Section 10.7 Judgments. Any arbitration award under this Agreement
shall be final and binding. Any court having jurisdiction may enter
judgment on such arbitration award upon application of a Party.
Section 10.8 Expenses. If any Party commences arbitration
proceedings or court proceedings seeking equitable relief with respect to
this Agreement, the prevailing Party in such arbitration proceedings or case
may receive as part of any award or judgment reimbursement of such Party's
reasonable attorneys' fees and expenses to the extent that the arbitrators
or court considers appropriate.
Section 10.9 Cost of the Arbitration. The arbitrators shall assess
the costs of the arbitration proceedings, including their fees, to the
Parties in such proportions as the arbitrators consider reasonable under the
circumstances.
Section 10.10 Exclusivity of Remedies. To the extent permitted by
Law, the arbitration and judicial remedies set forth in this Article X shall
be the exclusive remedies available to the Parties with respect to any
dispute under this Agreement or Claim for damages under this Agreement.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Amendment. No amendment of this Agreement shall be
effective unless in a writing signed by Purchaser and each Seller.
Section 11.2 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
agreement, but all of which shall constitute one and the same agreement.
Any Party may execute and deliver this Agreement by an executed signature
page transmitted by a facsimile machine. If a Party transmits its signature
page by a facsimile machine, such Party shall promptly thereafter deliver an
originally executed signature page to the other Parties, provided that any
failure to deliver such an originally executed signature page shall not
affect the validity, legality, or enforceability of this Agreement.
Section 11.3 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.
Section 11.4 Expenses. Each Party shall bear its own expenses with
respect to the negotiation and preparation of this Agreement and the
Closing, including any fees and expenses of its Representatives, provided
that if a Party terminates this Agreement because of another Party's breach
of this Agreement, the non-breaching Party shall be entitled to seek
reimbursement of its expenses as part of its damages with respect to such
breach.
Section 11.5 Governing Law. This Agreement shall be governed by the
laws of the State of Texas, regardless of the laws that might otherwise
govern under the conflicts of laws principles of such state.
Section 11.6 Consent to Service of Process. Each Party waives any
objection that such party may now or hereafter have to the laying of venue
of any such Action, and irrevocably submits to the jurisdiction of any such
court in any such Action. Any and all service of process and any other
notice in any such Action shall be effective against such Party when
transmitted in accordance with Notices. Nothing contained herein shall be
deemed to affect the right of any Party to serve process in any manner
permitted by Law.
Section 11.7 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of all of
the other Parties. Any attempted assignment or delegation without such
prior consent shall be void. Notwithstanding this prohibition against
assignment and delegation, Purchaser may assign its rights and delegate its
duties under this Agreement to a wholly-owned subsidiary of Purchaser
without the Sellers' consent. Upon Purchaser's assignment of its benefits
and delegation of its duties under this Agreement to such a wholly owned
subsidiary, Purchaser shall be released from any obligations under this
Agreement. In addition, after the Closing, Purchaser may assign its rights
under this Agreement to a purchaser of all of the assets or equity of
Purchaser without the Sellers' consent, and any such purchaser and any
subsequent purchasers of all of the assets or equity of Purchaser may
similarly assign such rights.
Section 11.8 No Third Party Beneficiaries. This Agreement is solely
for the benefit of the Parties and no other Person shall have any right,
interest, or claim under this Agreement.
Section 11.9 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be
in writing. Such claims, consents, designations, notices, waivers, and
other communications shall be considered received (i) on the day of actual
transmittal when transmitted by facsimile with written confirmation of such
transmittal, (ii) on the next business day following actual transmittal when
transmitted by a nationally recognized overnight courier, or (iii) on the
third business day following actual transmittal when transmitted by
certified mail, postage prepaid, return receipt requested; in each case when
transmitted to a Party at its address set forth below (or to such other
address to which such Party has notified the other Parties in accordance
with this Section to send such claims, consents, designations, notices,
waivers, and other communications):
Purchaser: Hallmark Financial Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇. ▇▇▇ ▇▇▇▇▇▇
The Sellers: Millers American Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇
Section 11.10 Public Announcements. The Parties shall agree on the
terms of any press releases or other public announcements related to this
Agreement, and shall consult with each other before issuing any press
releases or other public announcements related to this Agreement; provided,
however, that any Party may make a public disclosure if in the opinion of
such party's counsel it is required by Law or the rules of the Securities
and Exchange Commission, American Stock Exchange or other regulatory agency
to make such disclosure. The parties agree, to the extent practicable, to
consult with each other regarding any such public announcement in advance
thereof.
Section 11.11 Representation by Legal Counsel. Each Party is a
sophisticated Person that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 11.12 Schedules. All references in this Agreement to
schedules shall mean the schedules identified in this Agreement, which are
incorporated into this Agreement and shall be deemed a part of this
Agreement for all purposes. Each Section of this Agreement that refers to a
schedule shall have a separate schedule. In addition, any disclosure under
a particular section's schedule shall be made under the heading of any
relevant subsection of such section. A disclosure of an item in a schedule
for a particular Section or under a heading in a schedule corresponding to a
particular subsection shall not be a disclosure under any other section's
schedule or any other subsection, unless so noted specifically on such
schedule. The Sellers have delivered to Purchaser a correct and complete
copy of each document described on each schedule to this Agreement and a
correct and complete written description of each unwritten arrangement or
other item described on each such schedule.
Section 11.13 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Agreement or affect the validity or
enforceability of such provision in any other jurisdiction. In addition,
any such prohibited or unenforceable provision shall be given effect to the
extent possible in the jurisdiction where such provision is prohibited or
unenforceable.
Section 11.14 Specific Performance. Each Seller acknowledges that the
benefits that Purchaser will derive from the transactions contemplated by
this Agreement are unique and irreplaceable. Accordingly, if such Seller
improperly abandons or terminates this Agreement, Purchaser would not have
an adequate remedy at law. Purchaser therefore shall be entitled to a court
order requiring such Seller to perform this Agreement. No Seller shall be
entitled to specific performance of this Agreement.
Section 11.15 Successors. This Agreement shall be binding upon and
shall inure to the benefit of each Party and its heirs, legal
representatives, permitted assigns, and successors, provided that this
Section shall not permit the assignment or other transfer of this Agreement,
whether by operation of law or otherwise, if such assignment of other
transfer is not otherwise permitted under this Agreement.
Section 11.16 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 11.17 Waiver. No provision of this Agreement shall be
considered waived unless such waiver is in writing and signed by the Party
that benefits from the enforcement of such provision. No waiver of any
provision in this Agreement, however, shall be deemed a waiver of a
subsequent breach of such provision or a waiver of a similar provision. In
addition, a waiver of any breach or a failure to enforce any term or
condition of this Agreement shall not in any way affect, limit, or waive a
Party's rights under this Agreement at any time to enforce strict compliance
thereafter with every term and condition of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Party executed, or caused a duly authorized
officer to execute, this Agreement as of the Signing Date.
PURCHASER: HALLMARK FINANCIAL SERVICES, INC.
By: __________________________
Name: __________________________
Title: __________________________
SELLERS: MILLERS AMERICAN GROUP, INC.
By: __________________________
Name: __________________________
Title: __________________________
TRILOGY HOLDINGS, INC.
By: __________________________
Name: __________________________
Title: __________________________
APPENDIX A
DEFINITIONS AND RULES OF INTERPRETATION
Definitions. Unless the context otherwise requires, the terms defined
in this Appendix shall have the meanings specified below for all purposes of
this Agreement:
"Action" means any action, arbitration proceeding, cause of
action, charge, counterclaim, cross claim, inquiry, investigation, legal
action, litigation, Order, proceeding, or suit.
"Agreement" shall have the meaning set forth in the Preamble.
"Arbitration Notice" shall have the meaning set forth in
Arbitration Notice. To submit a monetary Claim or dispute to arbitration, a
Party shall furnish the other Parties and the American Arbitration
Association with a notice (the "Arbitration Notice") containing (i) the name
and address of such Party, (ii) the nature of the monetary Claim or dispute
in reasonable detail, (iii) the Party's intent to commence arbitration
proceedings under this Agreement, and (iv) the other information required
under the Federal Arbitration Act and the Arbitration Rules..
"Arbitration Rules" shall have the meaning set forth in
Arbitration Proceedings.
"Assumed Plans" shall have the meaning set forth in Employee
Benefit Plans. From and after the Effective Date, the Company shall elect
to continue as a participating employer in the Seller Plans listed on
Schedule 7.8(a) (the "Assumed Plans") and the coverage of the Employees
under all the Assumed Plans shall remain in effect in accordance with the
terms of the Assumed Plans. Effective as of the Effective Date, one or more
affiliates of Purchaser will assume sponsorship of the Assumed Plans and
such sponsors shall maintain and administer the Assumed Plans in accordance
with applicable Law and in a manner designed to maintain the tax qualified
status of the Assumed Plans under any applicable provisions of the Code.
Purchaser or its affiliate may elect in its sole discretion at any time
prior to the Effective Date to become the plan administrator and sponsoring
employer with the sole authority to designate the plan administrator or
amend or terminate any Assumed Plan..
"Bank Accounts" shall have the meaning set forth in Bank Accounts;
Powers of Attorney.
"Books and Records" shall mean all the books and records
maintained by or for any Person, including all accounting records, minute
books, stock records, computerized records and storage media and the
software used in connection therewith.
"Cash Balance Plan" means the frozen Retirement Plan for Employees
of The Millers Insurance Group restated effective July 1, 1996, as amended.
"Ceded Business" shall have the meaning set forth in Reinsurance
Transactions.
"Charter Documents" shall mean (i) in the case of a corporation,
its articles or certificate of incorporation and its bylaws, (ii) in the
case of a partnership, its partnership certificate and its partnership
agreement, and (iii) in the case of any other Person, its organic and
governing documents; in each case as such document has been amended or
supplemented from time to time prior to the Signing Date.
"Claim" shall mean any arbitration award, assessment, charge,
citation, claim, damage, demand, directive, expense, fine, interest, joint
or several liability, lawsuit, notice, obligation, payment, penalty, or
summons of any kind or nature whatsoever, including any damages incurred
because of the claimant's negligence or gross negligence or any strict
liability imposed upon the claimant, any consequential or punitive damages,
and any reasonable attorneys' fees and expenses. A Claim shall be
considered to exist even though it may be conditional, contingent, indirect,
potential, secondary, unaccrued, unasserted, unknown, unliquidated, or
unmatured.
"Closing" shall have the meaning set forth in Closing.
"Closing Date" shall have the meaning set forth in Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in Recital C.
"Company" shall have the meaning set forth in the Preamble.
"Company Assets" shall have the meaning set forth in Sufficiency
of the Company Assets. The assets reflected on the Books and Records of the
Company (collectively, the "Company Assets") constitute all the assets,
properties, licenses and other arrangements which are presently being used
or are reasonably related to the business of the Company, and are sufficient
to operate such business in a manner consistent with past practice and
historic capacity..
"Company Real Property" shall have the meaning set forth in
Schedule 3.30 contains a complete and accurate list of all real property
leased by the Company (the "Company Real Property"). The Company does not
own any real property..
"Confidential Information" means any proprietary information, and
any information which Purchaser reasonably considers to be proprietary,
pertaining to the Company's and Purchaser's past, present or prospective
business secrets, methods or policies, earnings, finances, security holders,
lenders, key employees, nature of services performed by such entity's sales
personnel, procedures, standards and methods, information relating to
arrangements with suppliers, the identity and requirements of arrangements
with customers, all policyholder information of policyholders, the type,
volume or profitability of services or products for customers, drawings,
records, reports, documents, manuals, techniques, ratings, information,
data, statistics, trade secrets and all other information of any kind or
character relating to each of the Parties, whether or not reduced to
writing.
"Consent" shall mean a consent, approval, order, authorization or
waiver from, notice to or declaration, registration or filing with any
Person.
"Effective Date" shall mean January 1, 2003.
"Employee Benefit Plan" shall mean any (i) Pension Benefit Plan,
(ii) Welfare Benefit Plan, (iii) accident, dental, disability, health, life,
medical, or vision plan or insurance policy, (iv) bonus, executive,
incentive or deferred compensation plan, (v) change in control plan, (vi)
fringe benefits and perquisites, (vii) holiday, sick pay, leave, vacation,
moving or tuition reimbursement or other similar policy, (viii) stock
option, stock purchase, phantom stock, restricted stock or stock
appreciation plan, (ix) severance plan, or (x) other employee arrangement,
commitment, custom, policy or practice.
"Employees" shall have the meaning set forth in Employees.
Schedule 3.20(a) lists the name, job title, date of employment and current
annual compensation (salary, bonus and participation in any non-qualified
deferred or incentive compensation arrangement) for each employee of the
Company employed as of the Signing Date (collectively, the "Employees").
All Employees are either United States citizens or otherwise authorized to
engage in employment in the United States in accordance with all Laws. All
sums due for Employee compensation and benefits and all vacation time owing
to any Employee (including all persons whose employment by the Company was
terminated prior to the Signing Date) have been duly and adequately accrued
on the accounting Books and Records of the Company..
"Encumbered Instrument" shall mean any contract and lease that by
its terms requires Consent from a third party in order to transfer the
rights and obligations thereunder.
"Encumbrance" shall mean any title defect or objection, mortgage,
lien, deed of trust, equity, judgment, claim, restrictive covenant, use
restriction, charge, pledge, security interest or other encumbrance of any
nature whatsoever, including all leases, chattel mortgages, conditional
sales contracts, collateral security arrangements and other title or
interest retention arrangements.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"GAAP" shall mean generally accepted accounting principles in
effect in the United States of America as of the Signing Date.
"Governmental Authority" shall mean any federal, state, local,
tribal, foreign or other governmental agency, department, branch,
commission, board, bureau, court, instrumentality or body.
"Independent Person" shall have the meaning set forth in
Appointment of Independent Person. If Purchaser and the Sellers fail to
agree by the day which is 30 days prior to the due date (including
extensions) of a Tax Return due pursuant to this Section, the matters in
dispute (but no other matters) will be submitted to a firm of independent
certified accountants mutually acceptable to Purchaser, on the one hand, and
the Sellers, on the other hand (the "Independent Person"), which firm will
make a final and binding determination as to the matters in dispute within
15 days after its appointment. The Independent Person will send its written
determination, at which point the determination of the Independent Person
will be binding on Purchaser and the Sellers, absent fraud or manifest
error. The fees and expenses of the Independent Person will be borne one-
half by the Purchaser, on the one hand, and one-half by the Sellers, on the
other hand..
"Insurance Policies" shall have the meaning set forth in
Insurance.
"Intangible Asset" shall mean any patent, trademark, trademark
license, servicemark, servicemark license, computer software, trade name,
masthead, brand name, slogan, copyright, reprint right, franchise, license,
process, authorization, invention, know-how, formula, trade secret and other
intangible asset, together with any pending application, continuation-in-
part or extension therefor.
"Law" shall mean any applicable code, statute, law, common law,
rule, regulation, order, ordinance, judgment, decree, order, writ or
injunction of any Governmental Authority.
"Law Affecting Creditors' Rights" shall mean any bankruptcy,
fraudulent conveyance or transfer, insolvency, moratorium, reorganization,
or other law affecting the enforcement of creditors' rights generally, and
any general principles of equity.
"Leases" shall have the meaning set forth in Except as set forth
in Schedule 3.30, there are no existing leases, subleases, tenancies,
licenses, contracts or other agreements relating to the Company Real
Property to which the Company is a party (the "Leases"). The Company has
delivered to Purchaser true and complete copies of all of the Leases
involving the Company Real Property..
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, matured or
unmatured, conditional or unconditional, latent or patent, accrued or
unaccrued, liquidated or unliquidated, or due or to become due.
"MAG" shall have the meaning set forth in the Preamble.
"Material Adverse Change" shall mean, with respect to a Person,
that such Person has (i) breached a Material Contract, (ii) incurred a Claim
or become a party to an Action that could have a significant and detrimental
effect upon it, (iii) suffered a Material Adverse Effect, or (iv) violated
any Law or Order to which it or any of its assets is subject or bound.
"Material Adverse Effect" shall mean, with respect to a Person,
the occurrence of an event or the existence of a circumstance that has a
material adverse effect on such Person's assets, business, cash flows,
financial condition, liabilities, operations, prospects, or relationships,
including the occurrence of any event or the existence of any circumstance
that could cause such an effect in the future.
"Material Contracts" shall have the meaning set forth in
Contracts.
"Note" shall have the meaning set forth in Purchase Price.
"Order" shall mean any consent decree, decree, determination,
injunction, judgment, order, or writ of any arbitrator or Governmental
Authority.
"Partial Tax Period" shall have the meaning set forth in
Apportionment of Income and Loss. For purposes of apportioning taxable
income or loss relating to any taxable period that ends on the day
immediately preceding the Effective Date ("Short Tax Period") and for that
portion of any taxable year that includes (but that does not end on) the day
immediately preceding the Effective Date (a "Partial Tax Period"), such
taxable income or loss shall be determined by reference to the operations of
the Company through the day immediately preceding the Effective Date as
though it were the last day of a taxable year under Treasury Regulation
Section 1.1502-76(b). If required, appropriate elections shall be made with
applicable taxable authorities to accomplish such result..
"Parties" shall have the meaning set forth in Recital C.
"Pension Benefit Plan" shall mean (i) an "employee pension benefit
plan" as defined in Section 3(2) of ERISA, and (ii) a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Permit" shall mean any license, approval, certificate, franchise,
registration, permit or authorization issuable by any Governmental
Authority.
"Permitted Encumbrance" shall mean any Encumbrance directly
related to (i) workers', repairmen's and similar Encumbrances imposed by Law
that have been incurred in the ordinary course of business, (ii) retention
of title agreements with suppliers entered into in the ordinary course of
business, and (iii) the rights of others to customer deposits.
"Person" shall mean any association, bank, business trust,
corporation, estate, general partnership, Governmental Authority,
individual, joint stock company, joint venture, labor union, limited
liability company, limited partnership, non-profit corporation, professional
association, professional corporation, trust, or any other organization or
entity.
"Personal Property Leases" shall have the meaning set forth in
Leased Personal Property. Schedule 3.13(b) lists, as of the Signing Date,
all the leases of personal property to which the Company is a party. All of
the leases on Schedule 3.13(b) and any leases of personal property entered
into after the Signing Date in accordance with Conduct of Business
(collectively, the "Personal Property Leases") are or when entered into will
be, as applicable, valid, binding and in full force and effect. Neither the
Company nor, to the Sellers' Knowledge, any other Person is in default under
any Personal Property Lease, nor is there any event which with notice or
lapse of time, or both, would constitute a default thereunder by the Company
or any other Person. True and complete copies of all the Personal Property
Leases, and any amendments thereto, have been provided to Purchaser prior to
the Signing Date..
"Plan" shall mean any bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance, hospitalization or
other medical, life or other insurance, supplemental unemployment benefit,
profit sharing, pension, or retirement plan, program, agreement or
arrangement.
"Purchase Price" shall have the meaning set forth in Purchase
Price.
"Purchaser" shall have the meaning set forth in the Preamble.
"Reinsured Business" shall have the meaning set forth in
Reinsurance Transactions.
"Representatives" shall mean, with respect to a Person, such
Person's directors, employees, officers, agents, brokers, insurance
companies, coinsurers, reinsurers, accountants, affiliates, consultants,
investment bankers, attorneys, lenders, representatives and shareholders.
"Required Consents" shall have the meaning set forth in Pre-
Closing; Required Consents. Schedule 7.2(b) lists the Encumbered
Instruments under which a Consent to any deemed transfer or assignment must
be obtained from the appropriate third party prior to Closing (collectively,
the "Required Consents"). Except for the Required Consents, the obtaining
of any Consents related to the Encumbered Instruments shall not be a
condition to Closing, and Closing shall occur irrespective of whether any
such Consent has been obtained..
"Required Permits" shall have the meaning set forth in Pre-
Closing; Required Permits. Schedule 7.3(b) lists the Permits which must be
transferred to or obtained by Purchaser prior to Closing (the "Required
Permits"). Except for the Required Permits, the transfer or issuance to
Purchaser of any Permit shall not be a condition to Closing, and Closing
shall occur irrespective of whether any such Permit has been transferred or
obtained..
"Returns" shall have the meaning set forth in Tax Returns. All
Tax returns (including amended returns and claims for refund), reports, and
declarations of estimated Tax (collectively, "Returns") which were required
to be filed by the Company with any Governmental Authority have been timely
filed. All Returns are true and correct and accurately reflect the Tax
liabilities of the Company. All Taxes shown to be due pursuant to such
Returns have been paid..
"Seller Plans" shall have the meaning set forth in Identification
of Seller Plans. Schedule 3.21(a) sets forth a list of all Employee Benefit
Plans which provide compensation or benefits to employees, officers,
directors or consultants of the Company, including, without limitation, all
Employee Benefit Plans and all employment or executive compensation
agreements (collectively, the "Seller Plans"). The Sellers have delivered
to Purchaser true and complete copies of: (i) each of the Seller Plans and
any related funding agreements thereto (including insurance contracts)
including all amendments, all of which are legally valid and binding and in
full force and effect and there are no defaults thereunder, (ii) the
currently effective Summary Plan Description pertaining to each of the
Seller Plans, (iii) the three most recent annual reports for each of the
Seller Plans, (iv) the most recent IRS determination letter for each Seller
Plan which is intended to constitute a qualified plan under Section 401 of
the Code, and (v) financial statements for each funded Seller Plan.
Notwithstanding any statement or indication in this Agreement to the
contrary, except as disclosed in Schedule 3.21(a), there are no Seller Plans
which the Sellers or Purchaser will not be able to terminate (or in which
the Sellers or Purchaser will not be able to terminate the participation of
their employees) immediately after the Closing in accordance with their
terms and ERISA, and without incurring any expenses (including, but not
limited to, loads or termination charges imposed with respect to insurance
policies or mutual funds used to fund such Seller Plans), other than
administrative expenses in connection with such termination and benefits
accrued as of the date of such termination..
"Sellers" shall have the meaning set forth in the Preamble.
"Sellers' Knowledge" shall mean the actual knowledge as of the
date that a specific representation or warranty is made or deemed made,
after reasonable inquiry, of an individual Seller or the executive officers
of any Seller that is a corporation.
"Settlement Meeting" shall have the meaning set forth in
Settlement Meeting.
"Shares" shall have the meaning set forth in Sale of Shares.
"Short Tax Period" shall have the meaning set forth in
Apportionment of Income and Loss. For purposes of apportioning taxable
income or loss relating to any taxable period that ends on the day
immediately preceding the Effective Date ("Short Tax Period") and for that
portion of any taxable year that includes (but that does not end on) the day
immediately preceding the Effective Date (a "Partial Tax Period"), such
taxable income or loss shall be determined by reference to the operations of
the Company through the day immediately preceding the Effective Date as
though it were the last day of a taxable year under Treasury Regulation
Section 1.1502-76(b). If required, appropriate elections shall be made with
applicable taxable authorities to accomplish such result..
"Signing Date" shall have the meaning set forth in the Preamble.
"Subject Jurisdictions" shall have the meaning set forth in
Liability For Short Period Tax. Any taxable income or loss with respect to
a Short Tax Period shall be included in the Company's federal income Tax
Return, and, if applicable, consolidated, unitary or combined state income
Tax Returns filed on behalf of the Company in all jurisdictions to which the
Company is subject to income Tax (together with the United States Federal
Return, the "Subject Jurisdictions"). Any income tax payable with respect
to such Short Tax Period shall be borne by the Sellers, as a group, and
Purchaser as hereinafter provided; provided, however, that any tax liability
arising from an election made under Section 338 of the Code shall be borne
solely by Purchaser..
"Subscription Right" shall have the meaning set forth in
Capitalization.
"Supplemental Document" shall have the meaning set forth in
Supplemental Document and Consents.
"Tax" shall mean any assessment, charge, duty, fee, impost, levy,
tariff, or tax of any nature whatsoever imposed by any Governmental
Authority or payable pursuant to any tax sharing agreement, including any
income, payroll, withholding, excise, gift, alternative minimum, capital
gain, added value, social security, sales, use, real and personal property,
use and occupancy, business and occupation, mercantile, real estate, capital
stock, and franchise tax or charge, together with any related interest,
penalties or additions thereon.
"Tax Items" shall have the meaning set forth in Payment of Short
Period Taxes. With respect to each Tax Return covering a Short Tax Period
that is required to be filed in a Subject Jurisdiction after the Effective
Date for, by or with respect to a Company, the Sellers shall cause such Tax
Return to be prepared, shall cause to be included in such Tax Return all
items of income, gain, loss, deduction and credit or other items
(collectively "Tax Items") required to be included therein, and shall
deliver the original of such Tax Return to Purchaser, with copies of work
papers that will permit Purchaser to review and substantiate the accuracy of
such Tax Return, at least 45 days prior to the due date (including
extensions) of such Tax Return. The Sellers, severally, shall pay to
Purchaser (for payment to the applicable taxing authority) not less than 2
days prior to the due date (including extensions) of a Tax Return to be
filed in a Subject Jurisdiction for a Short Tax Period the amount of tax
shown to be due on such Tax Return (except that any tax liability arising
from an election made under Section 338 of the Code shall be borne solely by
Purchaser)..
"Taxing Authority" shall mean the Internal Revenue Service and any
other domestic or foreign Governmental Authority responsible for the
administration of any Tax.
"Transaction Documents" shall mean this Agreement, the
Supplemental Document, and all other documents and instruments executed and
delivered pursuant to or in furtherance of this Agreement.
"Trilogy" shall have the meaning set forth in the Preamble.
"Welfare Benefit Plan" shall mean an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA, including an employee welfare
benefit plan which is a "multiemployer welfare plan" as defined in Section
3(37) of ERISA and a "multiple employer welfare arrangement" as defined in
Section 3(40) of ERISA.
Accounting Terms. Except as otherwise provided in this Agreement, all
accounting terms defined in this Agreement, whether defined in this Article
or otherwise, shall be construed in accordance with GAAP on a consolidated
basis.
Articles, Sections, Exhibits and Schedules. Except as specifically
stated otherwise, references to Articles, Sections, Exhibits and Schedules
refer to the Articles, Sections, Exhibits and Schedules of this Agreement.
Attorneys' Fees. Whenever this Agreement refers to a Person's
"attorneys' fees and expenses," such reference also shall include any fees
and expenses of accountants, experts, investigators, and other professional
advisors whose services such Person's attorney considered advisable in
connection with the prosecution or defense of the particular matter.
Breach. The term "breach" with respect to any contract or instrument
means any breach or violation of, or default under, such contract or
instrument, any conflict with another contract or instrument or any
emergence of a right of another party to such contract or instrument to
accelerate, cancel, modify or terminate such contract or instrument,
including any such breach, violation, default, conflict, or right that will
arise after notice or lapse of time.
Drafting. Neither this Agreement nor any provision set forth in this
Agreement shall be interpreted in favor of or against any Party because such
Party or its legal counsel drafted this Agreement or such provision. No
prior draft of this Agreement or any provision set forth in this Agreement
shall be used when interpreting this Agreement or its provisions.
Headings. Article and Section headings are used in this Agreement only
as a matter of convenience and shall not have any effect upon the
construction or interpretation of this Agreement.
Include. The term "include" or any derivative of such term does not
mean that the items following such term are the only types of such items.
Or. The term "or" shall not be interpreted as excluding any of the
items described.
Plural and Singular Words. Whenever the plural form of a word is used
in this Agreement, that word shall include the singular form of that word.
Whenever the singular form of a word is used in this Agreement, that word
shall include the plural form of that word.
Predecessors. Any of the Sellers' representations and warranties
concerning any Claim against the Company, any liability or obligation of the
Company, or any violation of Law by the Company shall include any Claims
with respect to each predecessor of the Company, including all direct and
indirect predecessors of any such predecessor.
Pronouns. Whenever a pronoun of a particular gender is used in this
Agreement, if appropriate that pronoun also shall refer to the other gender
and the neuter. Whenever a neuter pronoun is used in this Agreement, if
appropriate that pronoun also shall refer to the masculine and feminine
gender.
Representations and Warranties. The Sellers' representations and
warranties under this Agreement shall mean the representations and
warranties set forth in Article III and the reaffirmation of the Sellers'
representations and warranties in certificates delivered pursuant to Article
II. Purchaser's representations and warranties under this Agreement shall
mean the representations and warranties set forth in Article IV and the
reaffirmation of those representations and warranties in the certificates
delivered pursuant to Article II.
Statutes. Any reference to Law or any specific statute shall include
any changes to such law or statute after the Signing Date, any successor law
or statute, and any regulations and rules promulgated under such law or
statute and any successor law or statute, whether promulgated before or
after the Signing Date.