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): March 28, 2000
1ST ATLANTIC GUARANTY CORPORATION
(Exact Name of Registrant as Specified in Charter)
Maryland 333-41361 54-1322110
(State or Other Jurisdiction (Commission File Number) (IRS Employer of
Incorporation) Identification No.)
7920 Norfolk Avenue, Suite 1150, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 656-4200
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Item 5. Other Events.
On March 28, 2000, a Stock Purchase Agreement (the
"Agreement") was made and entered into by and among 1st Atlantic Guaranty
Corporation ("1st Atlantic"), SBM Certificate Company (the "Company"), and ARM
Financial Group, Inc. ("ARM"), which sets forth the terms and conditions of the
proposed acquisition by 1st Atlantic of the Company from ARM.
The Company, a Minnesota corporation, is a registered
investment company under the Investment Company Act of 1940, as amended. It
offers for sale and issues face-amount certificates. The transaction is
scheduled to close on May 1, 2000, or on such later date as the parties may
agree upon.
Pursuant to ARM's voluntary petition for relief under chapter
11 of the Bankruptcy Code in the United States Bankruptcy Court for the District
of Delaware IN RE: ARM FINANCIAL GROUP, INC. Case No. 99-4430, the acquisition
is subject to the approval of the Bankruptcy Court.
Additionally, the acquisition is subject to various other
terms and conditions. A copy of the Agreement is filed herewith as an exhibit.
Item 7. Financial Statements, Pro-forma Financial Information and Exhibits.
(c) Exhibits
(2) Stock Purchase Agreement dated March 28, 2000 by and among 1st
Atlantic Guaranty Corporation, SBM Certificate Company, and
ARM Financial Group (Exhibits omitted).
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.
Date: April 12, 2000
1ST ATLANTIC GUARANTY CORPORATION
By: /s/ John J. Lawbaugh
Name: John J. Lawbaugh
Title: President
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EXHIBIT (2)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 28th day of March, 2000 by and among 1st ATLANTIC GUARANTY
CORPORATION, a Maryland corporation ("Buyer"), SBM CERTIFICATE COMPANY, a
Minnesota corporation (the "Company"), and ARM FINANCIAL GROUP, INC., a Delaware
corporation (the "Shareholder"), which is the sole shareholder of the Company.
W I T N E S S E T H:
WHEREAS, Shareholder owns all of the issued and outstanding shares of
capital stock of the Company and Shareholder desires to sell and convey to
Buyer, and Buyer desires to purchase from Shareholder, all of the outstanding
capital stock of the Company;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants and agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1 PURCHASE OF STOCK; MINIMUM SHAREHOLDERS' EQUITY.
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(a) On the Closing Date (as defined in paragraph 7.1 below),
Buyer agrees to purchase from Shareholder, and Shareholder agrees to sell to
Buyer, all of the issued and outstanding shares of common stock, par value $1.00
per share, of the Company (the "Company Shares") owned by Shareholder for a
total cash Consideration of SIX HUNDRED FIFTY THOUSAND and 00/100 DOLLARS
($650,000.00), less the amount, if any, of reduction of Consideration provided
in Section 5.8 hereof (the "Purchase Price"). Immediately prior to the Closing,
the Company shall dividend to Shareholder an amount equal to Net Shareholders'
Equity (as defined below) LESS (i) $250,000.00 and (ii) estimated "deferred
acquisition costs", net of income taxes ("DAC") as of the Closing Date (the
"Dividend"); said dividend to be in the form of (1) a transfer in kind of the
securities listed in SCHEDULE 1.1(A) (the "Securities") and (2) to the extent
the market value of the Securities as of March 31, 2000 is less than the
Approximate Shareholders' Equity (as defined below), an amount equal to such
shortfall in immediately available funds.
(b) "Net Shareholders' Equity" shall mean the shareholders'
equity of the Company, prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") as of the Closing Date if the Closing
Date is a month end, or if the Closing Date is not a month end, then the
previous month end shareholders' equity.
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(c) [RESERVED]
(d) For purposes of the Dividend to be paid, Shareholder will
provide Buyer at least 15 days prior to the Closing Date with a reasonable
estimate of shareholders' equity, net of estimated deferred acquisition costs,
as of the Closing Date, and Company shall dividend, for purposes of Section
1.1(a) above, an amount equal to estimated shareholders' equity, net of
estimated DAC, less TWO Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
(the "Approximate Shareholders' Equity"). On or before sixty (60) days following
the Closing Date, Shareholder will provide Buyer with a final balance sheet,
prepared in accordance with GAAP, reflecting actual Shareholders' Equity as of
the Closing Date if the Closing Date is a month end, or if the Closing Date is
not a month end, then as of the previous month end (the "Final Balance Sheet").
If the actual Shareholders' Equity less actual DAC minus Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00) (collectively, "Final Shareholders"
Equity) is less than the Approximate Shareholders' Equity, then Buyer shall have
the right to collect from the Escrow Consideration (as defined below) an amount
equal to the Approximate Shareholders' Equity minus the Final Shareholders'
Equity. If the Final Shareholders' Equity is more than the Approximate
Shareholders' Equity, then Buyer, within five (5) business days shall transfer
to Shareholder, in immediately available funds, an amount equal to Final
Shareholders' Equity minus Approximate Shareholders' Equity.
(e) Upon delivery by Shareholder to Buyer of the Final Balance
Sheet, Shareholder and Company shall settle the intercompany accounts and
transactions consistent with past practices. To the extent such settlement
provides a net amount owed by Shareholder to Company, Buyer shall be distributed
such net amount owed out of the Escrow Consideration. To the extent such
settlement provides a net amount owed by Company to Shareholder, Buyer and/or
Company shall pay to Shareholder, within five (5) business days, such net amount
in immediately available funds.
1.2 ESCROW CONSIDERATION. An amount equal to the Purchase Price less
Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) (the "Escrow
Consideration") shall be placed in escrow pursuant to the provisions of
Paragraph 5.9 hereof to be held for a period of 18 months as security for
indemnification obligations of Shareholder under this Agreement.
1.3 DEPOSIT. Buyer has posted a purchase price deposit in the amount of
$100,000.00 (the "Deposit") with DuFour & Kohlhoss, Chartered ("Escrow Agent")
which shall be applied to the payment of the Escrow Consideration at Closing.
Shareholder has received evidence of the Deposit from the Escrow Agent.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
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Each of the Company and the Shareholder, jointly and severally,
represent and warrant that all of the following representations and warranties
with respect to the Company and its business and operations set forth in this
Article II are true and correct in all material respects on the date hereof and
will be true and correct in all material respects at the time of the Closing.
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2.1 AUTHORIZATION. Subject to the entry and effectiveness of the order
of the Bankruptcy Court in substantially the form of EXHIBIT "A" hereto (the
"Section 363/365 Order"), this Agreement has been duly executed and delivered by
the Company and the Shareholder and constitutes the valid and binding obligation
of each such party, enforceable against each such party in accordance with its
terms.
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF THE COMPANY. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota with all requisite power to carry on
its business as now being conducted. Set forth on SCHEDULE 2.2 is a list of the
jurisdictions in which the Company is qualified or licensed to do business as a
foreign corporation. True, complete and correct copies of (i) the Articles of
Incorporation of the Company and (ii) the By-laws of the Company are attached
hereto on SCHEDULE 2.2 (the "Charter Documents"). The minute books of the
Company have been made available to Buyer and, except as set forth on SCHEDULE
2.2, are correct and complete in all material respects.
2.3 CAPITAL STOCK OF THE COMPANY
(a) The Company's authorized capital stock consists of one
million (1,000,000) shares of common stock, $1.00 par value per share, of which
two hundred fifty thousand (250,000) shares are issued and outstanding, all of
which are owned of record by Shareholder. All of the Company Shares have been
validly issued and are fully paid and nonassessable and no holder thereof is
entitled to any preemptive rights (except any statutory preemptive rights, which
the Shareholder hereby waives). There are no outstanding conversion or exchange
rights, subscriptions, options, warrants or other arrangements or commitments
obligating the Company to issue any shares of capital stock or other securities
or to purchase, redeem or otherwise acquire any shares of capital stock or other
securities, or to pay any dividend or make any distribution in respect thereof.
(b) The Shareholder (i) owns of record and beneficially and has
good and marketable title to the Company Shares, free and clear of any and all
liens, mortgages, security interests, encumbrances, pledges, charges, adverse
claims, options, buy-sell agreements, right of first refusal agreements,
property settlement agreements, rights or restrictions of any character
whatsoever other than standard state and federal securities law private offering
legends and restrictions (collectively, "Liens"), and (ii) has the right to vote
the Company Shares on any matters as to which any shares of the Company common
stock are entitled to be voted under the laws of the State of Minnesota and the
Company's Charter Documents, free of any right of any other person.
2.4 SUBSIDIARIES. The Company does not presently own, of record or
beneficially, or control directly or indirectly, 80% or more of the (i) capital
stock, securities convertible into capital stock or (ii) other equity or
membership interest in any corporation, association or business entity nor is
the Company, directly or indirectly, a participant in any joint venture or
partnership.
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2.5 FINANCIAL STATEMENTS.
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(a) The Company has previously furnished to Buyer the balance
sheet of the Company as of December 31, 1999 and the related statements of
operations, shareholder equity and cash flows for the three (3) fiscal years
then ended, as audited by Ernst & Young, certified public accountants
(collectively, the "Financial Statements"). The Financial Statements present
fairly the financial position and results of operations of the Company as of the
indicated dates and for the indicated periods and have been prepared in
accordance with GAAP except as disclosed on SCHEDULE 2.5.
(b) Except to the extent reflected in the December 31, 1999
balance sheet included in the Financial Statements or as disclosed on SCHEDULE
2.5, the Company has no liabilities or obligations required to be reflected in
the Financial Statements (or the notes thereto) in accordance with GAAP other
than liabilities incurred in the ordinary course of business, consistent with
past practice, subsequent to December 31, 1999.
2.6 PERMITS AND INTANGIBLES. The Company holds all material licenses,
franchises, permits and other governmental authorizations necessary to conduct
its business as it is currently conducted (the "Material Permits").
2.7 TAX MATTERS. The Company has filed all income tax returns required
to be filed by the Company and all returns, reports and forms of other Taxes (as
defined below) required to be filed by the Company and has paid or provided for
all Taxes shown to be due on such returns and all such returns are correct and
complete in all material respects. Except as set forth on SCHEDULE 2.7, (i) no
action or proceeding for the assessment or collection of any Taxes is pending
against the Company and no notice of any claim for Taxes, whether pending or
threatened, has been received; (ii) no deficiency, assessment or other formal
claim for any Taxes has been asserted or made against the Company that has not
been fully paid or finally settled; and (iii) no issue has been formally raised
by any taxing authority in connection with an audit or examination of any return
of Taxes. No federal, state or foreign income tax returns of the Company have
been examined, and there are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for such Taxes for any period. All
Taxes that the Company has been required to collect or withhold have been duly
withheld or collected and, to the extent required, have been paid to the proper
taxing authority. For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments including, without limitation,
income, excise, property, withholding, sales and franchise taxes, imposed by the
United States, or any state, county, local or foreign government or subdivision
or agency thereof, and including any interest, penalties or additions
attributable thereto.
2.8 ASSETS AND PROPERTIES.
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(a) REAL PROPERTY. The Company does not own or hold any
interest in real property.
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(b) REAL PROPERTY LEASES. The Company is not a party to any
lease of any real property.
2.9 [RESERVED]
2.10 CONTRACTS. Set forth on SCHEDULE 2.10 is a listing of all material
contracts, agreements, arrangements and commitments (whether oral or written) to
which the Company is a party or by which its assets or business are bound (other
than the contracts represented by its outstanding Face Amount Certificates).
2.11 NO VIOLATIONS. Subject to the entry and effectiveness of the
Section 363/365 Order, neither the execution, delivery and performance of this
Agreement by the Company and the Shareholder nor the consummation of the
transactions contemplated hereby will (i) violate any provision of any Charter
Document, or (ii) violate, in any material respect, any statute, rule,
regulation, order or decree of any public body or authority by which the Company
or the Shareholder or its respective properties or assets are bound.
2.12 CONSENTS. Except as set forth in SCHEDULE 2.12, and upon entry of
the Section 363/365 Order, no consent, approval, notice to, registration or
filing with, authorization or order of, any court or governmental authority,
under any contract or other agreement or commitment to which the Company or
Shareholder is a party or by which its respective assets are bound, is required
as a result of or in connection with the execution or delivery of this
Agreement, and the other agreements and documents to be executed by the Company
and Shareholder or the consummation by the Company and Shareholder of the
transactions contemplated hereby.
2.13 LITIGATION AND RELATED MATTERS. Set forth on SCHEDULE 2.13 is a
list of all actions, suits, proceedings, investigations or grievances pending
against the Company or, to the best knowledge of the Company and the
Shareholder, threatened against the Company, the business or any property or
rights of the Company, at law or in equity, before or by any arbitration board
or panel, court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign
("Agencies"). None of the actions, suits, proceedings or investigations listed
on SCHEDULE 2.13 would, if adversely determined (i) have a material adverse
effect on the Company or (ii) affect the right or ability of the Company to
carry on its business substantially as now conducted. The Company is not subject
to any continuing court or Agency order, writ, injunction or decree applicable
specifically to its business, operations or assets or its employees, nor is the
Company in default with respect to any order, writ, injunction or decree of any
court or Agency with respect to its assets, business, operations or employees.
SCHEDULE 2.13 lists all actions, suits or proceedings filed by or against the
Company since December 31, 1997. The Company has not during the last two (2)
years been required to make any indemnification payment as a result of any
actual or alleged act or omission of the Company or any person under its
control.
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2.14 COMPLIANCE WITH LAWS.
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(a) The Company is in compliance with all applicable laws,
regulations (including federal, state and local procurement regulations),
orders, judgments and decrees except where the failure to so comply would not
have a material adverse effect on the Company or its business.
(b) The Company is a registered Investment Company under the
Investment Company Act of 1940, as amended (the "1940 Act") and is in compliance
with all provisions of the 1940 Act and the rules promulgated thereunder as
applicable to issuers of a "face amount certificate" as that term is defined in
the 1940 Act, except where the failure to so comply would not have a material
adverse effect on the Company or its business.
(c) The Company publicly offers and sells face amount
certificates which are registered under the Securities Act of 1933, as amended
(the "1933 Act"). Currently the only registration statement maintained by the
Company under the 1933 Act is its Form S-1 Registration Statement No. 33-38066
(the "Registration Statement") with respect to its Series 503 Certificates. The
Registration Statement, including the Prospectus which is a part thereof, does
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading. There are no stop order or similar proceedings pending
or threatened against the Company with respect to the Registration Statement.
(d) The Company has filed all periodic reports required to be
filed by it under the Securities Exchange Act of 1934, as amended (the "1934
Act") and the rules promulgated thereunder, except where the failure to so
comply would not have a material adverse effect on the Company or its business.
(e) The Company is in compliance with all state securities
laws applicable to the offer and sale of its face amount certificates, except
where the failure to so comply would not have a material adverse effect on the
Company or its business.
2.15 YEAR 2000 REPROGRAMMING. Except as disclosed in writing to Buyer,
none of the (A) computer software, computer firmware, computer hardware (whether
general or special purpose) or other similar or related items of automated,
computerized or software systems and (B) equipment containing embedded
microchips (including systems and equipment supplied by others) used or relied
on by the Company in the conduct of its business has malfunctioned or, based on
the Company's reasonable inquiry is expected to malfunction, cease to function,
generate incorrect data or produce incorrect results when processing, providing
or receiving date-related data from, into and between the year 1999 and earlier,
and the year 2000 and thereafter, or date-related data in connection with any
valid data in the twentieth and twenty-first centuries.
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2.16 EMPLOYEES AND EMPLOYEE BENEFIT PLANS. The Company has no employees
or employee benefit plans.
2.17 OFFICERS AND DIRECTORS. Set forth on SCHEDULE 2.17 is a list of
the current officers and directors of the Company.
2.18 BANK ACCOUNTS AND POWERS OF ATTORNEY. SCHEDULE 2.18 sets forth
each bank, savings institution and other financial institution with which the
Company has an account or safe deposit box, letter of credit, line of credit or
other financial agreement, arrangement or obligation and the names of all
persons authorized to draw thereon or to have access thereto. Each person
holding a power of attorney or similar grant of authority on behalf of the
Company is identified on SCHEDULE 2.18. Except as disclosed on SCHEDULE 2.18,
(i) the Company has not given any revocable or irrevocable powers of attorney to
any person, firm, corporation or organization relating to its business for any
purpose whatsoever, and (ii) the Company has canceled any and all credit, debit,
gas and other cards issued to or otherwise payable by the Company effective
prior to the Closing and all amounts due thereunder have been fully paid and
discharged. SCHEDULE 2.18 identifies all agreements with First National Bank of
Minneapolis regarding custodial accounts or other custodial arrangements.
2.19 DISCLOSURE. All written agreements, lists, schedules, instruments,
exhibits, documents, certificates, reports, statements and other writings
furnished to Buyer pursuant hereto or in connection with this Agreement or the
transactions contemplated hereby are and will be complete and accurate in all
material respects. No representation or warranty by the Shareholder and the
Company contained in this Agreement, in the schedules attached hereto or in any
certificate furnished or to be furnished by the Shareholder or the Company to
Buyer in connection herewith or pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary in order to make any statement contained herein or therein not
misleading. There is no fact known to the Shareholder that has specific
application to the Shareholder or the Company (other than general economic or
industry conditions) and that materially adversely affects or, as far as the
Shareholder can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of the Company that has
not been set forth in this Agreement or any schedule hereto.
(B) REPRESENTATION AND WARRANTY OF SHAREHOLDER
The Shareholder represents and warrants that the representation and
warranty in Section 2.20 is true and correct in all material respects as of the
date hereof, and will be true and correct in all material respects at the time
of the Closing.
2.20 ABSENCE OF CLAIMS AGAINST THE COMPANY. The Shareholder does not
have any claims against the Company other than as disclosed herein, including
without limitation, final settlement of intercompany accounts and transactions
consistent with past practices.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company and Shareholder that all
of the following representations and warranties with respect to Buyer are true
and correct as of the date hereof, and will be true and correct in all material
respects at the time of the Closing in all material respects.
3.1 ORGANIZATION AND AUTHORIZATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Buyer has all requisite corporate power, capacity and authority to execute and
deliver this Agreement and all other agreements and documents contemplated
hereby. The execution and delivery of this Agreement and such other agreements
and documents by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by Buyer and no other corporate
action on the part of Buyer is necessary to authorize the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Buyer and is the legal valid and binding obligation of Buyer, enforceable in
accordance with its terms.
3.2 NO VIOLATIONS. The execution and delivery of this Agreement and the
other agreements and documents contemplated hereby by Buyer and the consummation
of the transactions contemplated hereby will not (a) violate any provision of
the articles of incorporation or bylaws of Buyer (b) violate any statute, rule,
regulation, order or decree of any public body or authority by which Buyer or
its properties or assets are bound, or (c) result in a violation or breach of,
or constitute a default under or result in the creation of any encumbrance upon,
or create any rights of termination, cancellation or acceleration in any person
with respect to any agreement, contract, indenture, mortgage or instrument to
which Buyer is a party or any of its properties or assets is bound.
3.3 CONSENTS. No consent, approval or other authorization of any
governmental authority or third party is required as a result of or in
connection with the execution and delivery of this Agreement and the other
agreements and documents to be executed by Buyer or the consummation by Buyer of
the transactions contemplated hereby.
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3.4 FINANCIAL STATEMENTS. Buyer has previously furnished to Shareholder
the balance sheet of Buyer as of September 30, 1998 and September 30, 1999 and
the related statements of operations, shareholders' equity and cash flows for
the fiscal years then ended (collectively, the "Buyer Financial Statements").
The Buyer Financial Statements present fairly the financial position and results
of operations of Buyer as of the indicated dates and for the indicated periods
and have been prepared in accordance with GAAP except as disclosed on SCHEDULE
3.4.
3.5 FINANCING. As of the Closing, Buyer will have, sufficient funds to
consummate the transactions contemplated hereby, including, without limitation,
payment of the Purchase Price.
ARTICLE IV.
COVENANTS OF THE PARTIES
4.1 COURSE OF CONDUCT BY THE COMPANY. From the date hereof through and
until the Closing Date, except as approved in writing by Buyer or as otherwise
permitted or contemplated by this Agreement, the Company's business shall be
conducted only in the ordinary course of business consistent with past practice,
and the Shareholder shall cause the Company to comply with the following
covenants:
(a) ARTICLES OF INCORPORATION; BYLAWS. The Company shall not make
any material change to its Charter Documents.
(b) RELATIONS WITH SUPPLIERS, CUSTOMERS, ETC. The Company will use
commercially reasonable efforts to preserve its relationships with its material
suppliers, customers and others having material business dealings with it and
shall not change or modify or commit to change or modify any terms offered to
customers.
(c) INCURRENCE OF DEBT. The Company will not voluntarily incur or
assume, whether directly or by way of guaranty or otherwise, any material
obligation or liability, except obligations and liabilities incurred in the
ordinary course of business, consistent with past practice.
(d) LIENS. The Company will not mortgage, pledge, encumber, create
or allow any Liens not existing on the date hereof upon any of its properties or
assets, tangible or intangible, except Liens created in the ordinary course of
business, consistent with past practice.
(e) DISPOSITION OF ASSETS. The Company will not sell, transfer or
otherwise dispose of any of its assets, except in the ordinary course of
business, consistent with past practice or as otherwise provided in this
Agreement. The Company will not cancel or forgive any debts or claims except or
in the ordinary course of business, consistent with past practice, except as
otherwise provided in this Agreement.
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(f) MATERIAL TRANSACTIONS. The Company will not enter into any
other agreement, course of action or transaction material to it, except in the
ordinary course of business, consistent with past practice.
(g) STOCK ISSUANCE: REDEMPTIONS: REORGANIZATIONS. The Company shall
not (i) issue, grant or dispose of, or make any agreement, arrangement or
commitment obligating the Company to issue, grant or dispose of any capital
shares or other securities of the Company, (ii) redeem or acquire, or make any
agreement, arrangement or commitment obligating the Company to redeem or
acquire, any shares of capital stock or other securities of the Company, or
(iii) authorize or effect or make any agreement, arrangement or commitment
obligating the Company to effect, any reorganization, recapitalization or
split-up of such capital stock of the Company.
4.2 INVESTIGATIONS. The Company shall provide Buyer and its
representatives and agents such access to the books and records of the Company
and furnish to Buyer such financial and operating data and other information
with respect to the businesses and properties of the Company as it may
reasonably request from time to time, and permit Buyer and its representatives
and agents to make such inspections of the Company's real and personal
properties as they may reasonably request. The Shareholder shall promptly
arrange for Buyer and its representatives and agents to meet with such
directors, officers, employees and agents of the Company as reasonably
requested.
4.3 RECORDS PERTAINING TO THE COMPANY.
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(a) TURNOVER OF RECORDS. At the Closing, the Shareholder will
deliver or cause to be delivered to the Company any and all records applicable
to the Company (i) in the possession of the Shareholder, and (ii) of which the
Company does not already have copies.
(b) ACCESS TO RECORDS. The Shareholder shall allow Buyer and
its representatives access to all business records and files of the Shareholder
that pertain in part to the Company, during normal working hours at the
principal place(s) of business of the Shareholder, or at any location where such
records are stored, and the Company shall have the right, at its own expense, to
make copies of any such records and files.
(c) ASSISTANCE WITH RECORDS. From and after the Closing Date,
the Shareholder shall make available to Buyer, upon written request, to the
extent reasonably available (i) personnel of the Shareholder to assist Buyer in
locating and obtaining records and files maintained by the Shareholder, and (ii)
any personnel of Shareholder, whose assistance or participation is reasonably
required by Buyer in anticipation of, or preparation for, any existing or future
third party actions, Tax or other matters in which the Company or any of its
past, present or future Affiliates is involved and which relate to the business
of the Company.
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(d) RECORDS PRIOR TO CLOSING. Commencing on the effective date
of this Agreement, Shareholder shall provide Buyer with all current records in
electronic or other form appropriate for loading into Buyer's system and Buyer's
personnel shall, at Buyer's cost and expense, be permitted to assist the Company
in the servicing of its assets and accounts for purposes of familiarization and
transition. Such records shall be held in strict confidence and shall be
promptly returned to Shareholder or the Company in the event this Agreement is
terminated prior to Closing for any reason.
4.4 PREPARATION AND FILING OF TAX RETURNS.
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(a) Shareholder shall prepare or cause to be prepared and file
or cause to be filed all federal and state income Tax returns for all taxable
periods of the Company ending on or prior to the Closing Date. Such Tax returns
shall be prepared on a basis consistent with past practice. Shareholder shall be
responsible for the payment of all taxes attributable to such Tax returns. Buyer
shall prepare or cause to be prepared and file or cause to be filed all Tax
returns of the Company for taxable periods which begin before the Closing Date
and end after the Closing Date. The Buyer shall be responsible for the payment
of all amounts due on such Tax returns. Shareholder shall pay Buyer within
thirty (30) days after the date on which Taxes are paid, with respect to such
periods, an amount equal to the portion of such Taxes which relates to the
portion of such taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for tax liability set forth on the
Financial Statements. Buyer shall prepare or cause to be prepared and file or
cause to be filed all Tax returns of the Company for taxable periods which begin
on or after the Closing Date. Buyer shall be responsible for the payment of all
amounts due on such Tax returns. For purposes of this Section, in the case of
any Taxes that are imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) the Closing Date, the portion of such
Tax which relates to the portion of such taxable period ending on the Closing
Date shall (x) in the case of any Taxes other than Taxes based upon or related
to income or receipts, be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (y) in the case of
any Tax based upon or related to income or receipts be deemed equal to the
amount which would be payable if the relevant taxable period ended on the
Closing Date. Any credits relating to a taxable period that begins before and
ends after the Closing Date shall be taken into account as though the relevant
taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
the prior practice of the Company. Shareholder and Buyer shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax returns pursuant to this Section.
(b) The Shareholder shall have responsibility for the conduct
of any audit of the Company for any taxable period ending on or prior to the
Closing Date; PROVIDED, HOWEVER, that in the event that the Shareholder receives
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notice of a claim from the IRS or any other taxing authority the Shareholder
shall promptly, but in any event within five (5) business days, notify Buyer of
such claim and of any action taken or proposed to be taken. In the event Buyer
wishes to participate in such audit it may do so at its own cost and expense.
Notwithstanding any indication in this Agreement to the contrary, the
Shareholder shall not agree to an adjustment in a federal or state income tax
audit, appeals procedure or judicial proceeding that will adversely impact the
Company in tax periods after the Closing Date without the prior written consent
of Buyer, which consent shall not be unreasonably withheld.
(c) All tax attributes of the Company as of the Closing Date
computed on a separate company basis shall remain with the Company after the
Closing.
(d) Unless provided for in the Final Balance Sheet, any Tax
refunds, that are received by Buyer or Company, and any amounts credited against
Tax to which Buyer or Company become entitled, that relate to tax periods or
portions thereof ending on or before the Closing Date shall be for the account
of Shareholder, without setoff, counterclaim, or right of recoupment, and Buyer
shall pay over to Shareholder any such refund or the amount of any such credit
within fifteen (15) days after receipt or entitlement thereto.
4.5 1940 ACT APPLICATION. Shareholder shall prepare or cause to be
prepared and file or cause to be filed with the Securities and Exchange
Commission on behalf of the Company, and such other applicants as are necessary
or appropriate, an application for an order issued pursuant to Section 28(c) of
the 1940 Act permitting the Company, or any successor company, to engage the
services of such custodians as the Company may select, in addition to its
current custodian, subject to their respective qualification as required by
Section 28(c).
4.6 POST CLOSING CAPITALIZATION. Buyer covenants and agrees that,
immediately following the Closing, Buyer shall contribute sufficient capital to
Company to cause Company to comply with any and all applicable laws, rules and
regulations.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Company Shares, and to cause
the other transactions contemplated hereby to occur at the Closing, shall be
subject to the satisfaction of each of the following conditions at or prior to
the Closing:
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5.1 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
the Company and the Shareholder contained in this Agreement and in any Schedule
or other disclosure in writing from the Company or the Shareholder shall be true
and correct in all material respects when made, and shall be true and correct in
all material respects on and as of the Closing Date.
5.2 COVENANTS OF THE SHAREHOLDER AND THE COMPANY. All of the terms,
covenants, conditions and agreements herein on the part of the Shareholder and
the Company to be complied with or performed on or before the Closing Date shall
have been fully complied with and performed.
5.3 CERTIFICATE OF THE COMPANY AND THE SHAREHOLDER. There shall be
delivered to Buyer a certificate dated the Closing Date and signed by an officer
of the Company and by the Shareholder to the effect set forth in SECTIONS 5.1
and 5.2, which certificate shall have the effect of a representation and
warranty made by the Company and the Shareholder on and as of the Closing Date.
5.4 ABSENCE OF LITIGATION. No inquiry, action, suit or proceeding shall
have been asserted, threatened or instituted (i) in which it is sought to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof,
(ii) which could, if adversely determined, have a material adverse effect on the
Company or (iii) as a result of which, in the reasonable judgment of Buyer,
Buyer would be deprived of the material benefits of the ownership of the Company
Shares.
5.5 CONSENTS AND APPROVALS. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for the Shareholder and the
Company to consummate the transactions contemplated hereby shall have been
obtained and copies thereof shall be delivered to Buyer. The Section 363/365
Order shall have been entered in substantially the form attached hereto.
5.6 CERTIFICATES. The Company and the Shareholder shall have delivered
to Buyer (i) certificates of the appropriate governmental authorities, dated as
of a date not more than twenty (20) days prior to the Closing Date, attesting to
the existence and good standing of the Company in the State of Minnesota and
qualification as a foreign corporation in the state of Kentucky; (ii) a copy,
certified by the Secretary of State of the State of Minnesota as of a date not
more than twenty (20) days prior to the Closing Date, of the Articles of
Incorporation and all amendments thereto of the Company; (iii) a copy certified
by the Secretary of the Company, dated the Closing Date, of the Bylaws of the
Company; and (iv) certificates, dated the Closing Date, of the Secretary of the
Company, relating to the incumbency and corporate proceedings in connection with
the consummation of the transactions contemplated hereby.
5.7 [RESERVED]
5.8 ACCOUNT VALUE. The Account Value of the face amount certificates of
the Company shall not be less than $28,000,000.00. If the Account Value is
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less than $28,000,000 but $26,000,000 or more, the Purchase Price shall be
reduced by $50,000. If the Account Value is less than $26,000,000 but
$24,000,000 or more, the Purchase Price shall be reduced by another $50,000. If
the Account Value is less than $24,000,000 but $22,000,000 or more, the Purchase
Price shall be reduced by another $50,000. If the Account Value is less than
$22,000,000 Buyer shall have the option either to proceed to Closing and receive
another $50,000 reduction of the Purchase Price, or to terminate this Agreement
by delivery of written notice of termination to the Shareholder and the Company,
whereupon this Agreement shall become null and void, Buyer shall become entitled
to a refund of the Deposit and all parties shall be relieved of all obligations
hereunder.
5.9 ESCROW AGREEMENT. The Shareholder shall have executed and delivered
an escrow agreement (the "Escrow Agreement") in the form of EXHIBIT B hereto to
be by and among Buyer, the Shareholder and the escrow agent (the "Escrow Agent")
and the Escrow Consideration shall have been paid to Escrow Agent to be held as
security for the post closing obligations and liabilities of Shareholder under
this Agreement.
5.10 SHAREHOLDER'S RELEASE. The Shareholder shall have executed and
delivered to Buyer immediately prior to the Closing Date an instrument dated the
Closing Date in the form of EXHIBIT "C" hereto (the "Shareholder's Release")
releasing the Company from any and all claims of the Shareholder against the
Company and obligations of the Company to the Shareholder.
5.11 OPINION OF COUNSEL. Buyer shall have received an opinion of
counsel to the Shareholder and the Company, dated the Closing Date substantially
in the form attached hereto as EXHIBIT ?E?. (the "Legal Opinion").
5.12 [RESERVED]
5.13 NO TRANSFERS TO AFFILIATES. Except as otherwise expressly
contemplated by this Agreement, the Company shall not have distributed or
transferred any of its assets or properties, or made any payments, to or for the
benefit of any of its affiliates.
5.14 [RESERVED]
5.15 No condition shall exist that was not disclosed in writing to
Buyer prior to the date hereof that would have a material adverse effect on the
business of the Company.
5.15 NONCOMPETITION AGREEMENT. The Shareholder shall have executed and
delivered to Buyer a noncompetition agreement in the form attached hereto as
EXHIBIT "D" (The "Noncompetition Agreement").
5.16 TERMINATION OF RELATED PARTY AGREEMENTS. All existing agreements
between the Company and the Shareholder and all existing bonus and incentive
plans and arrangements of the Company shall have been canceled or terminated.
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5.17 STOCK CERTIFICATES. The Shareholder shall have tendered
certificates representing the Company Shares, duly endorsed in blank or
accompanied by appropriate stock powers, in proper form for transfer, with all
transfer taxes paid.
5.18 RESIGNATIONS OF DIRECTORS AND OFFICERS. Buyer shall have received
the resignations of each of the directors and officers of the Company, effective
as of the Closing.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER
The obligations of the Shareholder to sell the Company Shares and to
cause the other transactions contemplated hereby to occur at the Closing shall
be subject, except as the Shareholder may waive in writing, to the satisfaction
of each of the following conditions at or prior to the Closing:
6.1 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Buyer contained in this Agreement and in any Schedule or other disclosure in
writing from Buyer shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on and as of the Closing
Date with the same effect as though such representation and warranty had been
made on and as of the Closing Date.
6.2 COVENANTS OF BUYER. All of the terms, covenants, conditions and
agreements herein on the part of Buyer to be complied with or performed on or
before the Closing Date shall have been fully complied with and performed.
6.3 ABSENCE OF LITIGATION. No inquiry, action, suit or proceeding shall
have been asserted, threatened or instituted in which it is sought to restrain
or prohibit the carrying out of the transactions contemplated by this Agreement
or to challenge the validity of such transactions or any part thereof.
6.4 CERTIFICATES. Buyer shall have delivered to the Shareholder (i) a
certificate of the appropriate governmental authority, dated as of a date not
more than twenty (20) days prior to the Closing Date, attesting to the existence
and good standing of Buyer in the State of Maryland; (ii) copies, certified by
the Secretary of the State of its incorporation as of a date not more than
twenty (20) days prior to the Closing Date, of the articles of incorporation and
all amendments thereto of Buyer; (iii) copies, certified by the Secretary of
Buyer, dated the Closing Date, of the bylaws of Buyer; and (iv) certificates,
dated the Closing Date, of the Secretary of Buyer relating to the incumbency and
corporate proceedings in connection with the consummation of the transactions
contemplated hereby.
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6.5 TRANSFER OF FUNDS. Buyer shall have delivered to Shareholder and
Escrow Agent the amounts of cash set forth in SECTION 7.3 to be delivered at
Closing.
6.6 CERTIFICATE OF BUYER. There shall be delivered to Shareholder a
certificate dated as of the Closing Date and signed by an officer of Buyer to
the effect set forth in SECTIONS 6.1 and 6.2 which certificate shall have the
effect of a representation and warranty made by Buyer on and as of the Closing
Date.
6.7 ENTRY OF THE SECTION 363/365 ORDER. The Bankruptcy Court shall have
entered the Section 363/365 Order.
6.8 DIVIDEND. The Dividend shall have been received by the Shareholder.
ARTICLE VII.
CLOSING
7.1 CLOSING. Unless this Agreement is first terminated as provided in
SECTION 8.1, and subject to the satisfaction or waiver of all the conditions set
forth in ARTICLES V and VI, the closing of the transactions contemplated hereby
(The "Closing") shall take place at the offices of Paul, Weiss, Rifkind, Wharton
& Garrison, in New York, New York, or by telecopy with originals of all
materials to follow upon the agreement of the parties, or such other place as is
agreed to by Buyer and Shareholder, on April 15, 2000 (but effective for
accounting purposes as of March 31,2000), or such other date (and effective
date) as the parties may agree upon in writing (the "Closing Date").
7.2 DELIVERY OF THE COMPANY SHARES. At the Closing, Shareholder shall
deliver or cause to be delivered to Buyer the stock certificate(s) evidencing
all of the Company Shares owned by Shareholder, duly endorsed or accompanied by
duly executed stock powers assigning the Company Shares to Buyer and otherwise
in good form for transfer.
7.3 PAYMENT OF CASH TO SHAREHOLDER AND ESCROW AGENT. At the Closing,
Buyer shall deliver, by wire transfer of immediately available funds, to (i)
Escrow Agent, under the Escrow Agreement referred to in Section 5.9 and attached
hereto as EXHIBIT B, the Escrow Consideration; and (ii) to Shareholder, Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00).
ARTICLE VIII.
TERMINATION PRIOR TO CLOSING
8.1 TERMINATION.
-----------
(a) This Agreement may be terminated and abandoned at any time
prior to the Closing:
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(i) By the written mutual consent of Buyer and
Shareholder;
(ii) By Buyer on the Closing Date if any of the conditions
set forth in ARTICLE V shall not have been fulfilled on or prior to the Closing
Date;
(iii) By Shareholder on the Closing Date if any of the
conditions set forth in ARTICLE VI shall not have been fulfilled on or prior to
the Closing Date;
(b) Any termination pursuant to this ARTICLE VIII shall be
without prejudice to the terminating party's rights and remedies under this
Agreement by reason of any violation of this Agreement occurring prior to such
termination. Notwithstanding the foregoing, it is expressly agreed that Buyer's
sole remedy for any breach by Company or Shareholder of this Agreement, or any
of the representations or warranties contained herein, shall be collection
against the Escrow Consideration. Once the Escrow Consideration is depleted,
Buyer shall have no other remedy, at equity or law, against Shareholder and/or
the Company, and Shareholder and the Company shall each be deemed to be released
from any and all further claims by Buyer. In the event of a termination pursuant
to this ARTICLE VIII, each party shall bear its own costs and expenses incurred
with respect to the transactions contemplated hereby. In the event Buyer
terminates or materially violates this Agreement, Shareholder shall be entitled
to the damages set forth in SECTION 10.13 below.
ARTICLE IX.
INDEMNIFICATION
9.1 BUYER'S LOSSES.
--------------
(a) Shareholder agrees to indemnify and hold harmless Buyer
and its directors, officers, employees, representatives, agents and attorneys
from, against and in respect of any and all Buyer's Losses (as defined below)
suffered, sustained, incurred or required to be paid by any of them by reason of
(i) except as set forth in Section 10.10, any material liability arising from or
based upon the operation of the Company through the Closing Date; (ii) any
material failure by the Shareholder to observe or perform its covenants and
agreements set forth in this Agreement or in any other agreement or document
executed by it in connection with the transactions contemplated hereby; or (iii)
any material liability arising from or based upon the engagement by the Company
or the Shareholder of any broker or agent.
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(b) "Buyer's Losses" shall mean all damages (including,
without limitation, amounts paid in settlement with the Shareholder's consent,
which consent may not be unreasonably withheld), losses, obligations,
liabilities, claims, deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees), penalties, fines, interest and monetary
sanctions, including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and Agency orders, and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce the rights of Buyer or such other persons
to indemnification hereunder.
9.2 SHAREHOLDER LOSSES.
------------------
(a) Buyer agrees to indemnify and hold harmless the
Shareholder and its directors, officers, employees, representatives, agents and
attorneys, from, against and in respect of any and all Shareholder Losses (as
defined below) suffered, sustained, incurred or required to be paid by
Shareholder by reason of (i) except as set forth in Section 10.10, any material
failure by Buyer to observe or perform its covenants and agreements set forth in
this Agreement or any other agreement or document executed by it in connection
with the transactions contemplated hereby; (ii) any material liability for
claims arising from or based upon the operation of the Company subsequent to the
Closing Date; or (iii) any material liability arising from or based on the
engagement by Buyer of any broker or agent.
(b) "Shareholder Losses" shall mean all damages (including,
without limitation, amounts paid in settlement with the consent of Buyer, which
consent may not be unreasonably withheld), losses, obligations, liabilities,
claims, deficiencies, costs and expenses (including, without limitation,
reasonable attorneys' fees), penalties, fines, interest and monetary sanctions,
including, without limitation, reasonable attorneys' fees and costs incurred to
comply with injunctions and other court and Agency orders, and other costs and
expenses incident to any suit, action, investigation, claim or proceeding or to
establish or enforce the right of the Shareholder or such other persons to
indemnification hereunder.
9.3 [RESERVED]
9.4 NOTICE OF LOSS. Except to the extent set forth in the next
sentence, a party to the Agreement will not have any liability under the
indemnity provisions of this Agreement with respect to a particular matter
unless a notice setting forth in reasonable detail the breach or other matter
which is asserted has been given by the party seeking indemnification (the
"Indemnified Party") to the indemnifying party (the "Indemnifying Party") and,
in addition, if such matter arises out of a suit, action, investigation,
proceeding or claim, such notice is given promptly, but in any event within
thirty (30) days after the Indemnified Party is given notice of the claim or the
commencement of the suit, action, investigation or proceeding. Notwithstanding
the preceding sentence, failure of the Indemnified Party to give notice
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hereunder shall not release the Indemnifying Party from its obligations under
this ARTICLE IX, except to the extent the Indemnifying Party is actually
prejudiced by such failure to give notice.
9.5 RIGHT TO DEFEND. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnified Party shall have the option of electing to
defend, contest or otherwise protect against such suit, action, investigation,
claim or proceeding, with the costs and expenses of such defense to be borne by
the Indemnifying Party, and the Indemnifying Party must cooperate in any such
defense or other action. The Indemnifying Party shall have the right, but not
the obligation, to participate at its own expense in a defense thereof by
counsel of its own choosing, but the Indemnified Party shall be entitled to
control the defense unless otherwise determined by the Indemnified Party or if
the Indemnified Party fails to assume defense of the matter. In the event the
Indemnified Party shall fail to defend, contest or otherwise protect in a timely
manner against any such suit, action, investigation, claim or proceeding, the
Indemnifying Party shall defend, contest or otherwise protect against the same
and make any compromise or settlement thereof, and shall pay all costs thereof,
including, without limitation, reasonable attorneys' fees, disbursements and all
amounts paid as a result of such suit, action, investigation, claim or
proceeding or the compromise or settlement thereof; provided, however, that the
Indemnifying Party must send a written notice to the Indemnified Party of any
such proposed settlement or compromise, which settlement or compromise the
Indemnified Party may reject, in its reasonable judgment, within thirty (30)
days of receipt of such notice. Failure to reject such notice within such thirty
(30) day period shall be deemed an acceptance of such settlement or compromise.
The Indemnified Party shall have the right to effect a settlement or compromise
over the objection of the Indemnifying Party; provided that if the Indemnifying
Party has assumed the defense from the Indemnified Party upon the election of
the Indemnified Party, the Indemnified Party waives any right to indemnity
therefor. If the Indemnifying Party undertakes the defense of such matters upon
the election of the Indemnified Party, the Indemnified Party shall not, so long
as the Indemnifying Party does not abandon the defense thereof, be entitled to
recover from the Indemnifying Party any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than the reasonable costs of investigation undertaken by the Indemnified Party
with the prior written consent of the Indemnifying Party.
9.6 COOPERATION. Each of Buyer, Shareholder and the Company, and each
of their affiliates, successors and assigns, shall cooperate, to the extent
possible, with each other in the defense of any suit, action, investigation,
proceeding or claim by a third party and, during normal business hours, shall
afford each other, to the extent possible, reasonable access to their books and
records and employees relating to such suit, action, investigation, proceeding
or claim and shall furnish each other all such further information that they
have the right and power to furnish as may reasonably be necessary to defend
such suit, action, investigation, proceeding or claim.
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9.7 COLLECTION OF DAMAGES BY BUYER. Notwithstanding anything contained
herein to the contrary, it is expressly agreed that Buyer's sole remedy pursuant
to this Agreement shall be collection against the Escrow Consideration. Once the
Escrow Consideration is depleted, Buyer shall have no other remedy, at equity or
law, against Shareholder, and Shareholder shall be deemed to be released from
any and all further claims by Buyer.
ARTICLE X.
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. This Agreement may not be assigned
by any party hereto (by operation of law or otherwise) without the prior written
consent of all other parties hereto.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.4 HEADINGS. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
10.5 CONSTRUCTION. As used in this Agreement, the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, paragraph or
other subdivision.
10.6 MODIFICATION AND WAIVER. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by Buyer, the Company and the Shareholder. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
10.7 SCHEDULES, ETC. All exhibits and schedules annexed hereto are
expressly made a part of this Agreement as though fully set forth herein.
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10.8 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt request, (b) delivering the same in
person to an officer or attorney of such party, (c) telecopying the same with
electronic confirmation of receipt.
(i) If to Buyer, addressed to:
1st Atlantic Guaranty Corporation
7920 Norfolk Avenue 11th Floor
Bethesda MD 20814
ATTENTION: John J. Lawbaugh
(ii) If to the Shareholder, addressed to:
ARM Financial Group., Inc.
515 West Market Street
Louisville, KY 40202
ATTENTION: General Counsel
With copy to:
Walker, Truesdell, Radick & Associates
380 Lexington Avenue Suite 1514
New York, New York 10168
ATTENTION: Hobart G. Truesdell
or to such other address or counsel as any party hereto shall specify pursuant
to this Section from time to time.
10.9 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO
EXPRESSLY CONSENT AND AGREE THAT ANY DISPUTE, CONTROVERSY, LEGAL ACTION OR OTHER
PROCEEDING THAT ARISES UNDER, RESULTS FROM, CONCERNS OR RELATES TO THIS
AGREEMENT SHALL BE BROUGHT IN THE FEDERAL AND STATE COURTS IN AND OF THE STATE
OF NEW YORK AND ACKNOWLEDGE THAT THEY WILL ACCEPT SERVICE OF PROCESS BY
REGISTERED OR CERTIFIED MAIL OR THE EQUIVALENT DIRECTED TO THEIR LAST KNOWN
ADDRESS AS DETERMINED BY THE OTHER PARTY IN ACCORDANCE WITH THIS AGREEMENT OR BY
WHATEVER OTHER MEANS ARE PERMITTED BY SUCH COURTS.
10.10 TERMINATION OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall terminate at and as of the
Closing.
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10.11 EXPENSES. The Company and the Shareholder, on the one hand, and
Buyer, on the other hand, shall be solely responsible for their respective costs
and expenses incurred in connection with the transactions contemplated hereby.
10.12 NUMBER AND GENDER OF WORDS. Whenever the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.
10.13 LIQUIDATED DAMAGES. In the event Buyer fails to close as required
hereunder, the sole remedy of Seller and the Company shall be forfeiture of the
Deposit as fixed and liquidated damages.
10.14 FURTHER ASSURANCES. From time to time after the Closing, at the
request of any other party but at the expense of the requesting party, Buyer,
the Company or the Shareholder, as the case may be, will execute and deliver any
such other instruments of conveyance, assignment and transfer, and take such
other action as the other party may reasonably request in order to consummate or
evidence the transactions contemplated hereby.
10.15 BROKERS AND AGENTS. Each party represents and warrants that it
has employed no broker or agent in connection with this transaction and agrees
to indemnify and hold harmless the other parties against all loss, cost, damages
or expense arising out of claims for fees or commissions of brokers employed or
alleged to have been employed by such indemnifying party.
ARTICLE XI
BANKRUPTCY APPROVAL
Shareholder has filed a voluntary petition for relief under chapter 11
of the Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware IN RE: ARM FINANCIAL GROUP, INC. Case No. 99-4430 (Judge Walsh) (the
"Bankruptcy Proceeding"). Shareholder shall seek to have the transactions
contemplated hereby approved by the Bankruptcy Court. If for any reason such
approval has not been obtained by May 31, 2000, Buyer may terminate this
Agreement by delivery of written notice of termination whereupon Buyer shall be
entitled to a refund of the Deposit and this Agreement shall become null and
void. Buyer acknowledges and agrees that Shareholder is required to and shall
seek higher or better offers for the Common Shares until such time as the
Section 363/365 Order is entered.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
1ST ATLANTIC GUARANTY CORPORATION
By: /s/ John J. Lawbaugh
COMPANY:
SBM CERTIFICATE COMPANY
By: /s/ Kevin L. Howard / Secretary
SHAREHOLDER:
ARM FINANCIAL GROUP, INC.
By: /s/ Walker, Truesdell, Radick & Associates, Restructuring Agent
25
