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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 21, 1998
UNIFIED FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22629 35-1797759
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204-1873
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 634-3301
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ITEM 2. ACQUISITION OF ASSETS
By Joint Action by Consent in Lieu of a Special Meeting dated July 10,
1998, the stockholders and the Board of Directors of Fiduciary Counsel, Inc.
("Fiduciary"), by Action by Consent dated July 10, 1998, the sole stockholder
of Fiduciary Acquisition Corporation ("FAC"), a wholly owned subsidiary of
Unified Financial Services, Inc. ("Unified"), and by Action by Consent dated
March 20, 1998, the Board of Directors of Unified, each approved and adopted
an Agreement and Plan of Merger, dated July 10, 1998 (the "Merger
Agreement"), by and among Unified, Fiduciary, FAC, Associated Family
Services, Inc., Intellectronic Management Systems, Inc., Jack R. Orben,
Andrew E. Beer and Charles C. Hickox. Pursuant to the Merger Agreement,
Fiduciary was merged with and into FAC (the "Merger") and each share of
common stock, no par value, of Fiduciary ("Fiduciary Common Stock"), was
converted into the right to receive either $35.00 in cash, up to an aggregate
amount of $800,835 or 1.334 shares of common stock, $0.01 par value, of
Unified ("Unified Common Stock") up to an aggregate of 66,634 shares of
Unified Common Stock, subject to the elections procedures set forth in the
Merger Agreement. In connection with such transaction, Unified paid $800,835
in cash and issued 36,110 shares of Unified Common Stock in exchange for all
of the outstanding shares of Fiduciary Common Stock. The purchase price paid
in connection with the Merger was determined through arm's-length
negotiations among the parties to the Merger Agreement.
By Joint Action by Consent in Lieu of a Special Meeting dated July 8,
1998, the sole stockholder and the Board of Directors of EMCO Estate
Management Company, Inc. ("EMCO"), by Joint Action by Consent dated July 8,
1998, the sole stockholder and the Board of Directors of VAI Acquisition
Corporation ("VAI"), a wholly owned subsidiary of Unified, and by Action by
Consent dated Mach 20, 1998, the Board of Directors of Unified, each approved
and adopted a Purchase and Assumption Agreement, dated July 8, 1998 (the
"Purchase Agreement"), by and among Unified, EMCO, VAI, Associated Family
Services, Inc., Intellectronic Management Systems, Inc., Jack R. Orben and
Andrew E. Beer. Pursuant to the Purchase Agreement, VAI purchased certain of
the assets and business of EMCO (the "Acquisition"), including receivables,
fixed assets, contract rights, intellectual property, intangibles and other
rights (the "Assets"), and assumed certain obligations relating to the
purchased assets and business of EMCO. In consideration of and as full
payment for the Assets, VAI paid to EMCO eleven thousand (11,000) shares of
Unified Common Stock. The purchase price paid in connection with the
Acquisition was determined through arm's-length negotiations among the
parties to the Purchase Agreement.
Both the Merger and the Acquisition became effective as of August 21,
1998. As a result of the Merger, the business and operations of Fiduciary
will be continued through FAC. Through a provision in the Certificate of
Merger filed on August 21, 1998, FAC amended its Certificate of Incorporation
to reflect the change of its corporate name to Fiduciary Counsel, Inc.
In connection with the Acquisition, EMCO assigned the right and
authority to use its corporate name to VAI by that certain Assignment
executed August 21, 1998. By Joint Action by Consent dated August 21, 1998,
the sole stockholder and the Board of Directors of EMCO changed the corporate
name of EMCO to The Patty Corporation. By Joint Action by Consent dated
August 21, 1998, the sole stockholder and the Board of Directors of VAI
changed the corporate name of VAI to EMCO Estate Management Company, Inc.
Certificates of Amendment to the Certificates of Incorporation of each of
EMCO and VAI were filed with the Delaware Secretary of State on August 21,
1998 to reflect such name changes.
Fiduciary, which is based in New York, is one of the nation's oldest
investment counsel organizations and provides professional investment
management to individuals and institutions on a customized basis. EMCO is a
wealth management firm based in New York City. Since 1921, EMCO has been
providing fee only services to individuals, families and fiduciaries. EMCO
professionals assist clients
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in a variety of disciplines, including the following: financial, tax and
estate planning; family office services such as budgeting, bill paying and
payroll administration; trust administration; and income tax return
preparation and filing for individuals, trusts, partnerships and small
businesses.
Jack R. Orben, a director of Unified, was the Chairman, Chief Executive
Officer and Treasurer of Fiduciary and the Chairman, Chief Executive Officer
and Treasurer of the former EMCO. By Joint Action by Consent dated August
22, 1998, the sole stockholder and the Board of Directors of FAC appointed
Mr. Orben Chairman, Chief Executive Officer and Treasurer of FAC. By a Joint
Action by Consent dated August 21, 1998, the sole stockholder and the Board
of Directors of VAI appointed Mr. Orben Chairman, Chief Executive Officer and
Treasurer of VAI.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
-----------------------------------------
Pursuant to Item 7(a)(4) of Form 8-K, Unified will file the required
financial statements with respect to Fiduciary by an amendment to this
Current Report on Form 8-K as soon as is practicable, but not later than 60
days after the date that this report is required to be filed.
(b) Pro Forma Financial Information.
-------------------------------
Pursuant to Item 7(b)(2) of Form 8-K, Unified will file the required
pro forma financial information with respect to the acquisition of Fiduciary
by an amendment to this Current Report on Form 8-K as soon as is practicable,
but not later than 60 days after the date that this report is required to be
filed.
(c) Exhibits. See Exhibit Index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIFIED FINANCIAL SERVICES, INC.
Dated: August 28, 1998 By: /s/ Timothy L. Ashburn
------------------------------------
Timothy L. Ashburn
Chairman, President and Chief
Executive Officer
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<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit No. Description
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<C> <S>
2 Agreement and Plan of Merger, dated July 10, 1998, by and among
Unified Financial Services, Inc., Fiduciary Acquisition Corporation,
Fiduciary Counsel, Inc., Associated Family Services, Inc.,
Intellectronic Management Systems, Inc., Jack R. Orben, Andrew E.
Beer and Charles C. Hickox
</TABLE>
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (which, together with the
Schedules attached hereto and incorporated herein by reference, is
hereinafter referred to as this "Agreement") is made and entered into as of
the 10th day of July 1998, by and among UNIFIED FINANCIAL SERVICES, INC., a
Delaware corporation (the "Buyer"), FIDUCIARY ACQUISITION CORPORATION, a
Delaware corporation and wholly owned subsidiary of Buyer ("Merger Sub"),
FIDUCIARY COUNSEL, INC., a Delaware corporation ("Fiduciary"), ASSOCIATED
FAMILY SERVICES, INC., a Delaware corporation ("AFS"), INTELLECTRONIC
MANAGEMENT SYSTEMS, INC., a Delaware corporation ("Intellectronic"), JACK R.
ORBEN, a resident of New York ("Orben"), ANDREW E. BEER, a resident of New
York ("Beer"), and CHARLES C. HICKOX, a resident of Connecticut ("Hickox").
AFS, Intellectronic, Orben and Beer are referred to collectively in this
Agreement as the "Principal Stockholders." Hickox is referred to in this
Agreement as the "Minority Stockholder." The Principal Stockholders and
Minority Stockholder are referred to collectively in this Agreement as the
"Sellers."
RECITALS:
A. The respective Boards of Directors of Buyer and Fiduciary deem it
advisable and in the best interests of such corporations and their respective
stockholders that Fiduciary merge with and into Merger Sub, with Merger Sub
as the surviving corporation, all as specifically set forth in this Agreement
(the "Merger").
B. AFS and Hickox, as the stockholders of Fiduciary, and Orben and
Beer, as the individuals indirectly controlling AFS, have approved the Merger
and other transactions contemplated by this Agreement.
C. The parties intend that the Merger, for federal income tax
purposes, shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
D. The parties hereto desire to set forth certain representations,
warranties, covenants and agreements made as an inducement to the execution
and delivery of this Agreement and to set forth certain conditions precedent
to the Merger contemplated in this Agreement.
NOW, THEREFORE, in consideration of these premises, the covenants
and agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged, the parties
hereto agree as follows:
Article 1
The Merger
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3) Fiduciary shall
be merged with and into Merger Sub in accordance with Section 251 of the
General Corporation Law of the State of Delaware (the "DGCL") and the
separate corporate existence of Fiduciary shall thereupon cease. Merger Sub
shall be the surviving corporation of the Merger (sometimes referred to
herein as the "Surviving
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Corporation") and shall continue to be governed by the laws of the State of
Delaware. The Merger shall have the effects set forth in Section 259 of the
DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the properties, rights, privileges, powers and
franchises of Fiduciary and Merger Sub shall rest in the Surviving
Corporation, and all debts, liabilities and duties of Fiduciary and Merger
Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.2 Closing. The closing (the "Closing") of the Merger shall take
place at 10:00 a.m., local time, at the offices of Thompson Coburn in St.
Louis, Missouri on the date that the Effective Time occurs (the "Closing
Date"), which Closing Date shall not be earlier than July 15, 1998, nor later
than August 30, 1998, or at such other date, time and place as Buyer and
Fiduciary shall agree.
1.3 Effective Time. The Merger shall become effective on the date
and at the time (the "Effective Time") on which a duly executed original of a
Certificate of Merger is filed with the Secretary of State of the State of
Delaware in such form as required by, and in accordance with, the relevant
provisions of the DGCL. Unless otherwise agreed in writing by Buyer and
Fiduciary, subject to the terms and conditions of this Agreement (including,
without limitation, Section 1.2), the Effective Time shall occur within five
business days after the satisfaction or waiver in accordance with this
Agreement of all conditions to the Merger contained in this Agreement, or on
such other date as is agreed to by Buyer and Fiduciary.
1.4 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances or any other acts are necessary or desirable
(i) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Fiduciary or (ii) otherwise to carry out the purposes
of this Agreement, Fiduciary by its execution of this Agreement shall be
deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such deeds, assignments or assurances and
to do all acts necessary or desirable to vest, perfect or confirm title and
possession to such rights, properties or assets in the Surviving Corporation
and otherwise to carry out the purposes of this Agreement, and the officers
and directors of the Surviving Corporation hereby are authorized, in the name
of Fiduciary or otherwise, to take any and all such action.
1.5 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation and Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation following the Merger until otherwise amended or
repealed; provided, however, that Article FIRST of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows:
"FIRST: The name of the Corporation is Fiduciary Counsel, Inc."
1.6 Boards of Directors and Officers. At the Effective Time, the
directors and officers of Merger Sub immediately prior to the Effective Time
shall be the directors and officers, respectively, of the Surviving
Corporation following the Merger and such directors and officers shall hold
office in accordance with the Surviving Corporation's Bylaws and applicable
law.
1.7 Effect on Capital Stock. At the Effective Time, each share of
common stock, no par value, of Fiduciary, regardless of class or designation
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("Fiduciary Common Stock"), issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and, subject to the terms of
this Agreement shall be converted into, at the election of the holder
thereof, the right to receive, either (A) $35.00 in cash, up to an aggregate
amount of $800,835.00, the "Cash Option," or (B) 1.334 shares of Buyer common
stock, $0.01 par value ("Unified Common Stock"), up to an aggregate of 66,634
shares of Unified Common Stock, hereafter the "Securities Option"; provided,
however, in the event the number of issued and outstanding shares of
Fiduciary Common Stock shall exceed 49,950, the Cash Option and the
Securities Option shall be appropriately and proportionately adjusted such
that the total Merger Consideration to be paid to the holders of Fiduciary
Common Stock shall not exceed the amount of Merger Consideration to be paid
based upon 49,950 shares of Fiduciary Common Stock outstanding as of the date
hereof. In the event it is determined after the Closing Date that more than
49,950 shares of Fiduciary Common Stock are validly issued and outstanding,
the Sellers shall remit to the Buyer any Merger Consideration paid by Buyer
to the Sellers in excess of the amount of Merger Consideration that such
holder would have been entitled to receive based upon an appropriate and
proportionate adjustment to the Cash Option or the Stock Option due to such
additional shares of Fiduciary Common Stock being outstanding. Each issued
share of common stock of Merger Sub shall remain outstanding as a share of
common stock of the Surviving Corporation. By its execution of this
Agreement, AFS hereby irrevocably elects to and shall only be entitled to
receive the Securities Option in exchange for all of the Fiduciary Common
Stock it owns.
1.8 Exchange Procedures.
(a) At the Effective Time, against its receipt of the items in
Section 1.8(b), Buyer shall deliver or cause to be delivered to each holder
of Fiduciary Common Stock (i) immediately available funds in the amount of
the Cash Option in respect of each share of Fiduciary Common Stock for which
the Cash Option has been elected, and (ii) the Securities Option in respect
of each share of Fiduciary Common Stock for which the Securities Option has
been elected. The aggregate amount of cash and Unified Common Stock
deliverable hereunder is collectively referred to as the "Merger
Consideration."
(b) At or after the Closing, each holder of Fiduciary Common
Stock shall deliver all original certificates for Fiduciary Common Stock,
each duly endorsed for transfer in blank, together with written notice of
exercise of the Cash Option or Securities Option (and in the case of a holder
exercising the Securities Option who is not a signatory hereto, if any,
representations comparable to those in Article 4 below).
1.9 Anti-Dilution Adjustments. If, between the date of this
Agreement and the Effective Time, Buyer shall effect a stock dividend, or
make distributions in stock upon, or subdivide, split up, reclassify or
combine Unified Common Stock or declare a dividend or make a distribution on
Unified Common Stock in the form of a security convertible into Unified
Common Stock, then appropriate and proportional adjustment or adjustments
will be made to the Securities Option such that such shares, as adjusted,
shall result in the issuance of that number of shares of Unified Common Stock
or other securities as if the declaration or payment of such dividend,
distribution, subdivision, split-up, reclassification or combination of such
Unified Common Stock had a record or payment date therefor immediately after
the Effective Time.
1.10 Dissenting Stockholders. "Dissenting Shares" means shares held by
any holder who becomes entitled to payment of the fair value of such shares
under Section 262 of the DGCL. Dissenting Shares shall not be converted into
or be exchangeable for the Merger Consideration, and any holder of Dissenting
Shares shall be entitled to payment for such shares only to the extent
permitted by and in accordance with the provisions of such law and
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Buyer shall cause the Surviving Corporation to pay such consideration with
funds provided by Buyer. Each party hereto shall give the other prompt
notice of any written demands for the payment of fair value of any shares,
withdraws of such demands, and any other instruments, served pursuant to the
DGCL and Fiduciary shall give Buyer the opportunity to participate in all
negotiations and proceedings with respect to such demands. Fiduciary shall
not voluntarily make any payment with respect to any demands for payment of
fair value and shall not, except with the prior written consent of Buyer,
settle or offer to settle any such demands. By their execution of this
Agreement, AFS and Hickox waive their right to demand an appraisal of their
Fiduciary Common Stock in connection with the Merger.
ARTICLE 2
Representations and Warranties of Fiduciary and Principal Stockholders
Fiduciary and each Principal Stockholder hereby jointly and
severally represent and warrant to Buyer as follows (and the Minority
Stockholder hereby represents and warrants as set forth in Section 2.4(b)
below):
2.1 Organization and Qualification. Fiduciary is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, has all requisite corporate power to own, lease and
operate its properties and to carry on its business as it is now being
conducted, and is duly qualified and in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified.
2.2 Certificate of Incorporation and Bylaws. Attached hereto
as Exhibits A and B, respectively, are true and complete copies of
Fiduciary's Certificate of Incorporation, as amended (certified as of a
recent date by the Secretary of State of the State of Delaware), and Bylaws,
as amended (certified as of the date hereof by the Secretary or an Assistant
Secretary of Fiduciary).
2.3 Capitalization. The authorized capital stock of Fiduciary
consists only of Fifty Thousand (50,000) shares of common stock, no par value
per share. The issued and outstanding capital stock of Fiduciary consists
solely of (i) twenty-two thousand eight hundred eighty-one (22,881) shares of
Fiduciary Common Stock owned of record and beneficially by Hickox, and (ii)
twenty-seven thousand sixty-nine (27,069) shares of Fiduciary Common Stock
owned of record and beneficially by AFS (the shares of Fiduciary Common Stock
owned by Hickox and AFS are collectively referred to as the "Fiduciary
Shares"). All treasury shares of Fiduciary are identified on Schedule
2.3(a). AFS and Hickox are the only legal and beneficial owners of capital
stock or other securities of any kind or class of Fiduciary, and own the
Fiduciary Shares free and clear of all liens, claims, encumbrances and
transfer restrictions. All of the Fiduciary Shares are duly authorized,
validly issued, fully paid and nonassessable. There are no options,
warrants, subscriptions, puts, calls or other rights, commitments,
undertaking or understanding to acquire, or restrict the transfer of, any
capital stock or other securities of any kind or class of Fiduciary or any
rights, obligations or undertakings convertible into securities of any kind
or class of Fiduciary which has been authorized or which is outstanding.
There is no stock appreciation, phantom stock, profit participation, success
fee or similar right with respect to Fiduciary that has been authorized or
which is outstanding. There are no voting trusts, proxies or other agreements
or understandings with respect to the voting of the capital stock of
Fiduciary. Fiduciary is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock.
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2.4 Authorization and Consents.
(a) Principal Stockholders. Each Principal Stockholder has all
requisite power and authority to enter into and to consummate the sale
contemplated by this Agreement, and otherwise to perform his obligations
hereunder. The execution and delivery of this Agreement by AFS and the
performance by AFS of its obligations hereunder have been duly and
effectively authorized and approved by all requisite corporate action, and no
other corporate or stockholder act or proceeding on the part of AFS is
necessary to authorize AFS' performance of its obligations hereunder. This
Agreement constitutes a valid and legally binding obligation of AFS and each
Principal Stockholder, enforceable against each of them in accordance with
its terms. Except as disclosed on Schedule 2.4, neither the execution and
delivery of this Agreement by any Principal Stockholder nor the consummation
by any Principal Stockholder of the transactions contemplated hereby will (i)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the Fiduciary
Common Stock or any of the properties of Fiduciary under, (A) the Certificate
of Incorporation, as amended, or Bylaws of Fiduciary or AFS or (B) any note,
bond, mortgage indenture, deed of trust, lease, license, agreement or other
instrument or obligation to which Fiduciary is bound, or by which Fiduciary
or any of its properties, or the Principal Stockholders or any of the
Fiduciary Common Stock, may be bound or affected, or (ii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to any
Principal Stockholder, Fiduciary or any of their respective properties. No
consent or approval by, notice to or registration with any governmental
authority or other third party, other than those disclosed on Schedule 2.4,
is required on the part of any Principal Stockholder, or Fiduciary in
connection with the execution and delivery of this Agreement or the
consummation by any Principal Stockholder or Fiduciary of the Merger and the
other transactions contemplated hereby.
(b) Minority Stockholder. The Minority Stockholder has all
requisite power and authority to enter this Agreement and otherwise to
perform his obligations hereunder. This Agreement constitutes a valid and
legally binding obligation of the Minority Stockholder enforceable against
him in accordance with its terms. Neither the execution and delivery of this
Agreement by the Minority Stockholder nor the consummation by the Minority
Stockholder of the transactions contemplated hereby will (i) violate, or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the Fiduciary Common Stock owned
by him under, any note, bond, mortgage indenture, deed of trust, lease,
license, agreement or other instrument or obligation to which the Minority
Stockholder is bound, or by which he or any of the Fiduciary Common Stock
owned by him may be bound or affected, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Minority
Stockholder. No consent or approval by, notice to or registration with any
governmental authority or other third party, is required on the part of the
Minority Stockholder in connection with the execution and delivery of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. The Minority Stockholder owns twenty-two thousand eight
hundred eighty-one (22,881) shares of Fiduciary Common Stock free and clear
of all liens, claims, encumbrances and transfer restrictions. There is no
suit, claim, action, proceeding or governmental investigation now pending or,
to the Minority Stockholder's knowledge, threatened against such Minority
Stockholder that contests the validity of this Agreement or the ability of
the Minority Stockholder to dispose of his Fiduciary Common Stock pursuant to
the Merger.
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2.5 Financial Statements and Undisclosed Liabilities.
(a) Fiduciary's Financial Statements. Attached hereto as
part of Schedule 2.5(a) are true and complete copies of Fiduciary's balance
sheets and related statements of income and cash flow as of and for the
fiscal years ended December 31, 1997 and 1996 (collectively, the "Fiduciary
Financial Statements"). Except as disclosed on Schedule 2.5(a), the
Fiduciary Financial Statements (i) have been prepared from the books and
records of Fiduciary in accordance with generally accepted accounting
principles and (ii) fairly present the financial position and results of
operations of Fiduciary as of and for the fiscal years then ended.
(b) Undisclosed Liabilities. Except as set forth in the
Fiduciary Financial Statements or Schedules to this Agreement, Fiduciary has
no liabilities or obligations of any kind, whether existing, fixed,
contingent upon future events, vested, funded, unfunded or otherwise, except
for (i) current liabilities that were incurred since December 31, 1997 in the
ordinary course of Fiduciary's business, and (ii) liabilities which will not
have a Material Adverse Effect. For purposes of this Agreement, the term
"Material Adverse Effect" means (A) any adverse impact on the assets,
operations, liabilities, earnings, prospects, business or condition of
Fiduciary that represents a diminution in value to Fiduciary (whether
immediate or as a result of diminished future cash flows) of more than Ten
Thousand Dollars ($10,000), (B) any loss of the full-time services of key
personnel of Fiduciary and/or (C) the creation of any lien, security
interest, charge or encumbrance upon any of the properties of Fiduciary.
2.6 Absence of Certain Changes or Events. Since December 31,
1997, and except as disclosed on Schedule 2.6 or as contemplated by this
Agreement, there has not been with respect to Fiduciary:
(a) any change in the assets, operations, liabilities,
earnings, prospects, business or condition (financial or otherwise) that has
been or which the Principal Stockholders reasonably should expect to have,
individually or in the aggregate with other changes, a Material Adverse
Effect;
(b) any damage, destruction or casualty loss (whether or
not covered by insurance) which has been or which any Principal Stockholder
reasonably should expect to have a Material Adverse Effect;
(c) any increase in the compensation payable to any
director, officer, employee or agent other than routine increases made in the
ordinary course of business consistent with past practice, or any bonus,
incentive compensation, service award or other like benefit, granted, made or
accrued, contingently or otherwise, to or to the credit of any of such
director, officer, employee or agent, or any employee welfare, pension,
retirement or similar payment or arrangement made or agreed to by Fiduciary
with respect to any such director, officer, employee or agent, other than
pursuant to the existing plans disclosed on Schedule 2.13;
(d) any addition to, or modification of, any profit
sharing, bonus, deferred compensation, insurance, pension, retirement or
other employee benefit plan, arrangement or practice described on Schedule
2.13 other than accruals in accordance with the normal practices of Fiduciary
and the extension of coverage to employees who became eligible after December
31, 1997;
(e) any sale, assignment or transfer (including, without
limitation, any collateral assignment or the granting or permitting of any
lien, charge or encumbrance arising other than in connection with the
creation of a security interest in after-acquired property under a security
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agreement disclosed on Schedule 2.7) of any asset, property or right (except
sales of inventory and sale or disposal of worn out and obsolete fixed
assets, each in the ordinary course of business);
(f) any amendment, modification, waiver or cancellation
of any debt owed to, or claim of, Fiduciary or settlement of any dispute
involving any payment or other obligation due to or owed by Fiduciary to be
made or performed after the Closing Date involving more than $5,000 (provided
that all items excluded by reason of such threshold are less than $10,000 in
the aggregate);
(g) any borrowing of money, any increase in any existing
indebtedness, or the incurrence of any obligation or liability (whether
absolute or contingent), other than current liabilities incurred in the
ordinary course of business;
(h) any capital expenditure or commitment to make a
capital expenditure (exclusive of expenditures for repair or maintenance of
equipment in the ordinary course of business) exceeding $5,000 individually
or $10,000 in the aggregate, or the execution of any lease or similar
arrangement with respect to any aspect of the business of Fiduciary, or
incurring of liability therefor;
(i) any cancellation, termination or amendment of any
material contract, agreement, license or other instrument to which Fiduciary
is a party or by which it is bound;
(j) any lending or advance of money or other pledging of
credit, by way of guaranty or otherwise, in connection with any aspect of its
business, except normal travel and expense advances to employees and normal
equity advances incurred with respect to residential real property, in the
ordinary course of business consistent with prior practice;
(k) any declaration or payment of any dividend or other
distribution of any kind with respect to any of the capital stock of
Fiduciary;
(l) any failure on the part of Fiduciary to operate its
business in the ordinary course and to preserve its business organization
intact;
(m) any agreement by, or commitment of, any Seller or
Fiduciary to do or permit any of the foregoing; or
(n) any other event or condition of any character which,
in any one case or in the aggregate, will or can reasonably be expected to
have a Material Adverse Effect.
2.7 Title to Assets; Condition of Equipment. Schedule 2.7
contains the address of all real properties owned or used by Fiduciary and
the buildings and structures located thereon ("Business Premises"). Except
as set forth on Schedule 2.7, Fiduciary has good and marketable title to all
assets and properties used in its business, subject to assets held under
lease arrangements disclosed on Schedule 2.9. With the exception of (a) the
liens, security interests and other encumbrances disclosed on Schedule 2.7,
(b) liens arising by operation of law for taxes accrued but not yet payable,
and (c) such imperfections of title, if any, as do not materially detract
from the value or interfere with Fiduciary's present use of such assets nor
impair the marketability of title of any of the assets or properties of
Fiduciary, none of the assets of Fiduciary is subject to any lease, lien,
security interest, mortgage, charge, easement or encumbrance, right of first
refusal, option or other restriction of any nature whatsoever, nor subject to
any pending or, to any Principal Stockholder's knowledge, threatened
condemnation proceedings. To each Principal Stockholder's knowledge, none of
the Business Premises or the operation or maintenance thereof as now operated
and maintained, contravenes any applicable zoning ordinance or other
administrative regulation or violates any
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restrictive covenant or any provision of law. Unless otherwise set forth on
Schedule 2.7, the Business Premises are in good operating condition and
repair.
2.8 Cash, Cash Equivalents, Receivables and Prepaid Expenses.
(a) Set forth on Schedule 2.8 are (i) a list of all bank
lines, credit arrangements, bank accounts, money market and securities
brokerage accounts, and safe deposit boxes maintained by Fiduciary together
with the names of all authorized signatories on each such arrangement or
account, and (ii) a list of all certificates of deposit, money market fund
investments, other cash equivalents, marketable securities of other persons
and investment companies and similar temporary investments.
(b) All of the accounts receivable of Fiduciary reflected
on the Fiduciary Financial Statements and all such accounts receivable
arising subsequent to the date thereof, (i) represent actual indebtedness
incurred by the applicable account debtors, (ii) have arisen in the ordinary
course of Fiduciary's business, (iii) except for liens, security interests
and encumbrances described on Schedule 2.7, are subject to no prior
assignment, claim, charge or encumbrance of any nature whatsoever, and (iv)
are collectible net of the allowance for uncollectible accounts set forth on
the Fiduciary Financial Statements, as the case may be, without rights of
counterclaim or setoff by any account debtor.
(c) All of the prepaid expenses of Fiduciary reflected on
the Fiduciary Financial Statements represent actual advance payments of
Fiduciary's ordinary operating expenses, and can be utilized in full by
Fiduciary after the Closing to the extent not used in the ordinary course of
business prior to Closing.
2.9 Other Agreements; Absence of Defaults. Except as disclosed
on Schedule 2.9, neither Fiduciary nor any of its assets or properties is a
party to or bound by: (a) any loan agreement, note, mortgage, deed of trust,
security agreement, conditional sales agreement, capital lease, guaranty,
letter of credit arrangement or other document or instrument reflecting
present or contingent indebtedness of Fiduciary or for which any of
Fiduciary's properties are mortgaged or pledged as collateral (all such items
are referred to collectively as the "Loan Documents"); (b) any employment
agreement, consulting agreement, sales agency agreement, distributor
agreement or other contractual arrangement for services; (c) any collective
bargaining agreement covering any employees; (d) any contract, agreement or
arrangement which prohibits or restricts Fiduciary from freely engaging in
any business in any part of the world; (e) any contract, agreement or
arrangement relating to the marketing or sales of its services, or requiring
minimum or exclusive purchases of supplies or services from vendors; (f) any
contract, agreement or arrangement between Fiduciary and a client for the
provision of relocation services; (g) any contract relating to a prior
business acquisition, merger, combination or similar transaction or
reorganization under which Fiduciary has any continuing rights or
obligations; (h) any contract under which Fiduciary has agreed to indemnify a
present or former officer, director or employee of Fiduciary; or (i) any
other contract, agreement, lease, license, outstanding bid or offer or other
commitment (whether formal or informal, written or oral) calling for the
payment or receipt by Fiduciary of property or services valued at $5,000 or
more, excluding purchase orders for supplies ordered in the ordinary course
of business. The Principal Stockholders have made available for inspection
by Buyer a true and complete copy of each agreement, instrument or other
document (as amended) referenced or cross-referenced in Schedule 2.9. In the
case of oral contracts and commitments required to be disclosed pursuant to
this Section, Schedule 2.9 contains a true and complete description of the
material terms thereof. Except as disclosed on Schedule 2.9, Fiduciary is
not in default under any Loan Document, contract, offer, commitment or other
item listed on Schedule 2.9, nor has any event occurred which, upon notice or
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passage of time or both, will result in such a default. Except as disclosed
on Schedule 2.9, all payments required to be made by Fiduciary pursuant to
the Loan Documents on or prior to the date hereof have been paid in full.
2.10 Patents and Trademarks; Year 2000.
(a) Except as noted on Schedule 2.10, Fiduciary does not
use any patent, trade name, trademark, service mark or copyright, or any
application therefor whether or not registered (collectively, "Patents and
Trademarks") that is not owned by or validly licensed to Fiduciary, except
where the failure to have a license will not have a Material Adverse Effect.
All Patents and Trademarks (and any applications therefor) used by Fiduciary
are described on Schedule 2.10 hereto, together with the name and address of
the owner thereof if other than Fiduciary. Schedule 2.10 contains a true and
complete list of all license agreements, indemnification agreements and other
agreements or understandings with respect to Patents and Trademarks, and true
and complete copies of the same have been delivered to Buyer for review.
Except as disclosed in Schedule 2.10, no Patents and Trademarks owned,
licensed or used by Fiduciary are the subject of a lawsuit or any other
proceeding involving Fiduciary, no party has challenged or threatened to
challenge Fiduciary's right to use such Patents and Trademarks, and to each
Principal Stockholder's knowledge there is no basis for any such challenge
based on a claim of infringement or otherwise.
(b) This space intentionally left blank.
2.11 No Violation of Statute, Decree or Order. Except as
disclosed on Schedule 2.11, Fiduciary, is not, and since January 1, 1995 has
not been, in default under or in breach or violation of any statute, law,
ordinance, decree, order, rule or regulation of any governmental body
applicable to Fiduciary or its properties, except where such default, breach
or violation will not and cannot reasonably be expected to have a Material
Adverse Effect. The consummation of the Merger and the consummation of the
other transactions contemplated by this Agreement will not constitute or
result in any default under or breach or violation of any statute, law,
ordinance, decree, order, rule or regulation of any governmental body
applicable to Fiduciary or its respective properties.
2.12 Litigation. Except as listed in Schedule 2.12, there is
not, and since January 1, 1995 there has not been, any suit, claim, action,
proceeding or governmental investigation against Fiduciary or respecting any
aspect of its business ("Third Party Litigation") pending or, to any
Principal Stockholder's knowledge, threatened, nor to any Principal
Stockholder's knowledge is there presently any condition or set of facts
which will give rise to any Third Party Litigation. There are no decrees,
injunctions or orders of any court, administrative or regulatory body,
arbitration panel or governmental agency outstanding against Fiduciary
relating to any aspect of its business under which Fiduciary has continuing
obligations. There is no suit, claim, action, proceeding or governmental
investigation now pending or, to the Principal Stockholders' knowledge,
threatened against any Principal Stockholder or Fiduciary which contests the
validity of this Agreement or the ability of Fiduciary or any Principal
Stockholder to consummate the Merger and other transactions
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<PAGE> 10
contemplated by this Agreement. The Principal Stockholders have furnished to
Buyer true and correct copies of all audit response letters received by
Fiduciary in the twelve months preceding the date hereof from legal counsel
devoting substantive attention to matters which may result in any liability
or obligation of Fiduciary.
2.13 Employee Benefit Plans.
(a) Definitions. For purposes of this Section 2.13:
(i) Arrangement. The term "Arrangement" means any
personnel policy (including, but not limited to, vacation time, holiday pay,
bonus programs, moving expense reimbursement programs, and sick leave),
salary reduction agreements, change-in-control agreements, employment
agreements, stock option plans, consulting agreements or any other benefit,
program, agreement or contract, whether or not written, (A) which currently
is being or since December 31, 1992 has been maintained for employees of
Fiduciary or (B) to which Fiduciary makes or is required to make, or since
December 31, 1992 has made or was required to make, contributions.
(ii) Plan. The term "Plan" includes each employee
benefit plan, as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA") (other than a Multiemployer Plan within the
meaning of Section 3(37) of ERISA, but including terminated Plans) (A) which
currently is being or since December 31, 1992 has been maintained for
employees of Fiduciary or (B) to which Fiduciary makes or is required to
make, or since December 31, 1992 has made or was required to make,
contributions.
(iii) Qualified Plan. The term "Qualified Plan"
means any Plan which is an employee pension benefit plan as defined in
Section 3(2) of ERISA and which is intended to meet the qualification
requirements of Section 401(a) of the Code.
(iv) Title IV Plan. The term "Title IV Plan" means
any Qualified Plan that is a defined benefit plan (as defined in Section
3(35) of ERISA) and is subject to Title IV of ERISA.
(b) Operations of Plans. Except as set forth on Schedule
2.13:
(i) Each Arrangement and each Plan has been
administered in compliance with its terms and with all filing, reporting,
disclosure and other requirements of all applicable statutes (including, but
not limited to, ERISA, the Code and the Consolidated Omnibus Budget
Reconciliation Act), regulations and interpretations thereunder. Each
Qualified Plan (together with its related funding instrument) is intended to
be qualified and tax exempt under Sections 401 and 501 of the Code and is the
subject of a favorable Internal Revenue Service determination with respect to
such qualification and exemption.
(ii) All oral or written communications with respect
to each Arrangement and each Plan materially reflect and have materially
reflected the documents and operations of the Arrangement or Plan and no
action is pending or, to any of the Principal Stockholders' knowledge,
threatened, against any person to assert any liability by reason of any such
communication or any failure to communicate with respect to any Arrangement
or Plan.
(iii) Fiduciary does not contribute to or sponsor,
and has never contributed to or sponsored, any Title IV Plan.
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<PAGE> 11
(iv) Fiduciary, nor any of its directors or
employees, nor any fiduciary, has not engaged in any transaction with respect
to the Plans, including the execution and delivery of this Agreement and
other agreements, instruments and documents for which execution and delivery
by Fiduciary is contemplated herein, in violation of Section 406(a) or (b) of
ERISA or which is a "prohibited transaction" (as defined in Section
4975(c)(1) of the Code) for which no exemption exists under Section 408(b) of
ERISA or Section 4975(d) of the Code or for which no administrative exemption
has been granted under Section 408(a) of ERISA and which has or would have a
Material Adverse Effect.
(v) Every fiduciary and every other person who
handles funds or other property of each Plan is bonded to the extent required
by Section 412 of ERISA and no civil or criminal action with respect to any
Arrangement or Plan, pursuant to any federal or state law, has been brought,
is pending or, to any of the Principal Stockholders' knowledge, threatened
against Fiduciary, any officer, director or employee of it or any fiduciary
of any Arrangement or Plan. No Plan fiduciary or any other person has, or
has had, any liability to any participant or beneficiary under any Plan or
Arrangement or to any other person under any provision of ERISA or any other
applicable law by reason of any action or failure to act in connection with
any Plan or Arrangement, including, but not limited to, any liability by
reason of any payment of, or failure to pay, benefits or any other amounts or
by reason of any credit or failure to give credit for any benefits or rights.
(vi) There are no Plans or Arrangements to which
Fiduciary is a party or by which it is bound and under which, as a result of
this Agreement or any transaction contemplated by this Agreement, any
director, officer, employee or other agent of Fiduciary or any other party
claiming through such a person (A) shall or may acquire rights with respect
to any Plan or Arrangement (including, without limitation, the creation,
increase or extension of new or existing rights), (B) shall become entitled
to a distribution or payment with respect to any Plan or Arrangement at a
date earlier than if this Agreement had not been signed or such transaction
had not occurred (except for benefits paid in the normal course under a Plan
upon termination of a Plan participant's employment with Fiduciary or any
successor employer), or (C) shall otherwise receive or become vested in
rights or benefits with respect to any Plan or Arrangement.
(c) Plan Documents and Records.
(i) All Arrangements and Plans are set forth in
Schedule 2.13. Correct and complete copies of all documents, including all
amendments thereto, with respect to each Arrangement and Plan, have been
heretofore delivered to the Buyer. These documents include, but are not
limited to, (A) current (and for those Plans or Arrangements terminated since
January 1, 1995, current as of the applicable termination date) Plan and
Arrangement documents, trust agreements, insurance contracts, annuity
contracts, summary plan descriptions, investment manager and investment
adviser contracts and Internal Revenue Service determination letters, (B) for
the most recent three full plan years ended prior to the date hereof, annual
and quarterly (for any quarter ended since the most recent full plan year)
audit reports, financial statements, annual reports (Form 5500), analyses of
discrimination testing under Code Sections 401(k) and 401(m) and other
filings with governmental agencies, (C) any Internal Revenue Service
recognitions of exemption issued since December 31, 1988, and (D) any other
general explanation or substantive communication distributed or otherwise
provided to participants in each such Arrangement or Plan which describes any
relevant aspect of each Arrangement or Plan.
(ii) As of the date of Closing, the participant or
beneficiary records with respect to each Arrangement and Plan shall be in the
custody of the persons listed on Schedule 2.13. Except as set forth on
Schedule 2.13, all such records accurately set forth the history of each
participant and beneficiary in connection with each Arrangement and Plan, and
accurately
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state the benefits accrued or credited to each such person, as of the end of
the last quarter of the applicable Plan Year preceding the Effective Time,
and provide information sufficient to determine such benefits for the period
from the last quarter to the Effective Time.
(d) Finances. All contributions payable to each
Qualified Plan for all benefits earned and other liabilities accrued through
December 31, 1997, determined in accordance with the terms and conditions of
such Qualified Plan, ERISA and the Code, have been paid or otherwise provided
for, and to the extent unpaid are reflected on the Fiduciary Financial
Statements. Schedule 2.13 sets forth (1) the amount of the liability for
minimum contributions for the last plan year to any Qualified Plan, (2) the
approximate amount of the minimum contribution to any Qualified Plan for the
plan year during which the Closing is to occur, (3) the annual cost of
providing coverage under any Plan that is a welfare plan as defined in
Section 3(1) of ERISA to all current employees of Fiduciary and all
dependents of a current employee, and (4) the annual cost of providing
coverage under any Plan that is a welfare plan as defined in Section 3(1) of
ERISA to all former employees of Fiduciary and all dependents of a former
employee.
(e) Multiemployer Plans. Fiduciary has not, and neither
Fiduciary nor any predecessor ever has had, an obligation to contribute to a
"Multiemployer Plan" within the meaning of Section 3(37) of ERISA.
(f) Controlled Group. Except as set forth on Schedule
2.13, Fiduciary is not, nor has it ever been, a member of a controlled group
of corporations within the meaning of Section 414(b) of the Code, any group
of corporations or entities under common control with AFS within the meaning
of Section 414(c) of the Code or any affiliated service group of which AFS is
a member within the meaning of Section 414(m) of the Code.
2.14 Discrimination, Occupational Safety, Labor and Other
Statutes and Regulations. Except as disclosed on Schedule 2.14, no person,
party or labor organization (including, but not limited to, governmental
agencies of any kind) has any claim, action or proceeding pending or, to any
Principal Stockholder's knowledge, threatened or available to it against
Fiduciary arising out of any statute, ordinance or regulation relating to the
payment of wages or benefits, plant closing laws, discrimination in
employment, employment practices, immigration, continuation of health
insurance benefits or occupational safety and health standards (including,
but without limiting the foregoing, any applicable state statutes, any rules,
regulations or other similar standards of the Occupational Health and Safety
Administration, the Truth In Lending Act, the Real Estate Settlement
Practices Act, the Fair Labor Standards Act, National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act of 1967, or the Americans with Disabilities Act, in each case
as amended). Except as disclosed on Schedule 2.14, to the Principal
Stockholders' knowledge, there is not presently pending or threatened any
proceeding, hearing or investigation with respect to the adoption by any
state, county or municipality where a Business Premises is located, of
amendments or modifications to existing local or municipal laws, ordinances,
regulations or restrictions with respect to such matters which, if adopted,
would have a Material Adverse Effect.
2.15 Insurance Policies. Schedule 2.15 sets forth a complete
list of insurance policies and bonds in force covering Fiduciary and/or its
properties, operations and personnel. Upon request, each of said policies,
together with all records and documents relating to insured losses and claims
(other than under any group health or major medical insurance policy) paid or
made during the past three years will be made available to Buyer for its
review. All such policies are in full force and effect, Fiduciary is not in
default with respect to its obligations under such policies, Fiduciary has
not received any notice of cancellation of any of such policies, and there is
no claim outstanding which could be expected to cause a material increase in
Fiduciary's insurance rates. Except as disclosed in
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Schedule 2.15, there has been no reservation of rights by any insurance
carrier, and to each Principal Stockholder's knowledge no such reservation is
threatened, concerning the coverage of any matter required to be disclosed
pursuant to this Agreement.
2.16 Environmental Matters.
(a) Except as set forth on Schedule 2.16, neither
Fiduciary nor any Principal Stockholder has received any oral or written
notice of, nor to any of the Principal Stockholders' knowledge is there any
basis for, any violation, citation, claim or complaint relating to the
business of Fiduciary or any property now or previously owned or operated by
Fiduciary arising under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act, the Toxic Substances Control
Act, the Safe Drinking Water Act, the Federal Water Pollution Control Act
(Clean Water Act), the Clean Air Act, the Powerplant and Industrial Fuel Use
Act of 1978, the National Environmental Policy Act (Environmental Impact
Statement) and antipollution, waste control and disposal and environmental
"cleanup" provisions of similar statutes of any Governmental Authority, and
all regulations and standards enacted pursuant thereto and all permits and
authorizations issued in connection therewith (collectively, "Environmental
Matters"). Schedule 2.16 sets forth all Environmental Matters and all such
violations, citations, claims and complaints.
(b) Except as set forth in Schedule 2.16, to each of the
Principal Stockholders' knowledge no underground tanks are now or have been
located at any facility now or previously owned or operated by Fiduciary, and
no toxic or hazardous substances have been generated, treated, stored,
disposed of on or from or otherwise deposited in or on or allowed to emanate
from any such property (irrespective of whether such substances remain at the
property or were transferred to or otherwise disposed of off site),
including, without limitation, the surface waters and subsurface waters
thereof, which may support a claim or cause of action under any federal,
state or local environmental statutes, ordinances, regulations or guidelines.
2.17 Governmental Approvals. Schedule 2.17 contains a listing
of all licenses, franchises, permits (including, without limitation,
environmental permits) and other governmental authorizations held by
Fiduciary or any of its employees. All of such licenses, franchises, permits
and governmental authorizations are in full force and effect, and to the
Principal Stockholders' knowledge, there is no basis for any governmental
body to deny or rescind any such license, franchise, permit or governmental
authorization. The business of Fiduciary as presently conducted does not
require any other license, franchise, permit or other governmental
authorization for Fiduciary or any of its employees from any governmental
body, whether federal, state, local or foreign.
2.18 Taxes.
(a) Definitions. For purposes of this Section 2.18 and
Article 6 of this Agreement:
(i) the term "Code" shall mean the Internal Revenue
Code of 1986, as amended. All citations to the Code or to the regulations
promulgated thereunder shall include any amendments or any substitute or
successor provisions thereto;
(ii) the term "Returns" shall mean, collectively,
(A) all reports, declarations, estimates, returns, information statements and
similar documents relating to, or required to be filed in respect of, any
Taxes; and (B) any statements, returns, reports or similar documents required
to be filed pursuant to Part III of Subchapter A of Chapter 61 of the Code or
pursuant to any
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<PAGE> 14
similar income, excise or other tax provision of federal, territorial, state,
local or foreign law; and the term "Return" means any one of the foregoing
Returns; and
(iii) the term "Taxes" shall mean (A) all taxes
measured with respect to net income, gross income or taxable income, and all
gross receipts, sales, use, ad valorem, franchise, profits, license, lease,
service, service use, withholding, employment, payroll, excise, severance,
transfer, documentary, mortgage, registration, stamp, occupation,
environmental, premium, property, windfall profits, customs, duties and other
taxes, fees, assessments or charges of any kind whatever, together with any
interest, penalties and other additions with respect thereto, imposed by any
federal, territorial, state, local or foreign government; and (B) any
penalties, interest or other additions to tax for the failure to collect,
withhold or pay over any of the foregoing, or to accurately file any Return;
and the term "Tax" shall mean any one of the foregoing Taxes; provided,
however, that when used with reference to a specified person (for example and
without limitation, "Taxes of Fiduciary"), the terms "Taxes" and "Tax" shall
include only those amounts for which such person is, or could become, liable
in whole or part (including, without limitation, any obligation in connection
with a duty to collect, withhold or pay over any Tax, any obligation to
contribute to the payment of any Taxes determined on a consolidated, combined
or unitary basis, any liability as a transferee, or any liability as a result
of any express or implied obligation to indemnify or pay the Tax obligations
of another person).
(b) Returns Filed and Taxes Paid. Except as otherwise
set forth in Schedule 2.18: (i) Fiduciary has duly filed or caused to be
filed, on or before the due date thereof (taking into account any
extensions), with the appropriate taxing authorities, all Returns that it is
required to file; (ii) each such Return (including any amendment thereto) is
true, correct and complete in all material respects; and (iii) all Taxes of
Fiduciary due with respect to, or shown to be due on, each such Return (or
amendment) or subsequent assessment with regard thereto, have been timely
paid, or an adequate reserve has been established therefor on the Fiduciary
Financial Statements. The Principal Stockholders have delivered to Buyer
true copies of Fiduciary's federal and state income tax Returns (and amended
Returns, revenue agents' reports and other notices from federal or state
taxing authorities) for the last four taxable years of Fiduciary.
(c) Tax Reserves and Tax Liabilities. The amount of
Fiduciary's liability for unpaid Taxes for all periods ending on or before
the date of the Fiduciary Financial Statements does not, in the aggregate,
exceed the amount of the current liability accruals for Taxes (excluding
reserves for deferred Taxes) as such accruals are reflected on the Fiduciary
Financial Statements and the amount of Fiduciary's liability for unpaid Taxes
for all periods ending on or before the Closing Date shall not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes) as such accruals are reflected on the
books and records of Fiduciary on the Closing Date. Except for Taxes so
accrued, no other Taxes of Fiduciary are due or payable with respect to any
taxable periods or portions of periods ending on or before the date hereof.
Fiduciary has collected or withheld all Taxes that it is required to collect
or withhold. Fiduciary is not a party to or bound by any tax indemnity, tax
sharing or tax allocation agreement, or any other contractual obligation to
pay the Tax obligations of another person or to pay the Tax obligations with
respect to transactions relating to any other person, except as otherwise set
forth in Schedule 2.18.
(d) Audit History and Other Proceedings. Fiduciary has
not made an election under Treas. Reg. Sec. 301.6241-1T(c)(2)(v)(A) (relating
to entity level audit proceedings). Except as set forth in Schedule 2.18:
(i) there are no pending or, to any of the Principal Stockholders' knowledge,
threatened (either in writing or verbally, formally or informally) audits,
investigations, claims, suits or other proceedings for or relating to any
material liability in respect of Taxes; (ii) no material deficiencies for
Taxes have been claimed, proposed or assessed by any taxing
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or other governmental authority; (iii) there are no matters under discussion
with any governmental authorities that could result in any additional amount
of Taxes; (iv) no extension of a statute of limitations (whether arising by
reason of a waiver, claim for refund or otherwise) relating to Taxes or
Returns is in effect; and (v) there are no requests for rulings or
determinations in respect of Taxes pending with any governmental authority.
With regard to taxable periods beginning after 1992, audits of Federal, state
and local Returns have been completed by the relevant taxing authorities with
regard to the Taxes, jurisdictions and periods set forth in Schedule 2.18.
(e) Tax Basis, Attributes and Miscellaneous Elections.
Except as otherwise set forth in Schedule 2.18: (i) the net carrying values
of all assets of Fiduciary, as reflected on the Fiduciary Financial
Statements, are equal in all material respects to the adjusted bases of those
assets for Federal income tax purposes; (ii) Fiduciary does not own any real
property in the State of New York or any other jurisdiction in which a Tax is
imposed upon the transfer of an interest in real property; (iii) any change
made in any method of accounting used by Fiduciary for Federal income tax
purposes has been approved by the Internal Revenue Service in accordance with
Section 446(e) of the Code; (iv) Fiduciary will not have a "net unrealized
built-in loss" (as defined in Section 382(h)(3) of the Code) on the Closing
Date; (v) Fiduciary has never been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code; (vi) Fiduciary
has never been a member of any combined, consolidated or unitary group for
state income or franchise tax purposes and does not file (and is not required
to file) combined, consolidated or unitary Returns for state income or
franchise tax purposes; (vii) Fiduciary is not a party to any agreement,
arrangement or plan that has resulted or could result in the payment of any
"excess parachute payment" as defined in Section 280G of the Code (without
regard to subsection (b)(4) thereof); (viii) Fiduciary is not subject to any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for Federal income tax purposes; and (ix) Fiduciary
has fully disclosed on its Federal income tax Returns all positions taken
therein that could give rise to a substantial understatement penalty within
the meaning of Code Section 6662. Except as otherwise set forth in Schedule
2.1, Fiduciary: (i) does not have any net operating losses or other tax
attributes presently subject to limitation under Code Sections 382, 383, 384,
or the Federal consolidated return regulations; (ii) has not agreed, or is
not otherwise required, to make any adjustment or report any income under
Section 481 of the Code after the Closing Date by reason of a change in
accounting method or otherwise; (iii) has not been a party to any transaction
that could cease to be a "reorganization" (as defined in Section 168 of the
Code) as a result of the transactions contemplated by this Agreement; (iv)
has not made, or is not required to make (or take any action that could
result in), an election or deemed election under Section 338 of the Code; (v)
has not made an election, or is not otherwise required, to treat any asset of
Fiduciary as owned by another person pursuant to the so-called "safe harbor
lease" provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended by the Economic Recovery Tax Act of 1981; (vi) does not have any
asset that directly or indirectly secures any debt the interest on which is
tax-exempt under Section 103(a) of the Code; (vii) does not have any asset
that is "tax-exempt use property" as defined in Section 168(h) of the Code;
(viii) does not have any asset that is subject to a lease, other than a
"true" lease for Federal income tax purposes; and (ix) has not made (or
given) any of the foregoing elections (or consents) or is not required to
apply any rules similar to the foregoing under any provisions of territorial,
state, local or foreign income tax law. Accurately set forth in Schedule
2.18 is: (i) a list of all states, territories and jurisdictions (whether
foreign or domestic) to which any Tax is properly payable by Fiduciary; and
(ii) a complete schedule of the amount of any net operating loss, net capital
loss, unused investment or other credits, unused foreign tax credits, and
excess charitable contributions. The transactions contemplated by this
Agreement are not subject to the withholding provisions of Section 3406 of
the Code, or of subchapter A of Chapter 3 of the Code, or of any similar
provision of territorial, state, local or foreign tax law.
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2.19 Subsidiaries and Investments. Except as disclosed on
Schedule 2.19, Fiduciary does not own, and in the last five (5) years has not
owned, any subsidiary or any equity or debt security of, or other material
economic interest in, any other corporation, partnership, joint venture or
other business enterprise.
2.20 Corporate Minutes and Stock Transfer Records. The
Principal Stockholders have furnished to Buyer for review the corporate
minutes of Fiduciary, which are current and complete and which contain an
accurate record of all actions taken by the Board of Directors and
Stockholders of Fiduciary. The Principal Stockholders have furnished to
Buyer for review the stock certificate books of Fiduciary, which are current,
complete and correct and which accurately reflect all transactions involving
equity securities of Fiduciary.
2.21 Transactions With Affiliates. Except as disclosed on
Schedule 2.21, no Seller and no officer or director of Fiduciary, will
immediately prior to or immediately after the Closing Date (a) have any
direct or indirect interest, except through ownership of less than two
percent (2%) of the outstanding securities of corporations listed on a
national securities exchange or registered under the Securities Exchange Act
of 1934, in any entity which does business with Fiduciary or is competitive
with its business or any property, asset or right which is used by Fiduciary
in the conduct of such business or (b) be a party to any transaction with
Fiduciary relating to any aspect of its business, including, without
limitation, any contract, agreement or other arrangement (i) providing for
the furnishing or services, by, (ii) providing for lease, management, rental
or purchase or real or personal property to or from, or (iii) otherwise
requiring payments to (other than for services as employees, officers or
directors) any such person, any member of the immediate family of any such
person or any corporation, partnership, trust or other entity in which any
such person has a substantial interest or is an officer, director, trustee or
partner. Except as disclosed on Schedule 2.21, no employee of Fiduciary is
presently a party, directly or indirectly, to any transaction with Fiduciary
(other than as an employee) relating to any aspect of its business requiring
payments by Fiduciary in excess of $500 within any twelve-month period.
2.22 No Broker. No person has acted in the capacity of broker
or finder on behalf of any Principal Stockholder or Fiduciary (a) to bring
about the negotiation or consummation of this Agreement, the Merger or the
sale of any of the Fiduciary Shares, or (b) in connection with any prior
transaction involving a sale of a material portion of Fiduciary's assets or
Fiduciary's stock, whether directly, by merger or otherwise.
2.23 Accuracy of Statements. Neither this Agreement nor any
Schedule hereto nor any certificate furnished by Fiduciary, or any Principal
Stockholder to Buyer in connection with this Agreement or any of the
transactions contemplated hereby contains or will contain an untrue statement
of a material fact or omits or will omit to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
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ARTICLE 3
Representations and Warranties of Buyer
Buyer hereby represents and warrants to the Sellers as follows:
3.1 Organization and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, and has corporate power and
authority to own its properties and assets and to carry on its business as it
is now being conducted.
3.2 Capitalization of Buyer, Merger Sub. The authorized capital
stock of Buyer consists of (i) 10,000,000 shares of Unified Common Stock and
(ii) 1,000,000 shares of preferred stock, $0.01 par value, of Buyer ("Unified
Preferred Stock"). As of June 30, 1998, 1,425,133 shares of Unified Common
Stock were issued and outstanding. As of the date hereof, Buyer has
designated 10,000 shares of Unified Preferred Stock as "Series A 8%
Cumulative Preferred Stock," of which no shares are issued and outstanding,
10,000 shares of Unified Preferred Stock as "Series B 8% Cumulative Preferred
Stock," of which no shares are issued and outstanding, and 2,100 shares of
Unified Preferred Stock as "Series C 6.75% Cumulative Convertible Preferred
Stock," of which 2,100 shares are issued and outstanding (the "Series C
Preferred Stock"). As of June 30, 1998, Buyer has reserved (i) 56,981 shares
of Unified Common Stock for issuance pursuant to a private placement, (ii)
11,000 shares of Unified Common Stock for issuance upon the acquisition of
Estate Management and (iii) 1,500,000 shares of Unified Common Stock for
issuance pursuant to the Unified Financial Services, Inc. 1998 Stock
Incentive Plan. Each share of Series C Preferred Stock presently is
convertible into 135 shares of Common Stock. Prior to the Effective Time,
additional shares of Unified Common Stock may be issued upon the conversion
by Buyer of its Series C Preferred Stock upon the exercise of the conversion
rights with respect thereto. Buyer continually evaluates possible
acquisitions and may prior to the Closing Date enter into one or more
agreements providing for, and may consummate, the acquisition by it of
another company (or the assets thereof) for consideration that may include
capital stock of Buyer. In addition, prior to the Closing Date, Buyer may,
depending on market conditions and other factors, otherwise determine to
issue equity, equity-linked or other securities for financing purposes or to
repurchase shares of its outstanding capital stock. All of the present (and
to be) issued and outstanding shares of Unified Common Stock are (and will
be) validly issued, fully paid and nonassessable, and have not been issued in
violation of any preemptive right of any stockholder of Buyer. Prior to
Closing Buyer shall take all appropriate action to cause Merger Sub to
approve and consummate the Merger in accordance with the terms and subject to
the conditions in this Agreement.
3.3 Authorization.
(a) Buyer has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Buyer and the
consummation by Buyer of the Merger and other transactions contemplated hereby
have been duly authorized by all requisite corporate action of Buyer. Subject
to the receipt of such approvals of regulatory authorities as may be required
by statute or regulation, this Agreement is a valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
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<PAGE> 18
(b) Neither the execution, delivery and performance by
Buyer of this Agreement, nor the consummation by Buyer of the transactions
contemplated hereby, nor compliance by Buyer with any of the provisions
hereof, will (i) violate, conflict with or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of, any
lien upon any of the properties or assets of Buyer under any of the terms,
conditions or provisions of (x) its Certificate of Incorporation or Bylaws, or
(y) any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Buyer is a party or by
which it may be bound, or to which Buyer or any of its properties or assets
may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in subsection (c) of this Section 3.3, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or any of its properties or assets, other than violations,
conflicts, breaches, defaults, terminations, accelerations or liens which
would not have a material adverse effect on Buyer and its subsidiaries, taken
as a whole.
(c) Other than in connection with or in compliance with the
provisions of federal securities laws, the securities or blue sky laws of the
various states or any required approvals of any other Regulatory Authority,
no notice to, filing with, exemption or review by, or authorization, consent
or approval of, any public body or authority is necessary for the
consummation by Buyer of the transactions contemplated by this Agreement.
3.4 Buyer Financial Statements. The consolidated balance sheet of
Buyer and its subsidiaries as of December 31, 1997 and 1996 and related
supplemental consolidated statements of income, changes in stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1997, together with the notes thereto, audited by Larry E. Nunn
Associates, L.L.C. (collectively, the "Unified Financial Statements"), have
been prepared in accordance with generally accepted accounting principles,
present fairly the consolidated financial position of Buyer and its
subsidiaries at the dates thereof and the consolidated results of operations,
changes in stockholders' equity and cash flows of Buyer and its subsidiaries
for the periods stated therein and are derived from the books and records of
Buyer and its subsidiaries, which are complete and accurate in all material
respects and have been maintained in accordance with good business practices.
Neither Buyer nor any of its subsidiaries has any material contingent
liabilities that are not described in the Unified Financial Statements.
3.5 Material Adverse Change. Since December 31, 1997, there has
been no material adverse change to the financial position or results of
operation of Buyer and its subsidiaries, taken as a whole.
3.6 Legal Proceedings or Other Adverse Facts. Except as otherwise
disclosed in the Unified Financial Statements, neither Buyer nor any of its
subsidiaries is a party to any pending or, to the best knowledge of Buyer,
threatened claim, action, suit, investigation or proceed-ing, or is subject
to any order, judgment or decree, except for matters which, in the aggregate,
will not have, or reasonably could not be expected to have, a material
adverse effect on Buyer and its subsidiaries, taken as a whole.
3.7 Brokers and Finders. Neither Buyer nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Buyer in connection with this Agreement or the transactions contemplated
hereby.
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<PAGE> 19
3.8 Accuracy of Information. The statements contained in this
Agreement, the Schedules and in any other written document executed and
delivered by or on behalf of Buyer pursuant to the terms of this Agreement
are true and correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE 4
TRANSFER LIMITATIONS AND COVENANTS
4.1 Securities Subject to Article 4. For the purposes of this
Agreement, the term "Securities" shall mean all shares of Unified Common
Stock issued pursuant to the Merger and all equity securities (including debt
obligations) of Buyer (or any successor corporation) received in exchange for
or in respect of such Unified Common Stock (whether by reason of a stock
split, stock dividend, combination of shares, recapitalization,
reclassification, merger, consolidation, corporate reorganization or
otherwise).
4.2 Restriction on Transfer. From and after the Closing Date,
neither the Securities nor any interest therein shall be transferable except
upon satisfaction of the relevant conditions specified in Section 4.4 of this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act of 1933, as amended (the "Securities Act"),
in respect of the transfer of any of the Securities or any interest therein.
Each of the Sellers shall cause any proposed transferee of the Securities (or
of any interest therein) to take and hold such Securities (or any interest
therein) subject to the provisions and upon the conditions specified in
Article 4 of this Agreement.
4.3 Restrictive Legend. Each certificate for the Securities
issued to the Sellers or to a subsequent transferee shall (unless otherwise
permitted by the provisions of Section 8.4) include a legend in boldface, 12
point (or larger) print in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED
EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT RELATING TO THE
SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144
UNDER SUCH ACT, OR (iii) AN OPINION OF COUNSEL OR OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT SUCH SALE, TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS
IN COMPLIANCE WITH THE PROVISIONS OF SUCH ACT.
4.4 Notice of Proposed Transfers. Not less than five days
prior to any proposed transfer of any Securities bearing the restrictive
legend set forth in Section 4.3 or any interest therein, the holder thereof
shall give written notice to Buyer of such holder's intention to effect such
transfer, setting forth the manner and circumstances of the proposed transfer
in reasonable detail. Any such proposed transfer which is not made pursuant
to a registration statement filed under the Securities Act may be effected
only if Buyer shall have received such notice of transfer accompanied by (a)
an opinion of counsel, reasonably satisfactory to Buyer, to the effect that
the proposed transfer of such Securities or such interest therein may be
effected without
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<PAGE> 20
registration of such Securities under the Securities Act (except that such an
opinion shall not be required for transfers pursuant to Rule 144 of the
Securities Act), and (b) such representation letters are in form and
substance satisfactory to Buyer to the extent required by the provisions of
the Securities Act. In addition, if in the opinion of counsel, reasonably
satisfactory to Buyer, subsequent transfers of such Securities will not
require registration under the Securities Act, Buyer will promptly after such
contemplated transfer deliver new certificates for such Securities that do
not bear the legend set forth in Section 4.3 above. If the foregoing
conditions entitling the holder to effect a proposed transfer of such
Securities without registration have not been satisfied, the holder in each
case will not transfer the Securities proposed to be transferred. Buyer
shall make a notation in its stock records to the effect that the Securities
are subject to the provisions of this Agreement. Each certificate evidencing
the Securities transferred as above provided shall bear the appropriate
legend set forth in Section 4.3, and each agreement purporting to transfer
any interest in any of the Securities shall contain a provision setting forth
a similar legend, except that such certificate or agreement shall not bear
such legend if the opinion of counsel, reasonably satisfactory to Buyer, is
to the further effect that neither such legend nor the restriction on
transfer in this Section 4.4 are required in order to ensure compliance with
the provisions of the Securities Act. Notwithstanding the foregoing, the
restrictions imposed by this Section 4.4 upon the transferability of any
particular Securities shall cease and terminate when such Securities have
been sold pursuant to an effective registration statement under the
Securities Act (or any similar or successor provision then in force). The
holder of any Securities as to which such restrictions shall have terminated
shall be entitled to receive from Buyer, without expense, a new certificate
of the same type but not bearing the restrictive legend set forth above and
not containing any other reference to the restrictions imposed by this
Section 4.4.
4.5 Investment Representations.
(a) By executing this Agreement, each of the Sellers hereby
severally confirms that the Securities to be received by such Seller in
connection with this Agreement will be acquired for investment for its or his
own account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and that it or he has no present intention
of selling, granting participation in, or otherwise distributing the same.
By executing this Agreement, each of the Sellers represents that it or he
does not have any contract, undertaking, agreement, or arrangement with any
person to sell, transfer or grant participations to such person, or to any
third person, with respect to any of the Securities.
(b) Each of the Sellers understands that the Securities have
not been registered under the Securities Act in reliance upon an exemption or
exemptions from registration under the Securities Act, including Section 4(2)
thereof and/or Rule 506 promulgated thereunder, and that Buyer's reliance on
such exemptions is predicated upon such Seller's representations set forth
herein. Each of the Sellers realizes that the basis for the exemptions may
not be present if, notwithstanding such representations, such Seller has a
present intention of acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does
not rise. Each of the Sellers represents that it does not have any such
intention.
(c) Each of the Sellers hereby represents that it has such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment, and has the ability to
bear the economic risks of its investment. Each of the Sellers further
represents that it has had, during the course of the transaction and prior to
its execution of this Agreement, the opportunity to ask questions of, and
receive answers from, Buyer concerning the terms and conditions of the
issuance of the Securities and to obtain additional information (to the
extent Buyer possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to the Seller or to which it had access.
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<PAGE> 21
(d) Each of the Sellers hereby represents that its or his
principal office or residence, as the case may be, is located at the address
set forth in Section 13.1 hereof.
ARTICLE 5
Covenants Relating to Fiduciary And Competition.
5.1 Conduct of Business by Fiduciary. From the date hereof to
the Closing Date, except for transactions which are expressly approved in
writing by Buyer or contemplated by this Agreement, Fiduciary shall, and each
of the Principal Stockholders shall cause Fiduciary to, refrain from:
(a) subjecting any of its assets and properties, tangible
or intangible, to any lien of any kind, exclusive of liens arising as a
matter of law in the ordinary course of business as to which there is no
known default;
(b) except for sale or disposal of worn out and obsolete
fixed assets in the ordinary course of business, selling, assigning,
transferring or otherwise disposing of any of Fiduciary's assets and
properties;
(c) declaring or paying any dividend, whether in cash or
other property, or effecting or permitting any other distribution of any kind
on or with respect to any of the capital stock of Fiduciary;
(d) amending the Certificate of Incorporation or Bylaws
of Fiduciary;
(e) authorizing, issuing or selling any equity or debt
securities of Fiduciary, or granting any option, warrant or other right
exercisable for or convertible into any such security;
(f) purchasing or otherwise acquiring any partnership or
membership interests, equity or debt securities or other indebtedness of any
partnership, limited liability company, corporation or other person;
(g) increasing or enhancing the compensation or benefits
payable to any employee of Fiduciary, except for regularly scheduled wage
adjustments to hourly employees in amounts consistent with past practice;
(h) borrowing money or increasing existing indebtedness
by any amount, or incurring any other liability or obligation outside of the
ordinary course of business; and/or
(i) taking or permitting any other action that, if taken
or permitted immediately prior to the execution of this Agreement, would
constitute a breach of or an exception to the representations and warranties
in Section 2.6 hereof.
5.2 Affirmative Covenants Relating to Fiduciary. From the date
hereof to the Closing Date, each of the Principal Stockholders shall cause
Fiduciary to:
(a) maintain Fiduciary's properties and activities
insured in amounts and with coverage at least as great as the amounts and
coverage in effect on the date of this Agreement;
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<PAGE> 22
(b) maintain Fiduciary's properties in good repair, order
and condition, reasonable wear and tear excepted, and use its best efforts to
preserve Fiduciary's possession and control of all of its assets and
properties;
(c) maintain the books, accounts and records of Fiduciary
in a diligent manner and using procedures consistent with past practice;
(d) allow, at all reasonable times upon reasonable
notice, Buyer and its employees, attorneys, auditors, accountants and other
authorized representatives and its lenders, to have access to Fiduciary's
books, records and monthly and audited financial statements, and (following
notification to the Principal Stockholders) to contact key customers of
Fiduciary in order that Buyer and its lenders may have full opportunity to
make such investigation as they may desire of the business of Fiduciary;
(e) comply with all applicable laws, rules, regulations
and ordinances relating to Fiduciary or to the conduct of its business, and
conduct Fiduciary's business in such a manner so that on the Closing Date the
representations and warranties contained in this Agreement shall be true as
though such representations and warranties were made on and as of such date,
except for changes permitted or contemplated by the terms of this Agreement;
(f) provide Buyer with prompt written notice of (i) any
adverse change in the assets, operations, liabilities, earnings, prospects,
business or condition (financial or otherwise) of Fiduciary, and (ii) any
variances from the representations and warranties contained in Article 2; and
(g) operate its business only in the ordinary course
(including, without limitation, the collection of receivables and payment of
payables) and use its best efforts to preserve its business organization
intact, including the services of its present officers and the goodwill of
its suppliers, customers and others having business relations with Fiduciary.
5.3 Consents and Closing Conditions. Each of the Principal
Stockholders, Hickox and Fiduciary shall use their best efforts (a) to obtain
such consents from third parties and to take other actions as may be
appropriate in order to fulfill the closing conditions contained in this
Agreement that are reasonably within such party's control, and (b) to cause
the representations and warranties in Article 2 to be true and correct on and
as of the Closing Date.
5.4 Discharge of Related Party Debts. The Principal
Stockholders shall cause to be canceled or satisfied, in a manner that
results in no federal income tax to Fiduciary, all intercompany debts and
obligations owed by Fiduciary to AFS or any affiliate of AFS (excluding EMCO
Estate Management Company, Inc. as an affiliate solely for this purpose)
("Related Party Debt"). If any Related Party Debt is satisfied (as opposed
to being canceled) after June 20, 1998, AFS shall make a capital contribution
of cash to Fiduciary prior to the Closing Date in an amount equal to any
payments made in satisfaction of the Related Party Debt.
5.5 Non-Competition. As an inducement to the Buyer to complete
the transactions contemplated by this Agreement, Orben covenants and agrees
as follows:
(a) Non-Compete Agreement. During the period beginning as
of the Closing Date and ending on the fifth anniversary of the Closing Date
(the "Restricted Period"), Orben shall not, without prior written approval of
the Board of Directors of Buyer, become an officer, employee, agent, partner
or director of any business enterprise in substantial direct competition with
Buyer or any subsidiary or affiliate of Buyer ("Buyer's Group"). For
purposes of
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<PAGE> 23
Section 5.5, a business enterprise with which Orben becomes associated as an
officer, employee, agent, partner or director shall be considered in
substantial direct competition if, during the Restricted Period, such entity
competes with Buyer's Group in any business in which Buyer's Group is engaged
(at any time during the Restricted Period) and is within Buyer's market area
(as defined herein). Buyer's market area is defined for this purpose, as
those states in which reside customers of Buyer's Group at any time during
the Restricted Period. In the event any court shall determine that such
area where competition is prohibited or the time period during which
competition is prohibited is overbroad, then the area or time where such
competition is prohibited shall be reduced appropriately as the court may
determine is necessary to make this Section 5.5 enforceable.
(b) Non-Solicitation of Employees. During the Restricted
Period, Orben shall not, either directly or indirectly, approach or solicit
any employee of Buyer's Group with a view towards enticing such employee to
leave the employ of Buyer's Group to work for Orben or any other person.
(c) Non-Solicitation of Customers. During the Restricted
Period, Orben shall not, either directly or indirectly, approach or solicit
any past or existing customers (including all persons who become customers
during the Restricted Period) with a view towards diverting or attempting to
divert from any business that Buyer's Group has enjoyed, to Orben or to any
other person who or which is competitive with Buyer's Group.
(d) Confidential Information. Orben shall hold in a
fiduciary capacity for the benefit of Buyer all secret or confidential
information, knowledge or data relating to Buyer, or any of its subsidiaries
or affiliates, obtained by Orben before or during the Restricted Period and
which shall not be or become public knowledge (other than by acts by Orben or
representatives of Orben in violation of this Agreement). After termination
of the Restricted Period, Orben shall not, without the prior written consent
of Buyer, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone
other than Buyer and those designated by it.
ARTICLE 6
Covenants Regarding Tax Matters
6.1 Returns and Payment of Taxes. Fiduciary shall prepare and
timely file or cause to be prepared and timely filed all Returns and
amendments thereto required to be filed by Fiduciary on or before the Closing
Date (taking into account any extensions); such Returns shall be true,
correct and complete in all material respects. Buyer shall have a reasonable
opportunity to review all such Returns and amendments thereto prior to the
filing thereof. Fiduciary shall pay and discharge all Taxes shown to be due
on such Returns before the same shall become delinquent and before penalties
accrue thereon. Fiduciary shall prepare and timely file or cause to be
prepared and timely filed with the appropriate taxing authorities any Returns
of Tax which are due after the Closing Date (including Fiduciary's Federal
income tax Return for the period that includes the Closing Date) with respect
to periods ending on or before the Closing Date; such Returns shall be true,
correct and complete in all material respects, and all Taxes shown to be due
thereon will be timely paid in full by Fiduciary. In order appropriately to
apportion Taxes attributable to a period that includes (but that would not,
but for this Section, close on) the Closing Date, the parties hereto will, to
the extent permitted by applicable law, elect with the relevant taxing
authorities to treat for all purposes the Closing Date as the last day of a
taxable period of Fiduciary, and such period shall be treated as a
"Pre-Closing Partial Period" for purposes of this Agreement.
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<PAGE> 24
6.2 Elections and Settlements. Except with the prior written
consent of Buyer, prior to the Closing Fiduciary shall not, and each
Principal Stockholder shall cause Fiduciary not to, make or change any
election, change any annual tax accounting period, adopt or change any tax
accounting method, file any amended Return, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim a refund of
Taxes, consent to any extension or waiver of the limitation period applicable
to any Tax claim or assessment, or take any other action or omit to take any
action, if any such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action or omission may have the
effect of increasing, directly or indirectly, the Taxes of Fiduciary, Buyer
or any affiliate of Buyer.
6.3 Post-Closing Audits and Other Proceedings. From and after
the Closing Date, Buyer shall give prompt notice to the Principal
Stockholders of any proposed adjustment to Taxes for periods that end on or
prior to the Closing Date or that include the Closing Date. The parties
hereto acknowledge that Fiduciary shall control the conduct of any audit or
other proceeding involving Fiduciary for such periods, and shall keep the
Sellers reasonably informed of the progress thereof. Each of the Principal
Stockholders shall cooperate with Fiduciary in the conduct of any audit or
other proceeding and may participate at her or its own expense.
ARTICLE 7
Covenants of Buyer
Buyer shall use its best efforts (a) to obtain such consents from third
parties and to take other actions as may be required in order to fulfill the
closing conditions contained in this Agreement that are reasonably within its
control, and (b) to cause the representations and warranties in Article 3 to
be true and correct on and as of the Closing Date.
ARTICLE 8
Buyer's Conditions to Closing
The obligation of Buyer to consummate the Merger and the other
transactions contemplated by this Agreement shall be subject to the
fulfillment to Buyer's satisfaction of each of the following conditions:
8.1 Continued Truth of Warranties. The representations and
warranties of each of the Sellers and Fiduciary contained herein shall be
true on and as of the Closing Date with the same force and effect as though
made as of such date, except to the extent events occurring and facts
discerned after the date of this Agreement require additional disclosures to
ensure the accuracy of such representations and warranties, and subject in
all events to Sections 8.3 and 8.5.
8.2 Performance of Covenants. Each of the Sellers and
Fiduciary shall have performed all covenants and obligations and complied
with all conditions required by this Agreement to be performed or complied
with by it or them on or prior to the Closing Date.
8.3 No Material Adverse Change. There shall have been no
material adverse change to the properties, operations, liabilities, earnings,
prospects, business or condition (financial or otherwise) of Fiduciary since
December 31, 1997.
8.4 Permits and Consents. Each of the Principal Stockholders
and Fiduciary shall have secured all appropriate orders, consents, approvals
and clearances, in form and substance satisfactory to the Buyer, by and from
all regulatory agencies and other governmental authorities and
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agencies, whose order, consent and approval or clearance is required by
contract or law for the consummation of the Merger and other transactions
herein contemplated, and from all third parties to the contracts designated
on Schedule 2.9 as a condition to the Buyer's obligation to consummate the
Merger.
8.5 Full Investigation. Buyer and its employees, attorneys,
accountants and other agents shall have been permitted to conduct a full
investigation of the books, records, assets, liabilities, operations,
prospects, business and condition of Fiduciary, including attorneys' audit
response letters, and environmental assessments of Fiduciary's facilities and
business if Buyer deems it appropriate to obtain the same, and Buyer shall
not have discovered any event, circumstance or set of facts which could
reasonably be expected to constitute or lead to a Material Adverse Effect and
that is not accurately disclosed in the Fiduciary Financial Statements or the
Schedules to this Agreement. The completion of such investigation by Buyer
shall not be deemed to be a waiver by Buyer of any claim of Buyer for a
breach of representation or warranty of any of the Sellers or Fiduciary.
8.6 Closing Documents. Each of the Sellers shall have
delivered all documents required to be delivered by such Seller at Closing,
as more specifically set forth in Article 10 of this Agreement, in each case
in form and substance reasonably satisfactory to Buyer.
ARTICLE 9
Fiduciary's Conditions to Closing
The obligation of Fiduciary to consummate the Merger and the
other transactions contemplated by this Agreement shall be subject to the
fulfillment to Fiduciary's satisfaction of the following conditions:
9.1 Continued Truth of Warranties. The representations and
warranties of Buyer herein contained shall be true on and as of the Closing
Date with the same force and effect as though made as of such date, except to
the extent events occurring and facts discerned after the date of this
Agreement require additional disclosures to ensure the accuracy of such
representations and warranties.
9.2 Performance of Covenants. Buyer shall have performed all
covenants and obligations and complied with all conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
9.3 Closing Documents. Buyer shall have delivered all
documents required to be delivered by Buyer at Closing, as more specifically
set forth in Article 10 hereof, in each case in form and substance reasonably
satisfactory to Sellers.
9.4 Permits and Consents. Buyer shall have secured all
appropriate orders, consents, approvals and clearances, in form and substance
reasonably satisfactory to the Principal Stockholders by and from all
regulatory agencies and other governmental authorities and agencies whose
order, consent, approval or clearance is required by contract or law for the
consummation of the transactions herein contemplated, and all third parties
to the contracts designated on Schedule 2.9 as a condition to the Sellers'
obligation to close.
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<PAGE> 26
ARTICLE 10
Documents to be Delivered at Closing
10.1 Documents to be Delivered by Sellers. At the Closing:
(a) the Sellers shall execute and deliver to Buyer the
original certificates for all of the Fiduciary Shares, together with a
written notice of exercise of the Cash Option or Securities Option and with
stock transfer powers duly executed by AFS and Hickox and satisfactory to
Buyer, transferring to Buyer good and marketable title to the Fiduciary
Shares free and clear of all liens, claims, encumbrances and transfer
restrictions whatever;
(b) the Principal Stockholders shall deliver to Buyer a
certificate of incumbency and copy of the resolutions adopted by the Board of
Directors of AFS, authorizing the execution and delivery of this Agreement,
duly certified as of the Closing Date by the Secretary or an Assistant
Secretary of AFS;
(c) the Principal Stockholders shall deliver to Buyer
certificates of good standing or their equivalent, each dated not more than
ten days prior to the Closing Date, attesting to the good standing of AFS and
Fiduciary as corporations under the laws of the State of Delaware and as a
foreign corporation under the laws of each jurisdiction set forth on Schedule
2.1.
(d) to the extent any consents or approvals shall be
necessary to any of the transactions herein contemplated, or to the effective
transfer of the Fiduciary Shares, the Principal Stockholder shall deliver to
Buyer copies of all such consents or approvals as obtained by them;
(e) the Principal Stockholders shall deliver to Buyer (A)
the Certificate of Incorporation, as amended, of Fiduciary, certified by the
Secretary of State of the State of Delaware as of a date not more than ten
days prior to the Closing Date, and (B) the Bylaws, as amended, of Fiduciary,
certified as of the Closing Date by the Secretary or an Assistant Secretary;
(f) the Principal Stockholders shall deliver to Buyer the
resignations of the directors of Fiduciary and such officers of Fiduciary as
Buyer shall request; and
(g) the Principal Stockholders shall deliver to Buyer the
original corporate minute books, stock transfer books and corporate seal of
Fiduciary.
10.2 Documents to be Delivered by Buyer. At the Closing, Buyer
shall:
(a) deliver to Sellers a certificate of incumbency and
copy of the resolutions adopted by the Board of Directors of Buyer,
authorizing the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, duly certified as of the Closing
Date by the Secretary of Buyer;
(b) deliver to Sellers a certificate of good standing or
its equivalent, dated not more than ten days prior to the Closing Date,
attesting to the good standing of Buyer as a corporation under the laws of
the State of Delaware;
(c) to the extent any consents or approvals shall be
necessary to any of the transactions herein contemplated, or to the effective
transfer of the Fiduciary Shares to Buyer, deliver to Sellers copies of all
such consents or approvals as obtained by Buyer;
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<PAGE> 27
(d) deliver to holders of Fiduciary Shares the Merger
Consideration as contemplated in Section 1.8.
ARTICLE 11
Survival and Indemnification
11.1 Survival; Knowledge. The representations, warranties,
covenants and agreements set forth in this Agreement or in any certificate or
other writing delivered in connection with this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby
notwithstanding any examination made for or on behalf of any party. For the
purposes of this Agreement, the term "knowledge" (or words of similar import)
of any party shall mean the actual present knowledge of such party after
inquiry of each other person known to such party to be in possession of, or
in a position to be aware of, information relating to the matter in question.
11.2 General Indemnification.
(a) By Principal Stockholders. By execution of this
Agreement, the Principal Stockholders jointly and severally agree to
indemnify the Buyer and Fiduciary and their respective successors and assigns
and hold them harmless against and in respect of:
(i) any and all loss, liability, cost, expense or
damage (including judgments and settlement payments) incurred by any of them
incident to, arising in connection with or resulting from any
misrepresentation, breach, nonperformance or inaccuracy of any
representation, warranty or covenant by any of the Principal Stockholders or
Fiduciary made or contained in this Agreement or in any Exhibit, Schedule,
certificate or other document executed and delivered to Buyer by or on behalf
of any of the Principal Stockholders or Fiduciary under or pursuant to this
Agreement or the transactions contemplated herein;
(ii) any and all loss, liability, cost, expense or
damage (including judgments and settlement payments) incurred by them
incident to, arising in connection with or resulting from any failure of AFS
to properly distribute the Merger Consideration among its stockholders;
(iii) any and all loss, liability, cost, expense or
damage (including judgments and settlement payments) incurred by any of them
incident to, arising in connection with or resulting from any liability or
obligation of Fiduciary of any kind, whether existing, fixed, contingent upon
future events, vested, funded, unfunded or otherwise, which is not either (A)
fully covered by insurance purchased at the expense of Fiduciary, or (B)
fully reflected in the liabilities of Fiduciary on the Fiduciary Financial
Statements; and
(iv) any and all costs, expenses and all other
actual damages incurred by any of them in claiming, contesting or remedying
any breach, misrepresentation, non-performance or inaccuracy of any of the
Principal Stockholders and Fiduciary described above, including, by way of
illustration and not limitation, all legal and accounting fees, other
professional expenses and all filing fees and collection costs incident
thereto and all such fees, costs and expenses incurred in defending claims
which, if successfully prosecuted, would have resulted in Damages (as defined
herein).
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<PAGE> 28
(b) By Buyer. By execution of this Agreement, and
subject to Sections 11.4 and 11.5 below, Buyer agrees to indemnify each
Principal Stockholder and his or its heirs, personal representatives,
successors and/or assigns and hold them harmless against and in respect of:
(i) any and all loss, liability, cost, expense or
damage (including judgments and settlement payments) incurred by any of them
incident to, arising in connection with or resulting from any
misrepresentation, breach, non-performance or inaccuracy of any
representation, warranty or covenant by the Buyer made or contained in this
Agreement or in any Exhibit, Schedule, certificate or document executed and
delivered by or on behalf of Buyer under or pursuant to this Agreement or the
transactions contemplated herein; and
(ii) any and all costs, expenses and all other
actual damages incurred by any of the Principal Stockholders in claiming,
contesting or remedying any breach, misrepresentation, non-performance or
inaccuracy of Buyer described above, including, by way of illustration and
not limitation, all legal and accounting fees, other professional expenses
and all filing fees and collection costs incident thereto and all such fees,
costs and expenses incurred in defending claims which, if successfully
prosecuted, would have resulted in Damages (as defined herein).
(c) Damages. Any and all of the items set forth in
Section 11.2(a), (b) or (c) for which a party is entitled to be indemnified
hereunder are collectively called "Damages."
11.3 Notice of, and Procedures for, Collecting Indemnification.
(a) Initial Claim Notice. When a party becomes aware of
a situation which may result in Damages for which it would be entitled to be
indemnified hereunder, such party (the "Indemnitee") shall submit a written
notice (the "Initial Claim Notice") to the other party (the "Indemnitor") to
such effect with reasonable promptness after it first becomes aware of such
matter and shall furnish the Indemnitor with such information as it has
available demonstrating its right or possible right to receive indemnity. If
the potential claim is predicated on, or later results in, the filing by a
third party of any action at law or in equity (a "Third Party Claim"), the
Indemnitee shall provide the Indemnitor with a supplemental Initial Claim
Notice not later than ten (10) days prior to the date on which a responsive
pleading must be filed, and shall also furnish a copy of such claim (if made
in writing) and of all documents received from the third party in support of
such claim. Each Initial Claim Notice shall name, when known, the person or
persons making the assertions which are the basis for such claim. Failure by
the Indemnitee to deliver an Initial Claim Notice or an update thereof in a
timely manner or otherwise in the manner described herein shall not relieve
the Indemnitor of any of its obligations under this Agreement except to the
extent that the Indemnitor can demonstrate actual monetary prejudice
resulting from such delay.
(b) Rights of Indemnitor. If, prior to the expiration of
thirty (30) days from the mailing of an Initial Claim Notice (the "Claim
Answer Period"), the Indemnitor shall request in writing that such claim not
be paid, the same shall not be paid, and the Indemnitor shall settle,
compromise or litigate in good faith such claim, and employ attorneys of its
choice to do so; provided, however, that Indemnitee shall not be required to
refrain from paying any claim which has matured by court judgment or decree,
unless appeal is taken therefrom and proper appeal bond posted by the
Indemnitor, nor shall it be required to refrain from paying any claim where
such action would result in the foreclosure of a lien upon any of its assets
or a default in a lease or other contract except a lease or other contract
which is the subject of the dispute. If the Indemnitor elects to settle,
compromise or litigate such claim, all reasonable expenses, including but not
limited to all amounts paid in settlement or to satisfy judgments or awards
and reasonable attorney's fees and costs, incurred by the Indemnitor in
settling, compromising or litigating such claim shall be secured to the
reasonable satisfaction of Indemnitee. Indemnitee shall cooperate fully to
make available to the Indemnitor and
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<PAGE> 29
its attorneys, representatives and agents, all pertinent information under
its control. Indemnitee shall have the right to elect to settle or
compromise all other contested claims with respect to which the Indemnitor
has not, within the Claim Answer Period, acknowledged in writing (i)
liability therefor (should such claim, to the extent Indemnitor is ultimately
determined to be liable for such indemnification under this Agreement,
ultimately be resolved against Indemnitee), and (ii) its election to assume
full responsibility for the settlement, compromise, litigation and payment of
such claim.
(c) Final Claims Statement. At such time as Damages for
which the Indemnitor is liable hereunder are incurred by Indemnitee by actual
payment thereof or by entry of a final judgment, Indemnitee shall forward a
Final Claims Statement to the Indemnitor setting forth the amount of such
Damages in reasonable detail on an itemized basis. All amounts reflected on
each Final Claims Statement shall be paid promptly by Indemnitor to
Indemnitee.
11.4 Time Limits. Any claim for indemnification under this
Article 11 for Damages must be made in writing to the Indemnitor no later
than the fifth anniversary of the Closing Date, except only as follows:
(a) any Indemnitee may bring a claim against any
Principal Stockholder for indemnification for Damages attributable to a
breach of a representation or warranty (i) in Section 2.1, 2.2, 2.3, 2.4,
2.22, 2.23 and the second sentence of Section 2.7, at any time after the
Closing Date, and (ii) in Section 2.19, at any time within the period ending
thirty (30) days after expiration of the applicable statute of limitations
covering the Tax with respect to which indemnification is sought; and
(b) any Indemnitee may bring a claim against the Buyer
for indemnification for Damages attributable to a breach of a representation
or warranty in Section 3.1, 3.2 or 3.4, at any time after the Closing Date.
11.5 Limits on Amounts. The Principal Stockholders, on the one
hand, and the Buyer, on the other hand, shall not be liable under this
Article 11 for Damages until such time as the Indemnitee has sustained
otherwise indemnifiable Damages under this Agreement totaling Ten Thousand
Dollars ($10,000) (the "Indemnity Basket"); provided that any representation
or warranty in Article 2 that would be breached but for a qualification by
"Material Adverse Effect," "material" or any similar term shall be treated as
otherwise indemnifiable Damages for purposes of computing the Indemnity
Basket. The Principal Stockholders, on the one hand, and the Buyer, on the
other hand, shall not be liable under this Article 11 for Damages which,
together with all other indemnifiable Damages under this Agreement, exceed an
amount equal to the One Million seven Hundred Two Thousand Dollars
($1,702,000) (the "Indemnity Cap"). Notwithstanding the foregoing, the
Indemnity Basket and Indemnity Cap shall not apply to:
(a) claims by the Buyer for indemnification for Damages
attributable to a breach of a representation or warranty in Sections 2.1,
2.2, 2.3, 2.4, 2.22, 2.23 or the second sentence of Section 2.7; and
(b) claims by the Principal Stockholders for
indemnification for Damages attributable to a misrepresentation or breach of
warranty in Section 3.1, 3.2 or 3.4.
11.6 Sole Remedy. The parties to this Agreement acknowledge
that the provisions of this Article 11 shall constitute the sole legal remedy
of any party hereto against any other party hereto with respect to the sale
of the Fiduciary Shares by the Sellers to the Buyer on the terms set forth in
this Agreement, any representations made in connection with such sale, and
any obligations
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<PAGE> 30
or liabilities of the Company attributable to periods prior to the Closing,
provided that this Section 11.6 shall not affect the right of any party to
seek specific performance, injunctive or other equitable relief with respect
to a violation of this Agreement.
ARTICLE 12
Termination of Agreement
12.1 Termination. Anything in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of the Buyer and Fiduciary;
(b) upon written notice from the Buyer to Fiduciary if either
(i) any of the conditions precedent to the Buyer's obligations hereunder
shall have become incapable of fulfillment through no fault of the Buyer, or
(ii) Fiduciary or any Seller is in breach of any representation, warranty or
covenant of such party in this Agreement, which breach has continued for ten
(10) days after delivery of written notice to such party specifying such
breach;
(c) upon written notice from Fiduciary to the Buyer if either
(i) any of the conditions precedent to Fiduciary's obligations hereunder
shall have become incapable of fulfillment through no fault of Fiduciary or
any Seller, or (ii) Buyer is in breach of any representation, warranty or
covenant of Buyer in this Agreement, which breach has continued for ten (10)
days after delivery of written notice to Buyer specifying such breach; or
(d) upon written notice from any party to the other parties
hereto if the Closing does not occur by August 30, 1998 (unless the failure
to consummate the purchase and sale of the Fiduciary Shares by such date
shall be due to the action or failure to act of the party seeking to
terminate this Agreement or any affiliate thereof).
Any such written notice shall state the grounds for termination asserted by
the party delivering such notice of termination.
12.2 Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are abandoned pursuant to Section 12.1, then
this Agreement shall become null and void and of no effect, except for the
provisions of this Article 12 and Article 13 (relating to, among other
things, notices, contract construction and effect and expenses); provided,
however, that such termination shall not affect the right of any party to
bring an action against another party for a breach occurring prior to the
termination or for a wrongful termination.
ARTICLE 13
Miscellaneous
13.1 Notices. Any notices or other communications required or
permitted hereunder (including, by way of illustration and not limitation,
any notice permitted or required under Article 11 hereof) to any party hereto
shall be sufficiently given if delivered in person or sent by certified or
registered mail, postage prepaid, addressed as follows:
In the case of Buyer or (after Closing) Fiduciary, to:
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<PAGE> 31
Unified Financial Services, Inc.
1104 Buttonwood
Lexington, Kentucky 40515
Attention: Mr. Timothy L. Ashburn
With a copy to:
Thompson Coburn
One Mercantile Center
St. Louis, Missouri 63101
Attention: Charles H. Binger
(314) 552-7012 (fax)
In the case of the Principal Stockholders to:
Associated Family Services, Inc.
The Bar Association Building
36 West 44th Street, Suite 1310
New York, New York 10036
and also to:
Jack R. Orben
177 Soundview
White Plains, New York 10606
and also to:
Andrew E. Beer
311 Broadway
Fifth Floor Penthouse
New York, New York 10007
In the case of the Minority Stockholder to:
Charles C. Hickox
Ashland Management
26 Broadway
New York, New York 10004
or such substituted address as any party shall have given notice to the
others in writing in the manner set forth in this Section 13.1.
13.2 Amendment. This Agreement may be amended or modified in
whole or in part only by an agreement in writing executed by all parties
hereto and making specific reference to this Agreement.
13.3 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one
instrument.
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<PAGE> 32
13.4 Joint and Several Nature; Binding on Successors and
Assigns. The Principal Stockholders are jointly and severally liable for all
of each other's representations, warranties, covenants and indemnity
obligations hereunder. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by and against the parties hereto and their
respective successors and assigns in accordance with the terms hereof.
Neither Fiduciary nor any Seller shall be entitled to assign its or his
rights under this Agreement prior to the Closing without the prior written
consent of the Buyer. Prior to the Closing, Buyer may assign its rights
under this Agreement to any existing or new subsidiary corporation provided
that Buyer shall remain liable for the performance of its obligations
hereunder to the extent such assignee fails to do so.
13.5 Headings; Pronouns. Descriptive headings and subheadings
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Except as the context may
otherwise require, each reference to a paragraph is to a paragraph of this
Agreement. Each reference herein to any party or to any person affected hereby
shall be deemed to be in the appropriate number and gender.
13.6 Severability. In the event that any one or more of the
provisions contained in this Agreement or any application thereof shall be
invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Agreement and any other
application thereof shall not in any way be affected or impaired thereby;
provided, however, that to the extent permitted by applicable law, any
invalid, illegal, or unenforceable provision may be considered for the
purpose of determining the intent of the parties in connection with the other
provisions of this Agreement.
13.7 Waivers. The parties may, by written agreement, (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto, (b) waive any inaccuracies in the representations contained
in this Agreement or in any document delivered pursuant to this Agreement,
(c) waive compliance with, or modify, any of the covenants or conditions
contained in this Agreement, and (d) waive or modify performance of any of
the obligations of any of the parties hereto; provided, that the occurrence
of the Closing shall not of itself constitute such a waiver or modification,
and provided further, that no such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall
operate as a waiver of, or an estoppel with respect to, any subsequent
insistence upon such strict compliance other than with respect to the matter
so waived or modified.
13.8 Publicity. Any public announcements prior to the Closing
concerning the transaction contemplated by this Agreement shall be jointly
planned and simultaneously released by Buyer and Fiduciary and no party shall
act in this regard without the prior approval of the other parties, which
approval shall not be unreasonably withheld or delayed.
13.9 Headings. The headings in the sections and subsections of
this Agreement and in the Schedules are inserted for convenience only and in
no way alter, amend, modify, limit or restrict the contractual obligations of
the parties.
13.10 List of Exhibits and Schedules. As mentioned in this
Agreement, there are attached hereto or delivered herewith, the following
Exhibits and Schedules:
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<PAGE> 33
<TABLE>
<CAPTION>
EXHIBITS
Section
Exhibit Document Reference
------- -------- ---------
<S> <C> <C>
A Certificate of Incorporation 2.2
B Bylaws 2.2
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
Schedule
No. Schedule Caption
- -------- ----------------
<S> <C>
2.1 Foreign Jurisdictions
2.3 Capitalization
2.4 Consents and Violations
2.5 Exceptions to Financial Statements
2.6 Certain Changes or Events
2.7 Exceptions to Title
2.9 Bank Accounts and Procedures
2.10 Contracts and Defaults
2.11 Patents and Trademarks
2.12 Violations of Law
2.13 Litigation
2.14 Employee Benefit Plans and Employment History
2.15 Proceedings and Regulations
2.16 Insurance
2.17 Environmental Matters
2.18 Permits
2.19 Taxes
2.20 Subsidiaries and Investments
2.22 Conflicts of Interest
2.23 Brokers
3.2 Consents
</TABLE>
Each of the foregoing Exhibits and Schedules is incorporated herein by this
reference and expressly made a part hereof.
13.11 Expenses. Except to the extent otherwise provided in this
Agreement, each of the Sellers and Buyer shall bear its own expenses incurred
in connection with the negotiation, execution and performance of this
Agreement and the transactions herein contemplated, including, but not
limited to, legal and accounting fees and expenses. AFS shall bear all costs
and expenses of AFS and Stockholders relating to the negotiation, execution
and delivery of this Agreement and the Merger (collectively, the "Transaction
Expenses").
13.12 Entire Agreement; Law Governing. All prior negotiations
and agreements between the parties hereto are superseded by this Agreement,
and there are no representations, warranties, understandings or agreements
other than those expressly set forth herein or in an Exhibit or Schedule
delivered pursuant hereto, except as modified in writing concurrently
herewith or subsequent hereto. Except to the extent the DGCL applies to the
Merger, this Agreement shall be governed by and construed and interpreted
according to the internal laws of the State of Indiana, determined without
reference to conflicts of law principles.
[The balance of this page has been left blank intentionally]
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<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
"BUYER"
UNIFIED FINANCIAL SERVICES, INC.
By /s/ Timothy L. Ashburn
------------------------------------------
Timothy L. Ashburn, Chairman of the Board,
President and Chief Executive Officer
"MERGER SUB"
FIDUCIARY ACQUISITION CORPORATION
By /s/ Timothy L. Ashburn
------------------------------------------
Timothy L. Ashburn, President
"SELLERS" AND
"PRINCIPAL STOCKHOLDERS"
ASSOCIATED FAMILY SERVICES, INC.
By /s/ Jack R. Orben
------------------------------------------
Jack R. Orben, Chairman and Chief Executive
Officer
FIDICIARY COUNSEL, INC.
By /s/ Jack R. Orben
------------------------------------------
Jack R. Orben, Chairman and Chief
Executive Officer
INTELLECTRONIC MANAGEMENT SYSTEMS, INC.
By /s/ Andrew E. Beer
------------------------------------------
Andrew E. Beer, President and Secretary
/s/ Jack R. Orben
--------------------------------------------
Jack R. Orben, Chairman and Chief Executive
Officer
/s/ Andrew E. Beer
--------------------------------------------
Andrew E. Beer, President and Secretary
"SELLER" AND "MINORITY STOCKHOLDER"
/s/ Charles C. Hickox
--------------------------------------------
Charles C. Hickox
Solely for purposes of Sections 1.4(c),
2.4(b), 10.1(a) and 13.10 and Article 4
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