EXHIBIT 4.27
THIS AGREEMENT IS MADE EFFECTIVE as at the 1st day of October, 2003
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Purchaser")
and
DKWS ENTERPRISES, INC.
a body corporate incorporated
pursuant to the laws of the State of California
(hereinafter referred to as "DKWS")
and
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
a trust formed pursuant to the laws of the State of California,
(hereinafter referred to as the "Trust")
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
a resident of the City of Novato
in the State of California
(hereinafter referred to as "JWK")
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
a resident of the City of Novato
in the State of California
(hereinafter referred to as "TK")
WHEREAS DKWS has its principal offices in Novato, California and is primarily
engaged in the insurance brokerage business in California under the name of
"Vista International Insurance Brokers" (the "Business"), and wishes to sell to
the Purchaser substantially all of the Business' assets (other than as described
herein) and the Purchaser desires to acquire such assets upon the terms and
conditions expressed in this Agreement;
AND WHEREAS the Trust owns the insurance Client Files and Book of Business
processed by DKWS and wishes to sell to the Purchaser substantially all of its
assets including the insurance Client Files and book of business processed by
DKWS and the Purchaser desires to acquire such assets upon the terms and
conditions expressed in this Agreement;
1
AND WHEREAS the Trust was formed pursuant to the laws of the State of California
by an agreement dated July 2, 1998, and the trustees of the Trust are JWK and TK
(together referred to herein as the "Trustees");
AND WHEREAS the Trust owns all of the outstanding capital stock of DKWS and will
provide certain non-competition, indemnification and other assurances to the
Purchaser as a material inducement for Purchaser to enter into this transaction;
AND WHEREAS JWK and TK currently operate and manage the affairs of the Trust and
DKWS (in their capacities as trustees, officers and directors as the case may
be) and are entering into this Agreement to provide certain non-competition,
indemnification and other assurances to the Purchaser as a material inducement
for Purchaser to enter into this transaction;
NOW THEREFORE in consideration of the premises and the mutual agreements and
covenants herein contained, and for other good and valuable consideration, the
Parties covenant and agree as follows:
1.00 - DEFINITIONS
1.01 In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following words and terms shall have
the respective meanings ascribed to them as follows:
(a) "Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due
or to become due), obligations, taxes, liens, losses, expenses, and fees,
including all reasonable attorneys' fees and court costs;
(a) "Assumed Contracts" shall mean any right, title, interest, entitlement
or benefit of the Vendor under or in respect of any contract, agreement,
non-competition contract, lease, engagement, commitments including unfilled
orders received by the Vendor in connection with the Business or license
which is applicable to the Business and specifically assumed by the
Purchaser to the extent the same may be assignable to the Purchaser,
including, but not restricted to, the Lease Agreements and the contracts
described in Schedules "C" and "D" attached hereto;
(a) "Carrier Appointment" means that the Purchaser has received written
notification from an insurance carrier or wholesaler, as the case may be,
stating that the Purchaser is an authorized agent of the insurance carrier
or wholesaler for the sale of its insurance products;
2
(a) "Client Files" shall mean all business files, customer lists and other
records applicable to the Business including, without limiting the
generality of the foregoing, the Client List attached as Schedule "A"
hereto, all client files and policies owned by the Vendor and which
reasonably would result in Earned Commissions for the Vendor prior to this
sale and are expected to result in Earned Commissions for the Purchaser
thereafter; all lapsed client files which relate to former clients of the
Business and all records, documents, computer tapes and disks and related
electronic data in which or by which any such Business files, customer
lists, lapsed client files or other records applicable to the Business are
stored or kept;
(a) "Closing Date" means the 17th day of October, 2003, or such other date
as shall be mutually agreed to by the parties in writing;
(a) "Closing Time" means 2:00 o'clock a.m. Pacific time, on the Closing
Date or such other time on such date as the parties may agree as the time
at which the Closing shall take place;
(a) "Commissions Earned" or "Earned Commissions" shall mean the commission
revenue attributable to policies sold by the Vendor and/or payable under
agreements with insurers, with an effective date after the Effective Date
and which shall include commissions notwithstanding that the same may not
have been invoiced. Notwithstanding the foregoing, the Commissions Earned
shall not include any:
(i) Contingency Revenues in excess of $50,000.00;
(ii) revenues derived by the Purchaser from joint venture or revenue
processing agreements which the Purchaser or Vendor may enter
into after the Closing Date, except those revenues derived by the
Purchaser from those persons or agencies set forth on Schedule
"M" attached hereto which shall be included in the definition of
Earned Commissions;
(iii) life insurance revenues;
(iv) interest income; or
(v) finance charges;
(a) "Contingency Revenue" means those commissions paid to the Purchaser by
insurance companies based upon the volume, growth and or profitability of
insurance business placed with such insurance companies by the Purchaser;
(a) "Effective Date" means October 1st, 2003; (a)
(a) "Environmental, Health, And Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local,
and foreign governments (and all
3
agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes;
(a) "Escrow Agent" means Demiantschuk ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, barristers
and solicitors, located at 1200, ▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇;
(a) "Excluded Assets" means those assets set forth in Schedule "T"
attached hereto and forming a part hereof;
(a) "Intellectual Property" means (A) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (B) all trademarks,
service marks, trade dress, logos, together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (C) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith, (D) all mask works and all applications, registrations, and
renewals in connection therewith, (E) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing
plans and proposals), (F) all computer software (including data and related
documentation), (G) all other proprietary rights, and (H) all copies and
tangible embodiments thereof (in whatever form or medium);
(a) "Lease Agreements" means the lease agreements and sub-lease agreements
(as the case may be) for the Premises of the Business as attached as
Schedule "C" hereto;
(r) "Non-Competition Agreement" means those agreements respecting
competition by DKWS, the Trust, JWK and TK substantially in the form
attached hereto as Schedule "F";
(p) "Premises" means the properties as municipally described in Schedule
"V" attached hereto;
(p) "Purchased Assets" means, subject to paragraph 2.03 herein, all of the
4
assets, property and rights (other than the Excluded Assets) of any kind
and description owned and used by the Vendor or held by them for use in, or
in respect of the operations of, the Business wherever such assets,
property or rights are located as of the Effective Date hereof including,
without limitation, the following assets, properties and rights: (p)
i all rights, title and interest of the Vendor in, to and under all
Assumed Contracts, contracts, leases, agreements, engagements,
commitments including unfilled orders received by the Vendor in
connection with the Business and other rights of or pertaining to the
Business as are specifically accepted by the Purchaser in writing,
whether written or unwritten, provided that the Purchaser shall in no
event be liable or responsible for any liabilities or obligations
thereunder which shall be in existence at, or accruing for or during
the period prior to, the Closing Date except as otherwise agreed in
this Agreement;
ii all fixed assets, equipment, supplies, inventory of and pertaining to
and used in the Business, including without limiting the generality of
the foregoing, all furniture, furnishings, fixtures, leasehold
improvements (whether or not fixtures), and all other materials and
accessories, goods, chattels and effects of all kinds utilized by the
Vendor in connection with the operation of the Business including,
without limitation, computer hardware, credit card verification
equipment, computer software and accounting systems and all of those
other assets listed in Schedule "B" (collectively the "Fixed Assets");
iii the right of the Vendor to carry on the Business under the name of
"Vista International Insurance Brokers" and the right to use any words
or tradenames of the Vendor indicating that the Business is so carried
on;
iv the goodwill of the Vendor in the Business ("Goodwill") including,
without limitation, the rights granted to the Purchaser in respect of,
inter alia, the name "Vista International Insurance Brokers" for use
in the Business, the right of the Vendor to retain and use all of the
Business' present telephone numbers, listings and advertisements as
listed in the current telephone directory for all locations where the
Business is conducted and all licenses, permits and other required
authorizations issued by any governmental body, which are required in
the continued operation of the Business and which are assignable, and
the list of customers of and suppliers to the Business, and to the
extent they exist and are capable of being assigned any and all
customer profiles and customer databases and all advertising signs,
registered and unregistered trademarks, trade or brand names, service
marks, copyrights, franchises, technology or other processes
pertaining to the Business;
v all of the Vendor's Business records necessary to enable the Purchaser
to renew the Purchased Book of Business (as defined in section
1.00(p)(vii) below);
vi all Intellectual Property related to the Business;
vii all of the Business, including, but not limited to, the life, health,
bond, and property and casualty insurance business (both personal and
commercial
5
lines) and renewals and expirations thereof, together with all written
or otherwise recorded documentation, data or information relating to
the Business, whether compiled by Vendor or by other agents, trustees
or employees of Vendor, including, but not limited to: (i) lists of
insurance companies and records pertaining thereto; (ii) customer
lists, prospect lists, policy forms, and/or rating information,
expiration dates, information on risk characteristics, information
concerning insurance markets for large or unusual risks, and all other
types of written or otherwise recorded information customarily used by
Vendor or available to Vendor, including all other records of and
pertaining to the accounts and customers of Vendor, past and present,
including, but not limited to, the active insurance customers of
Vendor (collectively, the "Purchased Book of Business");
viii All other assets of Vendor relating or pertaining to the Purchased
Book of Business, including (i) computer disks, servers, software,
databases (whether in the form of computer tapes or otherwise),
related object and source codes, and associated manuals, and any other
records or media of storage or programs for retrieval of information
pertaining to the Purchased Book of Business, (ii) all supplies and
materials, including promotional and advertising materials, brochures,
plans, supplier lists, manuals, handbooks, and related written data
and information, (iii) customer and other deposits and prepayments,
(iv) transferable approvals, permits, licenses, orders, registrations,
certificates, variances and similar rights obtained from governments
and governmental agencies to own and operate the Business and
Purchased Assets; and (v) the Client Files and book of business; and
ix all rights, title and interest of the Vendor in, to and under all
contracts, leases, agreements, engagements, commitments and all
commission revenue derived by the Vendor from those persons or
agencies set forth on Schedule "M" attached hereto and forming a part
hereof;
6
(r) "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not; (r)
(r) "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes arising from the
operation of the Business or the ownership of the Purchased Assets,
including any schedule or attachment thereto, and including any amendment
thereof;
(r) "Vendor" means collectively DKWS and the Trust.
1.02 The following are the Schedules which are to be attached to and are
incorporated into this Agreement by reference and are deemed to be a part
hereof:
(d) Schedule "A": Client list including the Client Files and names of
customers (current and previous), all commission revenues, all
premiums and all policies in force for each client, also referred to
as the Accounts;
(e) Schedule "B": Fixed Assets of the Vendor on Closing Date;
(f) Schedule "C" Lease Agreements;
(g) Schedule "D": Assumed Contracts (including insurance company
contracts) of the Vendor;
(h) Schedule "E": Financial Statements of the Vendor;
(i) Schedule "F" Non-Competition Agreements of DKWS, the Trust, JWK and
TK;
(j) Schedule "G" Employment Agreements of JWK and TK;
(k) Schedule "H" Permitted Encumbrances;
(l) Schedule "I" Tax Returns and Other Tax Matters;
(m) Schedule "J" Volume Reports - Summary Production Reports;
(n) Schedule "K" Vendor's Insurance;
(o) Schedule "L" Escrow Agreement;
(p) Schedule "M" Joint Venture Agencies;
(q) Schedule "N" Schedule of Vendors Existing carrier appointments With a
B+ or Higher Rating;
(r) Schedule "O" Promissory Note;
(s) Schedule "P" Agency Agreement;
(t) Schedule "Q" Final Note;
(u) Schedule "R" Subordination Agreement and Power of Attorney;
(v) Schedule "S" DKWS Liabilities
(w) Schedule "T" Excluded Assets;
(x) Schedule "U" Security Agreement;
(y) Schedule "V" Municipal Description of Premises; and
7
(z) Schedule "W" List of Those Clients of the Business From The Client
Files Who Provide Earned Commissions to the Vendor in excess of
$5,000.00 per Annum.
1.03 Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in United States funds.
1.04 Any references herein dealing with federal or state legislation, rules,
regulations or codes shall be deemed to be a reference to those federal or
state legislation, rules, regulations or codes as amended from time to
time.
2.00 - THE ACQUISITION
2.01 At the Effective Date, and upon and subject to the terms and conditions of
this Agreement, the parties mutually covenant and agree as follows:
(a) Vendor shall sell, convey and assign to Purchaser all right, title and
interest of Vendor in and to the Purchased Assets free and clear of all
liens, pledges, security interests, charges, restrictions or encumbrances
of any nature whatsoever, except for those described in Schedule "H"
annexed hereto; and
(b) Purchaser shall purchase and accept the Purchased Assets from Vendor
and assume the Assumed Contracts in exchange for the consideration
described in Article 3.00.
2.02 On the Effective Date, Purchaser shall assume all of the obligations and
liabilities first arising or occurring under the Assumed Contracts after
the Closing Date. Except for these obligations, the Purchaser shall not
assume or be deemed to have assumed any liability or obligation of the
Vendor whatsoever.
2.03 Vendor does not agree to sell or assign, and Purchaser does not agree to
purchase or assume, any assets, liabilities and obligations not described
in paragraphs 2.01 or 2.02 of this Agreement. Without limiting the
foregoing and notwithstanding anything to the contrary set forth herein,
Purchaser shall not purchase or assume any of the following:
(a) the Vendor's cash in hand or in banks and other readily liquid working
capital as of the close of business on the Effective Date, including
Vendor's accounts and other receivables, money market certificates, stocks,
bonds, and Vendor's automobiles and other vehicles;
(b) Vendor's claims, refunds, causes of action, choses in action, rights
of recovery, rights of set off, and rights or recoupment (including any
such right relating to the payment of Taxes) except those relating to the
Purchased Assets or the Business arising after the Effective Date;
(c) (i) any contract, lease or other obligation that relates to the
Purchased Assets or the Business and is not otherwise assigned to Purchaser
under this Agreement or (ii) any contract, lease or other obligation
whatsoever not relating to the Purchased Assets or the Business;
(d) (i) Vendor's corporate charter, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
certificates, and other
8
documents relating to the organization, maintenance, and existence of
Vendor as a corporation or (ii) any of the rights of Vendor under this
Agreement;
(e) any duty or liability of any type whatsoever with respect to any
employee or to any pension or profit sharing plan or other employee
benefit;
(f) (i) any liability for income, transfer, sales, use, and other Taxes,
including any such Taxes arising in connection with the consummation of the
transactions contemplated hereby (including any Taxes arising because
Vendor is transferring the Purchased Assets), (ii) any liability of Vendor
for the unpaid Taxes of any person or entity under United States Treasury
Regulation 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise, (iii) any
obligation of Vendor to indemnify any person or entity (including any
shareholder) by reason of the fact that such person or entity was a
director, officer, employee, or agent of Vendor or was serving at the
request of any such entity as a partner, trustee, director, officer,
employee, or agent of another entity (whether such indemnification is for
judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such indemnification is pursuant
to any statute, charter document, bylaw, agreement, or otherwise), (iv) any
liability of Vendor for costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, or (v) any liability or
obligation of Vendor under this Agreement (or under any related agreement
between Vendor on the one hand and Purchaser on the other hand entered into
on or after the date of this Agreement); or
(g) those assets set forth on Schedule "T" attached hereto.
2.04 The consummation of the purchase and sale of the Purchased Assets shall
take place by way of the mutual exchange of documents under appropriate
trust conditions at the Closing Time on the Closing Date at the offices of
the Escrow Agent, unless another date or place is agreed to in writing by
the parties hereto.
3.00 - CONSIDERATION AND METHOD OF PAYMENT
3.01 Subject to the terms and conditions of this Agreement, the Vendor hereby
sells, assigns and transfers to the Purchaser and the Purchaser hereby buys
from the Vendor the Purchased Assets for the aggregate sum of: (1)
$5,171,173.00 (which sum represents 80% of the Purchase Price), subject to
Adjustment as set out in paragraph 3.04; PLUS (2) that amount (the
"Remaining Balance of the Purchase Price") as shall be determined in
accordance with the terms of paragraph 3.05 herein; (both amounts together
are referred to herein collectively as the "Purchase Price")
3.02 For all purposes (including federal and state income tax purposes), the
parties agree to allocate the aggregate of the Purchase Price (as adjusted
pursuant to the First Adjustment or the Second Adjustment - collectively
referred to herein as the "Adjustment") among the Purchased Assets as
follows (the "Allocation"): (i) $103,423.50 shall be allocated to the Fixed
Assets owned by DKWS and listed on Schedule "B"; (ii) $103,423.50 shall be
allocated equally to the covenants of DKWS, JWK, TK and the Trust as set
forth in the
9
Non-Competition Agreements attached as Schedule "F" hereto; (iii)
$2,482,163.00 shall be allocated to the Goodwill, and (iv) $2,482,163.00
shall be allocated to the Purchased Book of Business. Each of Purchaser and
Vendor shall file, in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), an Asset Acquisition Statement on Form 8594 with its
federal income tax return for the tax year in which the Closing Date
occurs, and shall contemporaneously provide the other party with a copy of
the Form 8594 being filed. The Form 8594 shall be consistent with the
Allocation. Each of Purchaser and Vendor also shall file any additional
Forms 8594 from time to time as are required to reflect any Adjustment to
the Purchase Price as required hereunder or any alteration in the
allocation required by the Purchaser's auditor, and again shall
contemporaneously provide the other party with a copy of the additional
Form 8594 being filed. If there is an Adjustment in the Purchase Price
resulting from the application of Article 3.00 hereof, then the amounts
allocated to Goodwill and the Purchased Book of Business shall each be
reduced by an equal amount corresponding to one half of the Adjustment.
Once the amount of the Remaining Balance of the Purchase Price has been
determined then the parties hereto agree to allocate such amount equally
between Goodwill and the Purchased Book of Business. The final version of
each additional Form 8594 as agreed to by Purchaser and Vendor shall be
timely filed by each of Purchaser and Vendor. All indemnification payments
made pursuant to Article 6.00 hereof shall be treated as adjustments to the
Purchase Price.
3.03 The Purchase Price shall be subject to Adjustment (as more particularly set
forth in this Article 3.00) and be paid as follows:
(a) a down payment on the Closing Date in the sum of $1,656,173.00 (the
"Down Payment") which shall be disbursed and distributed as follows;
(i) $103,423.50 shall be disbursed to DKWS or to the account of DKWS
in full and final payment for the Fixed Assets and, this sum (or
such part thereof as is necessary) shall be applied by DKWS
towards the liabilities of DKWS as set forth on Schedule "S"
attached hereto (the "DKWS Liabilities") and any other trust
account deficiencies of DKWS existing as at the Closing Date;
(ii) $25,855.88 shall be disbursed to DKWS or to the account of DKWS
in full and final payment for the Non-Competition Agreement and,
this sum (or such part thereof as is necessary) shall be applied
by DKWS towards the DKWS Liabilities and any other trust account
deficiencies of DKWS existing as at the Closing Date;
(iii)$396,173.00 shall be disbursed to DKWS on behalf of the Trust
(as a partial payment for the Purchased Assets excluding the
Fixed Assets) and, this sum shall be applied by DKWS towards the
DKWS Liabilities and any other trust account deficiencies of DKWS
existing as at the Closing Date;
(iv) $25,855.88 shall be disbursed to the Trust or to the account of
the Trust in full and final payment for the Non-Competition
Agreement;
(v) $728,153.00 shall be disbursed to the Trust or to the account of
the Trust as a partial payment for the Purchased Assets excluding
the Fixed Assets;
(vi) $25,855.88 shall be disbursed to JWK or to the account of JWK in
full and final payment for the Non-Competition Agreement;
(vii)$25,855.88 shall be disbursed to TK or to the account of TK in
full and final
10
payment for the Non-Competition Agreement; and
(viii) $325,000.00 shall be disbursed to GVC Financial Services, LLC
("GVC") on behalf of the Vendor;
(b) on the Closing Date, the Purchaser shall provide the Escrow Agent with
a promissory note (the "Promissory Note"), attached as Schedule "O"
hereto, drawn in favour of the Vendor in the principal amount of
$3,515,000.00 (the "Principal Amount"). The Promissory Note shall be
held by the Escrow Agent and dealt with in accordance with the terms
of paragraph 3.04 and the Escrow Agreement attached as Schedule "L"
hereto.
(c) on the Closing Date, the Purchaser shall provide the Escrow Agent with
a promissory note (the "Final Note"), attached as Schedule "Q" hereto,
drawn in favour of the Vendor in the with the principal amount left in
blank. The Final Note shall be held by the Escrow Agent and dealt with
in accordance with the terms of paragraph 3.05 and the Escrow
Agreement .
3.04 The Promissory Note shall be dealt with in accordance with the following
terms:
(a) within 5 days of the end of the 14th month after the Closing Date, the
Purchaser shall prepare a Purchase Price reconciliation to show the
actual Commissions Earned from the Business. If the actual Earned
Commission revenue from the Business for the one year period from the
Closing Date is less than $3,000,000.00, then the Purchase Price will
be adjusted downward in accordance with the following formula:
(Earned Commissions x 2.155 x 0.8) - $5,171,173.00 = the "First
Adjustment"
if after the application of the formula the First Adjustment results
in a negative number, then the Purchase Price and the Principal Amount
of the Promissory Note shall be reduced by an amount equal to that
negative number. For greater clarification, the First Adjustment
cannot have the effect of increasing the Purchase Price, the First
Adjustment can only lower the Purchase Price;
(b) if after the First Adjustment is determined, there is no reduction in
the Purchase Price, then there shall be no changes made to the
Promissory Note by the Escrow Agent;
(c) if after the First Adjustment is determined, there is a reduction in
the Purchase Price, then the Escrow Agent shall amend the Promissory
Note by reducing the Principal Amount (and, after taking into account
any and all sums paid to The Trust pursuant to the Promissory Note up
to and including the date of the First Adjustment, any amortization
schedules related thereto) by the amount of the First Adjustment as
determined in accordance with paragraph 3.04(a);
(d) the First Adjustments to be made pursuant to this paragraph shall be
made within 15 months of the Closing Date;
(e) within 5 days of the end of the 26th month after the Closing Date, the
Purchaser shall prepare a Purchase Price reconciliation to show the
actual revenues (the "Revenues") received by the Purchaser from those
joint venture agencies set forth on Schedule "M"over the period
beginning on October 1st, 2004 and ending on September 30th, 2005 (the
"JV Period"). If it is determined that the Revenues over the JV Period
is less than the sum of $115,000.00, then the Purchase Price will be
adjusted downward in accordance with the following formula:
11
($115,000.00 - Revenues over the JV Period) x 2.155 x 0.8 = the
"Second Adjustment"
if after the application of the formula the Second Adjustment results
in a positive number, then the Purchase Price and the Principal Amount
of the Promissory Note shall be reduced by an amount equal to that
positive number. For greater clarification, the Second Adjustment
cannot have the effect of increasing the Purchase Price, the Second
Adjustment can only lower the Purchase Price;
(f) if after the Second Adjustment is determined, there is no reduction in
the Purchase Price, then there shall be no changes made to the
Promissory Note by the Escrow Agent and the Escrow Agent shall deliver
the Promissory Note to the Trust;
(g) if after the Second Adjustment is determined, there is a reduction in
the Purchase Price, then the Escrow Agent shall amend the Promissory
Note by reducing the Principal Amount (and, after taking into account
any and all sums paid to the Trust pursuant to the Promissory Note up
to and including the date of the Second Adjustment, any amortization
schedules related thereto) by the amount of the Second Adjustment as
determined in accordance with paragraph 3.04(e) and once done shall
deliver the amended Promissory Note to the Trust;
(h) the Second Adjustment to be made pursuant to this paragraph shall be
made within 27 months of the Closing Date; and
(i) the Parties agree that the Revenues over the JV Period and the Earned
Commission revenue from the Business shall be calculated on a pre-tax
basis.
3.05 The Final Note shall be dealt with in accordance with the following terms:
(a) within 60 days of the end of the September 30, 2008, the Purchaser
shall prepare a Purchase Price reconciliation (the "Reconciliation")
to show the actual Commissions Earned from the Business over the
period beginning on October 1st, 2007 and ending on September 30th,
2008 (the "Period"), and shall deliver the Reconciliation to the
Escrow Agent and The Trust;
(b) once the Earned Commission for the Period has been determined, then
the Remaining Balance of the Purchase Price shall be calculated in
accordance with the following formula:
Earned Commissions for the Period x 2.00 x 0.2 = the Remaining
Balance of the Purchase Price;
(c) after the Remaining Balance of the Purchase Price has been determined,
the Escrow Agent shall complete the Final Note (attached as Schedule
"Q" hereto) by filling in the principal amount thereof with such
number as is equal to the Remaining Balance of the Purchase Price and
attaching the appropriate amortization schedule thereto and once done,
the Escrow Agent shall then deliver the Final Note to The Trust; and
(d) the Parties agree that Earned Commission for the Period shall be
calculated on a pre-tax basis.
3.06 In order to secure the payments to be made to the Trust in accordance with
the terms of the Promissory Note and the Final Note, the Purchaser agrees
to grant to the Trust a security interest in the assets of the Purchaser
and to provide the Trust with a General Security Agreement (attached as
Schedule "U" hereto) in respect of those assets (the "Security").
12
3.07 The Trust hereby covenants and agrees with the Purchaser that any and all
payments due, any and all obligations owing and any and all Security taken
or granted pursuant to the Promissory Note and the Final Note shall be
subordinate to any and all senior debt financing, whether present or
future, which has been or may be obtained by the Purchaser now or at any
time into the future, and the Trust hereby agrees to execute a
Subordination Agreement and Power of Attorney (attached hereto as Schedule
"R) in order to give effect to this paragraph.
3.08 The Trust may, from time to time and during normal business hours, employ a
professionally qualified independent third party auditor (acceptable to the
Purchaser) to audit the books and records of the Purchaser which relate to
the Business and Purchased Assets in order to verify the amounts of:
a) the First Adjustment;
b) the Second Adjustment;
c) the Remaining Balance of the Purchase Price; and
d) the payments (and the timing thereof) to be made to the Trust in
accordance with the Promissory Note or the Final Note;
If the audit discloses a discrepancy unfavourable to the Trust in the First
Adjustment, the Second Adjustment or the Remaining Balance of the Purchase
Price of three per cent (3%) or more, then the Purchaser shall promptly pay
for the cost of the audit and shall make or cause to be made all of the
necessary adjustments as disclosed in the audit to the First Adjustment,
the Second Adjustment or the Remaining Balance of the Purchase Price as the
case may be. If the audit discloses a discrepancy in the payments (or the
timing thereof) to be made to the Trust in accordance with the terms of the
Promissory Note or the Final Note, then the Purchaser shall promptly pay
for the cost of the audit and shall forthwith bring all of the payments due
under the Promissory Note or the Final Note up to date in accordance with
the results of the audit and the terms of the Promissory Note and/or the
Final Note (as the case may be). If the audit discloses a discrepancy
unfavourable to the Trust in the First Adjustment, the Second Adjustment or
the Remaining Balance of the Purchase Price of less than three per cent
(3%) or if the audit does not disclose a discrepancy in the payments (or
the timing thereof) to be made to the Trust in accordance with the terms of
the Promissory Note or the Final Note, then the Trust shall be responsible
for the costs of the audit.
3.09 All rights of Adjustment and set off set forth in Article 3.00 shall
survive the completion of this Agreement.
4.00 - REPRESENTATIONS, WARRANTIES AND COVENANTS
4.01 Subject to the fulfilment of the Conditions Precedent set out in paragraphs
7.01(k) and 7.02, the Purchaser represents and warrants to the Vendor as
follows:
(a) Purchaser is a corporation organized and in good standing under the
laws of Delaware, and its status is active. Purchaser has all
requisite corporate power and
13
authority and all necessary governmental approvals to own, lease, and
operate its properties and to carry on its business as now being
conducted and as proposed to be conducted. Purchaser is duly qualified
or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased, or operated by it or
the nature of the business conducted by it or as proposed to be
conducted by it makes such qualification or licensing necessary;
(b) Purchaser has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement, and the consummation of the Agreement and the other
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement
has been duly executed and delivered by Purchaser, and, assuming this
Agreement constitutes a valid and binding obligation of Vendor,
constitutes a valid and binding obligation of Purchaser, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization or similar laws from time to
time in effect which offset creditors' rights generally and general
equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or in law);
(c) Neither the execution, delivery, or performance of this Agreement by
Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby nor compliance by Purchaser with any of the
provisions hereof will (a) conflict with or result in any breach of
any provision of the Articles of Incorporation or the Bylaws of
Purchaser, (b) require any filing with, or authorization, consent, or
approval of, any Governmental Authority except for necessary reports
and other filings in accordance with the terms of paragraph 7.02, (c)
result in a violation or breach of, or constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice or
consent any of the terms, conditions, or provisions of any agreement
or other instrument or obligation to which Purchaser is a party or by
which Purchaser or its properties or assets may be bound;
(d) There is no suit, claim, action, proceeding, or investigation pending
or, to the knowledge of Purchaser, threatened against Purchaser or its
affiliates before any Governmental Authority that is reasonably likely
to have a material adverse effect on Purchaser or would prevent
Purchaser from consummating the transactions contemplated by this
Agreement. Purchaser is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, in the future would have a material
adverse effect on Purchaser or would prevent Purchaser from
consummating the transactions contemplated hereby. No voluntary or
involuntary petition in bankruptcy, receivership, insolvency or
reorganization with respect to Purchaser, or petition to appoint a
receiver or trustee of Purchaser's property, has been filed by or
against Purchaser, nor shall Purchaser file such a petition prior to
the Closing Date or for one hundred (100) days thereafter, and if such
petition is filed by others, the same shall be promptly discharged.
Purchaser has not made any assignment for the benefit of creditors or
admitted in writing insolvency or that its property at fair valuation
shall not be sufficient to pay its debts; and
14
(e) None of the representations and warranties set forth in this
Agreement, notwithstanding any investigation thereof by Vendor,
contains any untrue statement of a material fact, or omits the
statement of any material fact necessary to render the statements made
not materially misleading.
4.02 The Trust, DKWS, JWK and TK, jointly and severally, hereby represent,
warrant and covenant to the Purchaser and acknowledge that the Purchaser is
relying on such representations, warranties and covenants in connection
with its purchase of the Purchased Assets, that:
(a) The Trust owns and holds all of the outstanding shares of the capital
stock of DKWS and there are no outstanding warrants, options or rights
to acquire additional shares of the capital stock of DKWS;
(a) The Trust is a trust formed pursuant to the laws of the State of
California on July 2nd, 1998, and JWK and TK are the only trustees and
beneficiaries of the Trust;
(a) Attached as Schedule "E" hereto are the following consolidated
financial statements of DKWS (collectively the "Financial
Statements"): (a) unaudited consolidated balance sheet and
consolidated statements of income and changes in shareholders' equity
as of and for the 3 months ended on December 31, 2001 and the fiscal
years ended September 30, 2001 and December 31, 2002 (the "Most Recent
Fiscal Year End"); and (b) unaudited consolidated balance sheet and
consolidated statements of income (the "Most Recent Financial
Statements") as of and for the nine months ended September 30, 2003
(the "Most Recent Fiscal Month End"). The Financial Statements
(including the Notes thereto) have been prepared on a compilation and
consistent basis throughout the periods covered thereby, present
fairly the financial condition of DKWS, including assets and
liabilities (whether accrued, absolute, contingent or otherwise) as of
such dates and the results of operations of DKWS for such periods, are
materially correct and complete, and are materially consistent with
the books and records of DKWS (which books and records are correct and
complete);
(a) Except as set forth on Schedule "I" annexed hereto: (a)
i) Vendor has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all material
respects. All Taxes owed by Vendor (whether or not shown on any
Tax Return) have been paid, or Vendor has made adequate provision
for the payment therefor. Vendor currently is not the beneficiary
of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where
Vendor does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no security interests on
any of the assets of Vendor that arose in connection with any
failure (or alleged
15
failure) to pay any Tax;
ii) Vendor has withheld and paid all Taxes required to have been
withheld and paid, if any, in connection with amounts paid or
owing to any employee, independent contractor, creditor,
shareholder, trustee, or other third party;
iii) There is no material dispute or claim concerning any Tax
liability of Vendor either (i) claimed or raised by any authority
in writing or (ii) as to which Vendor has knowledge based upon
personal contact with any agent of such authority. Schedule "I"
annexed hereto lists all federal, state, local, and foreign
income Tax Returns filed or to be filed with respect to Vendor
for taxable periods ended on or after December 31, 2002,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. Vendor
has delivered to Purchaser correct and complete copies of all
federal income Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by Vendor since
September 30, 2000;
iv) Vendor has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency;
v) Vendor has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
Section 6662. Vendor is not a party to any Tax allocation or
sharing agreement. Vendor (i) has not been a member of an
affiliated group within the meaning of Code Section 1504(a) of
the Code, and (ii) has not had any liability for the Taxes of any
person or entity under United States Treasury Regulation 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise;
vi) The unpaid Taxes of DKWS (i) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of
the balance sheet (rather than in any notes thereto) included in
the Most Recent Financial Statements and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of DKWS in
filing its Tax Returns; and
vii) The Vendor shall promptly pay the applicable state sales and use
taxes imposed with respect to the sale and transfer of the
Purchased Assets from the Vendor to the Purchaser pursuant to
this Agreement. The Vendor shall prepare the sales tax return and
submit it to the Purchaser at least seven (7) business days
before its due date. The Purchaser shall have five (5) business
days to approve the return, such approval not to be unreasonably
withheld. Failure to
16
disapprove during such five (5) business day period shall be
deemed approval. The Vendor shall be obligated to timely file the
return and pay the tax. Failure by the Vendor to timely file the
return or pay the tax due shall result in the Vendor bearing the
penalties and interest associated with such late payment or
filing, regardless of whether assessed against the Vendor ot the
Purchaser by the taxing authorities.
(e) DKWS is a corporation organized and in good standing under the laws of
the State of California and its status is active. DKWS has all
requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as now being conducted. DKWS is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction
where the conduct of its insurance agency business requires it to be
so qualified.
(e) DKWS has the requisite corporate power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
on the part of DKWS, the Trustees and the Trust, including without
limitation DKWS's board of directors.
(e) The Trust is in good standing under the laws of the State of
California and its status is active. The Trust has the requisite power
and authority to enter into, execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement have been duly authorized
by all necessary action on the part of the Trustees.
(e) This Agreement has been, and the other agreements, documents and
instruments required to be delivered by Vendor in accordance with the
provisions hereof (collectively, the "Vendor's Documents") shall be,
duly executed and delivered by duly authorized officers or Trustees
(as the case may be) of Vendor on behalf of Vendor, and this Agreement
constitutes, and Vendor's Documents when executed and delivered shall
constitute, the legal, valid and binding obligations of Vendor,
enforceable against Vendor in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization or similar law from
time to time in effect which offset creditors' rights generally and
general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or in law).
(e) no person or entity (except the Purchaser pursuant to this Agreement)
has any agreement, option, right or privilege capable of becoming of
an agreement or option for the acquisition of any of the Purchased
Assets of
17
the Vendor;
(e) since the Most Recent Fiscal Month End, DKWS has carried on the
Business in the usual, regular and ordinary course in substantially
the manner heretofore conducted and has taken no unusual actions with
respect to the Business or the Purchased Assets in contemplation of
this transaction, except with the consent of Purchaser. All of DKWS's
accounts payable, including accounts payable to insurance carriers,
are current and reflected properly on its books and records, and shall
be paid in accordance with their terms at their recorded amounts.
Without limiting the generality of the foregoing, since the Most
Recent Fiscal Month End:
i) Vendor has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, used in the Business other than
for a fair consideration in the ordinary course of business;
ii) Vendor has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) relating to the Business outside the ordinary course of
business;
iii) no party (including Vendor) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and
licenses) relating to the Business, to which Vendor is a party or
by which it is bound;
iv) subject to any security interest granted to the Purchaser, Vendor
has not imposed or granted any mortgage, pledge, lien,
encumbrance, charge or other security interest upon the Purchased
Assets or any of its assets, tangible or intangible, used in the
Business;
v) Vendor has not made any capital expenditure (or series of related
capital expenditures) relating to the Business outside the
ordinary course of business;
vi) Vendor has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other person
or entity (or series of related capital investments, loans, and
acquisitions) in connection with the Business;
vii) subject to any security interest granted to the Purchaser, Vendor
has not, in connection with the Business or the Purchased Assets,
issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation;
viii)Vendor has not delayed or postponed the payment of accounts
payable and other liabilities relating to the Business;
ix) Vendor has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) relating
to the Business;
x) Vendor has not granted any license or sublicense of any rights
under or with respect to any patent, trademark, service ▇▇▇▇,
logo, corporate name or computer software;
xi) there has been no change made or authorized in the charter or
bylaws of DKWS;
xii) DKWS has not issued, sold, or otherwise disposed of any of its
capital stock, or
18
granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
xiii)DKWS has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock or redeemed,
purchased, or otherwise acquired any of its capital stock;
xiv) Vendor has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of its property
relating to the Business or the Purchased Assets;
xv) Vendor has not made any loan to, or entered into any other
transaction with, any of its directors, officers, Trustees and
employees outside the ordinary course of business;
xvi) Vendor has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
xvii)Vendor has not granted any increase in the base compensation of
any of its employees employed in the Business;
xviii) Vendor has not adopted, amended, modified any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees employed in
the Business;
xix) Vendor has not made any other change in employment terms for any
of its employees employed in the Business;
xx) Vendor has not made or pledged to make any charitable or other
capital contribution; and
xxi) Vendor has not entered into any agreement to purchase or acquire
any insurance agency business;
(k) DKWS is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. DKWS
has not committed any unfair labor practice. To Vendor's knowledge,
there are no organizational efforts presently being made or threatened
by or on behalf of any labor union with respect to employees of DKWS.
(k) Vendor holds all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful
conduct of the Business (collectively, the "Permits"), and Vendor is
in compliance with the terms of the Permits except where failure to
comply would not have a material adverse effect on the Business,
financial condition, operations, results of operations or future
prospects of Vendor. Vendor is not in violation of any law, ordinance
or regulation of any Governmental Entity, including, without
limitation, any law, ordinance or regulation relating to any of
Vendor's employment practices. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to
Vendor is pending or, to the knowledge of Vendor, threatened.
19
(k) the Vendor is not in default of any agreement or other instrument to
which it is a party;
(k) it is agreed that no Contingency Revenues, of any kind, shall be
claimed by the Vendor as receivables and any that are received are for
the benefit of the Purchaser;
(k) there are no unpaid salaries, bonuses or other remuneration owing to
employees, consultants, trustees officers, or directors (except in the
ordinary course of business and at the regular rate of salary or other
remuneration);
(k) there is no suit, claim, action, proceeding or investigation
("Litigation") pending or threatened in writing against Vendor, and,
to the knowledge of Vendor and the Trustees, there is no basis for
such a suit, claim, action, proceeding or investigation. Vendor is not
subject to any outstanding order, writ, injunction or decree which,
insofar as can be reasonably foreseen, individually or in the
aggregate, in the future would have an adverse effect on Vendor, the
Business or the Purchased Assets or would prevent Vendor from
consummating the transactions contemplated hereby. No voluntary or
involuntary petition in bankruptcy, receivership, insolvency or
reorganization with respect to Vendor, or petition to appoint a
receiver or trustee of Vendor's property, has been filed by or against
Vendor, nor shall Vendor file such a petition prior to the Closing
Date or for one hundred (100) days thereafter, and if such petition is
filed by others, the same shall be promptly discharged. Vendor has not
made any assignment for the benefit of creditors or admitted in
writing insolvency or that its property at fair valuation shall not be
sufficient to pay its debts, nor shall Vendor permit any judgment,
execution, attachment or levy against it or its properties to remain
outstanding or unsatisfied for more than ten (10) days;
(k) Except as otherwise set forth herein, neither the execution, delivery
or performance of this Agreement by Vendor nor the consummation by it
of the transactions contemplated hereby nor compliance by it with any
of the provisions hereof shall (a) conflict with or result in any
breach of any provision of DKWS's Certificate of Incorporation or
Bylaws, (b) require any filing with, or permit, authorization, consent
or approval of, any court, arbitral tribunal, administrative agency or
commission, or other governmental or other regulatory authority or
agency (each a "Governmental Entity"), or (c) result in a violation or
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or
cancel, or require any notice or consent under any of the terms,
conditions or provisions of any agreement or other instrument or
obligation to which Vendor is a party or by which Vendor or any of its
properties or assets may be bound.
20
(k) the Vendor shall allow the Purchaser to maintain the Vendor's current
telephone number and Yellow Page listings and will take no active
steps to have such altered;
(k) the Vendor shall obtain before the Closing Date all consents,
approvals and authorizations from governmental and public authorities
or any other person as may be required to complete the purchase and
sale herein, including without limiting the generality of the
foregoing all necessary approvals from the California Department of
Insurance;
(k) Except for the Permitted Encumbrances, Vendor owns and holds, free and
clear of any lien, charge, pledge, security interest, restriction,
encumbrance or third-party interest of any kind whatsoever, sole and
exclusive right, marketable title and interest in and to the Purchased
Assets, together with the exclusive right to use such records and all
customer accounts, Client Files, copies of insurance policies and
contracts in force and all files, invoices and records pertaining to
the customers, their contracts and insurance policies, and all other
information comprising the Purchased Book of Business. The Vendor has
not received notice that any program, class of business, or book of
business in place with any single insurance carrier that is included
within the Purchased Book of Business has canceled or non-renewed or
intends to cancel or non-renew.
(k) Schedule "J" annexed hereto sets forth DKWS's Volume Reports
describing premiums and commissions with respect to each of DKWS's
appointed carriers including the DKWS's Summary Production Reports
for: A) the twelve month period ended on December 31, 2002; and B) the
six month period ended on June 30, 2003;
(k) The name "Vista International Insurance Brokers" is the only trade
name used by DKWS (or any subsidiary thereof) within the past three
(3) years. No party has filed a claim during the past three (3) years
against DKWS or any subsidiary thereof alleging that DKWS or any
subsidiary thereof has violated, infringed on or otherwise improperly
used the intellectual property rights of such party, or, if so, the
claim has been settled with no existing liability to DKWS or any
subsidiary thereof and, to the knowledge of Vendor and the Trustees,
neither Vendor nor any subsidiary \ thereof has violated or infringed
any trademark, trade name, service ▇▇▇▇, service name, patent,
copyright or trade secret held by others. The Vendor shall allow the
Purchaser to continue operating the Business under the name(s) it
holds as of and after the Closing Date;
(k) to Vendor's knowledge, Vendor's computer software included in the
Purchased Assets adequately performs as presently utilized by Vendor
in
21
its operation of the Business, and should, for at least twelve (12)
months following the Closing Date, continue to perform in such manner
in the event that Purchaser elects to continue utilizing such software
beyond the Closing Date. Vendor has delivered to Purchaser
substantially complete and correct copies of all user and technical
documentation issued to Vendor by the software producers related to
such software;
(e) other than as set forth herein, neither Vendor, JWK nor TK is a party
to any non-competition or other agreement that restricts Vendor's,
JWK's or TK's ability to compete in the insurance agency industry or
solicit specific insurance accounts;
(y) to Vendor's knowledge, DWKS has not incurred any liability or taken or
failed to take any action that may reasonably be expected to result in
a liability for errors or omissions in the conduct of the Business,
except such liabilities as are fully covered by insurance (other than
deductibles). DKWS has errors and omission (E&O) insurance coverage in
force, with minimum liability limits of $5,000,000.00 million per
occurrence and $5,000,000.00 million aggregate, and a deductible of
$10,000.00 per occurrence;
(y) Vendor and its predecessors and affiliates have complied with all
Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against it alleging any failure
so to comply. Without limiting the generality of the preceding
sentence, each of Vendor and its predecessors and affiliates has
obtained and been in compliance with all of the terms and conditions
of all permits, licenses, and other authorizations that are required
under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
Schedules, and timetables that are contained in, all Environmental,
Health, and Safety Laws;
(aa) Vendor has no liability (and none of Vendor and its predecessors and
affiliates has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Vendor giving rise to any
liability) for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to, any employee
or other individual, or for any reason under any Environmental,
Health, and Safety Law;
(bb) There are no outstanding material powers of attorney executed on
behalf of Vendor;
22
(cc) Employee Benefit Plans:
i) The only employee benefit plans (defined as any plan, program,
policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal
or informal, proposed or final, funded or unfunded, and whether
or not legally binding, including without limitation, any
"Employee Benefit Plan" within the meaning of Section 3(3) of
ERISA) which the Vendor currently maintains or to which the
Vendor currently contributes are the Medical Benefits Plan
(administered by HealthNet), the Dental Plan (administered by the
Principal Financial Group), the Long Term Disability Plan
(administered by CAN), the Vision Plan (administered by Medical
Eye), the Life Plan (administered by Fortis), the 401(k) Plan
(administered by Nationwide Companies), and the Group Travel Plan
(administered by American International Life Insurance Co.) (each
a "Vendor Plan" and collectively, the "Vendor Plans"). Vendor
maintains no other employee benefit plans. Each of the Vendor
Plans (and each related trust, insurance contract, or fund)
complies in form and have been operated and administered in all
material respects in accordance with their respective terms and
applicable law, including, without limitation, ERISA and the
Code;
ii) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been
paid to each Vendor Plan that is an "Employee Pension Benefit
Plan" (as defined in Section 3(2) of ERISA);
iii) Each Vendor Plan that is an Employee Pension Benefit Plan has
received a determination letter from the Internal Revenue Service
to the effect that it meets the requirements of Code Section
401(a);
iv) The Vendor does not participate currently and has never
participated in, and is not required currently and has never been
required to contribute to or otherwise participate in any plan,
program, or arrangement subject to Title IV of ERISA;
v) The Vendor does not maintain currently and has never maintained,
and is not required currently and has never been required to
contribute to or otherwise participate in any Multiemployer Plan
(as defined in ERISA Section 3(37));
vi) No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of
any Vendor Plan (other than routine claims for benefits) is
pending;
vii) No individual (i) who has experienced a "qualifying event," as
that term is defined in Code Section 4980B(f)(3), and (ii) who
either was an employee of Vendor or is a dependent or spouse of a
current or former employee of Vendor, is currently covered by a
health plan of Vendor pursuant to Code Section 4980B or Part 6 of
Title I of
23
ERISA;
24
(dd) Vendor has no knowledge of any material liability relating to the
Business or the Purchased Assets (and to Vendor's knowledge, there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving
rise to any liability), except for (a) liabilities set forth on the
face of the balance sheet included in the Most Recent Financial
Statements and the notes to the Financial Statements for the Most
Recent Fiscal Year End, (b) the Assumed Contracts and contracts and
agreements not assumed by Purchaser, (c) the deductibles for claims
covered by insurance, and (d) liabilities that have arisen after the
Most Recent Fiscal Month End in the ordinary course of business (none
of which results from, arises out of, relates to, is in the nature of,
or was caused by any breach of contract, breach of trust, breach of
warranty, tort, infringement, or violation of law);
(ee) at the Effective Date of this agreement and at the Closing Date there
has not been and shall not have been any material adverse change in
the nature, volume or profitability of the Business or the Purchased
Assets nor has there been nor will there by any development or
threatened or probable development which to the best of the knowledge
of the Vendor would or will have any materially adverse effect upon
the Business or the Purchased Assets. From the Effective Date hereof
to and including the Closing Date the Vendor shall retain, conduct and
maintain the Business and properly keep, repair, and maintain or
insure the Purchased Assets, at its own cost and expense so that upon
the closing of the transaction herein contemplated the Purchaser shall
have and enjoy the Purchased Assets and the Business as a going
concern without any material loss of Goodwill, customers, contracts,
licenses or depreciation in value of any of the physical items
included in the Purchased Assets;
(ff) DKWS has agreed to assign the Lease Agreements in respect of the
Premises to the Purchaser. After the Closing Date, DKWS shall give
notice of the Purchasers interest in any sub-leases to the Sub-Lessors
thereof, and DKWS shall use its commercially reasonable best efforts
to obtain the landlords consents to the assignment of the Lease
Agreements, that Purchaser may request in connection with the Lease
Agreements. At the Effective Date the use of the Premises of the
Business for the purpose of the conduct of the Business are and will
be in conformity with all zoning and other State and municipal
statutes, bylaws, rules, regulations and orders;
(gg) Schedule "K" annexed hereto sets forth the following information with
respect to each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which DKWS has been a named insured
or otherwise the beneficiary of coverage at any time within the past
three (3) years:
i) the name, address, and telephone number of the agent;
25
ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
iii) the policy number and the period of coverage;
iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and
operate) of coverage; and
v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
To Vendor's knowledge, no cancellation, amendment or increase of
premiums with respect to such insurance is pending or threatened to
occur at or prior to the Closing Date;
(hh) prior to the Closing Date, the Vendor shall permit the Purchaser and
its employees, agents, counsel and accountants or other
representatives, without interference to the ordinary conduct of the
Business, to have reasonable access during normal business hours to
the Business and to all the books, accounts, records, agreements,
contracts, documents, instruments and other data of the Vendor
(including, without limitation, all corporate, business and accounting
records of the Vendor) with respect to the Vendor, the Business and
the Purchased Assets, and the Vendor shall furnish to the Purchaser
such financial and operating data, agreements, contracts, documents,
instruments, and other materials and information with respect to the
Business and the Purchased Assets as the Purchaser shall from time to
time reasonably request. Until the Closing Date, and in the event of
the termination of this Agreement as provided for herein without
consummation of the transaction, the Purchaser will take the same care
to protect any confidential information obtained from the Vendor as it
takes to guard its own confidential information of a similar nature.
The Purchaser may disclose such information as required by law but
when requested by the Vendor will attempt to have the information kept
confidential to the extent possible under applicable law. If this
Agreement is so terminated, promptly after such termination, all
documents, work papers and other written material (including all
copies thereof) obtained from a Party in connection with this
Agreement shall be returned to the Party who provided such material;
(ii Vendor shall give any notices to third parties, and Vendor shall use
its commercially reasonable best efforts to obtain any third party
consents, that Purchaser may request in connection with the Assumed
Contracts. Vendor and Purchaser shall give any notices to, make any
filings with, and use their commercially reasonable best efforts and
cooperate with one another to obtain any authorizations, consents, and
approvals of governments and governmental agencies. Without limiting
the generality of the foregoing, each of the parties shall file any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and shall use its
commercially reasonable best efforts
26
to obtain an early termination of the applicable waiting period, and
shall make any further filings pursuant thereto that may be necessary,
proper, or advisable in connection therewith;
(jj) At reasonably mutually agreeable times, DKWS will permit Purchaser to
meet with its employees. Vendor shall be responsible for compliance
with the requirements of Code Section 4980B and Part 6 of Title I of
ERISA for all of Vendor's employees. Subject to Article 6.00 hereof,
Vendor shall indemnify and hold Purchaser harmless for any liability
Purchaser incurs at any time on or after the Effective Date under the
provision of Code Section 4980B and Part 6 of Title I of ERISA with
respect to any of Vendor's employees;
(kk) Intellectual Property
i) Vendor owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the Business as
presently conducted. Each item of Intellectual Property owned or
used by Vendor in connection with the Business immediately prior
to the Effective Date hereunder shall be owned or available for
use by the Purchaser on identical terms and conditions
immediately subsequent to the Effective Date hereunder;
ii) To the knowledge of Vendor, Vendor has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties, and, to
Vendor's knowledge, Vendor has never received any charge,
complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that Vendor must license or refrain from
using any Intellectual Property rights of any third party). To
the knowledge of Vendor, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of Vendor; and
iii) To the knowledge of Vendor, Vendor shall not interfere with,
infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a
result of the continued operation of the Business as presently
conducted;
(ll) Schedule "N" annexed hereto sets forth a true and complete copy of the
DKWS's list of carrier appointments and brokers representing other
carriers with a B+ or higher rating;
(mm) the Vendor will use its best efforts both prior to the Effective Date
and thereafter to aid the Purchaser in its acquisition of the Carrier
Appointments;
(nn) Except as set forth on Schedule "E" attached hereto, DKWS has no
liability, whether
27
accrued, absolute or contingent, of a type required to be reflected on
a balance sheet or described in the notes thereto in accordance with
US GAAP;
(oo) Improper and Other Payments:
(a) neither DKWS, nor any director, officer, employee thereof, nor,
to the knowledge of any Vendor, any agent or representative of
DKWS nor any person acting on behalf of any of them: (i) has
made, paid or received any illegal contribution, gift, bribe,
rebate, payoff, influence payment, kickbacks or other similar
payments to or from any authority, whether in money, property or
services: (1) to obtain favourable treatment in securing
business; (2) to pay for favourable treatment for business
secured; (3) to obtain special concessions or for special
concessions already obtained or (4) in violation of any
regulation or order; or (ii) established or maintained a fund or
asset that has not been recorded on the books and records of
DKWS;
(b) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made by the Vendor; and
(c) the internal accounting controls of DKWS are believed by DKWS's
management to be adequate to detect any of the foregoing under
current circumstances
(pp) Schedule "W" annexed hereto sets forth a true and complete copy of the
list of those clients of the Vendor who provide Earned Commissions to
the Business in excess of $5,000.00 per annum;
(qq) Schedule "V" annexed hereto sets forth a true and complete list of all
of the Premises used in the Business;
(rr) Schedule "W" annexed hereto sets forth a true and complete copy of the
DKWS Liabilities, and there are no other trust account liabilities of
the Vendor not disclosed therein; and
(ss) none of the foregoing representations and statements of fact contains
any untrue statement of a material fact or omits to state any material
fact necessary to make any such statement or representation not
misleading to a prospective purchaser of the Purchased Assets seeking
full information as to the Vendor, and its respective properties,
businesses and affairs;
4.03 The representations, warranties and covenants contained in 4.02 are
provided to and for the exclusive benefit of the Purchaser and a breach of
any one or more of the representations, warranties and covenants may be
waived by the Purchaser without prejudice to his right in respect to any
other breach of the same or any other representations, warranties or
covenants; and the representations, warranties and covenants contained in
this section shall survive execution hereof and the closing of this
28
Agreement and same shall continue in full force and effect for a period of
ten (10) years from the Closing Date.
4.04 The Purchaser and JWK and TK agree to execute and deliver to the other on
or before the Closing Date the employment agreements in form and substance
set forth in Schedule "G" attached hereto.
4.05 The Trust, DKWS, JWK and TK agree to execute and deliver to the Purchaser
on or before the Closing Date the non-competition agreements in form and
substance as set forth in Schedule "F" attached hereto.
4.06 The parties hereby acknowledge and agree that the Purchaser is not assuming
and shall not be liable or responsible for any of the liabilities, debts or
obligations (known or unknown, present or contingent) of the Vendor or the
Business existing at or accruing for or during the period prior to the
Effective Date, whether or not relating to the Business, except as
specifically provided in this Agreement.
5.00 - TO BE PERFORMED AT CLOSING
5.01 On or before the Closing Date the Vendor shall execute and deliver to the
Purchaser all such bills of sale, assignments, instruments of transfer,
assurances, consents and other documents as shall be necessary to
effectively transfer to the Purchaser good and marketable title to all the
Purchased Assets, and shall deliver up to the Purchaser possession of the
Purchased Assets. The Vendor shall cooperate with the Purchaser, at such
time or thereafter, in effecting such registrations, recordings and filings
with insurance companies and public authorities as may be required in
connection with the transfer of ownership to the Purchaser of the Purchased
Assets. Specifically, the Vendor shall deliver, or cause to have delivered,
the following documents to the Purchaser all in a form satisfactory to the
Purchaser and its counsel:
(a) Certified resolutions of the Directors of DKWS and of all its
shareholders adopting, approving and consenting to the sale of the
Purchased Assets as contemplated herein;
(b) Certificates from a director or officer of DKWS and of the Trustees of
the Trust stating that all of the Purchased Assets are owned by the
Vendor and are free and clear of all encumbrances save and except for
the Permitted Encumbrances;
(c) An Opinion of Counsel for DKWS in accordance with paragraph 7.01(i);
(d) An updated financial statement for DKWS to the Closing Date or, at the
Purchaser's option, as near to the Closing Date as reasonably
possible;
(e) a ▇▇▇▇ of sale covering and transferring the Purchased Assets to the
Purchaser in a form satisfactory to the Purchaser and its counsel;
(f) an assignment of the Vendors interest in the Lease Agreements;
(g) an assignment of the Vendor's current telephone numbers and Yellow
Page advertisements and listings related to the Business;
(h) an assignment of the Vendor's trade name of "Vista International
Insurance Brokers";
(i) executed employment agreements in respect of JWK and TK in the form as
set forth in Schedule "G";
(j) executed non-competition agreements (in substantially the same form as
that set forth in
29
Schedule "F" attached hereto) from the DKWS, the Trust, JWK and TK;
(k) an officer's certificate of DKWS in accordance with paragraph 7.01(a)
hereof;
(l) assignments of the Assumed Contracts assumed by the Purchaser
hereunder, provided that to the extent that any such assignment
require any third party consent or approval which has not been
obtained on or prior to the Closing Date, the Vendor will hold the
benefit of such lease or contract in trust for the sole and exclusive
use and benefit of the Purchaser until such consent or approval is
obtained or until the termination of such lease or contract and the
Purchaser will hold Vendor harmless for any failure of Purchaser to
fully perform and discharge any such accepted lease or contract from
and after the Closing Date;
(m) evidence satisfactory to the Purchaser that all Taxes have been paid
up to and including the Effective Date;
(n) all current and active insurance company statistics including premium
volumes and loss ratios;
(o) a certificate to the effect that the Vendor is not a "foreign person"
pursuant to United States Treasury Regulation 1.1445-2(b);
(p) a copy of the Escrow Agreement executed by the Vendor, or his agent(s)
and the Escrow Agent;
(q) an executed Agency Agreement in the same form as that set forth in
Schedule "P" attached hereto;
(r) Receipts for the Down Payment;
(s) a Subordination Agreement and Power of Attorney in accordance with
paragraph 3.07;
(t) a Certificate of Incumbency of DKWS executed by an officer of DKWS;
and
(u) a Certificate from a trustee of the Trust setting forth all of the
trustees and beneficiaries of the Trust.
5.02 On the Closing Date the Purchaser shall deliver the following documents or
items to the following persons:
(a) the sum of $1,656,173.00 by way of a certified cheque or wire transfer
to be delivered to the Vendor's counsel, which sum is to be disbursed
by the Vendor's counsel in strictly accordance with the terms of
paragraph 3.03(a) herein;
(b) a Resolution of the Directors of the Purchaser adopting, approving and
consenting to the purchase of the Purchased Assets as contemplated
herein to be delivered to the Vendor's counsel;
(c) The Promissory Note attached as Schedule "O" hereto executed by the
Purchaser shall be delivered to the Escrow Agent;
(d) The Final Note attached as Schedule "Q" hereto executed by the
Purchaser shall be delivered to the Escrow Agent;
(e) a copy of the Escrow Agreement executed by the Purchaser, or his
agent(s), to be delivered to the Escrow Agent and the Vendor's
counsel; and
(f) The General Security Agreement attached as Schedule "U" hereto
executed by the Purchaser shall be delivered to the Trust's counsel;
5.03 All books, records and documents in the possession of the Vendor relating
to the Business shall be delivered to the Purchaser on the Closing Date and
shall be deemed to have become the property of the Purchaser on the
Effective Date except to the extent
30
required by law to be retained by the Vendor in which case they shall be
made available by the Vendor to the Purchaser and its authorized
representatives for inspection and copying, at the Purchaser's sole
expense, but without any charge from the Vendor for providing such copies.
5.04 The parties agree as follows with respect to the period following the
Closing Date:
d) Vendor acknowledges and agrees that from and after the Closing Date
the Purchaser shall be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any
sort relating to the Purchased Assets and the Business.
e) If and for so long as any party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act, or transaction on or prior to
the Closing Date involving the Purchased Assets, the Business or the
obligations and liabilities assumed hereunder, the other party shall
cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Article
6.00 hereof).
f) Vendor shall not take any action that is designed or intended to have
the effect of discouraging any lessor, licensor, customer, supplier,
insurance carrier, or other business associate of Vendor from
maintaining the same business relationships with Purchaser after the
Closing Date as it maintained with Vendor prior to the Closing Date.
Vendor shall to refer all customer inquiries relating to the Business
to Purchaser from and after the Closing Date.
5.05 Consents To Assignment.
(a) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any contract,
lease, license or agreement of any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would
constitute a breach thereof.
(b) If any such consent is not obtained prior to the Closing Date, Vendor
and Purchaser shall cooperate (at their own expense) in any lawful and
reasonable arrangement under which Purchaser shall obtain the economic
claims, rights and benefits under the asset, claim or right with
respect to which the consent has not been obtained in accordance with
this Agreement, including subcontracting, sublicensing or subleasing
to Purchaser and enforcement of any and all rights of Vendor against
the other party thereto arising out of a breach or cancellation
thereof by the other party.
5.06 From time to time after the Closing Date, at the Purchaser's request, the
Vendor shall execute, acknowledge and deliver to the Purchaser such other
instruments of conveyance
31
and transfer and shall take such other actions and execute and deliver such
other documents, certifications and further assurances as the Purchaser may
reasonably request in order to vest more effectively in the Purchaser, or
to put the Purchaser more fully in possession of, any of the Purchased
Assets. Each of the parties hereto shall cooperate with the others and
execute and deliver to the other parties such other instruments and
documents and take such other actions as may be reasonably requested from
time to time by any other party hereto as necessary to carry out, evidence
and confirm the intended purposes of this Agreement.
6.00 - INDEMNITY
6.01 Survival Of Representations, Warranties, Indemnities And Covenants.
(a) Subject to paragraph 6.01(b), the representations, warranties,
covenants and indemnities set forth in this Agreement shall survive
for a period of ten (10) years from the Closing Date. If a party has
received notice of a potential breach of a representation, warranty or
covenant, or an otherwise indemnifiable event under this Article 6.00,
within such ten year period, it may preserve its right to assert a
later claim for damages caused by such breach by delivering written
notice of the breach (which shall specify the nature of the breach
with reasonable factual detail to the extent then in the possession of
such party) to the breaching party within ninety (90) days after such
ten (10) year period. All post-closing covenants shall survive the
Closing Date for the period(s) specified in this Agreement or, if not
specified, for a period of ten (10) years following the Closing Date;
(b) Notwithstanding anything set forth in paragraph 6.01(a); (i) to the
extent and only to the extent that the indemnification provisions of
paragraph 6.02(a)(ii) apply to Adverse Consequences that result from,
arise out of, relate to, or are caused by errors or omissions which
(A) occurred on or prior to the Effective Date and (B) result in a
loss after renewal of a policy by Purchaser after the Effective Date,
such provisions shall survive for a period of three (3) years, rather
than ten (10) years, from the Closing Date; and (ii) all
representations, warranties, covenants and indemnities in connection
with any tax liabilities of DKWS, the Trust, JWK, or TK shall survive
in perpetuity (subject to any applicable statutes of limitation).
6.02 Indemnification Provisions For The Benefit Of The Purchaser
(a) From and after the Effective Date, DKWS, The Trust, JWK and TK agree,
jointly and severally, to indemnify and hold Purchaser and its
officers, directors, and affiliates harmless from and against any
Adverse Consequences any of such parties may suffer or incur, to the
extent that they result from, arise out of, relate to, or are caused
by (i) the breach of any of DKWS's, the Trust's, JWK's or JK's
representations, warranties, obligations or covenants contained
herein, or (ii) the operation of the Business or the ownership of the
Purchased Assets by Vendor on or prior to the Closing Date, including,
without limitation, any claims or lawsuits based on conduct of DKWS,
the Trust, JWK or TK occurring before the Closing Date;
(b) In addition to and without limiting the foregoing, DKWS, the Trust,
JWK and TK, jointly and severally, agree, from and after the Effective
Date, to indemnify Purchaser from and against the entirety of any
Adverse Consequences Purchaser
32
may suffer resulting from, arising out of, relating to, in the nature
of, or caused by:
(iv) any liability or obligation of Vendor that is not assumed
hereunder (including any liability of Vendor that becomes a
liability of Purchaser under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger or
successor liability, or otherwise by operation of law); or
(v) any liability of Vendor for the unpaid taxes of any person or
entity (including Vendor) under United States Treasury Regulation
1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
6.03 From and after the Closing Date, Purchaser agrees to indemnify and hold
DKWS, the Trust, JWK and TK and their respective officers, directors,
shareholders and affiliates harmless from and against any Adverse
Consequences any of such parties may suffer or incur, to the extent they
result from, arise out of, relate to, or are caused by (a) the breach of
any of Purchaser's obligations or covenants contained herein, (b) the
operation of the Business or ownership of the Purchased Assets by Purchaser
after the Closing Date, including, without limitation, any claims or
lawsuits based on conduct of Purchaser occurring after the Closing Date, or
(c) liabilities and obligations of Vendor assumed by Purchaser hereunder.
6.04 Matters Involving Third Parties:
(a) If any third party shall notify any party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") that may give rise
to a claim for indemnification against the other party (the
"Indemnifying Party") under this Article 6.00, then the Indemnified
Party shall promptly notify (which the Indemnified Party will endeavor
to provide, by the sooner to occur of (i) fifteen (15) business days
after receipt of notice by it or (ii) five (5) days prior to the date
a responsive pleading is due) the Indemnifying Party thereof in
writing; Provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) that the Indemnifying Party thereby is
prejudiced;
(b) The Indemnifying Party shall have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party shall indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party shall have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only
33
money damages and does not seek by way of a motion an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently;
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with paragraph 6.04(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii)
the Indemnified Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party, and (iii)
the Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party;
(d) If any of the conditions in paragraph 6.04(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, the Indemnifying Party in connection
therewith), (ii) the Indemnifying Party shall reimburse the
Indemnified Party promptly and periodically (but no more frequently
that monthly) for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (iii) the
Indemnifying Party shall remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Article 6.00.
6.05 From and after the Effective Date, except for remedies that cannot be
waived as a matter of law and except for injunctive relief, the rights to
indemnification under this Article 6.00 shall be the exclusive remedy for
the parties with respect to this Agreement contemplated and consummated
hereby, and the parties shall not be entitled to pursue, and each hereby
expressly waives as of the Effective Date, any and all other rights that
may otherwise be available to either of them either at law or in equity
with respect thereto. This paragraph 6.05 does not limit the remedies
available to any party under any other agreement or instrument executed in
connection with this Agreement. Notwithstanding the foregoing, nothing
contained in this paragraph 6.05 shall prevent any party hereto from
seeking and obtaining, as and to the extent permitted by applicable law,
specific performance by the other party hereto of any of its obligations
under this Agreement or injunctive relief against the other party's
activities in breach of this Agreement.
6.06 Prior to asserting any claim pursuant to this Article 6.00, each
Indemnified Party shall file, or cause to be filed, a claim with respect to
the liabilities in question under applicable insurance policies, if any,
maintained by such Indemnified Party or any subsidiary, division or
affiliate thereof. The amount of any Adverse Consequences suffered,
sustained, incurred or required to be paid to or for the benefit of any
Indemnified Party
34
shall be reduced by the amount of (a) any insurance proceeds and other
amounts paid to or for the benefit of the Indemnified Party with respect to
such Adverse Consequences by any person not a party to this Agreement or
(b) any income or tax benefits actually received by or for the benefit of
the Indemnified Party or any Affiliate of any Indemnified Party.
6.07 The Indemnifying Party shall pay to the Indemnified Party in cash the
amount of any Adverse Consequence to which the Indemnified Party may become
entitled by reason of the provisions of this Article 6.00, such payment to
be made within fifteen (15) days after such Adverse Consequences are
finally determined either by mutual agreement of the parties hereto or
pursuant to the final unappealable judgment of a court of competent
jurisdiction.
7.00 - CONDITIONS PRECEDENT
7.01 The obligations of the Purchaser to complete the purchase of the Purchased
Assets hereunder shall be subject to the satisfaction of, or compliance
with, at or before the Closing Date, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the
exclusive benefit of the Purchaser and may be waived by it in whole or in
part):
(a) all of the representations, warranties and covenants of DKWS, the
Trust, JWK and TK herein contained shall be true and correct in all
material respects at the Closing Date and with the same effect as if
made at and as of the Closing Date and the Vendor shall have delivered
to the Purchaser a certificate of an officer or Trustee of the Vendor
(as the case may be), confirming, to the best of the knowledge of such
person, the truth and correctness in all material respects of such
representations, warranties and covenants;
(b) all instruments of conveyance and other documentation relating to the
sale and purchase of the Purchased Assets, including without
limitation, assignments of contracts and agreements (and third party
consents thereto, where required), bills of sale, documentation
relating to the due authorization and completion by the Vendor of the
sale of the Purchased Assets and the taking of all actions and
proceedings on or prior to the Closing Date in connection with the
performance by the Vendor of its obligations under this Agreement,
shall be satisfactory to the Purchaser and counsel for the Purchaser
and shall have been delivered to the Purchaser and the Purchaser shall
have received copies of all such other documentation or evidence as
the Purchaser may reasonably request in order to establish the
consummation of the transactions contemplated hereby and the taking by
the Vendor of all necessary corporate proceedings in connection
herewith in compliance with the terms and conditions hereof, in form
(as to certification and otherwise) and substance satisfactory to the
Purchaser and counsel for the Purchaser;
(c) All actions to be taken by DKWS, the Trust, JWK and TK in connection
with
35
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Purchaser.
(d) as at the Closing Date there shall not have been material adverse
damage or change to the Purchased Assets or the Business;
(e) the Vendor shall have delivered to the Purchaser physical possession
to all of the Purchased Assets, all keys, combinations to safes,
miscellaneous title documents and any and all other items or indicia
of title to enable it to assume full, complete and unencumbered
operation of the Business and possession of the Purchased Assets;
(f) DKWS, the Trust, JWK and TK shall have executed and delivered the
Non-Competition Agreements attached hereto as Schedule "F";
(g) the Purchaser shall have been satisfied that the leased premises are
satisfactory for the purposes intended in carrying on the Business;
(h) DKWS shall deliver to the Purchaser's counsel, on the Closing Date, a
legal opinion of the DKWS's counsel in a form satisfactory to the
Purchaser's counsel, acting reasonably;
(i) Purchaser shall have completed its due diligence investigation with
respect to Vendor including, but not limited to, (i) business,
financial, operational, customer, worker's compensation, and employee
due diligence, with results satisfactory to Purchaser in its sole
discretion, and (ii) its legal and regulatory due diligence, with
results satisfactory to Purchaser in its commercially reasonable
discretion;
(j) approval by the directors of the Purchaser and ▇▇▇▇▇▇▇ ▇▇▇▇▇
International Insurance Brokers Ltd. (the parent company of the
Purchaser) of this Agreement and the transactions contemplated herein;
(k) the receipt of all necessary approvals in favor of the Purchaser of
all insurance approvals and insurance licence matters from the
California Department of Insurance;
(l) delivery to and satisfactory review by the Purchaser of the rating of
the insurance carriers;
(m) DKWS shall have executed and delivered to Purchaser a certificate to
the effect that it is not a "foreign person" pursuant to United States
Treasury Regulation 1.1445-2(b);
(n) Satisfactory review and approval by the Purchaser of all Vendor Plans
currently
36
offered to the employees of the Vendor and approval by the Purchaser
of the costs to continue such Vendor Plans;
(o) the receipt by the Purchaser of errors and omissions insurance,
property and casualty insurance and all necessary business licences
required by the Purchaser in order to operate the Business;
(p) acquisition of satisfactory financing for completion of the purchase
by the Purchaser; and
(q) the Vendor shall have executed and delivered the Agency Agreement
attached hereto as Schedule "P".
7.02 In addition to the foregoing, the obligations of the Purchaser to complete
the purchase of the Purchased Assets hereunder shall be subject to the
acquisition by the Purchaser of any and all regulatory or stock exchange
approvals necessary for the purchase of the Purchased Assets. Should this
condition not be met by the Closing Date (if the time limitation has not
been extended by agreement in writing by both Parties hereto) then this
Agreement shall terminate and shall be considered to be null and void ab
initio; and
7.03 In case any of the foregoing conditions not being fulfilled on or before
the Closing Date or if any of the foregoing said conditions are not
satisfactory, for any reason at all, in the opinion of the Purchaser, then
in any such event, the Purchaser may rescind this Agreement upon written
notice to the Vendor and thereupon shall be released from all obligations
hereunder.
7.04 Risk of loss or damage to the Purchased Assets shall be that of the Vendor
until the Closing Date. If any loss or damage to the Purchased Assets shall
occur prior to such time and if such loss or damage is material, the
Purchaser may at its option cancel this Agreement at any time prior to
completion of the closing.
7.05 The obligations of Vendor, JWK and TK to effect the transactions
contemplated by this Agreement to occur on the Closing Date are subject to
the satisfaction of the following conditions on or prior to the Closing
Date, unless waived by Vendor or the Trust:
a) The representations and warranties of Purchaser set forth in this
Agreement shall be true and correct in all material respects as of the
Closing Date, except for such representations and inaccurate
warranties as will not, singly or in the aggregate, be reasonably
expected to have a material adverse effect on Purchaser;
b) Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date;
c) Purchaser shall have executed and delivered to JWK ant TK for
execution employment agreements in form and substance as set forth in
Schedule "G" attached hereto; and
d) All actions to be taken by Purchaser in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments
37
and other documents required to effect the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to
Vendor, acting reasonably.
8.00 - GENERAL
8.01 In this agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words importing persons shall include corporations,
companies, partnerships, syndicates, trusts and any number or aggregate of
persons.
8.02 This Agreement shall be governed by and construed and enforced in
accordance with internal Delaware law without regard to any applicable
conflicts of law, and the parties hereto agree to submit and attorn to the
jurisdiction of the Courts of Delaware in respect any disputes which may
arise hereunder.
8.03 Headings are not to be considered as part of this Agreement and are
included solely for convenience of reference and are not intended to be a
full or accurate description of the text thereof.
8.04 This Agreement may be executed in two or more counterparts, each of which
shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
8.05 Time shall be of the essence.
8.06 All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (if confirmed),
or mailed by registered or certified mail (return receipt requested), or
overnight courier service to the parties at the following addresses or at
such other address for a party as shall be specified by like notice:
To the DKWS, the Trust, JWK or TK at: ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
To the Purchaser at: 355, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: Primo Podorieszach
Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other party notice in the manner herein set forth.
8.07 Each party shall, at the request of any party, from time to time and at all
times hereafter, execute and deliver all deeds, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
8.08 This Agreement shall constitute and be the entire and final agreement by
their hands or
38
the hands of their authorized officers, between the parties hereto with
respect to all matters herein.
8.09 This Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
8.10 Where a period of time is prescribed or calculated from a day of event the
time shall be calculated excluding such day or the day of such event,
unless a contrary attention appears. Where the time for doing anything
falls or expires on a Saturday, Sunday or on a public holiday then such
thing may be validly done the first date thereafter that is not a Saturday,
Sunday or holiday.
8.11 No amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by the parties hereto. Vendor may
consent to any such amendment for itself at any time prior to the closing
without the prior authorization of its Board of Directors or the Trustees.
No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach
of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
8.12 Neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by DKWS, the Trust, JWK or TK (whether by
operation of law or otherwise) without the prior written consent of the
Purchaser. This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by the parties and their respective successors and
assigns.
8.13 If any provision or covenant, or any part thereof, of this Agreement should
be held by any court to be illegal, invalid or unenforceable, either in
whole or in part, such illegality, invalidity or unenforceability shall not
affect the legality, validity or enforceability of the remaining provisions
or covenants, or any part thereof, all of which shall remain in full force
and effect.
8.14 The prevailing party in any proceeding brought to enforce the terms of this
Agreement shall be entitled to an award of reasonable attorneys' fees and
costs incurred in investigating and pursuing such action, both at the trial
and appellate levels.
8.15 Each of the parties acknowledges and agrees that the other party would be
damaged irreparably if any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the parties agrees that the other party
shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having jurisdiction over the
parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
39
8.16 Vendor warrants and agrees to pay and discharge when due all claims of
creditors that could be asserted against Purchaser by reason of
non-compliance with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement, and acknowledges that such liabilities and obligations are not
to be assumed by Purchaser hereunder. Vendor hereby indemnifies and agrees
to hold Purchaser harmless from, against and in respect of, and shall on
demand reimburse Purchaser for, any loss, liability, cost or expense
suffered or incurred by Purchaser by reason of the failure of Vendor to pay
or discharge any such claims.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as to be
effective as at the date first written above.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
---------------------------
DKWS ENTERPRISES, INC.
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ [illegible] /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- --------------------------
Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ [illegible] /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------- --------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
40
SCHEDULE "A"
CLIENT LIST
The Vendor and the Shareholder, jointly and severally represent and warrant to
the Purchaser that the computer tape delivered to the Purchaser herewith and
identified as computer tape backup, constitutes a full and complete record of
the Vendors insurance clients and their respective policies.
INITIAL /s/ [initials JWK]
-----------------------
Vendor
/s/ [initials JWK]
-----------------------
Shareholder
SCHEDULE "B"
FIXED ASSETS
SCHEDULE "C"
REAL PROPERTY LEASE AGREEMENTS
1. Lease dated June 30, 2000, made between DKWS (as Tenant) and Active
Property Management (as Landlord) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
2. Lease dated July 8, 2002, made between DKWS (as Tenant) and Active Property
Management (as Landlord) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
3. Sub-Lease dated April 10, 2003, made between DKWS (as Sub-Lessee) and New
Israel Fund (as Sub-Lessor) with respect to Suite 205, 10350 Santa ▇▇▇▇▇▇
Blvd., Los Angeles, California;
4. Sub-Lease dated July 1, 2002, made between DKWS (as Sub-Lessor) and 2nd
Sight Software (as Sub-Lessee) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇; and
5. Sub-Lease dated July 27, 2000, made between DKWS (as Sub-Lessor) and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ (as Sub-Lessee) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
SCHEDULE "D"
ASSUMED CONTRACTS
Those agreements attached hereto and those agreements identified in the
Assignment Agreement dated October 1st, 2003, and made between the Vendor and
Purchaser.
1. Equipment Lease Agreement dated October 18, 2000, and made between ▇▇▇▇▇▇
East Capital Group and DKWS;
2. Equipment Lease Agreement dated January 30, 2001, and made between ▇▇▇▇▇▇
East Capital Group and DKWS;
3. Equipment Lease Agreement dated August 17, 2000, and made between Discovery
Office Systems and DKWS;
4. Equipment Lease Agreement dated September 13, 2002, and made between ▇▇▇▇▇▇
Capital Corporation and DKWS;
5. Equipment Lease Agreement identified as Lease No. 99PA014, and made between
▇▇▇▇▇▇ Leasing Company and DKWS;
6. Those lease agreements identified on Schedule "C";
7. Any agreement with those insurance companies identified on the Production
By Payee list included with this Schedule "D".
SCHEDULE "E"
FINANCIAL STATEMENTS OF THE VENDOR
SCHEDULE "F"
FORM OF NON-COMPETITION AGREEMENTS
1. DKWS
2. Trust
3. JWK
4. TK
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
DKWS ENTERPRISES, INC.
a body corporate duly incorporated
according to the laws of the State of California
(hereinafter referred to as the "DKWS")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from DKWS as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from DKWS and the ▇▇▇▇▇▇▇ Family Trust of July
1998 ("KFT") in accordance with the terms and conditions of an agreement for the
sale and purchase of assets dated as of the 1st day of October, 2003
(hereinafter referred to as the "Purchase Agreement");
AND WHEREAS DKWS has access to Confidential Information regarding the Purchased
Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by the Corporation to DKWS (receipt of and sufficiency
of which is hereby acknowledged) and for other good and valuable consideration
the parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the United States of America.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the
2
context, or the number of or gender of the parties, from time to time so
requires. Words importing persons shall include corporations, companies,
partnerships, syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 DKWS hereby covenants and agrees that for a period of fifteen (15) years
from the date this Agreement, DKWS will not, directly or indirectly, within
the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 DKWS covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, DKWS shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, DKWS hereby
covenants and agrees with the Corporation that upon demand by the
Corporation for the same, DKWS shall forthwith return any and all
Confidential Information in his possession to the Corporation.
3
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between DKWS and
the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then DKWS shall have the burden of
proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by DKWS of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, DKWS agrees that in the event of any such breach, in addition
to, and not in substitution of, all other remedies available to the
Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and DKWS shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with DKWS failure to keep,
observe or perform, from and after the dates hereof, the covenants to be
kept, observed and performed by DKWS under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by DKWS.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 DKWS shall not assign, or otherwise transfer, its rights or delegate its
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written,
4
pertaining to the subject matter hereof.
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to DKWS: ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
If to Addison York Insurance Brokers LTD: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 DKWS acknowledges that it has reviewed this Agreement and understands the
term and conditions hereof.
5
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
DKWS ENTERPRISES, INC.
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
a trust formed pursuant to the laws of the State of California
(hereinafter referred to as the "Trust")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from the Trust as a condition of agreeing to the purchase of
certain assets (the "Purchased Assets") from DKWS Enterprises, Inc. ("DKWS") and
the Trust in accordance with the terms and conditions of an agreement for the
sale and purchase of assets dated as of the 1st day of October, 2003
(hereinafter referred to as the "Purchase Agreement");
AND WHEREAS the Trust has access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by the Corporation to the Trust (receipt of and
sufficiency of which is hereby acknowledged) and for other good and valuable
consideration the parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the United States of America.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the
2
context, or the number of or gender of the parties, from time to time so
requires. Words importing persons shall include corporations, companies,
partnerships, syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 The Trust hereby covenants and agrees that for a period of fifteen (15)
years from the date this Agreement, the Trust will not, directly or
indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 The Trust covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, the Trust shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, the Trust
hereby covenants and agrees with the Corporation that upon demand by the
Corporation for the same, the Trust shall forthwith return any and all
Confidential Information in his possession to the Corporation.
3
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between the Trust
and the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then the Trust shall have the
burden of proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by the Trust of any of
the covenants herein contained would result in damages to the Corporation
for which the Corporation could not adequately compensated by a monetary
award. Accordingly, the Trust agrees that in the event of any such breach,
in addition to, and not in substitution of, all other remedies available to
the Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and the Trust shall be liable to the Corporation for all losses, costs,
legal fees, damages and expenses whatsoever which the Corporation may
sustain, pay or incur as result of or in connection with the Trust's
failure to keep, observe or perform, from and after the dates hereof, the
covenants to be kept, observed and performed by the Trust under this
Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by the Trust.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 The Trust shall not assign, or otherwise transfer, its rights or delegate
its duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written,
3
pertaining to the subject matter hereof.
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to the Trust: ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
If to Addison York Insurance Brokers LTD: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Attn: Primo Podorieszach
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 The Trust acknowledges that it has reviewed this Agreement and understands
the term
5
and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
------------------------
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
an individual residing in the City of Novato,
in the State of California,
(hereinafter referred to as "▇▇▇▇▇▇▇")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from ▇▇▇▇▇▇▇ as a condition of agreeing to the purchase of
certain assets (the "Purchased Assets") from DKWS Enterprises, Inc. ("DKWS") and
the ▇▇▇▇▇▇▇ Family Trust of July 1998 ("KFT") in accordance with the terms and
conditions of an agreement for the sale and purchase of assets dated as of the
1st day of October, 2003 (hereinafter referred to as the "Purchase Agreement");
AND WHEREAS ▇▇▇▇▇▇▇ has access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by the Corporation to ▇▇▇▇▇▇▇ (receipt of and
sufficiency of which is hereby acknowledged) and for other good and valuable
consideration the parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the United States of America.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the
2
context, or the number of or gender of the parties, from time to time so
requires. Words importing persons shall include corporations, companies,
partnerships, syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 ▇▇▇▇▇▇▇ hereby covenants and agrees that for a period of five (5) years
after ▇▇▇▇▇▇▇ is not employed by the Corporation, ▇▇▇▇▇▇▇ will not,
directly or indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 ▇▇▇▇▇▇▇ covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, ▇▇▇▇▇▇▇ shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, ▇▇▇▇▇▇▇ hereby
covenants and agrees with the Corporation that, upon ▇▇▇▇▇▇▇ termination of
employment with the Corporation for any reason whatsoever, or upon demand
by the Corporation for the same,
3
▇▇▇▇▇▇▇ shall forthwith return any and all Confidential Information in his
possession to the Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between ▇▇▇▇▇▇▇
and the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then ▇▇▇▇▇▇▇ shall have the burden
of proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by ▇▇▇▇▇▇▇ of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, ▇▇▇▇▇▇▇ agrees that in the event of any such breach, in
addition to, and not in substitution of, all other remedies available to
the Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and ▇▇▇▇▇▇▇ shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with ▇▇▇▇▇▇▇ failure to keep,
observe or perform, from and after the dates hereof, the covenants to be
kept, observed and performed by ▇▇▇▇▇▇▇ under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by ▇▇▇▇▇▇▇.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 ▇▇▇▇▇▇▇ shall not assign, or otherwise transfer, his rights or delegate his
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to ▇▇▇▇▇▇▇: ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
If to Addison York Insurance Brokers LTD: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
5
4.15 ▇▇▇▇▇▇▇ acknowledges that he has read this Agreement and understands the
term and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- --------------------------
Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
[print name of witness]
State of California
County of San Francisco
On October 17, 2003 before me, the undersigned, a Notary Public in and for the
said State, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
(typed or printed)
[NOTARIAL ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Commission #1263248
Notary Public - California
San Francisco County
My Comm. Expires May 11, 2004]
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
an individual residing in the City of Novato,
in the State of California,
(hereinafter referred to as "▇▇▇▇▇▇▇")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from ▇▇▇▇▇▇▇ as a condition of agreeing to the purchase of
certain assets (the "Purchased Assets") from DKWS Enterprises, Inc. ("DKWS") and
the ▇▇▇▇▇▇▇ Family Trust of July 1998 ("KFT") in accordance with the terms and
conditions of an agreement for the sale and purchase of assets dated effective
as of the 1st day of October, 2003 (hereinafter referred to as the "Purchase
Agreement");
AND WHEREAS ▇▇▇▇▇▇▇ has access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by the Corporation to ▇▇▇▇▇▇▇ (receipt of and
sufficiency of which is hereby acknowledged) and for other good and valuable
consideration the parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the United States of America.
1.04 In this Agreement words importing the singular shall include the plural and
words
2
importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words importing persons shall include corporations,
companies, partnerships, syndicates, trusts and any number or aggregate of
persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 ▇▇▇▇▇▇▇ hereby covenants and agrees that for a period of five (5) years
after ▇▇▇▇▇▇▇ is not employed by the Corporation, ▇▇▇▇▇▇▇ will not,
directly or indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 ▇▇▇▇▇▇▇ covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, ▇▇▇▇▇▇▇ shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, ▇▇▇▇▇▇▇ hereby
covenants and agrees with the Corporation that, upon ▇▇▇▇▇▇▇ termination of
employment with the
3
Corporation for any reason whatsoever, or upon demand by the Corporation
for the same, ▇▇▇▇▇▇▇ shall forthwith return any and all Confidential
Information in his possession to the Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between ▇▇▇▇▇▇▇
and the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then ▇▇▇▇▇▇▇ shall have the burden
of proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by ▇▇▇▇▇▇▇ of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, ▇▇▇▇▇▇▇ agrees that in the event of any such breach, in
addition to, and not in substitution of, all other remedies available to
the Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and ▇▇▇▇▇▇▇ shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with ▇▇▇▇▇▇▇ failure to keep,
observe or perform, from and after the dates hereof, the covenants to be
kept, observed and performed by ▇▇▇▇▇▇▇ under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by ▇▇▇▇▇▇▇.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 ▇▇▇▇▇▇▇ shall not assign, or otherwise transfer, his rights or delegate his
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to ▇▇▇▇▇▇▇: ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
If to Addison York Insurance Brokers LTD: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
5
4.15 ▇▇▇▇▇▇▇ acknowledges that he has read this Agreement and understands the
term and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------- --------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
[print name of witness]
State of California
County of San Francisco
On October 17, 2003 before me, the undersigned, a Notary Public in and for the
said State, personally appeared ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that she executed the same in her authorized
capacity, and that by her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
(typed or printed)
[NOTARIAL ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Commission #1263248
Notary Public - California
San Francisco County
My Comm. Expires May 11, 2004]
SCHEDULE "G"
EMPLOYMENT AGREEMENTS
1. JWK
2. TK
EMPLOYMENT AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate duly incorporated under
the laws of the State of Delaware and carrying on
business in the United States of America
(hereinafter referred to as the "Employer")
- and -
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
an individual, resident in the City of Novato
in the State of California
(hereinafter called the "Employee")
WHEREAS Employer is in the business of providing financial services usual and
customary to insurance, risk management, employee benefits, life and securities
and desires to engage the services of Employee to manage and direct all United
States operations; and
WHEREAS Employer desires to retain the services of Employee and Employee is
willing to accept employment by Employer, on the terms and subject to the
conditions set forth in this Agreement, and
WHEREAS Employer, DKWS Enterprises, Inc., Theolyn. ▇▇▇▇▇▇▇, the Employee and the
▇▇▇▇▇▇▇ Family Trust of July 1998 ("KFT") have made, executed and delivered a
certain Asset Purchase Agreement dated as of October 1, 2003 (the "APA"); and
WHEREAS pursuant to the terms of the APA, the Employer provided a Promissory
Note and a Final Note (as more particularly described in the APA and as set
forth in Schedules "O" and "Q" of the APA) and a Security Agreement (as set
forth in Schedule "U" of the APA) to KFT (all of the foregoing hereinafter
collectively referred to as the "Debt Agreements");
NOW, THEREFORE, in consideration of the premises and the covenants contained
herein, the parties hereto hereby agree as follows:
1.00 DEFINITIONS
1.01 In this Agreement and in any amendment hereto, the following terms shall
have the following meanings:
a) "Clients" mean any and all past, present or prospective customers of
the Employer;
b) "Commencement Date" means the 1st day of October, 2003;
c) "Owned Commission Revenue" means the commission revenue actually
received by the Employer from insurance companies in respect of the
sales of general insurance policies by the business, but does not
include any:
i) Contingency Revenues in excess of $50,000.00;
ii) revenues derived by the Employer from those persons or agencies
set forth on Schedule "A" attached hereto or any revenues derived
by the Employer from similar joint venture or revenue processing
agreements which the Employer may enter into either before or
after the Commencement Date;
iii) life insurance revenues;
iv) interest income; or
v) finance charges;
d) "Contingency Revenue" means those commissions generated by the
business and paid to the Employer by insurance companies based upon
the volume, growth and or profitability of insurance business placed
with such insurance companies by the Employer and from the business;
e) "EBITDA" means earnings before income taxes, depreciation and
amortization as determined by Canadian Generally Accepted Accounting
principles; and
f) "Vista Division" means that business and those assets purchased by the
Employer from DKWS Enterprises, Inc. and the ▇▇▇▇▇▇▇ Family Trust of
July 1998 pursuant to an Asset Purchase Agreement dated October 1st,
2003.
1.02 Unless otherwise indicated, all dollar amounts referred to in this
Agreement or in the Schedules are in United States funds.
2.00 EMPLOYMENT
2.01 During the term of this Agreement, the Employee agrees to be employed by
and to serve the Employer as President. The Employer agrees to employ and
retain the Employee in such capacities and the Employee accepts and agrees
to such employment, subject to the general supervision, advice and
direction of the Employers's Chief Operating Officer ("COO") and Board of
Directors. The Employee shall perform such duties as are customarily
performed by an Employee in a similar position and agrees to perform on
behalf of the Employer all such reasonable duties as may from time to time
be authorized and directed by the COO (the "Services"). The Employee shall
devote his full business time to the affairs of the Employer to perform the
duties of his position.
3.00 REMUNERATION
3.01 Subject to the terms of paragraph 3.02, as compensation for the Services
provided by the Employee under this Agreement, the Employer will pay the
Employee a salary of three hundred fifty thousand dollars ($350,000) per
year (the "Base Salary), payable in bi-
2
monthly installments of $14,583.00 each on the 15th and last days of each
month during the Term hereof. Upon termination of this Agreement, payments
under this paragraph shall cease, provided, however, that the Employee
shall be entitled to payments for periods or partial periods that occurred
prior to the date of termination and for which the Employee has not yet
been paid.
3.02 In the event that annual Owned Commission Revenue attributable to the Vista
Division falls below $3,000,000 per annum during the Term hereof, then the
amount of the Base Salary shall be reduced for the next 12 months by an
amount equal to $1.00 of Base Salary for each $8.55 that the Owned
Commission Revenue attributable to the Vista Division falls below
$3,000,000 (the "Base Salary Adjustment"). For greater clarification, the
Base Salary Adjustment cannot have the effect of increasing the Base
Salary, the Base Salary Adjustment can only lower the Base Salary, and in
no case will the Base Salary be greater than $350,000.
3.03 If, at the fiscal year end of the Employer (March 31) during the Term
hereof, commencing with the Commencement Date, the Employer's EBITDA from
the Vista Division has increased in excess of THIRTY (30%) PERCENT over the
previous fiscal period, then the Employee shall receive from the Employer
and the Employer shall pay to the Employee a bonus of FIFTY (50%) percent
of that portion of the EBITDA which is in excess of THIRTY (30%) PERCENT
(the "EBITDA Bonus"). The EBITDA Bonus, if any, shall be determined by the
Employer and be paid to the Employee on or before 120 days from the fiscal
year end of the Employer. When determining the EBITDA of the Employer from
the Vista Division, the Employer shall take into account only the Owned
Commission Revenue of the Vista Division plus all Contingency Revenues
received as a result of the operations of the Vista Division
(notwithstanding the exclusion of or any restrictions placed upon
Contingency Revenues in the definition of Owned Commission Revenues).
3.04 If, at the fiscal year end of the Employer (March 31) during the Term
hereof, the Employer's EBITDA from its business, excluding the EBITDA from
the Vista Division, has increased in excess of THIRTY (30%) PERCENT over
the previous fiscal period, then the Employee shall receive from the
Employer and the Employer shall pay to the Employee a bonus of FIFTY (50%)
percent of that portion of the EBITDA which is in excess of THIRTY (30%)
PERCENT (the "CORPORATE EBITDA Bonus"). The CORPORATE EBITDA Bonus, if any,
shall be determined by the Employer and be paid to the Employee on or
before 120 days from the fiscal year end of the Employer. When determining
the EBITDA of the Employer from its business, the Employer shall take into
account only the Owned Commission Revenue of the Employer minus the Owned
Commission Revenue from the Vista Division plus all Contingency Revenues
received as a result of the operations of the Employer (notwithstanding the
exclusion of or restrictions placed upon Contingency Revenues in the
definition of Owned Commission Revenues) minus any Contingency Revenues
from the Vista Division.
3.05 The remuneration provided in Section 3.00 herein shall be subject to
payroll deductions for income tax and for any and all other employee
deductions or remittances required by
3
law and imposed upon the Employer to collect and remit to any level of
government or regulatory authority.
3.06 Employer shall reimburse Employee for such "out-of-pocket" expenses as the
Board of Directors determines, in its sole discretion, to be necessary to
the performance of his duties to the Employer.
3.07 Employee shall be entitled to medical and dental insurance coverage and
such additional benefits as Employer provides to its Employees, and on the
terms provided to its employees.
3.08 The Employer shall, during the Term hereof and when presented with proper
third party invoices therefor, contribute up to $10,000.00 per annum to be
applied towards the premiums of a Long Term Disability insurance policy for
the benefit of the Employee, with such total Long Term Disability coverage
not to exceed the sum of $1,750,000.00 under the policy.
3.09 The Employer shall, during the Term hereof and when presented with proper
third party invoices therefor, contribute up to $10,000.00 per annum to be
applied towards the premiums of a Life Insurance policy for the benefit of
the Employee, with such total Life Insurance coverage not to exceed the sum
of $1,750,000.00 under the policy.
4.00 TERM
4.01 This Agreement is deemed to have commenced on the Commencement Date. Unless
otherwise terminated in accordance with the terms hereof, this Agreement is
a contract for employment for a period of five (5) years beginning on the
Commencement Date and ending on September 30, 2008 (the "Term"). Employer
agrees to continue the Employee's employment, and the Employee agrees to
remain employed by Employer, from the Commencement Date until the date when
the Employee's employment terminates pursuant to the provisions of this
Agreement.
5.00 DUTIES AND OBLIGATIONS OF THE EMPLOYEE
5.01 The Employee shall well and faithfully serve the Employer during the
continuance of his employment and he shall devote substantially his whole
time and attention to these duties and the provision of the Services and
shall not directly or indirectly engage in or be concerned in or interested
in any other business of any kind which may interfere, restrict or conflict
with his duties hereunder or the provision by him of the Services.
5.02 The Employee shall use his best efforts to market, service, promote and
sell the products and services of the Employer.
5.03 The Employee shall take all reasonable steps to promote the Employer's good
name and goodwill and shall not, under any circumstances, take any steps or
allow through inaction, the Employer's good name to be brought into
disrepute.
4
5.04 The Employee shall continue to be bound by all of the Employer's policies
in effect to date, or as amended from time to time with reasonable notice
to the Employee.
5.05 Subject to the terms and conditions of this Agreement, all fees,
compensation, money and other things of value received or realized as a
result of the Employee's rendering of the Services, be they sales,
supervisory, managerial or otherwise, and all income generated by the
Employee shall belong to the Employer, whether paid directly to the
Employee or to the Employer, if such income stems from the Business of the
Employer.
5.06 Employee shall be based at the principal offices of Employer, located in
Novato, California.
5.07 The Employee shall hold and maintain in good standing any and all such
qualifications, professional designations, licenses and permits as may be
required, necessary or desirable for the provision of the Services to the
Employer and its Clients.
6.00 DUTIES AND OBLIGATIONS OF THE EMPLOYER
6.01 The Employer shall remunerate the Employee in accordance with the terms of
Article 3.00 hereof.
6.02 Subject to the terms and conditions governing the Employer, and all other
applicable laws, regulations and rules of court, the Employer shall have
the power to:
a) assign Clients to the Employee;
b) review all work and Services performed by the Employee;
c) modify or cancel such work;
d) require the Employee to revise such work;
e) determine the time and manner of performance of all work; and
f) determine the standards of performance and, within reason, the
necessary hours of work.
7.00 VACATION, HOLIDAYS AND SICK LEAVE
7.01 Employee shall accrue vacation on a monthly basis (at the rate of 1.667
days per month). Employee shall thereby be entitled to twenty (20) days of
paid vacation for each year of employment. Employee is ineligible to accrue
vacation benefits while Employee is absent without pay including, but not
limited to, unpaid leaves of absence. The purpose of paid vacation is to
provide time for recreation and relaxation. Employer encourages all of its
employees to take accrued vacation each year. Accordingly, the maximum
vacation time Employee will be permitted to accrue is twenty (20) days in
addition to all normal scheduled holidays as are accustomed in the
insurance and financial services industry. Once this cap on the accrual of
vacation has been reached, no additional vacation will accrue until
Employee has reduced the balance of his unused vacation time accrued to
less than twenty (20) days. Thereafter, vacation will accrue on a
prospective basis as
5
long as Employee's total accrual remains under the cap. Employer reserves
the right to compensate Employee for earned, unused vacation time at any
time in its sole discretion.
7.02 All times for holidays shall be agreed to by both parties, acting
reasonably and in a business and professional like manner.
7.03 Employee shall be entitled to holidays with pay during each calendar year
consistent with the holiday schedule applicable to management Employees of
Employer generally.
7.04 Employee shall accrue sick/personal business leave on a monthly basis (at
the rate of 1.667 days per month). Employee shall thereby be entitled to
twenty 20) days of paid sick/personal business leave for each year of
employment, after the first three (3) months of employment. Sick leave may
not be accumulated from year to year and Employee will not be paid for
accrued but unused sick/personal business leave upon employment
termination. If Employee is unable to work for more than twenty (20) days
because of sickness or total disability, Employee's unused vacation time
may be applied to such absence. All requests for sick days and personal
days off shall be made by Employee in accordance with Employer policies in
effect from time to time.
8.00 EMPLOYMENT RELATIONSHIP
8.01 The Employee agrees that he is an employee of the Employer and shall not be
deemed to be an independent contractor at any time.
8.02 There shall be no agency established in any form or manner.
8.03 The Employer is to have control of the manner, method and details of the
performance of the Services provided by the Employee at all material times
and, the Employee shall comply with all reasonable requests of the Employer
with respect to the Services, the location of performance of the Services,
and method of performance of the Services.
8.04 The Employee shall not, without the express written consent of the
Employer, take any action that would bind the Employer to any agreement
outside the normal day-to-day operations of the Employer or any agreement
in excess of $5,000.00.
8.05 The Employee, at all times, and for the purposes of this Agreement, shall
personally fulfil the performance of the Services, and shall not permit or
allow any other person to fulfil such Services at any time, without the
express consent of the Employer.
8.06 Any and all Clients found, solicited or discovered by the Employee and all
information received by the Employee while providing the Services to the
Employer as set out in this Agreement shall remain the property of the
Employer.
8.07 The Employee shall, upon the request of the Employer and at any time,
execute any form of confidentiality agreement then being used by the
Employer.
8.08 Employee agrees to comply with all of the rules and regulations of
Employer.
8.09 Nothing contained herein shall be construed to give the Employee an
interest in the tangible or intangible assets of the Employer.
9.00 TERMINATION
9.01 In this Section 9.00, the following terms shall have the following
meanings:
i) "Termination Other Than For Cause" shall mean termination of the
Employee's employment by the Employer other than in a termination made
in accordance with the terms of paragraphs 9.02, 9.03 or 9.04;
ii) "Voluntary Termination" shall mean termination by action of Employee
of Employee's employment by Employer; and
iii) A "Demotion" shall mean (i) any reduction of Employee's then current
Base Salary other than in accordance with the terms of this Agreement;
(ii) any material reduction in the package of benefits and incentives
provided to Employee or any action by Employer which would materially
and adversely affect Employee's participation or reduce Employee's
benefits under any such plans, except to the extent that such benefits
and incentives of all other officers of Employer are similarly
reduced; (iii) any material diminution of Employee's duties,
responsibilities, or authority; or (iv) any requirement that Employee
relocate to a work site that would increase Employee's one-way commute
distance to more than fifty (50) miles from Employee's principal
residence. Notwithstanding the foregoing, any downsizing of the
operations by the Employer or any reduction in personnel (except the
Employee) in the Vista Division or otherwise shall not be deemed to be
a Demotion.
9.02 The Employer and the Employee agree that the Employer shall and hereby does
reserve the right to immediately terminate of the Employee for just cause.
Just cause being at the sole discretion of the Employer, acting reasonably,
and, includes, without restricting the generality of the foregoing, the
Employee:
a) being responsible for persistent willful breaches of the material
terms of this Agreement;
b) performing the Services in an unsatisfactory or unprofessional manner;
c) conducting himself in such a manner that the retention of a Client is
jeopardized, a Client, is lost, or the goodwill of the Employer is
harmed in any way whatsoever;
d) being convicted of a felony involving moral turpitude, persistent
dishonesty or fraud,
e) failing or refusing to comply with the policies and standards and
regulations from time to time established by the Employer;
f) committing fraud, being dishonest or committing other misconduct in
the performance of services rendered on behalf of the Employer;
g) habitually neglecting the performance of the duties which he is
required to
perform hereunder; or
h) having a deficiency in any trust account of the Employer for which the
Employee is directly responsible for.
9.03 This Agreement shall immediately terminate upon:
a) death of the Employee;
b) the Employee becoming insolvent or being adjudged bankrupt;
c) the failure of Employee to become bonded or continue to remain bonded
during the term of this Agreement;
d) the Employee being elected to hold office or accepting employment
which by operation of law places restrictions or limitations upon his
continued performance of the Services; or
e) the Employee becoming, without having obtained the Employer's consent,
a shareholder, an officer, director, agent or employee of another
Employer in a related business to that of the Employer;
f) the failure of Employee to hold and maintain in good standing any and
all licences, permits, professional designations or qualifications
necessary or required by the Employee in order to provide the Services
hereunder;
g) the Employee becoming permanently disabled and no longer able to
perform the essential functions of his position with reasonable
accommodation by Employer. It being acknowledged that the Employer
shall not be required to provide any accommodation that would produce
an undue hardship on the operation of the Employer's business; or
h) the end of the Term hereof.
9.04 This Agreement shall immediately terminate: (i) if there should be a
default by the Employer pursuant to the terms of the Debt Agreements; and
(ii) KFT exercises its rights under the Debt Agreements.
9.05 If this Agreement is terminated in accordance with paragraphs 9.02, 9.03 or
9.04, then the Employee shall be paid any accrued salary, any vested
deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plan of Employer in which Employee is a participant to
the full extent of Employee's rights under such plans, any accrued vacation
pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but
Employee shall not be paid any other compensation or reimbursement of any
kind, including without limitation, severance compensation.
9.06 Notwithstanding anything else in this Agreement, Employer may effect a
Termination Other Than For Cause at any time upon giving sixty (60) days
written notice to Employee of such termination. Upon any Termination Other
Than For Cause, Employee shall be paid any accrued salary, any bonus
compensation to the extent earned, any deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Employer in
which Employee is a participant to the full extent of Employee's rights
under such plans, any accrued vacation pay, any appropriate business
expenses incurred by Employee in connection with his duties hereunder, all
to the date of termination, and any severance compensation provided in
paragraph 9.08, but no other compensation or reimbursement of any kind.
9.07 Employee may effect a Voluntary Termination at any time upon giving sixty
(60) days notice to Employer. In the event of a Voluntary Termination,
Employer shall pay any accrued salary, any bonus compensation to the extent
earned, any vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Employer in which Employee is a
participant to the full extent of Employee's rights under such plans, any
accrued vacation pay and any appropriate business expenses incurred by
Employee in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind,
including without limitation, severance compensation.
9.08 In the event of (i) the termination of the Employee's employment by
Employer other than a termination made in accordance with paragraphs 9.02,
9.03 or 9.04; or (ii) a Demotion, then in each such case Employee shall be
paid as severance compensation an amount equal to the total Base Salary
that would be required to be paid to the Employee from the date of
termination through the end of the Term hereof, absent any termination of
Employee's employment, based on Employee's then-applicable annual Base
Salary, in addition to and not in lieu of commissions or other benefits to
which Employee may be entitled.
9.09 Upon termination of this Agreement, Employee shall deliver all property
(including keys, records, notes, lists, data, memoranda, models, and
equipment) that is in Employee's possession or under the Employee's control
that is Employer's property or related to Employer's business,
notwithstanding various personal articles or items that consist of art work
on loan to the Employer.
10.00 INDEMNITY
10.01 Employer hereby agrees to hold harmless and indemnify Employee to the full
extent authorized or permitted by law, as such may be amended from time to
time, and by the Bylaws of Employer, as such may be amended. In the event
that Employer chooses to purchase and maintain a policy or policies of
directors' and officers' liability insurance, to cover liabilities which
may be incurred by its officers or directors in the performance of their
obligations to Employer, Employer shall include Employee within such
policy.
11.00 MISCELLANEOUS
11.01 This Agreement contains the entire agreement of the parties and there are
no other promises or conditions in any other agreement whether oral or
written. This Agreement
supersedes any prior written or oral agreements between the parties. This
Agreement may be modified or amended, only if the amendment is made in
writing and is signed by both parties. This agreement cannot be altered in
any way by any oral statement(s) made to Employee. It is further
understood, however, that Employer's policies, procedures and rules may be
amended or changed at any time by Employer.
11.02 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
11.03 No provision of this agreement shall be deemed to be waived unless a
waiver is in writing. Any waiver of any default committed by any of the
parties hereto in the observance or performance of any part of this
agreement shall not extend to or be taken in any manner to effect any other
default.
11.04 The parties hereto, and each of them, covenant and agree that each of them
shall and will, upon reasonable request of the other party, make, do,
execute or cause to be made, done or executed, all such further and other
lawful acts, deeds, things, devices and assurances whatsoever for the
better or more perfect and absolute performance of the terms and conditions
of this agreement.
11.05 In this agreement words importing the singular shall include the plural
and words importing the masculine shall include the feminine or neuter, or
vice versa, as the context, or the number of or gender of the parties, from
time to time so requires. Words importing persons shall include
corporations, companies, partnerships, syndicates, trusts and any number or
aggregate of persons.
11.06 The headings of the clauses contained in this agreement have been inserted
for convenience of reference only and shall not affect the interpretation
of this agreement.
11.07 If any provision(s) of this Agreement shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision(s) of this
Agreement is invalid or unenforceable, but that by limiting such provision
it would become valid or enforceable, then such provision shall be deemed
to be written, construed, and enforced as so limited.
11.08 This agreement and its terms shall not be assigned by the Employee to any
other person, firm, corporation, or entity.
11.09 All notices, requests, demands, elections and other communications
hereunder shall be in writing and shall be deemed to have been duly given
only if delivered:
TO: THE EMPLOYER
355, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: Primo Podorieszach
TO: THE EMPLOYEE
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Either party may change its address for the notice by a notice given as
herein provided. A notice which is mailed will be considered as having been
given at such time as it would in the ordinary course of mail be received
by the party to which it is directed.
11.10 This agreement may be executed in any number of counterparts by any one or
more of the parties. Each executed counterpart shall be deemed to be an
original and such counterpart shall together constitute one and the same
agreement.
IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective
signatures and this agreement is delivered all as of the date first above
written.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
/s/ [illegible] /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -----------------------------
Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SCHEDULE "A"
The firms or individuals that represent Joint Venture business are as follows
(including year to date revenues as of September 30, 2003):
1. ▇▇▇▇ ▇▇▇▇▇▇, Novato, California;
2. ▇▇▇▇▇▇▇▇ Company, Greenville, South Carolina;
3. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Company, New Jersey & New York;
4. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Torrance, CA; and
5. ▇▇▇▇▇ Insurance Services, West Los Angeles, CA.
EMPLOYMENT AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate duly incorporated under
the laws of the State of Delaware and carrying on
business in the United States of America
(hereinafter referred to as the "Employer")
- and -
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
an individual, resident in the City of Novato
in the State of California
(hereinafter called the "Employee")
WHEREAS Employer is in the business of providing financial services usual and
customary to insurance, risk management, employee benefits, life and securities
and desires to engage the services of Employee to administer the Employers Vista
Division; and
WHEREAS Employer desires to retain the services of Employee and Employee is
willing to accept employment by Employer, on the terms and subject to the
conditions set forth in this Agreement, and
WHEREAS Employer, DKWS Enterprises, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Employee and the
▇▇▇▇▇▇▇ Family Trust of July 1998 ("KFT") have made, executed and delivered a
certain Asset Purchase Agreement dated as of October 1, 2003 (the "APA"); and
WHEREAS pursuant to the terms of the APA, the Employer provided a Promissory
Note and a Final Note (as more particularly described in the APA and as set
forth in Schedules "O" and "Q" of the APA) and a Security Agreement (as set
forth in Schedule "U" of the APA) to KFT (all of the foregoing hereinafter
collectively referred to as the "Debt Agreements");
NOW, THEREFORE, in consideration of the premises and the covenants contained
herein, the parties hereto hereby agree as follows:
1.00 DEFINITIONS
1.01 In this Agreement and in any amendment hereto, the following terms shall
have the following meanings:
a) "Clients" mean any and all past, present or prospective customers of
the Employer;
b) "Commencement Date" means the 1st day of October, 2003;
1
c) "Owned Commission Revenue" means the commission revenue actually
received by the Employer from insurance companies in respect of the
sales of general insurance policies by the Vista Division, but does
not include any:
i) Contingency Revenues in excess of $50,000.00;
ii) revenues derived by the Employer from those persons or agencies
set forth on Schedule "A" attached hereto or any revenues derived
by the Employer from similar joint venture or revenue processing
agreements which the Employer may enter into either before or
after the Commencement Date;
iii) life insurance revenues; iv) interest income; or v) finance
charges;
d) "Contingency Revenue" means those commissions generated by the Vista
Division and paid to the Employer by insurance companies based upon
the volume, growth and or profitability of insurance business placed
with such insurance companies by the Employer and from the Vista
Division; and
e) "Vista Division" means that business and those assets purchased by the
Employer from DKWS Enterprises, Inc. and the ▇▇▇▇▇▇▇ Family Trust of
July 1998 pursuant to an Asset Purchase Agreement dated October 1st,
2003.
1.02 Unless otherwise indicated, all dollar amounts referred to in this
Agreement or in the Schedules are in United States funds.
2.00 EMPLOYMENT
2.01 During the term of this Agreement, the Employee agrees to be employed by
and to serve the Employer as the Chief Office Administrator of the
Employer's Vista Division. The Employer agrees to employ and retain the
Employee in such capacities and the Employee accepts and agrees to such
employment, subject to the general supervision, advice and direction of the
Employers's President and Board of Directors. The Employee shall perform
such duties as are customarily performed by an Employee in a similar
position and agrees to perform on behalf of the Employer all such
reasonable duties as may from time to time be authorized and directed by
the President (the "Services"). The Employee shall devote her full business
time to the affairs of the Employer to perform the duties of his position.
3.00 REMUNERATION
3.01 Subject to the terms of paragraph 3.02, as compensation for the Services
provided by the Employee under this Agreement, the Employer will pay the
Employee a salary of $85,000 per year (the "Base Salary), payable in
bi-monthly installments of $3,541.66 each on the 15th and last days of each
month during the Term hereof. Upon termination of this Agreement, payments
under this paragraph shall cease, provided, however, that the Employee
shall be entitled to payments for periods or partial periods that occurred
prior to the date of termination and for which the Employee has not yet
been paid.
2
3.02 In the event that Owned Commission Revenue falls below $3,000,000 per annum
during the Term hereof, then the amount of the Base Salary shall be reduced
for the next 12 months by an amount equal to $1.00 of Base Salary for each
$8.55 that the Owned Commission Revenue falls below $3,000,000.00 (the
"Base Salary Adjustment"). For greater clarification, the Base Salary
Adjustment cannot have the effect of increasing the Base Salary, the Base
Salary Adjustment can only lower the Base Salary, and in no case will the
Base Salary be greater than $85,000 nor lower than $61,000.00.
3.03 The remuneration provided in Section 3.00 herein shall be subject to
payroll deductions for income tax and for any and all other employee
deductions or remittances required by law and imposed upon the Employer to
collect and remit to any level of government or regulatory authority.
3.04 Employer shall reimburse Employee for such "out-of-pocket" expenses as the
Board of Directors determines, in its sole discretion, to be necessary to
the performance of her duties to the Employer.
3.05 Employee shall be entitled to medical and dental insurance coverage and
such additional benefits as Employer provides to its Employees, and on the
terms provided to its employees.
4.00 TERM
4.01 This Agreement is deemed to have commenced on the Commencement Date. Unless
otherwise terminated in accordance with the terms hereof, this Agreement is
a contract for employment for a period of five (5) years beginning on the
Commencement Date and ending on September 30, 2008 (the "Term"). Employer
agrees to continue the Employee's employment, and the Employee agrees to
remain employed by Employer, from the Commencement Date until the date when
the Employee's employment terminates pursuant to the provisions of this
Agreement.
5.00 DUTIES AND OBLIGATIONS OF THE EMPLOYEE
5.01 The Employee shall well and faithfully serve the Employer during the
continuance of her employment and she shall devote substantially her whole
time and attention to these duties and the provision of the Services and
shall not directly or indirectly engage in or be concerned in or interested
in any other business of any kind which may interfere, restrict or conflict
with her duties hereunder or the provision by her of the Services.
5.02 The Employee shall use her best efforts to market, service, promote and
sell the products and services of the Employer.
5.03 The Employee shall take all reasonable steps to promote the Employer's good
name and goodwill and shall not, under any circumstances, take any steps or
allow through inaction, the Employer's good name to be brought into
disrepute.
3
5.04 The Employee shall continue to be bound by all of the Employer's policies
in effect to date, or as amended from time to time with reasonable notice
to the Employee.
5.05 Subject to the terms and conditions of this Agreement, all fees,
compensation, money and other things of value received or realized as a
result of the Employee's rendering of the Services, be they sales,
supervisory, managerial or otherwise, and all income generated by the
Employee shall belong to the Employer, whether paid directly to the
Employee or to the Employer, if such income stems from the Business of the
Employer.
5.06 Employee shall be based at the principal offices of Employer, located in
Novato, California.
5.07 The Employee shall hold and maintain in good standing any and all such
qualifications, professional designations, licenses and permits as may be
required, necessary or desirable for the provision of the Services to the
Employer and its Clients.
6.00 DUTIES AND OBLIGATIONS OF THE EMPLOYER
6.01 The Employer shall remunerate the Employee in accordance with the terms of
Article 3.00 hereof.
6.02 Subject to the terms and conditions governing the Employer, and all other
applicable laws, regulations and rules of court, the Employer shall have
the power to:
a) assign Clients to the Employee;
b) review all work and Services performed by the Employee;
c) modify or cancel such work;
d) require the Employee to revise such work;
e) determine the time and manner of performance of all work; and
f) determine the standards of performance and, within reason, the
necessary hours of work.
7.00 VACATION, HOLIDAYS AND SICK LEAVE
7.01 Employee shall accrue vacation on a monthly basis (at the rate of 1.667
days per month). Employee shall thereby be entitled to twenty (20) days of
paid vacation for each year of employment. Employee is ineligible to accrue
vacation benefits while Employee is absent without pay including, but not
limited to, unpaid leaves of absence. The purpose of paid vacation is to
provide time for recreation and relaxation. Employer encourages all of its
employees to take accrued vacation each year. Accordingly, the maximum
vacation time Employee will be permitted to accrue is twenty (20) days in
addition to all normal scheduled holidays as are accustomed in the
insurance and financial services industry. Once this cap on the accrual of
vacation has been reached, no additional vacation will accrue until
Employee has reduced the balance of her unused vacation time accrued to
less than twenty (20) days. Thereafter, vacation will accrue on a
prospective basis as long as Employee's total accrual remains under the
cap. Employer reserves the right to compensate Employee for earned, unused
vacation time at any time in its sole
4
discretion.
7.02 All times for holidays shall be agreed to by both parties, acting
reasonably and in a business and professional like manner.
7.03 Employee shall be entitled to holidays with pay during each calendar year
consistent with the holiday schedule applicable to Employees of Employer
generally.
7.04 Employee shall accrue sick/personal business leave on a monthly basis (at
the rate of 1.667 days per month). Employee shall thereby be entitled to
twenty 20) days of paid sick/personal business leave for each year of
employment, after the first three (3) months of employment. Sick leave may
not be accumulated from year to year and Employee will not be paid for
accrued but unused sick/personal business leave upon employment
termination. If Employee is unable to work for more than twenty (20) days
because of sickness or total disability, Employee's unused vacation time
may be applied to such absence. All requests for sick days and personal
days off shall be made by Employee in accordance with Employer policies in
effect from time to time.
8.00 EMPLOYMENT RELATIONSHIP
8.01 The Employee agrees that she is an employee of the Employer and shall not
be deemed to be an independent contractor at any time.
8.02 There shall be no agency established in any form or manner.
8.03 The Employer is to have control of the manner, method and details of the
performance of the Services provided by the Employee at all material times
and, the Employee shall comply with all reasonable requests of the Employer
with respect to the Services, the location of performance of the Services,
and method of performance of the Services.
8.04 The Employee shall not, without the express written consent of the
Employer, take any action that would bind the Employer to any agreement.
8.05 The Employee, at all times, and for the purposes of this Agreement, shall
personally fulfil the performance of the Services, and shall not permit or
allow any other person to fulfil such Services at any time, without the
express consent of the Employer.
8.06 Any and all Clients found, solicited or discovered by the Employee and all
information received by the Employee while providing the Services to the
Employer as set out in this Agreement shall remain the property of the
Employer.
8.07 The Employee shall, upon the request of the Employer and at any time,
execute any form of confidentiality agreement then being used by the
Employer.
8.08 Employee agrees to comply with all of the rules and regulations of
Employer.
5
8.09 Nothing contained herein shall be construed to give the Employee an
interest in the tangible or intangible assets of the Employer.
9.00 TERMINATION
9.01 In this Section 9.00, the following terms shall have the following
meanings:
a) "Termination Other Than For Cause" shall mean termination of the
Employee's employment by the Employer other than in a termination made
in accordance with the terms of paragraphs 9.02, 9.03 or 9.04;
b) "Voluntary Termination" shall mean termination by action of Employee
of Employee's employment by Employer; and
c) A "Demotion" shall mean (i) any reduction of Employee's then current
Base Salary other than in accordance with the terms of this Agreement;
(ii) any material reduction in the package of benefits and incentives
provided to Employee or any action by Employer which would materially
and adversely affect Employee's participation or reduce Employee's
benefits under any such plans, except to the extent that such benefits
and incentives of all other officers of Employer are similarly
reduced; (iii) any material diminution of Employee's duties,
responsibilities, or authority; or (iv) any requirement that Employee
relocate to a work site that would increase Employee's one-way commute
distance to more than fifty (50) miles from Employee's principal
residence. Notwithstanding the foregoing, any downsizing of the
operations by the Employer or any reduction in personnel (except the
Employee) in the Vista Division or otherwise shall not be deemed to be
a Demotion.
9.02 The Employer and the Employee agree that the Employer shall and hereby
does reserve the right to immediately terminate of the Employee for
just cause. Just cause being at the sole discretion of the Employer,
acting reasonably, and, includes, without restricting the generality of
the foregoing, the Employee:
a) being responsible for persistent willful breaches of the material
terms of this Agreement;
b) performing the Services in an unsatisfactory or unprofessional
manner;
c) conducting herself in such a manner that the retention of a
Client is jeopardized, a Client, is lost, or the goodwill of the
Employer is harmed in any way whatsoever;
d) being convicted of a felony involving moral turpitude, persistent
dishonesty or fraud,
e) failing or refusing to comply with the policies and standards and
regulations from time to time established by the Employer;
f) committing fraud, being dishonest or committing other misconduct
in the performance of services rendered on behalf of the
Employer; or
g) habitually neglecting the performance of the duties which she is
required to perform hereunder.
9.03 This Agreement shall immediately terminate upon:
a) death of the Employee;
b) the Employee becoming insolvent or being adjudged bankrupt;
c) the failure of Employee to become bonded or continue to remain
bonded during
the term of this Agreement;
d) the Employee being elected to hold office or accepting employment
which by operation of law places restrictions or limitations upon
her continued performance of the Services; or
e) the Employee becoming, without having obtained the Employer's
consent, a shareholder, an officer, director, agent or employee
of another Employer in a related business to that of the
Employer;
f) the failure of Employee to hold and maintain in good standing any
and all licences, permits, professional designations or
qualifications necessary or required by the Employee in order to
provide the Services hereunder;
g) the Employee becoming permanently disabled and no longer able to
perform the essential functions of her position with reasonable
accommodation by Employer. It being acknowledged that the
Employer shall not be required to provide any accommodation that
would produce an undue hardship on the operation of the
Employer's business; or
h) the end of the Term hereof.
9.04 This Agreement shall immediately terminate (i) if there should be a default
by the Employer pursuant to the terms of the Debt Agreements; and (ii) KFT
exercises its rights under the Debt Agreements.
9.05 If this Agreement is terminated in accordance with paragraphs 9.02, 9.03 or
9.04, then the Employee shall be paid any accrued salary, any vested
deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plan of Employer in which Employee is a participant to
the full extent of Employee's rights under such plans, any accrued vacation
pay and any appropriate business expenses incurred by Employee in
connection with her duties hereunder, all to the date of termination, but
Employee shall not be paid any other compensation or reimbursement of any
kind, including without limitation, severance compensation.
9.06 Notwithstanding anything else in this Agreement, Employer may effect a
Termination Other Than For Cause at any time upon giving sixty (60) days
written notice to Employee of such termination. Upon any Termination Other
Than For Cause, Employee shall be paid any accrued salary, any bonus
compensation to the extent earned, any deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Employer in which Employee is a participant to the full extent of
Employee's rights under such plans, any accrued vacation pay, any
appropriate business expenses incurred by Employee in connection with her
duties hereunder, all to the date of termination, and any severance
compensation provided in paragraph 9.08, but no other compensation or
reimbursement of any kind.
9.07 Employee may effect a Voluntary Termination at any time upon giving sixty
(60) days notice to Employer. In the event of a Voluntary Termination,
Employer shall pay any
accrued salary, any bonus compensation to the extent earned, any vested
deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Employer in which Employee is a participant to
the full extent of Employee's rights under such plans, any accrued vacation
pay and any appropriate business expenses incurred by Employee in
connection with her duties hereunder, all to the date of termination, but
no other compensation or reimbursement of any kind, including without
limitation, severance compensation.
9.08 In the event of (i) the termination of the Employee's employment by
Employer other than a termination made in accordance with paragraphs 9.02,
9.03 or 9.04; or (ii) a Demotion, then in each such case Employee shall be
paid as severance compensation an amount equal to the total Base Salary
that would be required to be paid to the Employee from the date of
termination through the end of the Term hereof, absent any termination of
Employee's employment, based on Employee's then-applicable annual Base
Salary, in addition to and not in lieu of commissions or other benefits to
which Employee may be entitled.
9.09 Upon termination of this Agreement, Employee shall deliver all property
(including keys, records, notes, lists, data, memoranda, models, and
equipment) that is in Employee's possession or under the Employee's control
that is Employer's property or related to Employer's business.
10.00 INDEMNITY
10.01Employer hereby agrees to hold harmless and indemnify Employee to the full
extent authorized or permitted by law, as such may be amended from time to
time, and by the Bylaws of Employer, as such may be amended.
11.00 MISCELLANEOUS
11.01This Agreement contains the entire agreement of the parties and there are
no other promises or conditions in any other agreement whether oral or
written. This Agreement supersedes any prior written or oral agreements
between the parties. This Agreement may be modified or amended, only if the
amendment is made in writing and is signed by both parties. This agreement
cannot be altered in any way by any oral statement(s) made to Employee. It
is further understood, however, that Employer's policies, procedures and
rules may be amended or changed at any time by Employer.
11.02This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
11.03No provision of this agreement shall be deemed to be waived unless a
waiver is in writing. Any waiver of any default committed by any of the
parties hereto in the
observance or performance of any part of this agreement shall not extend to
or be taken in any manner to effect any other default.
11.04The parties hereto, and each of them, covenant and agree that each of them
shall and will, upon reasonable request of the other party, make, do,
execute or cause to be made, done or executed, all such further and other
lawful acts, deeds, things, devices and assurances whatsoever for the
better or more perfect and absolute performance of the terms and conditions
of this agreement.
11.05In this agreement words importing the singular shall include the plural
and words importing the masculine shall include the feminine or neuter, or
vice versa, as the context, or the number of or gender of the parties, from
time to time so requires. Words importing persons shall include
corporations, companies, partnerships, syndicates, trusts and any number or
aggregate of persons.
11.06The headings of the clauses contained in this agreement have been inserted
for convenience of reference only and shall not affect the interpretation
of this agreement.
11.07If any provision(s) of this Agreement shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision(s) of this
Agreement is invalid or unenforceable, but that by limiting such provision
it would become valid or enforceable, then such provision shall be deemed
to be written, construed, and enforced as so limited.
11.08This agreement and its terms shall not be assigned by the Employee to any
other person, firm, corporation, or entity.
11.09All notices, requests, demands, elections and other communications
hereunder shall be in writing and shall be deemed to have been duly given
only if delivered:
TO: THE EMPLOYER
355, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: Primo Podorieszach
TO: THE EMPLOYEE
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Either party may change its address for the notice by a notice given as
herein provided. A notice which is mailed will be considered as having been
given at such time as it would in the ordinary course of mail be received
by the party to which it is directed.
11.10This agreement may be executed in any number of counterparts by any one or
more of
the parties. Each executed counterpart shall be deemed to be an original
and such counterpart shall together constitute one and the same agreement.
IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective
signatures and this agreement is delivered all as of the date first above
written.
Per: /s/ P. Podorieszach
------------------------
/s/ [illegible] /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------- -----------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SCHEDULE "A"
The firms or individuals that represent Joint Venture business are as follows
(including year to date revenues as of September 30, 2003):
1. ▇▇▇▇ ▇▇▇▇▇▇, Novato, California;
2. ▇▇▇▇▇▇▇▇ Company, Greenville, South Carolina;
3. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Company, New Jersey & New York;
4. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Torrance, CA; and
5. ▇▇▇▇▇ Insurance Services, West Los Angeles, CA.
SCHEDULE "H"
PERMITTED ENCUMBRANCES
Those UCC filings as listed below:
File Number File Date Secured Party
----------- --------- -------------
9907860785 03/11/99 Liberty Leasing Company
01121C0373 04/25/01 ▇▇▇▇▇ Fargo Bank MN, NA
0026960362 09/18/00 Discovery Office Systems
0031360790 10/30/00 Premier Capital Group Inc.
0110860370 04/10/01 Premier Capital Group Inc.
▇▇▇▇▇▇▇▇▇▇ 09/20/02 Premier Capital Group Inc.
SCHEDULE "I"
TAX RETURNS AND OTHER TAX MATTERS OF VENDOR
SCHEDULE "J"
VOLUME REPORTS AND SUMMARY PRODUCTION REPORTS
SCHEDULE "K"
VENDOR'S INSURANCE
1. Business Package including (i) Commercial General Liability; (ii) Business
Personal Property; (iii) EDP; (iv) Crime; (v) Hired and Non-Owned Auto
Liability; and Umbrella. The total limits inclusive of Primary and Excess
are $6,000,000.00 (except Crime which is $500,000.00) Coverage includes
Employee Benefits Liability. St. ▇▇▇▇ Insurance provides the coverage;
2. Statutory Workers Compensation and Employers Liability at $1,000,000.00 in
coverage supplied by St. ▇▇▇▇ Insurance;
3. Employment Practices Liability at $1,000,000.00 in coverage supplied by
▇▇▇▇▇▇ Insurance Company; and
4. Professional Liability at $5000,000.00 in coverage supplied by Firemans
Fund.
SCHEDULE "L"
ESCROW AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made as of the ____ day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Addison")
and
DKWS ENTERPRISES, INC.
a body corporate incorporated
pursuant to the laws of the State of California
(hereinafter referred to as "DKWS")
and
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
a trust formed pursuant to the laws of the State of California,
(hereinafter referred to as the "Trust")
and
DEMIANTSCHUK ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
a partnership formed pursuant to the
Laws of the Province of Alberta
(the "Escrow Agent")
WHEREAS Addison, DKWS, the Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ have made,
executed and delivered an Asset Purchase Agreement dated effective as of the 1st
day October, 2003 (the "APA"), a copy of which has been delivered to the Escrow
Agent for reference purposes.
AND WHEREAS the terms of the Asset Purchase Agreement provide that on the
Closing Date, among other things, Addison shall deliver to the Escrow Agent: 1)
a Promissory Note in accordance with Schedule "O" of the APA; and 2) a Final
Note in accordance Schedule "Q" of the APA.
AND WHEREAS Addison, DKWS and the Trust have made, executed and delivered an
Agency Agreement dated effective as of the1st day October, 2003 (the "Agency
Agreement"), a copy of which has been delivered to the Escrow Agent for
reference purposes.
AND WHEREAS the terms of the Agency Agreement provide that on the Closing Date,
among other things, the Trust shall deliver to the Escrow Agent a fully
completed and executed Securities Pledge Agreement along with share certificates
fully endorsed for transfer all in accordance with Schedule "D" of the Agency
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and in the Asset Purchase Agreement, the parties
hereto agree as follows:
1.00 Interpretation
-------------------
1.01 Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
2.00 Appointment of the Escrow Agent.
-------------------------------------
2.01 Addison, DKWS and the Trust hereby constitute and appoint the Escrow Agent
as, and the Escrow Agent hereby agrees to assume and perform the duties of,
the Escrow Agent under and pursuant to this Agreement. The Escrow Agent
also acknowledges receipt of an executed copy of the APA, the Agency
Agreement and the Securities Pledge Agreement.
3.00 Delivery of Documents to the Escrow Agent
----------------------------------------------
3.01 The Escrow Agent acknowledges that Addison has delivered the following
items to the Escrow Agent:
a) a properly completed and duly executed Promissory Note in accordance
with the terms of the APA and in the same form as is set forth in
Schedule "O" of the APA; and
b) a properly completed (save as is expressly otherwise set forth herein)
and duly executed Final Note in accordance with the terms of the APA
and in the same form as is set forth in Schedule "Q" of the APA.
3.02 The Escrow Agent acknowledges that the Trust has delivered the following
items to the Escrow Agent:
a) a duly executed Securities Pledge Agreement in accordance with the
terms of the Agency Agreement and in the same form as is set forth in
Schedule "D" of the Agency Agreement; and
b) those share certificates fully endorsed for transfer as more
particularly described in Schedule "A" of the Securities Pledge
Agreement.
3.03 The Escrow Agent acknowledges that DKWS has delivered to it a duly executed
Directors Resolution in the same form as is set forth in Schedule "C" of
the Agency Agreement.
4.00 Escrow Agent's Obligations In Respect of the Promissory Note and the Final
Note
--------------------------------------------------------------------------------
4.01 The Escrow Agent shall hold and deal with the Promissory Note in accordance
with the following terms::
(a) within 5 days after the amount of the First Adjustment has been
determined (in accordance with the terms of paragraph 3.04(a) of the
APA) and communicated to the Escrow Agent the Escrow Agent shall
proceed as follows:
(i) if after the First Adjustment is determined, there is no
reduction in the Purchase Price, then there shall be no changes
made to the Promissory Note by the Escrow Agent; and
(ii) if after the First Adjustment is determined, there is a reduction
in the Purchase Price, then the Escrow Agent shall amend the
Promissory Note by reducing the Principal Amount (and, after
taking into account any and all sums paid to the Trust pursuant
to the Promissory Note up to and including the date of the First
Adjustment, any amortization schedules related thereto) by the
amount of the First Adjustment; and
(b) within 5 days after the amount of the Second Adjustment has been
determined (in accordance with the terms of paragraph 3.04(e) of the
APA) and communicated to the Escrow Agent the Escrow Agent shall
proceed as follows:
(i) if after the Second Adjustment is determined, there is no
reduction in the Purchase Price, then there shall be no changes
made to the Promissory Note by the Escrow Agent and the Escrow
Agent shall deliver the Promissory Note to the Trust;
(ii) if after the Second Adjustment is determined, there is a
reduction in the Purchase Price, then the Escrow Agent shall
amend the Promissory Note by reducing the Principal Amount (and,
after taking into account any and all sums paid to the Trust
pursuant to the Promissory Note up to and including the date of
the Second Adjustment, any amortization schedules related
thereto) by the amount of the Second Adjustment as determined in
accordance with paragraph 3.04(e) and once done shall deliver the
amended Promissory Note to the Trust; or
(c) if there has been a default in the payment or performance of the
Promissory Note (the "Default") prior to the date of delivery thereof
to the Trust (in accordance with the terms of paragraph 4.01(b)(ii)
hereof) and the Trust has delivered a written notice of the Default to
the Escrow Agent, then the Escrow Agent shall, subject to the terms of
paragraph 4.05 hereof, deliver the Promissory Note to the Trust.
4.02 The Escrow Agent shall make the First Adjustment and the Second Adjustment
to the Promissory Note pursuant to or in accordance with: (i) a written
authorization signed by Addison and the Trust delivered to the Escrow
Agent, which authorization shall set forth the amount of the First
Adjustment or the Second Adjustment, as the case may be; or (ii) if no
written authorization is received, a certified copy of a final judgment of
a court of competent jurisdiction, provided, however, that a certified copy
of a final judgment shall
serve as a valid determination only if the time for appeal has expired and
no appeal has been perfected or all appeals have been exhausted or no
further right of appeal exists.
4.03 The Escrow Agent shall hold and deal with the Final Note in accordance with
the following terms: within 5 days after the amount of the Remaining
Balance of the Purchase Price has been determined (in accordance with the
terms of paragraph 3.05(b) of the APA) and communicated to the Escrow Agent
the Escrow Agent shall complete the Final Note by filling in the principal
amount thereof with such number as is equal to the Remaining Balance of the
Purchase Price and shall attach the appropriate amortization schedule
thereto (calculated in accordance with the terms of the Final Note and once
done, the Escrow Agent shall then deliver the Final Note to the Trust.
4.04 The Escrow Agent shall insert the Remaining Balance of the Purchase Price
as the principal amount of the Final Note pursuant to or in accordance
with: (i) a written authorization signed by Addison and the Trust delivered
to the Escrow Agent, which authorization shall set forth the amount of the
Remaining Balance of the Purchase Price; or (ii) if no written
authorization is received, a certified copy of a final judgment of a court
of competent jurisdiction, provided, however, that a certified copy of a
final judgment shall serve as a valid determination only if the time for
appeal has expired and no appeal has been perfected or all appeals have
been exhausted or no further right of appeal exists.
4.05 If there has been a Default of the Promissory Note, then the Escrow Agent
shall deliver the Promissory Note to the Trust in accordance with: (i) a
written authorization signed by the Trust delivered to the Escrow Agent,
which authorization shall set forth that there has been a Default in the
Promissory Note and the nature or amount of the Default; or (ii) if Addison
is disputing the Default and has notified the Escrow Agent in writing that
it has or intends to submit the dispute to a court of competent
jurisdiction, a certified copy of a final judgment of a court of competent
jurisdiction, provided, however, that a certified copy of a final judgment
shall serve as a valid determination only if the time for appeal has
expired and no appeal has been perfected or all appeals have been exhausted
or no further right of appeal exists.
5.00 Escrow Agent's Obligations In Respect of the Securities Pledge Agreement
and the Directors Resolution
--------------------------------------------------------------------------------
5.01 The Escrow Agent shall hold and deal with the Securities Pledge Agreement
(along with any share certificates delivered therewith) and the Directors
Resolution in accordance with the following terms:
(a) if Addison notifies the Escrow Agent that DKWS is in default of the
performance of its obligations as set forth in the Agency Agreement
(the "Default") and demands in writing that the Securities Pledge
Agreement and Directors Resolution be released to it, then, subject to
the terms of paragraph 5.02 hereof, the Escrow Agent shall forthwith
deliver the Securities Pledge Agreement and the Directors Resolution
to Addison, and once delivered, the Escrow Agent
shall be released from any and all obligations concerning the
Securities Pledge Agreement and the Directors Resolution; or
(b) upon the termination of the Agency Agreement (in accordance with the
terms thereof) and if no notice of default has been received by the
Escrow Agent from Addison in accordance with the terms of paragraph
5.01(a), then the Escrow Agent shall deliver the Securities Pledge
Agreement and the Directors Resolution to the Trust and DKWS (as the
case may be) and once delivered, the Escrow Agent shall be released
from any and all obligations concerning the Securities Pledge
Agreement and the Directors Resolution.
5.02 If there has been a Default of the Agency Agreement, then the Escrow Agent
shall deliver the Securities Pledge Agreement and the Directors Resolution
to Addison in accordance with: (i) a written authorization signed by the
Addison delivered to the Escrow Agent, which authorization shall set forth
that there has been a Default in the Agency Agreement and the nature or
amount of the Default; or (ii) if DKWS is disputing the Default and has
notified the Escrow Agent in writing that it has or intends to submit the
dispute to a court of competent jurisdiction, a certified copy of a final
judgment of a court of competent jurisdiction, provided, however, that a
certified copy of a final judgment shall serve as a valid determination
only if the time for appeal has expired and no appeal has been perfected or
all appeals have been exhausted or no further right of appeal exists.
6.00 Fees and Expenses.
-----------------------
6.01 The Escrow Agent shall be entitled to fees for its services under this
Escrow Agreement and to reimbursement for all reasonable costs, charges and
expenses (including reasonable attorney fees) incurred by it in connection
therewith. Addison shall be responsible for the payment of such fees,
costs, charges and expenses as and when incurred.
7.00 Limitations on Duties and Liabilities of the Escrow Agent.
---------------------------------------------------------------
7.01 Unless otherwise expressly provided in this Agreement, the Escrow Agent
shall:
a) not be held liable for any action taken or omitted under this
Agreement so long as it shall have acted in good faith and without
negligence;
b) have no responsibility to inquire into or determine the genuineness,
authenticity, or sufficiency of any securities, checks, or other
documents or instruments submitted to it in connection with its duties
under and pursuant to this Agreement; and
c) be entitled to deem (unless it has actual knowledge to the contrary)
the signatories of any documents or instruments submitted to it
pursuant to this Agreement as being those purported to be authorized
to sign such documents or instruments on behalf of the parties to this
Agreement and shall be entitled to rely (unless it has actual
knowledge to the contrary) upon the genuineness of the signatures of
such signatories without inquiry and without requiring substantiating
evidence of any kind.
8.00 Resignation and Removal of the Escrow Agent.
-------------------------------------------------
8.01 The Escrow Agent may resign as such thirty (30) days following the giving
of prior written notice thereof to Addison, DKWS and the Trust. Similarly,
the Escrow Agent may be removed and replaced following the giving of thirty
(30) days' prior written notice to the Escrow Agent by Addison, DKWS and
the Trust. Notwithstanding the foregoing, no such resignation or removal
shall be effective until a successor Escrow Agent has acknowledged its
appointment as such as provided in paragraph 8.03 below. In either event,
upon the effective date of such resignation or removal, the Escrow Agent
shall deliver the items delivered to the Escrow Agent in accordance with
the terms of Article 3.00 hereof to (the "Property") a successor Escrow
Agent appointed by Addison, DKWS and the Trust as evidenced by a written
notice executed by Addison, DKWS and the Trust and filed with the Escrow
Agent.
8.02 If Addison, DKWS and the Trust are unable to agree upon a successor Escrow
Agent, or shall have failed to appoint a successor Escrow Agent prior to
the expiration of thirty (30) days following the date of the notice of such
resignation or removal, the then acting Escrow Agent may petition any court
of competent jurisdiction for the appointment of a successor Escrow Agent,
or other appropriate relief, and any such resulting appointment shall be
binding upon all of the parties to this Agreement.
8.03 Upon acknowledgment by any successor Escrow Agent appointed in accordance
with the foregoing provisions of this Section 8.00 of the receipt of the
Property, the then acting Escrow Agent shall be fully released and relieved
of all duties, responsibilities, and obligations under this Agreement.
9.00 Indemnification of the Escrow Agent.
-----------------------------------------
9.01 Addison, DKWS and the Trust, or their respective successors and assigns,
jointly and severally agree to indemnify and save and hold harmless the
Escrow Agent and its successors and assigns of, from and against all
losses, costs and expenses that the Escrow Agent shall sustain or incur as
a result of the Escrow Agent's involvement as a party thereto in any
litigation commenced prior to the termination of this Agreement, arising
from the performance by the Escrow Agent of its duties and responsibilities
under and pursuant to this Agreement that is not attributable in any
manner, or to any extent, to any action taken, or omitted, by the Escrow
Agent in connection with this Agreement in respect of which the Escrow
Agent shall have been adjudged to have been negligent.
10.00 Termination of Escrow Fund.
---------------------------------
10.01 This Agreement (other than Sections 6.00 and 9.00) shall automatically
terminate when all of the Property held by the Escrow Agent shall have been
distributed, or otherwise disposed of, at any time while this Agreement
remains in effect by the Escrow Agent in accordance with the terms of this
Agreement.
11.00 Notices.
--------------
11.01 Any notice or other communication required or permitted hereunder shall be
in writing and shall be considered delivered in all respects when it has
been delivered by hand or overnight courier, by acknowledged facsimile
transmission followed by the original mailed by certified mail, return
receipt requested, or three (3) days after it is mailed by certified mail,
return receipt requested, first class postage prepaid, addressed as
follows:
TO ADDISON: Attn: Primo Podorieszach
355, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
TO DKWS and Trust ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
TO THE ESCROW AGENT: Demiantschuk ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
1200, ▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other addresses as shall be similarly furnished in writing by such
party.
12.00 Continuance of Agreement.
-------------------------------
12.01 This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
13.00 Applicable Law.
---------------------
13.01 This Agreement shall be governed by and construed under and in accordance
with the laws of the Province of Alberta and the parties hereto agree to
attorn and submit all disputes arising hereunder to the jurisdiction of the
Court of Queen's Bench of Alberta. .
14.00 Counterparts.
-------------------
14.01 This Agreement may be exercised in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the
same agreement. Each of the parties to this Agreement agrees that a
signature affixed to a counterpart of this Agreement and delivered by
facsimile by any person is intended to be its, his or her signature and
shall be valid, binding and enforceable against such person.
IN WITNESS WHEREOF, the parties hereto has executed this Agreement as of the
date and year first above written.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
DKWS ENTERPRISES, INC.
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
DEMIANTSCHUK ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE "M"
JOINT VENTURE AGENCIES
SCHEDULE "N"
VENDOR'S EXISTING CARRIER APPOINTMENTS WITH A B+ OR HIGHER RATING
SCHEDULE "O"
PROMISSORY NOTE
PROMISSORY NOTE
---------------
FOR VALUE RECEIVED the undersigned Promissor, ADDISON YORK INSURANCE BROKERS,
LTD., a Delaware corporation, promises to pay to the ▇▇▇▇▇▇▇ FAMILY TRUST OF
JULY 1998 ("KFT"), the sum of THREE MILLION FIVE HUNDRED FIFTEEN THOUSAND
($3,515,000.00) DOLLARS (hereinafter called the "Principal Amount") together
with interest thereon at the rate of SEVEN (7%) PERCENT interest per annum,
calculated and compounded annually, not in advance, both before and after
maturity. Subject to the terms hereof, the Principal Amount along with the
accrued interest thereon as aforesaid shall be repaid in monthly installments
(the "Installments") in accordance with the amortization schedule attached as
Schedule "A" hereto and forming a part hereof (the "Amortization Schedule")
beginning on the 31st day of October, 2003, to and until the 30th day of
September, 2013 (the "Maturity Date") when all amounts outstanding shall become
due and payable.
KFT acknowledges and agrees that, the Principal Amount is subject to Adjustment
as is more particularly set forth in Article 3.00 of the Asset Purchase
Agreement dated effective the 1st day of October, 2003, and made between the
Promissor, DKWS Enterprises, Inc. ("DKWS"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
KFT.
KFT acknowledges and agrees that any charge against the assets of the Promissor
which may be created by this instrument is subject to the terms of a
Subordination Agreement dated effective the 1st day of October, 2003 and made
between the Promissor, DKWS and KFT and is, inter alia, subordinate to all
present and future Senior Debt (as defined in the Subordination Agreement) of
the Promissor.
KFT acknowledges and agrees that the Promissor may discontinue making
Installments in accordance with the Amortization Schedule or at all if the
paying of an Installment or Installments would at any time, or from time to
time, cause the monthly consolidated cash balance (excluding any monthly
consolidated trust account balances) of ▇▇▇▇▇▇▇ ▇▇▇▇▇ International Insurance
Brokers Ltd. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), the parent company of the Promissor, to fall
below the sum of $500,000.00 after the servicing of all Senior Debt of the
Promissor and ▇▇▇▇▇▇▇ ▇▇▇▇▇. In addition, KFT acknowledges that: (i) it is the
sole shareholder of DKWS; (ii) the Promissor has provided a loan to DKWS in the
principal amount of $150,000.00 (the "Loan"), which Loan is evidenced by a
promissory note dated October 10, 2003 (the "Note"); and (iii) the Loan was used
by DKWS to reduce the trust account deficiencies of DKWS. In accordance with the
foregoing, KFT acknowledges and agrees that: (i) so long as the Installments to
be made hereunder are current to within 365 days of the payments to be made in
accordance with the Amortization Schedule, then there shall be no default under
this instrument and (ii) when determining whether or not the Instalments to be
made hereunder are current to within 365 days of the payments to be made in
accordance with the Amortization Schedule, any and all amounts owing to the
Promissor pursuant to the Note shall be taken into account.
KFT acknowledges and agrees that, at the option of the Promissor, the Principal
Amount (or any part thereof) along with all accrued interest thereon are
repayable without notice or bonus at any time prior to the Maturity Date. The
Promissor waives presentment for payment, notice of protest, demand for payment
and
notice of non-payment.
DATED at the City of Calgary, in the Province of Alberta this 1st day of
October, 2003.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: ________________________________
SCHEDULE "P"
AGENCY AGREEMENT
THIS AGENCY AGREEMENT IS MADE EFFECTIVE THE 1st DAY OF October, 2003
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the
laws of the State of Delaware
(hereinafter referred to as "AYI")
- and -
DKWS ENTERPRISES, INC.
(hereinafter referred to as "DKWS")
- and -
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998 a
trust formed pursuant to the laws of the State of
California,
(hereinafter referred to as the "Trust")
WHEREAS AYI, DKWS, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Trust have made,
executed and delivered a certain Asset Purchase Agreement dated as of October 1,
2003 (the "APA").
AND WHEREAS as at the date of the APA, AYI may not have obtained all of the
necessary regulatory approvals to operate as an insurance broker or agent in the
State of California and AYI has not obtained all of the Carrier Appointments
from those carriers listed in Schedule "N" of the APA.
AND WHEREAS pursuant to the terms of the APA, DKWS has agreed to enter into this
Agency Agreement in order to allow AYI to process its clients insurance policies
through DKWS, whereby AYI shall receive all revenues therefrom and shall pay all
of DKWS's reasonable out of pocket expenses and costs associated therewith in
accordance with the terms hereof.
AND WHEREAS the Trust has agreed to enter into this Agency Agreement and the
Securities Pledge Agreement (attached as Schedule "D" hereto) as additional
security for the performance of DKWS's obligations to AYI under the Agency
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and in the APA, the parties hereto agree as follows:
1.00 DEFINITIONS
1.01 Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
2
1.02 The following are the Schedules which are to be attached to and are
incorporated into this Agreement by reference and are deemed to be a part
hereof:
a) Schedule "A" Budget;
b) Schedule "B" Bank Accounts;
c) Schedule "C" Director's Resolution;
d) Schedule "D" Securities Pledge Agreement;
e) Schedule "E" Employees; and
f) Schedule "F" Real Property Leases
2.00 WARRANTIES AS TO LICENCE
2.01 DKWS for the benefit of AYI represents, warrants and covenants that:
a) DKWS holds all the licenses and permits required for an agent and an
agency in the State of California and in each and every other State of
the United States of America including the District of Columbia;
b) the employees of DKWS hold all applicable licenses and permits
required for the performance of their duties as insurance brokers or
otherwise;
c) DKWS and its employees will maintain in good standing throughout the
Term of this Agreement, all the licenses and permits referred to in
paragraphs 2.01(a) and (b);
d) DKWS will not knowingly or negligently do, or omit to do, anything
that results in, or is likely to result in, the suspension or
revocation of such licenses or permits, during the Term of this
Agreement;
e) DKWS shall maintain the appropriate trust accounts and account
balances all in accordance with the laws, rules and regulations
governing the operation of an insurance agency and brokerage in the
State of California; and
f) DKWS shall maintain in good standing its Carrier Appointment Contracts
with those insurance carriers or wholesalers set forth on Schedule "N"
of the APA and any other carrier or wholesaler appointments acquired
during the Term hereof.
3.00 WORKING RELATIONSHIP OF DKWS AND AYI
3.01 Except as otherwise specifically authorized by AYI in writing, DKWS shall,
for the sole and exclusive benefit of AYI and for the benefit of no other
person(s) whatsoever, market, sell, distribute, place and write general,
health and life insurance products to those persons set forth in the Client
Files and to any and all other potential customers who may wish to purchase
general, health and life insurance products.
3.02 Subject to the terms and conditions set forth herein and to AYI's prior
approval of all new office space, if any, DKWS shall, during the Term of
this Agreement, provide all necessary office space required for the
administration and functioning of DKWS as an agent or broker and shall, as
soon as possible and in any event prior to the termination of this
agreement, use its best efforts to have the leases (the "Leases")
identified on Schedule "F" attached hereto assigned to AYI. In order to
secure the better performance
3
of this agreement by DKWS, DKWS hereby grants AYI a security interest in
the Leases. However, the last day of the term of any lease, oral or
written, or any agreement therefor, now held or hereafter acquired by DKWS,
shall be excepted from the security interest hereby granted, but DKWS shall
stand possessed of such one day remaining, upon trust to assign and dispose
of the same as AYI shall direct. If any such lease or agreement therefor
contains a provision which provides in effect that such lease or agreement
may not be assigned, sub-leased, charged or encumbered without the leave,
license, consent or approval of the lessor, the application of the security
interest created hereby to any such lease or agreement shall be conditional
upon such leave, license, consent or approval having been obtained.
3.03 AYI shall, during the Term of this Agreement, and to the extent required to
enable DKWS to function as an agent or broker, provide without charge to
DKWS, the office equipment, required for the administration of functioning
of DKWS as an agent or broker. AYI shall not be required to furnish the
same for the conduct of any other business of DKWS than the business of an
insurance agent or broker pursuant to the terms of this agreement.
3.04 Subject to the terms and conditions set forth herein and to AYI's prior
approval of all staffing levels, salaries and benefits, DKWS shall, during
the Term of this Agreement, provide all necessary insurance sales and
brokerage, clerical and stenographic services, required for the
administration and functioning of DKWS as an agent or broker.
3.05 DKWS shall assure that all files, computer records, and accounting records
kept by DKWS and all other internal operating systems of DKWS are marked or
designated to indicate which documents, matters and entries pertain to
Client Files. DKWS shall maintain a software system that is capable of
generating reports listing all of the Client Files and basic related
information.
3.06 Upon the request of AYI, DKWS shall, in a timely fashion, provide to AYI
any and all reports, financial statements, bank reconciliations, contracts,
agreements, memorandums or other documents of any nature or kind whatsoever
concerning the Business or Purchased Assets, including the monthly
financial statements of the Business which shall be delivered to AYI within
15 days of the end of the month. In addition, DKWS shall permit AYI and its
employees, agents, professional advisors, counsel and accountants or other
representatives to have access to all of the books, accounts, records,
agreements, contracts, documents, instruments and other data of DKWS
(including, without limitation, all corporate, business and accounting
records of DKWS) and DKWS shall furnish to AYI such financial and operating
data, agreements, contracts, documents, instruments, and other materials
and information with respect to DKWS or the Business and the Purchased
Assets as AYI shall from time to time request.
3.07 AYI shall be responsible for the following reasonable and provable expenses
of DKWS:
4
a) all out of pocket expenses with respect to the operation of the
Business;
b) all of the costs and expenses incurred by DKWS in respect of those
matters set forth in paragraph 3.02;
c) all of the costs and expenses incurred by DKWS in respect of those
matters set forth in paragraph 3.04;
d) all required license fees and other required regulatory fees necessary
to maintain DKWS's status as an insurance agency or brokerage under
the laws of the State of California or under the rules of any
professional or regulatory or licensing body having jurisdiction over
the affairs of DKWS or an insurance agency or brokerage in general;
and
e) other reasonable and necessary operational expenses incurred in the
normal day to day operation of the Business. All as set forth in the
budget (the "Budget") attached as Schedule "A" hereto and forming a
part hereof. DKWS warrants and agrees that it must obtain the written
consent of AYI prior to making any capital expenditures in respect of
the better operation of the Business or the servicing of the Client
Files in excess of $5,000.00 for which it intends to hold AYI
responsible for the payment thereof.
3.08 Notwithstanding the terms of paragraph 3.07, DKWS represents and warrants
to AYI that DKWS receives at least $400,000.00 in annual commission
revenues from Shamrock Materials Inc. et al ("Shamrock") and pays the sum
of $24,000.00 per year ($2,000.00 per month) to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the
Chairman of Shamrock) in respect of those commission revenues. DKWS hereby
agrees with AYI that if the Shamrock account is lost or if the commission
revenues therefrom drop below the sum of $24,000.00 per annum, then DKWS
shall be solely responsible for any and all payments to be made to ▇▇▇ ▇.
▇▇▇▇▇▇▇▇. For greater clarity, if the Shamrock account is lost or if the
commission revenues therefrom drop below the sum of $24,000.00 per annum,
then DKWS hereby agrees to indemnify and save harmless AYI for any costs or
charges relating to any and all payments which may be owing by DKWS to ▇▇▇
▇. ▇▇▇▇▇▇▇▇.
3.09 Notwithstanding the terms of paragraph 3.07, DKWS represents and warrants
to AYI that it has entered into an employment agreement dated May 1, 2001
(the "EA"), with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ("JR"). Pursuant to the terms set
forth in paragraph 3 of the EA, DKWS has agreed, inter alia, to take out,
carry and pay for key man insurance on JR (the "Policy"). DKWS hereby
agrees with AYI that:
a) DKWS shall be responsible for all tax payments or consequences flowing
from the Policy and shall indemnify and save AYI harmless from such
payments or consequences; and
b) if JR should quit his employment with DKWS or if JR's employment with
DKWS is terminated for just cause, then the premiums paid in respect
of the Policy shall no longer form a part of the expenses to be paid
by AYI pursuant to the terms hereof and DKWS shall indemnify and save
AYI harmless from such payments or premiums.
5
3.10 DKWS represents and warrants to AYI that it will conduct its operations as
an insurance agency or broker in accordance with the established norms and
customs of the insurance industry and will operate the Business and service
the Client Files as would a prudent operator handling such matters.
3.11 DKWS represents and warrants to AYI that it shall, process the revenues
received by it and pay the expenses incurred from the Business and Client
Files through its general and trust bank accounts as more fully described
in Schedule "B" attached hereto and forming a part hereof (the "Accounts").
Subject to the normal and reasonable controls placed on such Accounts by
the relevant banking institution, DKWS agrees that AYI shall have the right
to impose its own controls over the Accounts, to designate the signing
officers on the Accounts and to change the signing officers on the Account
from time to time as AYI deems prudent and necessary. In order to give
effect to the foregoing, DKWS further agrees to execute the directors
resolution (the "Directors Resolution") attached as Schedule "C" hereto and
forming a part hereof and deliver the same to the Escrow Agent.
3.11 The Trust hereby agrees to execute the Securities Pledge Agreement attached
as Schedule "D" hereto and deliver the same to the Escrow Agent to be held
by the Escrow Agent and dealt with by the Escrow Agent in accordance with
the following terms:
(a) if DKWS is in default of the performance of its obligations as set
forth in this Agreement and AYI notifies the Escrow Agent of that
default and demands in writing that the Securities Pledge Agreement
and Directors Resolution be released to them, then the Escrow Agent
shall forthwith deliver the Securities Pledge Agreement and the
Directors Resolution to AYI, and once delivered, the Escrow Agent
shall be released from any and all obligations concerning the
Securities Pledge Agreement and the Directors Resolution; or
(b) upon the termination of this Agreement and if no notice of default has
been received by the Escrow Agent from AYI in accordance with the
terms of sub-paragraph (a), then the Escrow Agent shall deliver the
Securities Pledge Agreement and the Directors Resolution to the Trust
and once delivered, the Escrow Agent shall be released from any and
all obligations concerning the Securities Pledge Agreement and the
Directors Resolution.
4.00 OWNERSHIP OF CLIENT FILES AND REVENUES THEREFROM
4.01 DKWS acknowledges and agrees that the Client Files and all associated
tangible and intangible property, rights and choses in action associated
therewith are and shall remain the sole and exclusive domain and personal
property of AYI whether such files or documents therein or associated
rights bear or include the name of DKWS or any other trade name or style of
or associated with DKWS.
4.02 Subject to the interests of any joint venture agencies set forth in
Schedule "M" of the APA and any new joint venture interests which may be
agreed to by AYI after the date hereof, DKWS further acknowledges that any
new client files or insurance business originated by DKWS or AYI or their
personnel from and after the date hereof and all associated tangible and
intangible property rights and choses in action shall be and will
6
remain the sole and exclusive domain and personal property of AYI, whether
such files or documents therein or associated rights bear or include the
name of DKWS or any other trade name or style of or associated with DKWS
and shall form part of the Client Files.
4.03 Any and all commissions, fees, interest income earned on the Accounts or
otherwise, contingency fees or other revenues of any kind nature or
description whatsoever received by DKWS in connection with any Client File
or the Business shall be the sole and exclusive property of AYI (such
commissions, fees, interest income, contingency fees or revenues of any
kind nature or description whatsoever being referred to hereafter as the
"Revenues".
4.05 DKWS shall, immediately upon the demand of AYI, pay to AYI any and all sums
due and owing to AYI pursuant to the terms of this Agreement.
5.00 TERM OF AGREEMENT
5.01 This Agreement shall be terminated upon the occurrence of the earliest of
the following events:
a) the date upon which AYI obtains:
i) all of the necessary regulatory approvals to operate as an
insurance broker or agent in the State of California;
ii) all of the necessary regulatory approvals in respect of the
Assignment of employees to AYI; and
iii) all of the Carrier Appointments from those carriers listed in
Schedule "P" of the APA (or such lesser number of Carrier
Appointments which may be satisfactory to AYI in its sole and
unfettered discretion); or
b) the 30th day of September, 2018; or
c) the date that AYI delivers written notice to DKWS that it is
terminating this Agreement; or
d) a default under the Promissory Note or the Final Note; (the "Term").
5.02 Immediately upon the termination of this Agreement (except in the event of
a termination pursuant to paragraph 5.01(d)) DKWS hereby agrees to:
a) assign all of its right title and interest in and to any and all
employment agreements, non-competition agreements and confidentiality
agreements which it may have with those employees set forth on
Schedule "E" attached hereto and forming a part hereof and with any
other employee not listed on Schedule "E" but who may be employed by
DKWS at the time of termination of this Agreement. Notwithstanding the
foregoing, AYI, in its sole and unfettered discretion, retains the
right not to accept the assignment of any particular employee's
agreement; and
b) pay over to AYI any and all monies remaining in the Accounts which are
or will become due and owing to AYI pursuant to the terms of this
Agreement
5.03 It is further agreed by AYI and DKWS that after termination of this
contract:
7
a) AYI agrees to allow DKWS to retain copies from such files of those
documents which by operation of law or in accordance with the
regulatory requirements either of the insurance licensing agencies or
of licensing or agency agreements with insurers, DKWS may be
specifically obliged to retain; and
b) DKWS further warrants that he will keep the files available and intact
and in order for the Government and insurance industries prescribed
time limits and that he will produce and make available all files,
papers and information that he possesses, in order to assist AYI in
any future query or disputes regarding the Client Files.
6.00 ERRORS AND OMISSIONS AND OTHER INSURANCE
6.01 During the Term hereof, DKWS represents and warrants that it shall
place and will keep in effect and in good standing the following
insurance coverages for the benefit of AYI:
a) an Errors & Omission policy covering DKWS with such coverage and
limits as shall be approved by AYI in its sole discretion;
b) proper and adequate coverage with respect to the Client Files and
Fixed Assets of AYI with such coverage and limits as shall be
approved by AYI in its sole discretion;
c) proper and adequate coverage with respect to the Business, the
Premises and the operations of an insurance agency thereon with
such coverage and limits as shall be approved by AYI in its sole
discretion; and
d) any other forms of insurance which AYI may require from time to
time in its sole discretion with such coverage and limits as
shall be approved by AYI.
6.02 AYI shall be responsible for the payment of all costs and expenses related
to the placement of the insurance matters set forth in paragraph 6.01
6.03 If after the date hereof and until the termination hereof, there is an
errors or omissions ("E&O") claim made against DKWS in respect of the
Client Files, then AYI shall pay all costs up to the deductible portion on
DKWS's E&O policy, including any reasonable legal expenses incurred
thereon.
6.04 DKWS shall notify AYI immediately of any possible claim or occurrence that
could cause an E&O claim against DKWS.
6.05 Upon the termination of this Agreement (except in the event of a
termination pursuant to paragraph 5.01(d)) AYI hereby agrees to purchase,
at its cost and expense, `tail' or `extended reporting coverage' for a five
year period from an insurance carrier acceptable to DKWS in an amount equal
to the level of coverage maintained during the Term hereof in accordance
with paragraph 6.01.
7.00 GENERAL
7.01 Notices to be given under this Agreement shall be given in writing to the
Parties at the following respective addresses, namely:
8
TO: Addison York Insurance Brokers, Ltd.
355, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: Primo Podorieszach
TO: DKWS Enterprises, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
TO: ▇▇▇▇▇▇▇ Family Trust Of July 1998
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such address as any Party may for itself stipulate by written notice
in accordance with this paragraph 7.01, and any notice so sent by single,
or double registered mail shall be deemed received on the seventh (7) day
following such posting unless the contrary be proved, the burden of such
proof being that of the person whose receipt of such notice in question.
7.02 This agreement shall be governed by, and be construed in accordance with,
the laws of the State of California. In addition, the parties hereto waive
trail by jury and agree to submit to the personal jurisdiction and venue of
a court of subject matter jurisdiction located in Marin County, State of
California.
7.03 The Recitals herein form part of this Agreement in as full and effective a
manner as if incorporated herein as numbered clauses.
7.04 Should any clause or other portion of this Agreement be declared illegal,
void, invalid, or inoperative by any competent Court, then this Agreement
shall be read as if such impugned clause or portion had never been included
in the Agreement, and so as to give the Agreement as full and forceful a
reading as possible consistent with the deletion of such impugned clause or
portion.
7.05 In this Agreement, the masculine shall include the feminine and vice versa,
the personal the impersonal and vice versa, the individual the corporate
and vice versa, and the singular the plural and vice versa, all as the
context may require.
7.06 No purported amendment to, variation of, or departure from or indulgence of
any term of, this Agreement shall be of any force or effect whatever unless
and until evidence in writing and that writing executed by all the Parties
hereto in the same fashion as the execution hereof.
7.07 This Agreement may not be assigned by DKWS or the Trust without the prior
written consent of AYI, which consent may be unreasonably withheld.
7.08 Each Party agrees for the benefit of the other to do all things and to
execute all documents which may reasonably be required in order to give
effect to this Agreement.
9
IN WITNESS WHEREOF the Parties hereto have hereunder caused to be set hands and
seals as at the date first above written.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
DKWS ENTERPRISES, INC.
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
10
SCHEDULE "A"
BUDGET
11
SCHEDULE "B"
BANK ACCOUNTS
12
SCHEDULE "C"
DIRECTORS RESOLUTION
13
SCHEDULE "D"
SECURITIES PLEDGE AGREEMENT
14
SCHEDULE "E"
EMPLOYEES OF DKWS
15
SCHEDULE "F"
Leased Premises
1. Lease dated June 30, 2000, made between DKWS (as Tenant) and Active
Property Management (as Landlord) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
2. Lease dated July 8, 2002, made between DKWS (as Tenant) and Active Property
Management (as Landlord) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
3. Sub-Lease dated April 10, 2003, made between DKWS (as Sub-Lessee) and New
Israel Fund (as Sub-Lessor) with respect to Suite 205, 10350 Santa ▇▇▇▇▇▇
Blvd., Los Angeles, California;
4. Sub-Lease dated July 1, 2002, made between DKWS (as Sub-Lessor) and 2nd
Sight Software (as Sub-Lessee) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇; and
5. Sub-Lease dated July 27, 2000, made between DKWS (as Sub-Lessor) and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ (as Sub-Lessee) with respect to ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
SCHEDULE "Q"
FINAL NOTE
PROMISSORY NOTE
---------------
FOR VALUE RECEIVED the undersigned Promissor, ADDISON YORK INSURANCE BROKERS,
LTD., a Delaware corporation, promises to pay to the ▇▇▇▇▇▇▇ FAMILY TRUST OF
JULY 1998 ("KFT"), the sum of _____________________________________________
($_________________) DOLLARS (hereinafter called the "Principal Amount")
together with interest thereon at the rate of SEVEN (7%) PERCENT interest per
annum, calculated and compounded annually, not in advance, both before and after
maturity. Subject to the terms hereof, the Principal Amount along with the
accrued interest thereon as aforesaid shall be repaid in monthly installments
(the "Installments") in accordance with the amortization schedule attached as
Schedule "A" hereto and forming a part hereof (the "Amortization Schedule")
beginning on the ____ day of ___________, 2008, to and until the ____ day of
________________, 2018 (the "Maturity Date") when all amounts outstanding shall
become due and payable.
KFT acknowledges and agrees that any charge against the assets of the Promissor
which may be created by this instrument is subject to the terms of a
Subordination Agreement dated the 1st day of October, 2003 and made between the
Promissor and KFT and is, inter alia, subordinate to all present and future
Senior Debt (as defined in the Subordination Agreement) of the Promissor.
KFT acknowledges and agrees that the Promissor may discontinue making
Installments in accordance with the Amortization Schedule or at all if the
paying of an Installment or Installments would at any time, or from time to
time, cause the monthly consolidated cash balance (excluding any monthly
consolidated trust account balances) of ▇▇▇▇▇▇▇ ▇▇▇▇▇ International Insurance
Brokers Ltd. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), the parent company of the Promissor, to fall
below the sum of $500,000.00 after the servicing of all Senior Debt of the
Promissor and ▇▇▇▇▇▇▇ ▇▇▇▇▇. In addition, KFT acknowledges that: (i) it is the
sole shareholder of DKWS; (ii) the Promissor has provided a loan to DKWS in the
principal amount of $150,000.00 (the "Loan"), which Loan is evidenced by a
promissory note dated October 10, 2003 (the "Note"); and (iii) the Loan was used
by DKWS to reduce the trust account deficiencies of DKWS. In accordance with the
foregoing, KFT acknowledges and agrees that: (i) so long as the Installments to
be made hereunder are current to within 365 days of the payments to be made in
accordance with the Amortization Schedule, then there shall be no default under
this instrument and (ii) when determining whether or not the Instalments to be
made hereunder are current to within 365 days of the payments to be made in
accordance with the Amortization Schedule, any and all amounts owing to the
Promissor pursuant to the Note shall be taken into account.
KFT acknowledges and agrees that, at the option of the Promissor, the Principal
Amount (or any part thereof) along with all accrued interest thereon are
repayable without notice or bonus at any time prior to the Maturity Date. The
Promissor waives presentment for payment, notice of protest, demand for payment
and notice of non-payment.
DATED at the City of Calgary, in the Province of Alberta this ____ day of
_______________, 2008.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
------------------------
SCHEDULE "R"
SUBORDINATION AGREEMENT AND POWER OF ATTORNEY
THIS SUBORDINATION AGREEMENT IS MADE EFFECTIVE THE 1st DAY OF October, 2003
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the
laws of the State of Delaware
(hereinafter referred to as "AYI")
- and -
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998 a
trust formed pursuant to the laws of the State of
California,
(hereinafter referred to as the "Trust")
WHEREAS AYI, DKWS, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Trust have made,
executed and delivered a certain Asset Purchase Agreement dated as of October 1,
2003 (the "APA").
AND WHEREAS pursuant to the APA, the Trust is to receive two promissory notes
(the "Notes") from AYI and AYI has agreed to provide a security interest to the
Trust as security for the performance of AYI's obligations under the Notes;
AND WHEREAS AYI has agreed to execute and provide to the Trust a Security
Agreement (in the same form as Schedule "U" to the APA;
AND WHEREAS pursuant to the terms of the APA, the Trust has agreed to
subordinate the Notes and Security Agreement (collectively referred to herein as
the "Security Documents") to any and all senior indebtedness, whether present or
future, which has been or may be obtained by AYI now or at any time into the
future
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by AYI to the Trust (receipt of and sufficiency of
which is hereby acknowledged) and for other good and valuable consideration the
parties hereto and hereby agree as follows:
1. Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
2. "Senior Indebtedness" means the principal of and interest on any and all:
(c) operating lines of credit for AYI; or
(d) financing for the purpose of growing and expanding AYI and to provide
additional capital for brokerage acquisitions or other insurance
related assets;
which are, may be or may become required by AYI, at present or at any time
into the future.
1. The Trust covenants and agrees that the Security Documents are secured
obligations of AYI ranking subordinate to any and all Senior Indebtedness
of AYI, present or future, whether secured or unsecured, and without
limiting the generality of the foregoing, the Security Documents shall be
subordinate to any and all Senior Indebtedness which may be or become
required by AYI at present or at any time into the future. So long as no
default shall have occurred in the Security Documents and be continuing,
the Trust does hereby covenant and agree with AYI, that Primo Podorieszach
(the Chief Executive Officer of AYI), acting reasonably and in good faith,
is unconditionally and irrevocably authorized and empowered, without
further authorization or direction from the Trust, to postpone and
subordinate the Security Documents, to and in favour of AYI's principal
lender providing Senior Indebtedness to AYI, from time to time, and the
Trust hereby irrevocably nominates and appoints Primo Podorieszach as its
agent and lawful Power of Attorney with respect to the execution, delivery
and registration of any and all documents which may be or become required
pursuant to the terms of this Agreement.
1. The Trust agrees to execute and deliver to AYI the Limited Irrevocable
Power of Attorney (attached as Schedule "A" hereto and forming a part
hereof) appointing Primo Podorieszach as its agent and lawful attorney to
act in accordance with the terms hereof and thereof.
1. The Trust covenants and agrees that the payment of the principal and
interest on the Notes is hereby expressly subordinated and subrogated in
right of payment to the prior payment in full of all Senior Indebtedness of
AYI.
1. Notices to be given under this Agreement shall be given in writing to the
Parties at the following respective addresses, namely:
TO: Addison York Insurance Brokers, Ltd.
355, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: Primo Podorieszach
TO: ▇▇▇▇▇▇▇ Family Trust Of July 1998
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such address as any Party may for itself stipulate by written notice
in accordance with this paragraph 6, and any notice so sent by single, or
double registered mail shall be deemed received on the seventh (7) day
following such posting unless the contrary be proved, the burden of such
proof being that of the person whose receipt of such notice in question.
7. This agreement shall be governed by, and be construed in accordance with,
the laws of the State of California. In addition, the parties hereto waive
trail by jury and agree to submit to the personal jurisdiction and venue of
a court of subject matter jurisdiction
located in Marin County, State of California.
8. The Recitals herein form part of this Agreement in as full and effective a
manner as if incorporated herein as numbered clauses.
9. Should any clause or other portion of this Agreement be declared illegal,
void, invalid, or inoperative by any competent Court, then this Agreement
shall be read as if such impugned clause or portion had never been included
in the Agreement, and so as to give the Agreement as full and forceful a
reading as possible consistent with the deletion of such impugned clause or
portion.
10. In this Agreement, the masculine shall include the feminine and vice versa,
the personal the impersonal and vice versa, the individual the corporate
and vice versa, and the singular the plural and vice versa, all as the
context may require.
11. No purported amendment to, variation of, or departure from or indulgence of
any term of, this Agreement shall be of any force or effect whatever unless
and until evidence in writing and that writing executed by all the Parties
hereto in the same fashion as the execution hereof.
12. Each party shall, at the request of any party, from time to time and at all
times hereafter, execute and deliver all deeds, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
IN WITNESS WHEREOF the Parties hereto have hereunder caused to be set hands and
seals as at the date first above written.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
------------------------
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
SPECIAL POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS THAT THE UNDERSIGNED
THE ▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998 DOES HEREBY make, nominate, constitute and
appoint Primo Podorieszach as the undersigned's True and Lawful Attorney for the
undersigned and in the name, place and stead and for the sole use and benefit to
act as agent for the undersigned as described and set out in the Subordination
Agreement between it and Addison York Insurance Brokers, Ltd. dated the 1st day
of October, 2003 and to take all steps as agent as required by the Subordination
Agreement, including but not limited to, any postponements that need to be
executed pursuant to Senior Indebtedness as set out in the Subordination
Agreement.
And for all and every of the purposes aforesaid DO HEREBY GIVE AND GRANT unto
Primo Podorieszach, the said Attorney, full and absolute power and authority to
do and execute all acts, deeds, matters and things necessary to be done in and
about the premises.
IN WITNESS WHEREOF the undersigned has hereunto set its trustees's hand and seal
this 1st day of October, 2003.
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
SCHEDULE "S"
DKWS LIABILITIES
SCHEDULE "T"
EXCLUDED ASSETS
Certain artwork owned by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and identified as follows:
1. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
2. ▇▇▇▇▇;
3. Kostabi; and
4. ▇▇▇▇▇▇▇ ▇▇▇▇▇.
SCHEDULE "U"
SECURITY AGREEMENT
SECURITY AGREEMENT
------------------
This Security Agreement (the "Agreement") is entered into as of October __,
2003 by and between Addison York Insurance Brokers, Ltd. A Delaware corporation
(the "Company"), and the ▇▇▇▇▇▇▇ Family Trust of July 1998 (the "Trust" or
"Creditor").
WHEREAS, the Company, the Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("JWK"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
("TK"), and DKWS Enterprises, Inc. ("DWKS") have executed that certain Asset
Purchase Agreement (the "APA") dated effective the 1st day of October, 2003,
pursuant to which the Company will be acquiring substantially all the assets of
DWKS and the Trust, subject to the terms and conditions contained therein, and
in exchange for the certain consideration described therein, including but not
limited to the two promissory notes described therein (the "Notes"); and
WHEREAS, it is a condition precedent to the Trust, JWK, TK, and DKWS
consenting to the terms and conditions of the APA that the Company execute and
deliver to Creditor a security agreement in substantially the form hereof, in
order to secure the obligations of the Company represented by the Notes (the
"Obligations"); and
WHEREAS, the Company wishes to grant a security interest in favor of
Creditor as herein provided,
NOW, THEREFOR, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions shall
have the respective meanings provided therefor in the APA. The term "State", as
used herein, means the State of Delaware. All terms defined in the Uniform
Commercial Code of the State and used herein shall have the same definitions
herein as specified therein. However, if a term is defined in Article 9 of the
Uniform Commercial Code of the State differently than in another Article of the
Uniform Commercial Code of the State, the term has the meaning specified in
Article 9. The term "Obligations' as used herein, means all of the indebtedness,
obligations and liabilities of the Company to Creditor, individually or
collectively, whether direct or indirect, joint or several, absolute or
contingent, due or to become due, now existing or hereafter arising under or in
respect of the APA or the Notes, or any other instruments executed in connection
with this Agreement.
2. Grant of Security Interest. The Company hereby grants to Creditor, to
secure the payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Creditor the following properties,
assets and rights of the Company, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (all of the
same being hereinafter called the "Collateral"): all personal and fixture
property of every kind and nature including without limitation all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, supporting obligations, any other contract
rights or rights to the payment of money, insurance claims and proceeds, tort
claims, and all general
intangibles including, without limitation, all payment intangibles, patents,
patent applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, software, engineering drawings, service
marks, customer lists, goodwill, and all licenses, permits, agreements of any
kind or nature pursuant to which the Company possesses, uses or has authority to
possess or use property (whether tangible or intangible) of others or others
possess, use or have authority to possess or use property (whether tangible or
intangible) of the Company, and all recorded data of any kind or nature,
regardless of the medium of recording including, without limitation, all
software, writings, plans, specifications and schematics.
3. Authorization to File Financing Statements. The Company hereby
irrevocably authorizes Creditor at any time and from time to time to file in any
Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto (the "Financing Statements") that (a) identify the
Collateral, and (b) contain any other information required by part 5 of Article
9 of the Uniform Commercial Code of the State for the sufficiency or filing
office acceptance of any financing statement or amendment. A copy of the initial
Financing Statement proposed to be filed by Creditor is attached as Exhibit "A"
hereto.
4. Other Actions. The Company further agrees to take any and all action
reasonably requested by Creditor to insure the attachment and perfection of, and
the ability of Creditor to enforce, Creditor's security interest in the
Collateral including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the Uniform Commercial Code, to the extent, if any, that the Company's signature
thereon is required therefor, (b) causing the Creditor's name to be noted as a
secured party on any certificate of title if such notation is a condition to
attachment or perfection of, or ability of Creditor to enforce, Creditor's
security interest in the Collateral, (c) complying with any provision of any
statute, regulation or treaty of the United States as to the Collateral if
compliance with such provision is a condition to attachment or perfection of, or
ability of Creditor to enforce, the Creditor's security interest in the
Collateral, (d) obtaining governmental and other third party consents and
approvals, (e) taking all actions required by any earlier versions of the
Uniform Commercial Code or by other law, as applicable in any relevant Uniform
Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction.
5. Representations and Warranties Concerning Legal Status. The Company
represents and warrants to Creditor that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified to do
business as a foreign corporation in all jurisdictions where the nature of its
business and/or ownership of its assets makes such qualification necessary.
(b) The Company has the requisite power and authority to own its properties
and assets. All of the Company's properties and assets are located at its
offices set forth on Exhibit "B" attached hereto and forming a part hereof,
which are also the offices at which the Company keeps the records of its
patents, patent applications, trademarks and trademark applications.
(c) The Company has the power to execute deliver and perform this Agreement
and the other agreements and documents referred to herein to which it is a party
and to grant the security interests granted under or pursuant to the terms of
this Agreement, all of which actions have been duly authorized by all necessary
corporate action.
2
(d) The Company's execution of and performance of all transactions
contemplated by this Agreement do not and will not in any way materially and
adversely affect the rights of the Company, violate or constitute a breach of
any provision of law, any court or agency decree or judgment, rule or regulation
applicable to the Company or the Company's certificate of incorporation or
bylaws or be in conflict with or constitute a breach of any other agreement,
contract or instrument or other binding commitment to which the Company is a
party or by which it is bound.
(e) This Agreement and each of the other documents executed by the Company
and delivered to Creditor hereunder, when executed and delivered will constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
(f) The Company is not in default in the performance of any material
obligation, undertaking or covenant contained in any contract or agreement to
which it is a party or by which it, or any portion of the Collateral, is bound.
(g) There is currently no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or other agency or any
investigation into the affairs of the Company or any of its properties or
rights.
6. Covenants Concerning Company's Legal Status. The Company covenants with
Creditor that without providing at least 30 days prior written notice to
Creditor, the Company will not change its name, its place of business or, if
more than one, chief executive office, or its mailing address or organizational
identification number, and the Company will not change its type of organization,
jurisdiction of organization or other legal structure.
7. Representations and Warranties Concerning Collateral. The Company
further represents and warrants to Creditor as follows:
(a) The Company is the owner of or has other rights in or power to transfer
the Collateral, free from any adverse lien, security interest or other
encumbrance, except for the security interest created by this Agreement, the
security interest granted to Paragon Capital Corporation Ltd. (the "Paragon
Interest") and other liens permitted by this Agreement, the APA and the exhibits
and schedules thereto;
(b) None of the account debtors or other persons obligated on any of the
Collateral is a governmental authority subject to the Federal Assignment of
Claims Act or like federal, state or local statute or rule in respect of such
Collateral;
(c) The Company holds no commercial tort claim except as indicated on
Exhibit A; and,
(d) The Company has at all times operated its business in compliance with
all applicable provisions of the federal Fair Labor Standards Act, as amended,
and with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances and (1) all other information set forth on the Exhibit A
pertaining to the Collateral is accurate and complete.
3
8. Covenants Concerning Collateral. Etc. The Company further covenants with
Creditor as follows:
(a) The Collateral will be kept at the location agreed to by the parties
and the Company will not remove the Collateral from such location, without
providing at least 30 days prior written notice to Creditor;
(b) Except for the security interest herein granted and liens permitted by
the Security Agreement, the Paragon Interest and the APA, or exhibits thereto,
the Company shall be the owner of the Collateral free from any lien, security
interest or other encumbrance, and the Company shall defend the same against all
claims and demands of all persons at any time claiming the same or any interests
therein adverse to Creditor;
(c) The Company will keep the Collateral in good order and repair and will
not use the same in violation of law or any policy of insurance thereon;
(d) The Company will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in connection
with the use or operation of such Collateral or incurred in connection with this
Agreement.
9. Default. Each of the following constitutes an "Event of Default":
(a) Company fails to pay all or any part of the accrued interest or unpaid
principal on the Notes when and as the same becomes due and payable at maturity,
upon prepayment, by acceleration or otherwise, except as nonpayment may
otherwise be allowed by the terms of the Notes;
(b) The Company fails to observe or perform in all material respects any
covenant or agreement on its part contained in this Agreement or the Notes if
such failure is not remedied within 10 days after written notice is given to
Company by Creditor specifying such default, requiring that such default be
remedied and stating that such notice is a "Notice of Default."
(c) Any representation or warranty made in this Agreement or the Notes
proves to have been false or misleading in any material respect;
(d) Any action is taken establishing or seeking to establish a lien, charge
or other right to any of the assets comprising the Collateral, or seeking to
execute upon, seize or foreclose upon any such assets, and such action is not
fully released, abandoned or dismissed within ten days after such action is
first initiated.
(e) The Company pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case;
(iii) consents to the appointment of a Custodian of it for all or
substantially all of the its property; or
4
(iv) makes a general assignment for the benefit of its creditors; or
(f) A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against Company in an involuntary case;
(ii) appoints a Custodian for Company or for all or substantially all
of its property; or
(iii) orders the liquidation of Company;
and the order or decree remains unstayed and in effect for 60 consecutive days.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
10. Acceleration. If any Event of Default occurs and is continuing,
Creditor, by written notice to Company may declare the principal of and accrued
interest on the Notes to be immediately due and payable; provided that in the
case of an Event of Default described in Section 9 (e) or (f), the Notes shall
become due and payable without further action or notice.
11. No Duty on Creditor. The powers conferred on Creditor hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon Creditor to exercise any such powers. Creditor shall be accountable only
for the amounts that it actually receives as a result of the exercise of such
powers and neither it nor any of its officers, directors, employees or agents
shall be responsible to the Company for any act or failure to act, except for
Creditor's own gross negligence or willful misconduct.
12. No Waiver by Creditors. Creditor shall not be deemed to have waived any
of its rights upon or under the Obligations or the Collateral unless such waiver
shall be in writing and signed by Creditor. No delay or omission on the part of
Creditor in exercising any right shall operate as a waiver of such right or any
other right. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right on any future occasion. All rights and remedies of Creditor
with respect to the Obligations or the Collateral, whether evidenced hereby or
by any other instrument or papers, shall be cumulative and may be exercised
singularly, alternatively, successively or concurrently at such time or at such
times as Creditor deems expedient.
13. Governing Law: Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the state of
California. The Company agrees that any suit for the enforcement of this
Agreement may be brought in the courts of the State of California or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Company by
mail at the address set forth in the APA.
14. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of Creditor and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if
5
such invalid, illegal or unenforceable term had not been included herein.
IN WITNESS WHEREOF, the Company and Creditor have duly executed this Security
Agreement as of the ____ day of October, 2003.
CREDITOR:
▇▇▇▇▇▇▇ FAMILY TRUST OF JULY 1998
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (trustee)
And by: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (trustee)
COMPANY:
ADDISON YORK INSURANCE BROKERS, INC.
By: /s/ P. Podorieszach
------------------------
6
SCHEDULE "V"
MUNICIPAL DESCRIPTION OF PREMISES
1. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
2. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇; and
3. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
SCHEDULE "W"
LIST OF CLIENTS OF THE VENDOR WHO PROVIDE COMMISSION REVENUES TO
THE VENDOR IN EXCESS OF $5,000.00 PER ANNUM