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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
SECURITY CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
July 17, 1997
Date of Report (Date of earliest event reported)
Delaware 1-7921 13-3003070
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1111 North Loop West, Suite 400, Houston, Texas 77008
(Address of principal executive offices) (Zip Code)
(713) 880- 7100
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As previously reported in a Current Report on Form 8-K filed by the Company
on October 16, 1992, the Company's indirect, wholly-owned subsidiary, Foster
Insurance Managers, Inc., a Texas corporation ("FIM"), is party to an Agency and
Management Services Agreement (the "Agency Agreement"), effective September 1,
1992, as amended by an Amendment dated September 30, 1994, with Foster Insurance
Services, Inc., a Texas corporation ("FIS"), pursuant to which FIS serves FIM as
its local recording agent in the State of Texas and FIM provides management
consulting services to FIS and maintains insurance markets for the placement of
the insurance business produced by FIS. FIM is also party to a Buy-Sell
Agreement (the "Buy-Sell Agreement"), effective September 1, 1992, with FIS and
Edward G. Britt, Jr. ("Britt"), the sole shareholder of FIS. For a description
of the terms of the Agency Agreement and the Buy-Sell Agreement, reference is
made to the Company's Current Report on Form 8-K filed on October 16, 1992 and
the exhibits attached thereto, which are incorporated by reference herein.
As also previously reported in a Current Report on Form 8-K filed by the
Company on October 17, 1996, on August 29, 1996, Britt exercised his put option
pursuant to Section 2(a) of the Buy-Sell Agreement to require FIM to purchase
all of the shares of FIS common stock held by Britt for the put option price of
$1,000. By the same notice, Britt also exercised his option (the "Option")
pursuant to Section 2(b) of the Buy-Sell Agreement to purchase all of the
assets, liabilities and business of FIS at fifty percent (50%) of their Fair
Market Value (as defined in the Buy-Sell Agreement).
On July 17, 1997, FIM and Britt consummated the purchases and sales
described above pursuant to a Purchase Agreement (the "Purchase Agreement"),
dated as of July 3, 1997, by and among FIM, FIS, BMD&B, Inc., a Texas
corporation (the "Buyer"), Larry M. Karren ("Karren") and Britt. Prior to the
closing under the Purchase Agreement, all of the Buyer's shareholders, including
Britt, transferred all of their shares of capital stock in Buyer to Bowen,
Miclette & Descant, Inc., now known as Bowen, Miclette, Descant & Britt, Inc.
("BMD"), and Britt transferred all of his proprietary interest in FIS, including
all of the issued and outstanding capital stock of FIS (collectively, the
"Britt/FIS Proprietary Interest") and his Option to BMD which, in turn,
transferred and contributed the Britt/FIS Proprietary Interest and the Option to
Buyer.
Pursuant to the Purchase Agreement, FIM transferred to Buyer all of its
beneficial ownership in FIS in consideration of $1,314,484.64 (which represents
the purchase price of $1,525,845.00 specified in the Purchase Agreement, less
the net amount due FIS, Buyer or any of their respective affiliates other than
FIM and the Company (collectively, the "Buyer Group") from FIM or the Company,
after subtracting all amounts due to FIM or the Company by any of the Buyer
Group (including, without limitation, pursuant to the Agency Agreement and the
letter agreement, dated June 28, 1994, from Buyer to Capital Partners, Inc. with
respect to the institution of a management fee for the collection of life and
group commissions), through, at a
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minimum, June 30, 1997 (the "Effective Date")). The purchase price is subject
to adjustment based on a review by the Company's auditors, Deloitte & Touche
LLP, of financial information with respect to FIS and Bowen, Miclette, Descant
& Britt (the "Partnership") through the Effective Date. Disputes between FIM
and the Buyer are subject to arbitration.
In addition to the purchase price, FIM is entitled to receive 25% of the
value received by FIS on any accounts receivable of FIS and/or the Partnership
that have been written off as uncollectible prior to and as of the Effective
Date.
The Purchase Agreement also provides that FIS and Buyer, jointly and
severally, will indemnify FIM, its directors, officers, employees, affiliates
and assigns on account of claims, losses, damages and costs (including interest,
penalties and reasonable attorneys' fees) (i) which arise, result from, or
relate to (A) liabilities of FIS, (B) any breach of, or failure by Buyer, FIS or
Britt to perform any of its or his representations, warranties and covenants
contained in the Purchase Agreement or (C) the Agreements (as hereinafter
defined) (including the termination or modification thereof), (ii) which
otherwise relate to or arise out of the business (whether arising before or
after the closing) of FIS, Buyer or Britt, including all claims arising out of,
resulting from or relating to the QUALITY OILFIELD PRODUCTS, INC. litigation or
any other litigation described in the Purchase Agreement or (iii) which arise,
result from, or relate to any claim by any of Messrs. Karren, Acree or Drew that
any of them have any interest in or right to any interest in FIS or Buyer or any
affiliate thereof.
Finally, pursuant to the Purchase Agreement, the Buy-Sell Agreement and the
Agency Agreement were terminated as of the Effective Date, subject to payment of
all fees due FIM under the Agency Agreement through such date. FIM, FIS, Buyer,
BMD, Britt, Karren, David G. Miclette, Dennis M. Descant, Samuel F. Bowen,
William G. Bowen, Jr. and their respective spouses also entered into a
Modification Agreement, dated as of July 3, 1997, whereby each of (i) the Stock
Purchase Agreement effective the 1st day of January, 1993 among Britt and Karren
(and their respective spouses), FIS, FIM and Buyer, (ii) the Shareholder
Agreement effective as of the 1st day of January, 1993 by and among BMD, David
G. Miclette, Dennis Michael Descant, Samuel F. Bowen, William G. Bowen, Karren,
their respective spouses, Buyer, FIM and FIS, (iii) the Management Services
Agreement dated August 10, 1994 between FIM, FIS, BMD and Buyer, (iv) the
Partnership Agreement of the Partnership dated June 15, 1994 between BMD and
FIS, (v) the Personnel Services and Clarification Agreement dated June 15, 1994
among BMD, FIS, Buyer and the Partnership, and (vi) the Interim Agreement dated
October 30, 1992 between FIS, FIM, BMD, Samuel F. Bowen, David G. Miclette, D.
Michael Descant, William G. Bowen, Jr., Thomas C. Cook and Britt (each of
foregoing, together with the Buy-Sell Agreement and the Agency Agreement,
collectively, the "Agreements") was modified to remove FIM as a party thereto,
effective June 30, 1997.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information.
The Company believes that it is impracticable to provide any of the
required pro forma financial information at the time of filing of this Current
Report on Form 8-K. The required pro forma financial information will be filed
as soon as practicable and, in any event, not later than 60 days following the
due date of this Current Report on Form 8-K.
(c) Exhibits.
NUMBER EXHIBIT
1. Agency and Management Services Agreement (the "Agency Agreement"),
effective September 1, 1992, between Foster Insurance Managers, Inc.
("FIM") and Foster Insurance Services, Inc. ("FIS") (Incorporated by
reference to Exhibit 1 to the Company's Current Report on Form 8-K
dated September 1, 1992).
2. Amendment, dated September 30, 1994, to the Agency Agreement between
FIM and FIS (Incorporated by reference to Exhibit 10.10A to the
Company's Form 10-K Annual Report for the fiscal year ended September
30, 1994).
3. Buy-Sell Agreement, effective September 1, 1992, between FIM, FIS and
Edward G. Britt, Jr. ("Britt") (Incorporated by reference to Exhibit 2
to the Company's Current Report on Form 8-K dated September 1, 1992).
4. Purchase Agreement, dated as of July 3, 1997, by and among FIM, FIS,
BMD&B, Inc., a Texas corporation, formerly known as Bowen, Miclette,
Descant & Britt, Inc. ("Buyer"), Larry M. Karren ("Karren") and Britt.
5. Modification Agreement, dated as of July 3, 1997, by and among FIM,
FIS, Bowen, Miclette, Descant & Britt, Inc., a Texas corporation,
formerly known as Bowen, Miclette & Descant, Inc. ("BMD"), and Buyer.
6. Stock Purchase Agreement effective the 1st day of January, 1993 among
Britt, Patricia C. Britt, Karren, Jodi S. Karen, FIS, FIM and Buyer
(Incorporated by reference to Exhibit 10.18 to the Company's Form 10-K
Annual Report for the fiscal year ended September 30, 1995).
7. Shareholder Agreement effective as of the 1st day of January, 1993 by
and among BMD, David G. Miclette, Dennis Michael Descant, Samuel F.
Bowen, William G. Bowen, Karren, their respective spouses, Buyer, FIM
and FIS (Incorporated by reference to Exhibit 10.22 to the Company's
Form 10-K Annual Report for the
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fiscal year ended September 30, 1995).
8. Management Services Agreement dated August 10, 1994 between FIS, BMD
and Buyer (Incorporated by reference to Exhibit 10.15 to the Company's
Form 10-Q Quarterly Report for the period ended June 30, 1994).
9. Partnership Agreement of Bowen, Miclette, Descant & Britt (the
"Partnership") dated June 15, 1994 between BMD and FIS (Incorporated
by reference to Exhibit 3 to the Company's Form 10-Q Quarterly Report
for the period ended June 30, 1994).
10. Personnel Services and Clarification Agreement dated June 15, 1994
among BMD, FIS, Buyer and the Partnership (Incorporated by reference
to Exhibit 10.16 to the Company's Form 10-Q Quarterly Report for the
period ended June 30, 1994).
11. Interim Agreement dated October 30, 1992 between FIS, FIM, BMD,
Samuel F. Bowen, David G. Miclette, D. Michael Descant,
William G. Bowen, Jr., Thomas C. Cook, and Britt (Incorporated by
reference to Exhibit 10(P) to the Company's Form 10-K Annual Report
for the fiscal year ended September 30, 1992).
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SIGNATURE
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 thereunto duly authorized.
SECURITY CAPITAL CORPORATION
(Registrant)
Dated: August 1, 1997 By:
----------------------------
A. George Gebauer
President
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INDEX OF EXHIBITS
Sequentially
Numbered
NUMBER EXHIBIT PAGE
1. Agency and Management Services Agreement
(the "Agency Agreement"), effective
September 1, 1992, between Foster Insurance
Managers, Inc. ("FIM") and Foster Insurance
Services, Inc. ("FIS") (Incorporated by
reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated
September 1, 1992).
2. Amendment, dated September 30, 1994, to the
Agency Agreement between FIM and FIS (Incorporated
by reference to Exhibit 10.10A to the Company's
Form 10-K Annual Report for the fiscal year ended
September 30, 1994).
3. Buy-Sell Agreement, effective September 1,
1992, between FIM, FIS and Edward G. Britt,
Jr. ("Britt") (Incorporated by reference to
Exhibit 2 to the Company's Current Report on
Form 8-K dated September 1, 1992).
4. Purchase Agreement, dated as of July 3,
1997, by and among FIM, FIS, BMD&B, Inc., a
Texas corporation, formerly known as Bowen,
Miclette, Descant & Britt, Inc. ("Buyer"),
Larry M. Karren ("Karren") and Britt.
5. Modification Agreement, dated as of
July 3, 1997, by and among FIM, FIS, Bowen,
Miclette, Descant & Britt, Inc., a Texas
corporation, formerly known as Bowen, Miclette &
Descant, Inc. ("BMD"), and Buyer.
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6. Stock Purchase Agreement effective the 1st
day of January, 1993 among Britt, Patricia
C. Britt, Karren, Jodi S. Karen, FIS, FIM
and Buyer (Incorporated by reference to
Exhibit 10.18 to the Company's Form 10-K
Annual Report for the fiscal year ended
September 30, 1995).
7. Shareholder Agreement effective as of the
1st day of January, 1993 by and among BMD,
David G. Miclette, Dennis Michael Descant,
Samuel F. Bowen, William G. Bowen, Karren,
their respective spouses, Buyer, FIM and FIS
(Incorporated by reference to Exhibit 10.22
to the Company's Form 10-K Annual Report for
the fiscal year ended September 30, 1995).
8. Management Services Agreement dated August
10, 1994 between FIS, BMD and Buyer
(Incorporated by reference to Exhibit 10.15
to the Company's Form 10-Q Quarterly Report
for the period ended June
9. Partnership Agreement of Bowen, Miclette,
Descant & Britt (the "Partnership") dated
June 15, 1994 between BMD and FIS
(Incorporated by reference to Exhibit 3 to
the Company's Form 10-Q Quarterly Report for
the period ended June 30, 1994).
10. Personnel Services and Clarification
Agreement dated June 15, 1994 among BMD, FIS,
Buyer and the Partnership (Incorporated
by reference to Exhibit 10.16 to the Company's
Form 10-Q Quarterly Report for the period ended
June 30, 1994).
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11. Interim Agreement dated October 30, 1992
between FIS, FIM, BMD, Samuel F. Bowen,
David G. Miclette, D. Michael Descant,
William G. Bowen, Jr., Thomas C. Cook, and
Britt (Incorporated by reference to Exhibit
10(P) to the Company's Form 10-K Annual
Report for the fiscal year ended September 30, 1992).
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EXHIBIT 4
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is dated as of July 3, 1997, by
and among Foster Insurance Managers, Inc. ("FIM"), a corporation organized and
existing under Texas law, Foster Insurance Services, Inc. ("FIS"), a corporation
organized and existing under Texas law, BMD&B, Inc., formerly known as Bowen,
Miclette, Descant & Britt, Inc. ("Buyer"), a corporation organized and existing
under Texas law, Larry M. Karren ("Karren") and Edward G. Britt, Jr. ("Britt"),
both individuals who reside in Harris County, Texas.
RECITALS
A. FIM, FIS and Britt are parties to that certain Buy Sell Agreement
("Buy Sell Agreement") dated September 1, 1992, which, among other things,
grants Britt the option ("Option") to purchase all of FIM's beneficial interest
in FIS (the "FIM/FIS Proprietary Interest").
B. With the consent of FIM which is hereby acknowledged, all of the
Buyer's shareholders including Britt transferred all of their shares of capital
stock in Buyer to Bowen, Miclette & Descant, Inc., now known as Bowen, Miclette,
Descant & Britt, Inc. ("BMD"), and Britt transferred all of his proprietary
interest in FIS, including all of the issued and outstanding capital stock of
FIS (collectively, the "Britt/FIS Proprietary Interest") and his Option to
purchase the FIM/FIS Proprietary Interest to BMD which, in turn, transferred
and contributed the Britt/FIS Proprietary Interest and the Option to Buyer.
C. The parties hereto are in agreement that Buyer is the appropriate
party to purchase the FIS/FIM Proprietary Interest and that, following such
purchase, Buyer will own one hundred percent (100%) of the FIS/FIM Proprietary
Interest. The parties have reached an understanding with respect to the sale by
FIM and the purchase by Buyer of the FIM/FIS Proprietary Interest and they
execute this document for the purpose of evidencing their agreements.
NOW, THEREFORE, in consideration of the recitals, covenants,
representations and warranties of the parties contained herein and other good
and valid consideration, the receipt and sufficiency of which are acknowledged,
it is hereby agreed as follows:
ARTICLE 1
PURCHASE AND SALE; CLOSING; PURCHASE PRICE AND OTHER PAYMENTS
1.1 PURCHASE AND SALE. At the Closing, as defined in Section 1.2 hereof,
Buyer shall purchase and FIM shall sell the FIM/FIS Proprietary Interest for the
Purchase Price to be paid in the manner provided in sub-section 1.3 hereof. FIM
shall deliver a duly executed Bill of Sale and Assignment substantially in the
form of Exhibit A attached hereto to Buyer at the Closing transferring FIM's
beneficial ownership interest in FIS to Buyer against the delivery to FIM by
Buyer of the Purchase Price.
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1.2 TIME, PLACE AND EFFECTIVE DATE. The Closing of the transaction
contemplated by this Agreement (the "Closing") shall take place at 1111 N. Loop
West, Suite 400, Houston, Texas 77008 at 10:00 a.m. local time on July 3, 1997;
or at such other time and place as the parties may agree to in writing (the
"Closing Date"); the effective date ("Effective Date") of the transaction shall
be deemed for all purposes to be June 30, 1997; provided that the Closing occurs
by July 15, 1997; otherwise, the Effective Date shall be the Closing Date..
1.3 PURCHASE PRICE. At Closing, Buyer shall deliver or cause to be
delivered to FIM or its designee the amount of One Million Five Hundred Twenty
Five Thousand Eight Hundred Forty Five Dollars ($1,525,845.00) (the "Purchase
Price") by wire transfer of immediately available funds (in accordance with
written instructions which FIM agrees to give to Buyer) as the consideration for
the sale and transfer to Buyer of the FIM/FIS Proprietary Interest.
1.4 BUY SELL AGREEMENT - AGENCY AND MANAGEMENT SERVICES AGREEMENT -
INTERCOMPANY RECEIVABLES.
(a) The Buy Sell Agreement and the Agency and Management Services
Agreement between FIM and FIS dated September 1, 1992, as amended by an
Amendment dated September 30, 1994 (collectively, the "Management Services
Agreement"), shall automatically terminate and be of no further effect as of the
Effective Date and neither party thereto shall have any further obligations with
respect thereto except that FIS shall be obligated to pay FIM all fees due under
the Management Services Agreement calculated through the Effective Date, as
further provided in Section 1.4(b), less the amount of receivables, if any, due
FIS from FIM and/or Security Capital Corporation, a Delaware corporation
("SCC"), as of the Effective Date.
(b) At the Closing, Buyer shall transfer or cause to be transferred to FIM
or its designee by wire transfer the sum that represents Buyer's good faith
estimate of all amounts, if any, to be owed through the Effective Date to FIM or
SCC (collectively, the "FIM Group") by FIS, Buyer or any of their respective
affiliates other than FIM and SCC (collectively, the "Buyer Group"), including
the following: (i) all amounts due FIM pursuant to the Management Services
Agreement; (ii) all amounts due to FIM pursuant to the letter agreement, dated
June 28, 1994, from Buyer to Capital Partners, Inc. with respect to the
institution of a management fee for the collection of life and group
commissions; (iii) the depreciated book value of the Office Property (as defined
in the Management Services Agreement); and (iv) any advances or other amounts
due to FIM or SCC by any of the Buyer Group, LESS any amounts due from FIM to
any of the Buyer Group. Buyer shall furnish to FIM prior to the Closing a
detailed calculation of the foregoing (with appropriate supporting
documentation, which shall include, among other things, the balance sheet of
each of FIS, Buyer and Bowen, Miclette, Descant & Britt Company, a Texas general
partnership (the "Partnership"), as of May 31, 1997 and the income statement of
each of FIS and the Partnership for the period from September 1, 1996 through
the Effective Date included in Schedule 2.2(g) hereto). Within thirty (30) days
following the execution and delivery of this Agreement, Buyer shall submit to
FIM its final detailed calculation of the net amount (the "Net Amount"), if any,
which is due from the Buyer Group to the FIM Group or from the FIM Group to the
Buyer Group, as the case may be, taking into
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account the items set forth above in this Section 1.4(b) (with appropriate
supporting documentation, which shall include, among other things, a balance
sheet of each of FIS, Buyer and the Partnership as of the Effective Date and an
income statement of each of FIS, Buyer and the Partnership for the period from
September 1, 1996 through the Effective Date. FIM shall have ten (10) days to
review such final calculation of the Net Amount and to deliver to Buyer any
objections thereto. If FIM does not deliver any such objections with such ten
(10) day period, the final calculation of the Net Amount shall be conclusive and
binding among the parties. In the event Buyer and FIM cannot, within ten (10 )
days following FIM's submission to Buyer of FIM's objections, resolve such
issues, the parties shall submit the items remaining in dispute to a
mutually-agreed upon arbitrator, together with a written statement from each
describing each disputed item. Such arbitrator shall attempt to resolve the
disputed item within thirty (30) days after such submissions. Any such
resolution shall be in writing and shall be conclusive and binding among the
parties. Within five (5) days after the final calculation of the Net Amount
being deemed conclusive and binding among the parties, if FIM has no objections,
or the delivery to Buyer and FIM of the arbitrator's resolution, Buyer or FIM,
as the case may be, shall pay to the other by wire transfer the Net Amount which
is determined to be owed pursuant this Section 1.4(b). The parties agree that
any suit, action or proceeding to enforce the arbitrator's decision may be
instituted by Buyer in the state or federal courts in the County of Harris, the
State of Texas or, as the case may be, by FIM or SCC in the state or federal
courts in the County of Manhattan, the State of New York, and each of the
parties hereby consent to the jurisdiction of such courts and waives any
objection that such party may now or hereafter have to the venue of such suit,
action or proceeding.
(c) Notwithstanding anything to the contrary contained herein, FIM shall
be entitled to receive, and FIS shall pay to FIM in cash, within five (5) days
after receipt thereof, twenty-five percent (25%) of the value (whether in cash
or by credit, offset, deduction or similar reduction) received by FIS on any
accounts receivable of FIS and/or the Partnership that have been written off as
uncollectible prior to and as of the Effective Date, including, without
limitation, the overdue in the amount of approximately $200,000 from
Infrastructure Services, Inc..
1.5 MODIFICATION AGREEMENT. At or prior to Closing, two duplicate
originals of a Modification Agreement substantially in the form of Exhibit B
attached hereto shall be executed by each of the parties thereto and at Closing
one such duplicate original shall be delivered to FIM and the other shall be
delivered to Buyer.
ARTICLE 2
COVENANTS, REPRESENTATIONS AND WARRANTIES
2.1 BY FIM. FIM represents and warrants to and covenants with FIS, Buyer
and Britt now and as of the date of Closing as follows:
(a) ORGANIZATION, STANDING AND QUALIFICATION. FIM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, and has all requisite
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corporate power and authority to own, lease and operate its properties and to
carry on its business as now conducted.
(b) AUTHORIZATION, EXECUTION AND DELIVERY OF THIS AGREEMENT. FIM has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement have been duly authorized by all necessary corporate action of FIM,
and this Agreement has been duly and validly executed and delivered by FIM. This
Agreement, when executed and delivered by all parties hereto, shall constitute a
legal, valid and binding obligation of FIM, enforceable against it in accordance
with its terms. The execution and delivery by FIM of this Agreement and the
consummation by FIM of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time, or both, conflict with,
constitute a default under or violate (i) any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of FIM, (ii) any of the
terms, conditions or provisions of any document, agreement or other instrument
to which FIM is a party or by which FIM is bound (excluding the Agreements (as
hereinafter defined)), (iii) any Texas or federal law or regulation applicable
to FIM or any of its assets or (iv) any judgment, writ, injunction, decree,
order or ruling of any court or governmental authority binding on FIM or any of
its assets.
(c) LITIGATION. There is no suit, action, arbitration or legal,
administrative or other proceeding, governmental investigation, or any other
claim of damages, or incidents on which any of the above matters could be based,
pending or, to the knowledge of FIM, threatened against or affecting FIM that
questions or would delay or prevent the completion of the transactions
contemplated herein.
(d) CONSENTS. No consent from, other approval of, or filing with any
governmental entity or any other person is necessary to be obtained by FIM in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, other than those described
in SCHEDULE 2.1 (D) (which have already been obtained or completed).
(e) AGREEMENTS. To FIM's knowledge, the Buy Sell Agreement, the
Management Services Agreement and the Modified Agreements (as defined in the
Modification Agreement attached hereto as Exhibit B) (collectively, the
"Agreements") constitute all of the agreements, leases, evidence of
indebtedness, understandings or other contracts (of any nature, written or oral)
between FIM and/or SCC and any of Britt, FIS, Buyer, Karren, BMD, Samuel F.
Bowen, David G. Miclette, Dennis M. Descant, William Bowen, Jr., the Partnership
and the spouses of any of the forenamed individuals.
(f) MISCELLANEOUS. As of the date of this Agreement FIM owns and as of
the date of Closing will own the FIM/FIS Proprietary Interest, free and clear of
any liens and encumbrances of any nature. To the best of FIM's knowledge, Buyer
will immediately following the purchase by Buyer at the Closing of the FIM/FIS
Proprietary Interest and the completion of the deliveries required pursuant to
this Agreement, beneficially own FIS in the entirety, and neither FIM nor SCC
nor any party claiming by or through FIM or SCC shall have any stock or other
beneficial ownership interest
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in FIS. Notwithstanding the foregoing, FIM makes no representation or warranty
whatsoever with respect to any right Karren, Mike Acree or Jim Drew may have
with respect to any ownership interest in FIS nor with respect to any right of
ownership in FIS of any third party pursuant to any agreement to which FIM is
not a party. To the best of FIM's knowledge, the Purchase Price for the FIM/FIS
Proprietary Interest represents the fair market value of such interest. Neither
FIM nor SCC, nor any person controlled by them, have heretofore and will not
hereafter assert, claim or report any compensation or deduction with respect to
the acquisition by Buyer and/or Britt of any direct or indirect ownership
interest in FIS. Any knowledge which Karren and/or Deloitte & Touche LLP may
have with respect to the matters set forth in this subsection shall not be
attributed to nor deemed to be the knowledge of FIM.
(g) LIABILITIES. To the knowledge of FIM, there are no liabilities or
obligations (including indebtedness of any nature or any guarantee thereof)
(whether absolute, accrued, contingent, fixed or otherwise) of FIS or
Partnership, relating to or affecting either of them or any of their respective
assets or properties or their respective businesses except: (i) as reflected on
the unaudited financial statements which are included in Schedule 2.2(g)
attached hereto, and (ii) those which were incurred in the ordinary course of
business consistent with past practice during the period commencing June 1, 1997
and ending on the date hereof (the "Liabilities"). To the knowledge of FIM, FIS
and Partnership have not incurred any liability or obligation (including
indebtedness of any nature or guarantee thereof) (whether absolute, accrued,
contingent, fixed or otherwise) on behalf or in the name of or in any way
related to or affecting FIS or Partnership or any of their respective assets or
properties or its businesses. Any knowledge which Karren and/or Deloitte &
Touche LLP may have with respect to the matters set forth in this subsection
shall not be attributed to nor deemed to be the knowledge of FIM.
(h) TAXES. To the knowledge of FIM, all tax returns (as hereinafter
defined) required to have been filed by or with respect to FIM, SCC and FIS have
been duly filed, and each such Tax Return correctly and completely reflects the
Tax liability and all other information required to be reported thereon. To the
knowledge of FIM, all Taxes (as hereinafter defined) due and payable by FIM and
FIS , whether or not shown on any Tax Return, have been paid. To the knowledge
of FIM, the provisions for Taxes due by FIS in its Unaudited Financials are
sufficient for all of its unpaid Taxes, being only current Taxes not yet due and
payable. To the knowledge of FIM , none of FIM, or FIS is a party to any
agreement extending the time within which to file any Tax Return. During the
preceding five years, no claim has been made and, to the best knowledge of FIM ,
no claim has ever been made by a jurisdiction in which each of FIM, SCC or FIS
does not file Tax Returns that any of them is or may be subject to taxation by
that jurisdiction. To the knowledge of FIM, each of FIM, SCC and FIS has
withheld and paid all Taxes required to have been withheld and paid by it in
connection with amounts paid or due and payable to any employee, creditor,
independent contractor, partner or other third party. To the knowledge of FIM,
there is no dispute or claim concerning any Tax liability of FIM, SCC or FIS
either (i) claimed or raised by any taxing authority or (ii) otherwise known to
FIM. To the knowledge of FIM, none of FIM, SCC or FIS has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to any Tax assessment or deficiency. Any knowledge which Karren and/or Deloitte
& Touche may have with respect to the
5
<PAGE>
matters set forth in this subsection shall not be attributed to nor deemed to be
the knowledge of FIM.
For purposes hereof, "Tax" means all federal, state or local net or gross
income, gross receipts, net proceeds, sales, use, AD VALOREM, value added,
franchise, withholding, payroll, employment, excise, property, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto. For purposes hereof, "Tax Returns" means any returns,
reports or statements (including any information returns) required to be filed
with any governmental or regulatory authority for purposes of a particular Tax.
2.2 BY BUYER. FIS and Buyer, jointly and severally, represent and warrant
to FIM and covenant with FIM now and as of the date of Closing as follows:
(a) ORGANIZATION, STANDING AND QUALIFICATION. Each of FIS and Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas, and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted.
(b) AUTHORIZATION, EXECUTION AND DELIVERY OF THIS AGREEMENT. Each of FIS
and Buyer has all requisite corporate power and authority and Britt has legal
capacity to execute and deliver this Agreement and to perform its or his
obligations hereunder. The execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of each of FIS and Buyer, and
this Agreement has been duly and validly executed and delivered by each of FIS,
Buyer and Britt. This Agreement, when executed and delivered by all parties
hereto, shall constitute a legal, valid and binding obligation of each of FIS,
Buyer and Britt, enforceable against each of FIS, Buyer and Britt in accordance
with its terms. The execution and delivery by each of Britt, FIS and Buyer of
this Agreement and the consummation by each of Britt, FIS and Buyer of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, conflict with, constitute a default under or
violate (i) any of the terms, conditions or provisions of the Certificates of
Incorporation or Bylaws of each of FIS and Buyer, respectively, (ii) any of the
terms, conditions or provisions of any document, agreement or other instrument
to which any of Britt, FIS or Buyer is a party or by which any of Britt, FIS or
Buyer, respectively, is bound (excluding the Agreements) or by which any of
their respective assets are bound, (iii) any Texas or federal law or regulation
applicable to any of Britt, FIS or Buyer, respectively, or any of their
respective assets, or (iv) any judgment, writ, injunction, decree, order or
ruling of any court or governmental authority binding on any of Britt, FIS or
Buyer, respectively, or any of their respective assets.
(c) LITIGATION. There is no suit, action, arbitration or legal,
administrative or other proceeding, governmental investigation, or any other
claim of damages, or incidents on which any of the above matters could be based,
pending or, to the knowledge of Britt, FIS or Buyer, threatened against or
affecting any of Britt, FIS, FIM, the Partnership or Buyer, (i) except for those
described
6
<PAGE>
in SCHEDULE 2.2(C) or (ii) that questions or would delay or prevent the
completion of the transactions contemplated herein.
(d) CONSENTS. No consent from, other approval of, or filing with any
governmental entity or any other person is necessary to be obtained by any of
Britt, FIS or Buyer in connection with the execution, delivery or performance of
this Agreement or any other agreement or the consummation of the transactions
contemplated hereby, other than those described in SCHEDULE 2.2(D) (which have
already been obtained or completed).
(e) AGREEMENTS. To the knowledge of Britt, FIS and Buyer, the Agreements
constitute all of the agreements, leases, evidence of indebtedness,
understandings or other contracts (of any nature, written or oral) between FIM
and/or SCC and any of Britt, FIS, Buyer, Karren, BMD, Samuel F. Bowen, David G.
Miclette, Dennis M. Descant, William G. Bowen, Jr., the Partnership and the
spouses of any of the forenamed individuals.
(f) MISCELLANEOUS. Buyer covenants with FIM that, following the Closing,
it shall, as FIS's sole shareholder, take all appropriate action to assure the
compliance by FIS with the provisions of this Agreement including, without
limitation, FIS's performance of its covenant to pay FIM as promptly as
practical following the Closing all amounts which shall be due to FIM under
sub-section 1.4 above. To the best of Buyer's knowledge, the Purchase Price for
the FIM/FIS Proprietary Interest represents the fair market value of such
interest.
(g) FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.2(G) are true and
complete copies of the unaudited balance sheet of each of FIS, the Partnership
and Buyer dated August 31, 1996 (each being an "August Unaudited Balance Sheet")
and the unaudited balance sheet of each of FIS, the Partnership and Buyer and
the related statement of operations for each of them, respectively, for the
nine-month period which commenced September 1, 1996 and ended May 31, 1997 (each
being a "May Unaudited Financial", and, together with the August Unaudited
Balance Sheets, collectively, the "Unaudited Financial Statements") setting
forth, in comparative form, the corresponding figures for the corresponding
period of the previous fiscal year, certified on behalf of each of FIS, the
Partnership and Buyer, by its respective chief financial officer or tax matters
partner, as appropriate. The Unaudited Financial Statements fairly present in
all material respects the financial position of each of FIS, the Partnership and
Buyer, respectively, as of the dates thereof and the results of operations of
each of FIS, the Partnership and Buyer, respectively, for the periods set forth
therein, all in conformity with GAAP (subject to normal year-end adjustments),
except as specifically noted in any notes thereto.
(h) LIABILITIES. To the knowledge of FIS and Buyer, there are no
liabilities or obligations (including indebtedness of any nature or any
guarantee thereof) (whether absolute, accrued, contingent, known or unknown,
fixed or otherwise) of any of FIS, the Partnership or Buyer relating to or
affecting any of them or any of their respective assets or properties or their
respective businesses except: (i) as reflected on their respective May Unaudited
Financials, and (ii) those which were incurred by each of them in the ordinary
course of their respective business consistent with past
7
<PAGE>
practice during the period commencing June 1, 1997 and ending on the date hereof
(the "Liabilities"). FIS, the Partnership and Buyer shall discharge in a timely
manner or shall make adequate provision for all of the Liabilities. To the
knowledge of FIS, none of FIS, the Partnership or Buyer has incurred any
liability or obligation (including indebtedness of any nature or guarantee
thereof) (whether absolute, accrued, contingent, fixed or otherwise) on behalf
or in the name of or in any way related to or affecting FIM or any of its assets
or properties or its business.
(i) CONDUCT OF BUSINESS. Since August 31, 1996, each of FIS, Buyer and
the Partnership has conducted its business in the ordinary course, consistent
with past practices, and, other than in the ordinary course of business,
consistent with past practices, there has not been any (x) delay in the
recognition or collection of revenues (including contingent bonuses owed to
FIS), (y) increase in the salary, wages or other compensation (including any
bonuses, commissions and other payments) of any of their respective partners,
officers, employees or consultants or (z) increase in reserves. Since August
31, 1996, none of FIS, the Partnership or Buyer has declared, set aside or paid
any dividend or other distribution in respect of their capital stock or other
equity interests or directly or indirectly redeemed, purchased or otherwise
acquired any such capital stock or other equity interests. Except as disclosed
by Schedule 2.2(i) attached hereto, since December 31, 1996, none of FIS, the
Partnership or Buyer has paid or accrued any bonuses to any of their respective
partners, officers, employees or consultants.
(j) TAXES. To the knowledge of FIS and Buyer, all Tax Returns (as
hereinafter defined) required to have been filed by or with respect to FIS, the
Partnership or Buyer have been duly filed, and each such Tax Return correctly
and completely reflects the Tax liability and all other information required to
be reported thereon. To the knowledge of FIS and Buyer, all Taxes (as
hereinafter defined) due and payable by FIS, the Partnership or Buyer, whether
or not shown on any Tax Return, have been paid. To the knowledge of FIS and
Buyer, the provisions for Taxes due by each of FIS, the Partnership and Buyer in
their respective May Unaudited Financials are sufficient for all of their
respective unpaid Taxes, being only current Taxes not yet due and payable. To
the knowledge of FIS and Buyer, none of FIS, the Partnership or Buyer is a party
to any agreement extending the time within which to file any Tax Return. During
the preceding five years, no claim has been made and, to the best knowledge of
each of FIS, the Partnership and Buyer, no claim has ever been made by a
jurisdiction in which each of FIS, the Partnership or Buyer does not file Tax
Returns that any of them is or may be subject to taxation by that jurisdiction.
To the knowledge of FIS and Buyer, each of FIS, the Partnership or Buyer has
withheld and paid all Taxes required to have been withheld and paid by it in
connection with amounts paid or due and payable to any employee, creditor,
independent contractor, partner or other third party. To the knowledge of FIS
and Buyer, there is no dispute or claim concerning any Tax liability of FIS, the
Partnership or Buyer either (i) claimed or raised by any taxing authority or
(ii) otherwise known to any of FIS, the Partnership or Buyer. None of FIS, the
Partnership or Buyer has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to any Tax assessment or
deficiency.
For purposes hereof, "Tax" means all federal, state or local net or gross
income, gross receipts, net proceeds, sales, use, AD VALOREM, value added,
franchise, withholding, payroll,
8
<PAGE>
employment, excise, property, alternative or add-on minimum, environmental or
other taxes, assessments, duties, fees, levies or other governmental charges of
any nature whatever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto. For
purposes hereof, "Tax Returns" means any returns, reports or statements
(including any information returns) required to be filed with any governmental
or regulatory authority for purposes of a particular Tax.
ARTICLE 3
OBLIGATIONS OF FIM AFTER CLOSING
3.1 INDEMNIFICATION BY FIM. Subject to the provisions of this Article 3,
FIM agrees to indemnify, defend and hold harmless Buyer and FIS (and their
respective directors, officers, employees and affiliates) from and against the
following: any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest,
penalties, and reasonable attorneys' fees, which arise or result from, or relate
to any breach of, or failure by, FIM to perform any of its representations,
warranties or covenants contained in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by FIM
under this Agreement or which relate to the business of FIM.
3.2 RELATED INDEMNIFICATION MATTERS. With respect to the indemnities set
forth in this Article 3, Buyer or FIS (each a "Seller Indemnitee") shall notify
FIM of the existence of any claim, demand or other matter to which any of FIM's
indemnification obligations may apply not later than fifteen (15) days after a
claim is asserted against a Seller Indemnitee for which it or he may seek
indemnity. Each Seller Indemnitee shall cooperate to give FIM a reasonable
opportunity to defend the same at FIM's own expense and with counsel reasonably
acceptable to the relevant Seller Indemnitee; provided, however, that the
relevant Seller Indemnitee shall at all times also have the right to fully
participate in the defense at its or his own expense. If FIM shall, within a
reasonable time after the foregoing notice, fail to defend reasonably, the
relevant Seller Indemnitee shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
business judgment), the claim or other matter on behalf, for the account, and at
the risk of FIM. If the claim is one that cannot by its nature be defended
solely by FIM, then the relevant Seller Indemnitee shall make available all
information and assistance that FIM may reasonably request.
3.3 CONTINUING OBLIGATIONS OF FIM. FIM hereby agrees that, from time to
time after the Closing, upon the request of Buyer, it shall execute and deliver
or cause to be executed and delivered such other instruments of conveyance and
transfer and take such other action as either of them may reasonably request in
order to vest more effectively in Buyer or to put it in possession of FIS or the
FIM/FIS Proprietary Interest to be acquired hereunder, or to assure Buyer of the
benefits thereof.
9
<PAGE>
ARTICLE 4
OBLIGATIONS OF FIS AND BUYER AFTER CLOSING
4.1 INDEMNIFICATION BY FIS AND BUYER. Subject to the provisions of this
Article 4, FIS and Buyer, jointly and severally, agree to indemnify, defend and
hold harmless FIM (and its directors, officers, employees, affiliates and
assigns (each a "FIM Indemnitee")) from and against any and all claims, demands,
losses, expenses, costs, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees, (i)
which arise, result from, or relate to (A) the Liabilities, (B) any breach of,
or failure by Buyer, FIS or Britt to perform any of its or his representations,
warranties and covenants, contained in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by FIS,
Buyer or Britt under this Agreement or (C) the Agreements (including the
termination or modification thereof), (ii) which otherwise relate to or arise
out of the business (whether arising before or after the Closing) of FIS, Buyer
or Britt, including all claims arising out of resulting from or relating to the
Quality Oilfield Products, Inc. litigation or any other litigation described on
Schedule 2.2(c) or (iii) which arise, result from, or relate to any claim by any
of Messrs. Karren, Acree or Drew that any of them have any interest in or right
to any interest in FIS or Buyer or any affiliate thereof.
4.2 RELATED INDEMNIFICATION MATTERS. With respect to the indemnities set
forth in this Article 4, each FIM Indemnitee shall notify Buyer and FIS of the
existence of any claim, demand or other matter to which any of their
indemnification obligations may apply not later than fifteen (15) days after a
claim is asserted against an FIM Indemnitee for which an FIM Indemnitee may seek
indemnity. Each FIM Indemnitee shall cooperate to give Buyer and/or FIS a
reasonable opportunity to defend the same at its own expense and with counsel
reasonably acceptable to the relevant FIM Indemnitee; provided, however, that
any FIM Indemnitee shall at all times also have the right to fully participate
in the defense at its own expense. If Buyer or FIS shall, within a reasonable
time after the foregoing notice, fail to defend reasonably, the relevant FIM
Indemnitee shall have the right, but not the obligation, to undertake the
defense of, and to compromise or settle (exercising reasonable business
judgment), the claim or other matter on behalf, for the account and at the risk
of Buyer or FIS. If the claim is one that cannot by its nature be defended
solely by Buyer or FIS, then the relevant FIM Indemnitee shall make available
all information and assistance that Buyer or FIS may reasonably request.
4.3 BOOKS AND RECORDS. Each of Britt, FIS and Buyer shall afford to FIM,
its counsel and its accountants reasonable access to the books, records and
other data relating to FIS in its or his possession or in the possession of any
of its or his affiliates with respect to periods prior to the date hereof and
the right to make copies and extracts therefrom, to the extent that such access
may be reasonably required by FIM in connection with (i) the preparation of tax
returns, (ii) the determination or enforcement of rights and obligations under
this Agreement, (iii) compliance with the requirements of any governmental
authority or (iv) any actual or threatened action or proceeding. Each of Britt,
FIS and Buyer further agrees that, for a period extending until the end of all
tax statute of limitations relating to FIS, it or he shall not destroy or
otherwise dispose of any such books, records and other data unless it or he
shall first offer in writing to surrender such books, records and other data to
FIM.
10
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ARTICLE 5
GENERAL
5.1 FINDER'S OR BROKER'S FEES. Each of the parties represents that it has
dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement and no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions. FIM, on
the one hand, and Britt, FIS and Buyer, jointly and severally, on the other
hand, each agrees to indemnify, defend and hold harmless the other against any
loss, liability, damage, cost, claim or expense incurred by reason of any
brokerage, commission or finder's fee payable or alleged to be payable because
of any act, omission or statement of the indemnifying party.
5.2 EXPENSES. Each of Buyer, Britt and Karren, on their own behalf and on
behalf of FIS and BMD, on the one hand, and FIM, on the other, agrees to pay all
legal costs and other expenses incurred or to be incurred by them, respectively,
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
5.3 EFFECT OF HEADINGS. The subject headings of the Sections and
subsections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of the provisions of
this Agreement.
5.4 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes
the entire Agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
all the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
5.5 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.6 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
5.7 BINDING EFFECT; ASSIGNMENT. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party hereto without
11
<PAGE>
the consent of each other party hereto; provided, however, (i) FIM may assign
any or all of its rights, interests or obligations hereunder to (x) SCC or to
Security Capital Insurance Group, Inc. or another affiliate (by operation of law
or otherwise) and/or (y) in connection with or related to either (A) a sale of
the capital stock of FIM or (B) a transfer of its managing agent license, (ii)
FIM may direct that any payment due it hereunder be paid directly to SCC or to
Security Capital Insurance Group, Inc. or another affiliate and (iii) if FIS
shall, after the closing, be liquidated and dissolved, merged, consolidated or
otherwise cease to exist as a juridical entity, (x) all rights of and remedies
available to FIS hereunder shall inure to the benefit of and be enforceable by,
and (y) all obligations of FIS hereunder shall be assumed by and enforceable
against, such person or persons who shall be the assigns or successors in
interest to FIS.
5.8 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service, if served personally on the party to whom notice
is to be given, or on the second day after mailing, if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
To FIM at:
Foster Insurance Managers, Inc.
c/o Capital Partners, Inc.
One Pickwick Plaza, Suite 310
Greenwich, CT 06830
Attention: A. George Gebauer
To Buyer, FIS or Britt at:
Bowen, Miclette, Descant & Britt, Inc.
1111 N. Loop West, Suite 400
Houston, TX 77008
Attention: Edward G. Britt, Jr.
Any party may change its address for purposes of this Section by giving the
other parties written notice of the new address in the manner set forth above.
5.9 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Texas.
5.10 LITIGATION. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs
12
<PAGE>
incurred in that action or proceeding, in addition to any other relief to which
it, he or they may be entitled.
5.11 FURTHER ASSURANCES. At any time or from time to time after the date
hereof, FIM, FIS, Britt or Buyer shall at the request of any party hereto, and
at such party's expense, execute and deliver any further instruments or
documents and take all such further action as such party reasonably may request
in order to consummate and make effective the transactions effected pursuant to
this Agreement.
5.12 SEVERABILITY. If any provisions hereof shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability shall
have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
5.13 KARREN'S CONSENT. For good and valuable consideration, the receipt of
which is hereby acknowledged by Karren, Karren hereby consents to the
transactions contemplated by this Agreement and releases FIM, FIS and their
respective affiliates other than Buyer and Britt from any claim that Karren may
have in contract or otherwise to receive any ownership interest in FIS or Buyer
or any consideration in lieu thereof.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed as of the day and year first written above.
BMD&B, Inc., formerly known as
BOWEN, MICLETTE, DESCANT & BRITT, INC.
By:/s/ David G. Miclette
---------------------
David G. Miclette, President
/s/ Edward G. Britt, Jr.
------------------------
EDWARD G. BRITT, JR. (individually)
/s/ Patricia C. Britt
---------------------
PATRICIA C. BRITT
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<PAGE>
/s/ Larry M. Karren
---------------------
LARRY M. KARREN
FOSTER INSURANCE SERVICES, INC.
By:/s/ Edward G. Britt, Jr.
------------------------
Edward G. Britt, Jr., President
FOSTER INSURANCE MANAGERS, INC.
By:/s/ A. George Gebauer
------------------------
Name: A. George Gebauer
Title: President
14
<PAGE>
SCHEDULE 2.1(D)
FIM CONSENTS
None
<PAGE>
SCHEDULE 2.2(C)
LITIGATION
<PAGE>
SCHEDULE 2.2(D)
BRITT, FIS BUYER AND CONSENTS
None
<PAGE>
SCHEDULE 2.2(G)
FINANCIAL STATEMENTS
<PAGE>
Exhibit A
to Purchase
AGREEMENT
BILL OF SALE AND ASSIGNMENT
This Bill of SALE AND ASSIGNMENT ("Bill of Sale"), dated as of July 3,
1997, is from Foster Insurance Managers, Inc., a Texas corporation ("FIM"), to
BMD&B, Inc., formerly known as Bowen, Miclette, Descant & Britt, Inc., a Texas
corporation ("Buyer").
WITNESSETH:
WHEREAS, Buyer, FIM and others have entered into that certain Purchase
Agreement (the "Purchase Agreement"), pursuant to which FIM has agreed to sell
and assign to Buyer and Buyer has agreed to acquire all of FIM's beneficial
right, title and interest in and to Foster Insurance Services, Inc. ("FIS"), a
Texas corporation.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto, intending to be legally bound, agree as follows:
1. TRANSFER OF SELLER'S INTEREST IN FIS. For value received, the
adequacy and receipt of which are hereby acknowledged, FIM hereby sells,
conveys, assigns, transfers and delivers to Buyer, its successors and assigns,
to have and to hold forever, all of FIM's beneficial right, title and interest
in and to FIS, including, but not limited to, all of FIM's interest in the
capital stock of FIS (the "FIM/FIS Proprietary Interest").
2. POWER OF ATTORNEY. FIM hereby constitutes and appoints Buyer as its
true and lawful attorney, with full power of substitution, for FIM in FIM's
name, place and stead, but on behalf of and for the benefit of Buyer to do all
things necessary to perfect the transfer to Buyer of the FIM/FIS Proprietary
Interest.
3. FURTHER ASSURANCES. From time to time hereafter and without further
consideration, Seller shall execute and deliver such additional or further
instruments of conveyance, assignment and transfer and take such actions as
Buyer may reasonably request in order to more effectively convey and transfer to
Buyer the FIM/FIS Proprietary Interest sold to Buyer hereunder or as shall be
reasonably necessary or appropriate in connection with carrying out FIM's
obligations hereunder or the purposes of this Bill of Sale and Assignment.
4. COUNTERPARTS. This Bill of Sale may be executed in counterparts each
of which when executed by the parties hereto shall be deemed an original and all
of which together shall be deemed the same Bill of Sale.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Bill of Sale
as of the date first above written.
FOSTER INSURANCE MANAGERS, INC.
By:
----------------------------------
Name: A. George Gebauer
Title:
-------------------------
2
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EXHIBIT 5
MODIFICATION AGREEMENT
This Agreement (this "Agreement") is hereby dated as of July 3, 1997, by
and among Foster Insurance Managers, Inc., a Texas corporation ("FIM"), Foster
Insurance Services, a Texas corporation ("FIS"), Bowen, Miclette, Descant &
Britt, Inc., a Texas corporation, formerly known as Bowen, Miclette & Descant,
Inc. ("BMD"), BMD&B, Inc., a Texas corporation, formerly known as Bowen,
Miclette, Descant & Britt, Inc. ("BMD &B"), and the individuals and their
spouses who are identified as "Individuals" on the signature pages of this
Agreement.
RECITALS:
WHEREAS, FIM, FIS, BMD & B, Larry M. Karren ("Karren") and Edward G. Britt,
Jr. ("Britt") have entered into a Purchase Agreement ("Purchase Agreement")
which provides among other things for the delivery of this Modification
Agreement at the Closing held pursuant to the Purchase Agreement; and,
WHEREAS, FIM, FIS, BMD & B, Britt and Karren (and their respective spouses)
are parties to that certain Stock Purchase Agreement effective January 1, 1993
(the "Stock Purchase Agreement") providing, among other things, for the purchase
of all of the outstanding capital stock or assets of FIS on the terms set forth
therein; and,
WHEREAS, FIM, FIS, BMD &B, and the Individuals (and their respective
spouses) are parties to that certain Shareholders Agreement, dated as of January
1, 1993 (the "Shareholders Agreement"), containing, among other things,
restrictions and other provisions pertaining to the sale of BMD & B's shares;
and,
WHEREAS, FIM, FIS, BMD & B and BMD are parties to that certain Management
Services Agreement, effective January 1, 1993 (the "Services Agreement"),
pursuant to which BMD & B has rendered support, agency and management services
to FIS and BMD in the operation of their respective businesses; and,
WHEREAS, FIS and BMD are currently partners pursuant to a Partnership
Agreement ("Partnership Agreement") effective October 1, 1993 by which Bowen,
Miclette, Descant & Britt Company (the "Partnership") was formed as a Texas
general partnership; and,
WHEREAS, FIS, BMD, BMD & B, and Partnership are parties to that certain
Personnel Services and Clarification Agreement, effective October 1, 1993 (the
"Management Agreement"), pursuant to which BMD & B agreed to render management
and agency services to the Partnership, BMD and FIS; and,
WHEREAS, FIS, FIM, BMD, Samuel F. Bowen, David G. Miclette, D. Michael
Descant, William G. Bowen, Jr., Thomas C. Cook and Britt are parties to the
Interim Agreement, dated October 30, 1992; and
<PAGE>
WHEREAS, the Parties hereby have agreed that FIM shall be removed as a
party to the Stock Purchase Agreement, the Shareholders' Agreement, the Services
Agreement, the Partnership Agreement and the Management Agreement (collectively,
the "Modified Agreements");
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS, THE PURCHASE AGREEMENT AND
OTHER GOOD AND VALID CONSIDERATION THE RECEIPT AND SUFFICIENCY OF WHICH ARE
ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:
1. AMENDMENTS TO MODIFIED AGREEMENTS. Effective June 30, 1997, FIM is hereby
removed as a party to the Modified Agreements and FIM shall not hereafter have
any rights, benefits or obligations under the Modified Agreements.
2. NO FURTHER AMENDMENTS. Except as changed pursuant to paragraph 1 above,
the Modified Agreements shall remain in full force and effect.
3. GOVERNING LAW. This Agreement is governed by the laws of the State of
Texas in all respects, including matters of construction, validity, enforcement
and performance.
4. ENTIRE AGREEMENT. This Agreement constitutes the final and entire
agreement and understanding between the parties to this Agreement relative to
the subject matter of this Agreement.
5. NO BENEFIT FOR THIRD PARTIES. This Agreement is solely for the benefit of
the parties to this Agreement. This Agreement does not and shall not be deemed
to create or enlarge any rights or privileges of any type or nature whatsoever
in any person or entity not a party hereto.
6. BINDING EFFECT ON SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the parties to this Agreement and their
respective heirs, legal representatives, successors and assigns.
7. FURTHER ASSURANCES. Each party shall execute and deliver any further
documents and instruments, and perform any additional acts that may be necessary
or appropriate to carry out the purpose and intent of this Agreement.
8. EXECUTION IN COUNTERPARTS. Execution of this Agreement in any number of
counterparts is permissible. Each executed counterpart of this Agreement will be
deemed to be an original instrument, with all executed counterparts together
constituting a single agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
2
<PAGE>
FOSTER INSURANCE MANAGERS, INC.
By:/s/ A. George Gebauer
---------------------
Name: A. George Gebauer
Title: President
FOSTER INSURANCE SERVICES, INC.
By:/s/ Edward G. Britt, Jr.
------------------------
Edward G. Britt, Jr., President
BMD&B, Inc., formerly known as
BOWEN, MICLETTE, DESCANT & BRITT, INC.
By:/s/ David G. Miclette
-------------------------
David G. Miclette, President
BOWEN, MICLETTE, DESCANT & BRITT, INC.,
formerly known as
BOWEN, MICLETTE & DESCANT, INC.
By:/s/ David G. Miclette
-------------------------
David G. Miclette, Chairman
SPOUSES (IF APPLICABLE) INDIVIDUALS
/s/ Patricia C. Britt /s/ Edward G. Britt, Jr.
- --------------------- ------------------------
EDWARD G. BRITT, JR. (individually)
/s/ Susan R. Miclette /s/ David G. Miclette
- --------------------- ------------------------
DAVID G. MICLETTE (individually)
/s/ Louise K. Descant /s/ Dennis M. Descant
- --------------------- ------------------------
DENNIS M. DESCANT (individually)
3
<PAGE>
/s/ Martha E. Bowen /s/ Samuel F. Bowen
- --------------------- ------------------------
SAMUEL F. BOWEN (individually)
/s/ Ashley P. Bowen /s/ William G. Bowen, Jr.
- --------------------- ------------------------
WILLIAM G. BOWEN, JR. (individually)
/s/ Jodie S. Karren /s/ Larry M. Karren
- --------------------- ------------------------
LARRY M. KARREN (individually)
4
