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):
June 9, 1999 (June 2, 1999)
REALAMERICA CO.
(Exact name of registrant as specified in its charter)
DELAWARE 0-6978 61-8623857
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
5210 McKinney Avenue, Suite 300, Dallas TX 75205
(Address of principal executive offices including zip code)
(214) 526-0940
(Registrant's telephone number including area code)
100 N.W. Second Street, Suite 312, Evansville, IN 47708
(Former name or former address if changed since last report)
<PAGE>
Item 1. Change in Control of Registrant.
Stock Purchase Agreement with Merrion Shareholders.
On June 2, 1999 RealAmerica Co. (hereinafter alternately referred to as
the "Registrant" or the "Company") entered into a certain Stock Purchase
Agreement (the "Merrion Agreement") with a group of control shareholders of
the Company (the "Merrion Group"). A copy of the Merrion Agreement is
attached hereto as "Exhibit 1.1" and incorporated herein for all purposes.
The Merrion Agreement provides for the purchase of 100% of all of the capital
stock (the "Merrion Shares") in Merrion Reinsurance Company, a Dublin, Ireland
domiciled reinsurance company, by the Merrion Group in and for the
consideration and payment or exchange of (i) 5,273,000 shares of fully paid,
non-assessable, voting Class B, restricted common stock in Registrant and (ii)
91,000 shares of Series A, fully paid, non-assessable, preferred shares (the
"Series A Preferred Stock") in Registrant. The net effect of the Merrion
Agreement is to return all of the ownership of Merrion Reinsurance Company to
the Merrion Shareholders and for the Merrion Shareholders to relinquish and
return all of the ownership interest they own or ever owned in the Registrant.
The details and designation of the Series A Preferred Stock were
disclosed in a previous public 8-K filing dated February 26, 1997.
The basis of the Merrion Agreement and the business reason for the
transaction was a decision by the management of the Company (as used herein
"Management") that the full acquisition and control of Merrion Reinsurance
Company as a subsidiary of Registrant was going to be impossible to achieve in
a timely manner for reasons of diversity of certifying accounting data,
differing fiscal years of Merrion Reinsurance Company and its operating
subsidiaries, and the Registrant and diverse audit firms and varying
international standards. Merrion Reinsurance Company has operating
subsidiaries in the United Kingdom, Belgium and Italy. Upon reaching this
conclusion and the determination that there has been virtually no material
impact on the financial position of the Company since the original acquisition
of the Merrion Shares, and certainly no adverse financial impact on the
Company, the Management entered into the Merrion Agreement. It is anticipated
that the audited financial statements to be provided pursuant to this form
will disclose no material effect on net income of the Company and shall carry
no tax incidence to the Company in connection with the period of time that the
Company owned the Merrion Shares.
Agreement to Exchange Stock.
On June 2, 1999 the Registrant entered into a certain Agreement to
Exchange Stock (the "Agreement"), which Agreement is attached hereto as
"Exhibit 1.2" and incorporated herein for all purposes of this report, with
the shareholders and management of Trucat Holding Co., Inc., a Delaware
corporation ("Trucat"). The Agreement provides for the purchase of 100% of
the 4,571,425 shares of fully paid, non-assessable, voting, common stock in
Trucat, being the only class of stock outstanding in Trucat, in exchange
<PAGE>
for (i) 5,273,000 shares of fully paid, non-assessable, voting, restricted
Class B common stock in the Company and (ii) 91,000 shares of fully paid, non-
assessable, Series A Preferred Stock in Company being the same holdings in the
Registrant as were previously owned by the Merrion Group. The effect of this
transaction is the acquisition by the Company of all of the ownership of
Trucat, its business, management and operations to the end that the principal
business activity of the Company, the focus of its management, and the
anticipated future financial results will be directly related to the
operations of Trucat.
The Series A Preferred Stock, if 100% were converted to Class B voting
common stock as is allowed under the designation thereof, would substantially
dilute the present shareholders of the Company.
Business Activities of Trucat.
Trucat is engaged in the international transportation, freight forwarding
and logistics business.
More specifically and uniquely, Trucat has established a significant
market presence and industry presence as a neutral transportation logistics
company and forwarder, i.e. serving other major international forwarders, with
a specialization of service in Russia, the states of the former Soviet Union
(the "FSU"), Mongolia and in central Europe. Trucat has strategic alliances
with some of the world's largest industry partners. These alliances include a
five (5) year contract with Fritz Companies, Inc. of San Francisco, California
("Fritz") for project cargoes, contracts for ocean and air shipments with Air
Express International Corporation of Darien, Connecticut ("AEI"), and a
contract with P&O TransEuropean (Nederland) B.V., the European surface
transport subsidiary of the Peninsular and Oriental Steam Navigation Company
("P&O"). This means that Trucat handles Fritz project cargoes in Russia and
ongoing shipments of any nature for P&O and AEI in Russia and the FSU. Fritz
and AEI are both publicly owned companies quoted on the NASDAQ national market
system. P&O is a publicly owned company quoted on the London Stock Exchange
and other exchanges including ADRs quoted on the New York Stock Exchange.
With executive headquarters in Dallas, Texas and operational offices
throughout Russia, the FSU and central Europe, Trucat was founded in 1992 by
George E. Burch III who serves as President and chief executive officer. Mr.
Burch is the largest shareholder. The second largest shareholder is an
institutional London based investor known as Framlington Russian Investment
Fund ("Framlington"). Framlington is a publicly quoted investment fund on the
Luxembourg Stock Exchange organized pursuant to the laws the Grand Duchy of
Luxembourg as a Societ, d'Investissement Capital Variable ("SICAV"). The
chairman of Framlington is Lord Geoffrey Howe, who formerly served as Deputy-
Prime Minister, and also as Chancellor of the Exchequer in the United Kingdom
in Margaret Thatcher's government. In turn, Framlington's largest
shareholders are the European Bank for Reconstruction and Development ("EBRD")
and the International Finance Corporation ("IFC") arm of the World Bank. The
EBRD and
<PAGE>
IFC investments in such professionally managed funds as Framlington have
served to develop private industry in Russia and the FSU.
Trucat Management Team.
The management of Trucat combines many years of experience in
construction, logistics, public warehousing, international oil & gas and
oilfield services supply, accounting, the law, and the military. Operations
are headed by George E. Burch III, Neal Dewey, Susan Fuller-Sutherland, Andrey
Shakhnovsky and Michael McCall. Additional information on those and other key
personnel follows:
Senior Management
George E. Burch III., President and Director
- --------------------------------------------
Mr. Burch is the founder of the Company. He has more than 30 years
experience in international business including construction of projects in
remote areas, oil & gas operations, pipeline construction, port construction
and transportation. He founded Trucat more than 7 years ago and has managed
the strategic plan of the Company to make it the premier logistics provider in
the FSU. Mr. Burch holds a BA degree from Tulane University and an MBA degree
from Loyola University.
Neal R. Dewey, Vice-President
- -----------------------------
Formerly stationed in the Company's offices in St. Petersburg, Mr. Dewey
serves the Company in Dallas as Vice-President for Operations. After serving
in the U.S. Army Transportation Corps, Mr. Dewey pursued a career in
international transport and logistics, with duties ranging from air transport
captain in southeast Asian and Malaysian operations to management positions
with various international freight concerns working in the Philippines,
Indonesia, South America and Mexico.
Michael McCall, Vice-President European Operations
- --------------------------------------------------
Responsible for all Russian, FSU and central european operations, Mr.
McCall has been with the Company since 1996. Former logistics manager for
Russia for Halliburton Energy Services and logistics manager for Asia for
Halliburton Logging Services, he has also served in technical capacities at
Lockheed Aircraft and General Dynamics Corporation. He served on U.S. Navy
flight crew in Vietnam for four years.
Davis Martin, Vice-President, Director and Acting Chief Financial Officer
- -------------------------------------------------------------------------
Mr. Martin acts as financial advisor to the Company, and since January
of 1996 he has served as acting chief financial officer of the Company. He
has a background in accounting, mortgage banking, and investment banking and
has been principal liaison with Company shareholders including Framlington.
He served as director of Registrant from about August 1993 until December 1994
at which time it performed primarily as a
<PAGE>
financial services firm which owned Norcross Securities, Inc., an NASD broker-
dealer, and Biltmore Trust Company, a trust company licensed by the Arizona
Banking Department. He currently serves on the Advisory Board of the
American-Russian Investment Forum at the Harriman Institute of Columbia
University. Martin has a BBA from Southern Methodist University.
Theresa A. Kubitza, Secretary/Treasurer and Comptroller
- -------------------------------------------------------
Ms. Kubitza has served the Company as comptroller since its founding.
Associated with the Company or its predecessor since 1992, she previously
served as head staff accountant for a Dallas based paint manufacturer for 10
years. A native of St. Louis she has a B.S. from Texas Christian University,
with post-graduate work at the University of Texas (Arlington).
Susan Fuller-Sutherland, Vice-President Marketing
- -------------------------------------------------
Ms. Fuller-Sutherland is responsible for all marketing activities.
Experienced in marketing, sales program management, retail enterprise
ownership, and real estate management, she has served the Company or its
predecessor since 1988. She attended the University of Texas (Arlington),
University of California (Bakersfield) and the University of Michigan.
Dr. Andrey Shakhnovsky, Vice President and Director Trucat International
- ------------------------------------------------------------------------
(Russia)
- --------
Active in the founding of the Company with Mr. Burch in 1991, Mr.
Shakhnovsky is Vice-President and General Director of Trucat, Ltd., an
operating subsidiary of the Company in the CIS. His expertise is in rail and
inland water transportation. He is a graduate of the St. Petersburg State
University Law School. His scholarly background includes service on the
faculties of Leningrad University School of Management, State School of
Commerce and Trade, University of Texas (Dallas), Richland Community College
(Dallas). St. Petersburg (Ohio) State University and Youngstown (Ohio) State
University. He has a major degree in law.
General (ret.) Anatoly T. Fedchenko, Deputy General Director and Rail
- ----------------------------------------------------------------------
Operations
- ----------
Retired from the Russian Army with senior responsibility for rail
operations, General Fedchenko has served the Company as Deputy General
Director since 1993 with the planning and implementation of rail movements of
cargo throughout Russia and the FSU. He retired as Chief of Transportation,
Military Headquarters, St. Petersburg Russia in 1992. He is an honored
graduate of the Military Academy of Transport and Base, St. Petersburg,
Russia.
Non-Executive Directors
Non executive directors of the Company are the following persons whose
backgrounds are compatible with the industry:
<PAGE>
Robert J. G. Jenkins
- --------------------
A professional fund manager and chartered accountant based in London, Mr.
Jenkins is fluent in English, Russian, French and Spanish. He has extensive
experience working in the Soviet Union as a fund manager for Framlington and
in other private capacities. He is a graduate of Oxford University.
Count Luis Correa de Sa
- -----------------------
Count Correa de Sa is the Managing Director of Catermar S.A., a Lisbon,
Portugal based service provider which specializes in catering, camp
management, and dry dock services to the worldwide oil industry. Catermar
S.A. has cooperated with the Company on many projects in the past.
A total of ten people are employed at the Company headquarters in Dallas
where project movements are planned, sales & marketing administration is
performed, all revenues are received and processed, all payments made, and all
accounting functions are performed. The Company realizes 95% of its revenues
in western currency with payments generally received in Dallas.
Foreign Stations and Key Managers
Additional key management personnel carrying out Company operations at
foreign stations include Richard Snowden, Manager of Moscow Station, Ian
Mansell, Manager St. Petersburg Station, Julius Mosonyi, Manager Budapest
Station, Larry Dunbar, Director of Business Development Caspian Region, Ed
Gustin, Manager Baku Station, Sergey Karpin, General Director Trucat Ukraine,
Jon Baker, Project Manager Kiev Station, Leo van den Heuvel, Director
Rotterdam Station, Sergiy Karpich, General Director Trucat Kiev, Sergey
Zheltov, General Director Trucat Kazakstan (Almaty), Ken Kardonnaway, Manager
Aktau Station and Chris Drake, Assistant Manager Aktau Station.
Trucat has approximately 125 employees in Russia, the FSU, or central
Europe of which about 10 are expatriate employees from the U.S., the U.K.,
Hungary or Canada.
<PAGE>
Trucat Focus and Marketing.
Trucat achieved significantly rapid business and revenue growth in the
first six (6) months of 1998 over 1997; and at June 30, 1998 Trucat reached
the point of profitability with over $2 million in sales for the month. These
revenues were approximately 100% ahead of sales for the same six (6) month
period in 1997. However, the events in Russia of August 17 had a significant
negative impact on the Trucat's sales and performance. Since that time fixed
costs have been reduced dramatically, by about 40%, and the Trucat is now
poised for return to profitability as forecast for operations in the last six
months of 1999.
Its clients come from diverse business and industry interests, but they
require the full range of transportation and logistics support services. Such
diverse customers are served under contracts with Trucat or through its
alliance with industry partners.
In addition to the previously mentioned alliances with Fritz, AEI and
P&O, Trucat handles the FSU activities of Sotra Europe, a vessel operator with
direct services from European and other countries to inland ports in the FSU.
Trucat handles project cargoes in alliance with international forwarders
Zust-Bachmeier (USA) and Rulewave (UK) Ltd., and other forwarding companies.
It also acts as the inland carrier on transportation managed by Network
Americas Lines, Inc., that operates a container service between North America
and FSU destinations.
Present customers of Trucat include Caterpillar Tractor Co., Orryx
Energy, Kerr McGee, Texaco, Exxon, Unilever, Master Foods, 3M Corporation,
J.I. Case Co., John Deere, TransWorld Logistics, Schlumberger, Halliburton
Cos., Bechtel Corporation, Smith EA, BerBen Express, and many others.
Sales and marketing efforts are focused on direct either sales to major
clients or to companies in the freight forwarding or transportation business
who use the Trucat's services as a third party service provider in Trucat's
market area.
Services are marketed to and, generally, its clientele is comprised of
major multi-national companies doing business in Russia and the FSU, with an
increasing emphasis on pan-FSU operations and Caspian Sea oilfield related
customers.
It is also handling an increasing number of humanitarian aid cargoes and
is bidding for work for camps in Albania in cooperation with Crown Agents and
Greenshields, Cowie & Co. of the U.K.
Trucat's strategic plan calls for providing transportation services to
any point in the FSU, central and eastern Europe, and Mongolia from any point
in the world. This is possible outside of the direct operating area of Trucat
through its alliance with global partner AEI for all types of transportation
and with other partners for specific clients and cargoes. Through the
combined cooperation of Trucat and its alliance partners, it is able
<PAGE>
to perform any transportation operation required - rail, ocean, air, truck,
inland marine, customs clearance, warehousing and local distribution. The
client strategy is to focus on providing door-to-door service, origin to
destination, of all requirements for transportation for multi-national
companies that have a growth plan in place in Trucat `s market.
Other Business Activities.
While focused on its core business as described herein, the Company also
owns a transportation subsidiary known as Morex Limited ("Morex"). Morex is a
joint stock Russian company that operates vehicle rentals in St. Petersburg,
Russia. In this city of 5.5 million people, this is one of few recognized car
rental firms currently represented there. Morex primarily serves the same
multi-national customers as are served by Trucat in the logistics business.
The business plan for Morex calls for a slow increase in the fleet
commensurate with the growth in population and industry.
Significant Risk Factors
There are significant risk factors that face Trucat and its management.
Most significantly exemplified by the market crash in Russia, Trucat is, to
some extent, dependent on the Russian economy and on the financial
rehabilitation of the Russian economy, to realize sales growth. This includes
the sales growth that is forecast by the Company for the remainder of 1999 and
2000.
While endeavoring to expand in other markets with similar or compatible
activities (e.g. humanitarian aid cargoes to Albania, Tajikistan, and
Kazakstan), such business is dependent on U.S. policy, competitive bidding by
international carriers much larger than Trucat, And restrictive policies and
regulations of the U.S. Department of Agriculture and the U.S. AID which limit
the participation in such cargoes by non-vessel operating common carriers such
as those utilized by Trucat.
The business and the success of the business is somewhat dependent on the
abilities and the presence of current management, most significantly that of
the founder and President Mr. Burch.
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
See Item One (1) above.
Item 3. Bankruptcy or Receivership.
---------------------------
None.
<PAGE>
Item 4. Changes in Registrant's Certifying Accountant.
----------------------------------------------
The certifying accountant for the Company has previously been KPMG Peat
Marwick, which firm is expected to provide the basis of financial statements
through the fiscal year of the Company ended November 30, 1997 in compliance
with the requirements of this form.
The board of directors of Registrant has engaged the firm Semple &
Cooper/BDO Seidman Alliance of 1900 Avenue of the Stars, 11th Floor, Los
Angeles, CA 90067 as auditors of the Company. Semple & Cooper/BDO Seidman
Alliance have audited the Balance Sheets of Trucat for 1995 and 1996; and
have provided a stub period audit of Trucat for the six (6) month period ended
June 30, 1997 with a full audit for the twelve month period ended December 31,
1997. Their audit report for 1998, consolidated with the financial statements
of the Company from KPMG Peat Marwick, is expected to fullfil the requirements
of this form.
Item 5. Other Events.
-------------
In a meeting of the board of directors (the "Board") of the Company held
on June 2, 1999, four (4) new directors were nominated and elected to serve
on the Board, being George E. Burch III, Davis Martin, Robert J.G. Jenkins,
and Luis Correa de Sa, . Messrs. Burch and Martin are officers of
Trucat and are owners or beneficially owners of common stock in Trucat being
exchanged pursuant to the Agreement; and Messrs. Correa de Sa are
non-executive directors with no material ownership interest in either the
Company or Trucat. Mr. Jenkins, until recently, was associated with
Framlington and is a chartered accountant and resident of London. Mr. Martin
previously served as a director of the Company from about August 1993 through
December, 1994 and shares of the Company comprising less than five percent
(5%) of the outstanding common stock of the Company are currently owned
directly or beneficially by the Edna Maye Davis Martin Trust of which the
mother of Mr. Martin is the Trustee.
The Board nominated and elected the following to serve as officers of the
Company for a period of one (1) year or until the next shareholders'meeting of
the Company: George E. Burch III as President, Davis Martin as Vice-
President, Theresa A. Kubitza and Treasurer, and Theresa A. Kubitza as
Secretary. Those officers also serve Trucat in the same capacities.
Item 6. Resignation of Registrant's Directors.
--------------------------------------
Effective June 2, 1999 Jeffrey T. Wilson, Darren Thomas, Francois
Verkaerren and Stacy D. Smothers resigned from the Board.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
The required financial statements of the Registrant will be delivered in
accordance with the requirements of this form. Audited Financial Statements
for the 12 month period ended December 31, 1996 and 1997 and unaudited
financial statements for the 12 month period ended December 31, 1998 are
attached hereto as "Exhibit 7.1".
SIGNATURES.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RealAmerica Co.
(Registrant)
BY: /s/ George E. Burch III
________________________________
George E. Burch III
President
Date: June 9, 1999
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Stock Purchase Agreement
1.2 Agreement to Exchange Stock
7.1 Audited and Unaudited Financial Statements
</TABLE>
EXHIBIT 1.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is entered into as of this
2nd day of June, 1999, by and between RealAmerica Co. ("RealAmerica"), a
Delaware corporation, as SELLER and those individuals listed on Exhibit "A"
attached hereto and made a part hereof, (collectively referred herein as the
"The Merrion Shareholders"), as BUYER.
W I T N E S S E T H:
WHEREAS, RealAmerica is the owner of 100% of the capital stock of Merrion
Reinsurance Company Ltd. ("Merrion"), a corporation domiciled in Ireland; and
WHEREAS, in connection with its acquisition of Trucat Holding Company,
Inc., a Delaware corporation (hereinafter "Trucat") RealAmerica is obligated
prior to the closing with Trucat to dispose of its business interests and
subsidiaries with the result that RealAmerica shall have no interest in
Merrion at the time of the acquisition of Trucat; and
WHEREAS, RealAmerica desires to sell, transfer and assign to The Merrion
Shareholders all of its right, title and interest in and to 100% of the
capital stock of Merrion in exchange for the shares held by The Merrion
Shareholders in RealAmerica as set out on Exhibit "A" attached hereto and made
a part hereof; and
WHEREAS, it is the intent of both RealAmerica and The Merrion Shareholders
that The Merrion Shareholders acquire all of the assets and liabilities of
Merrion at the time of closing and that The Merrion Shareholders retain no
interest in or to any class of stock of RealAmerica; and
WHEREAS, the Board of Directors of RealAmerica and The Merrion
Shareholders deem it in the best interests of each to complete the transaction
herein contemplated;
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements, provisions, covenants, representations and warranties herein
contained, the parties hereto hereby agree as follows:
1. Purchase and Sale of Assets.
----------------------------
1.01 PURCHASE AND SALE. On and subject to the terms and conditions of
this Agreement, The Merrion Shareholders agrees to purchase from RealAmerica
and RealAmerica agrees to sell, transfer, convey and deliver to The Merrion
Shareholders all of RealAmerica's right, title and interest in and to the
Acquired Assets.
1.02 PURCHASE PRICE. The Merrion Shareholders agree to purchase the
Acquired Assets from RealAmerica at Closing for the following consideration:
(a) The Merrion Shareholders will endorse stock certificates to
RealAmerica representing 5,273,000 shares of fully paid, non-assessable
restricted Class B common stock of RealAmerica.
(b) The Merrion Shareholders will endorse stock certificates to
RealAmerica representing 91,000 shares of the fully paid, non-assessable
restricted Series A preferred stock of RealAmerica.
<PAGE>
1.03 CLOSING. Subject to the terms and provisions of this Agreement,
the closing of the transactions contemplated by this Agreement will be at
10:00 a.m. at the offices of RealAmerica located at 100 NW Second Street,
Suite 312, Evansville, IN 47708, on or before, June 30, 1999, or at such
earlier or later date or such other place as shall be mutually agreed upon by
The Merrion Shareholders and RealAmerica, such date and time sometimes being
referred to herein as the "Closing" or "Closing Date."
2. Representations and Warranties of The Merrion Shareholders.
-----------------------------------------------------------
The Merrion Shareholders represent and warrant both jointly and
severally, to RealAmerica that, to the best of its knowledge, the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 2.
2.01 AUTHORITY. The Merrion Shareholders have all requisite power and
authority to execute and deliver this Agreement and all agreements,
instruments and documents to be executed and delivered by The Merrion
Shareholders.
2.02 DISCLOSURE. The representations and warranties contained in this
Section 2 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in
this Section 2 not misleading.
2.03 REPRESENTATION. The Merrion Shareholders represent and warrant
that in making the decision to sell the Acquired Assets, they have relied upon
their own independent investigations and the independent investigations by
their representatives, including their own professional legal, tax, and
business advisors, and that The Merrion Shareholders and their
representatives have been given the opportunity to examine all relevant
documents and to ask questions of and to receive answers from RealAmerica.
3. Representations and Warranties Concerning RealAmerica.
------------------------------------------------------
RealAmerica, represents and warrants to The Merrion Shareholders that, to
the best of their knowledge, the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date as though the Closing Date were substituted
for the date of this Agreement throughout this Section 3.
3.01 AUTHORITY. RealAmerica has all requisite power and authority to
execute and deliver this Agreement and all agreements, instruments and
documents to be executed and delivered by RealAmerica hereunder, to consummate
the transactions contemplated hereby and to perform all terms and conditions
hereof to be performed by it. This Agreement constitutes, and each other
agreement and instrument to be executed by RealAmerica hereunder, when
executed and delivered by RealAmerica, will constitute, the valid and binding
obligation of RealAmerica enforceable against it in accordance with its terms.
3.02 NON-CONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge or other restriction of any government,
governmental agency or court to which RealAmerica is subject or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
<PAGE>
terminate, modify, or cancel or require any notice under any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
other arrangement to which RealAmerica is a party or by which it is bound or
to which any of its assets is subject or result in the imposition of any
security interest upon any of its assets. RealAmerica is not required to give
any notice to, make any filing with, or obtain any authorization, consent or
approval of any federal, state or local government, governmental agency, bank,
financial institution or other party in order for RealAmerica and The Merrion
Shareholders to consummate the transactions contemplated by this Agreement.
3.03 TITLE. RealAmerica has, and upon the Closing Date will have, valid
and binding contractual rights to acquire the Acquired Assets, free and clear
of all liens, claims, mortgages, security interests, pledges, encumbrances or
restrictions on transfer of any kind or nature.
3.04 GOVERNMENTAL APPROVALS. No consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority (including, without limitation, any
department, bureau or agency), is required to be obtained or made in
connection with the execution and delivery of this Agreement by RealAmerica or
the consummation by RealAmerica of the transactions contemplated hereby the
failure of which to obtain would have a material adverse affect on the
Acquired Assets, The Merrion Shareholders or The Merrion Shareholders's
ability to own, operate or exploit the Acquired Assets.
3.05 DISCLOSURE. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in
this Section 3 not misleading.
4. Survival and Indemnity.
-----------------------
4.01 SURVIVAL. All of the representations and warranties of RealAmerica
contained in this Agreement and the representations of The Merrion
Shareholders contained in this Agreement shall survive the Closing Date, even
if the damaged party knew or had reason to know of any misrepresentation or
breach of warranty at the time of the Closing Date, and shall continue in full
force and effect for a period of six months thereafter.
4.02 INDEMNIFICATION FOR BENEFIT OF THE THE MERRION SHAREHOLDERS . In
the event RealAmerica breaches any of their joint and several representations,
warranties or covenants contained herein, and provided that The Merrion
Shareholders makes a written claim for indemnification against RealAmerica
pursuant to Section 4.04, then RealAmerica agrees to indemnify and hold
armless The Merrion Shareholders from and against the entirety of any Adverse
Consequences The Merrion Shareholders may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences The Merrion
Shareholders may suffer after the end of the applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by
the breach.
4.03 INDEMNIFICATION FOR BENEFIT OF REALAMERICA. In the event The
Merrion Shareholders breaches any of its representations, warranties and
covenants contained herein, and provided that RealAmerica makes a written
claim for indemnification against The Merrion Shareholders pursuant to Section
4.04, then The Merrion Shareholders agree to indemnify and hold harmless
RealAmerica from and against the entirety of any Adverse Consequences
RealAmerica may suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in the nature of
or caused by the breach.
<PAGE>
4.04 INDEMNIFICATION PROCEDURE. If any third party shall notify any
party to this Agreement (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against any other party
(the "Indemnifying Party") under this Section 4, then the Indemnified Party
shall notify each Indemnifying Party thereof promptly; provided however, that
no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is damaged. In the event any Indemnifying Party notifies the
Indemnified Party within 10 days after the Indemnified Party has given notice
of the matter that the Indemnifying Party is assuming the defense thereof, (i)
the Indemnifying Party will defend the Indemnified Party against the matter
with counsel of the Indemnified Party's choice reasonably satisfactory to the
Indemnifying Party, (ii) the Indemnified Party may retain separate co-counsel
at its sole cost and expense, (iii) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party not to be
withheld unreasonably, and (iv) the Indemnifying Party will not consent to the
entry of any judgment with respect to the matter, or enter into any settlement
which does not include a provision whereby the plaintiff or claimant in the
matter releases the Indemnified Party for all liability with respect thereto,
without the written consent of the Indemnified Party not to be withheld
unreasonably. In the event no Indemnifying Party notifies the Indemnified
Party with 10 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming the defense thereof, however, the
Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate.
4.05 DETERMINATION OF LOSS. The parties shall make appropriate
adjustment for tax benefits and insurance proceeds and for the time cost of
money in determining the amount of loss for purposes of this Section 4.
4.06 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory or
common law remedy any party may have for breach of representation, warranty or
covenant.
4.07 DEFINITION OF ADVERSE CONSEQUENCES. As used in this Section 4,
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demand, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, taxes, liens, losses
(including any losses resulting from the loss or invalidity of the leases
comprising the Acquired Assets), expenses and fees, including all attorneys'
fees and court costs.
5. Conduct and Transactions prior to Closing.
------------------------------------------
5.01 COVENANTS OF REALAMERICA. Between the date of this Agreement and
the Closing Date or, if earlier termination of this Agreement:
(a) RealAmerica agrees to give The Merrion Shareholders its agents
and representatives, full access to the Acquired Assets and all of
RealAmerica's premises and books and records relating to the Acquired
Assets and its operation, and to furnish The Merrion Shareholders with such
financial and operating data and other information with respect to the
Acquired Assets and its ownership and operation as The Merrion Shareholders
shall from time to time request; provided, however, that any such
investigation shall not affect any of the representations and warranties of
RealAmerica hereunder; and provided further, that any such investigation
shall be conducted in such manner as not to interfere unreasonably with the
operation of the business of RealAmerica.
<PAGE>
(b)RealAmerica will conduct its business relating to the Acquired
Assets only in the ordinary course and will not engage in any practice,
take any action or enter into any transaction relating to the Acquired
Assets outside the ordinary course of business.
6. Conditions to Closing.
----------------------
6.01 CONDITIONS TO OBLIGATIONS OF THE MERRION SHAREHOLDERS. The
obligation of The Merrion Shareholders to effect the Closing of the
transactions
contemplated by this Agreement shall be subject to the following conditions:
(a) RealAmerica shall have furnished The Merrion Shareholders with
certified copies of resolutions duly adopted by its Board of Directors
authorizing all necessary and proper corporate action approving the
execution, delivery and performance of this Agreement.
(b) Except to the extent waived hereunder, (i) the representations
and warranties of RealAmerica contained herein shall be true and correct in
all material respects at the Closing Date with the same effect as though
made at such time; and (ii) RealAmerica shall have performed all
obligations and complied with all covenants required by this Agreement to
be performed or complied by them prior to the Closing Date.
(c) RealAmerica shall have obtained and delivered to The Merrion
Shareholders all consents required to consummate the transactions
contemplated by this Agreement.
(d) There shall not have occurred (i) any material adverse change
in the Acquired Assets or the business, properties, results of operations
or financial condition of RealAmerica, (ii) any loss of or damage to any of
the Acquired Assets (whether or not covered by insurance) of RealAmerica
which will materially affect or impair the ability of The Merrion
Shareholders to own or operate the Acquired Assets.
(e) All statutory requirements for the valid consummation by
RealAmerica of the transactions contemplated by this Agreement shall have
been fulfilled and all authorizations, consents and approvals of all
federal, state or local governmental agencies and authorities required to
be obtained in order to permit consummation by RealAmerica of the
transactions contemplated by this Agreement and to permit the business now
or previously carried on by RealAmerica at the Acquired Assets to continue
unimpaired to any material degree immediately following the Closing Date
shall have been obtained. Between the date of this Agreement and the
Closing Date, no governmental agency, whether federal, state or local,
shall have instituted (or threatened to institute) an investigation or
other proceeding which is pending at the Closing Date relating to the
transactions contemplated by this Agreement and between the date of this
Agreement and the Closing Date no action or proceeding shall have been
instituted or, to the knowledge of RealAmerica, shall have been threatened
by any party (public or private) before a court or other governmental body
to restrain or prohibit the transactions contemplated by this Agreement or
to obtain damages in respect thereof.
(f) RealAmerica shall have complied with the delivery requirements
set forth in Section 7.03 of this Agreement.
6.02 CONDITIONS TO OBLIGATIONS OF REALAMERICA. The obligation of
RealAmerica to effect the Closing of the transactions contemplated by this
Agreement shall be subject to the following conditions:
<PAGE>
(a) Except to the extent waived hereunder, (i) the representations
and warranties of The Merrion Shareholders contained herein shall be true
in all material respects at the Closing Date with the same effect as though
made at such time; and (ii) The Merrion Shareholders shall have performed
all material obligations and complied with all material covenants required
by this Agreement to be performed or complied with by it prior to the
Closing Date.
(b) All statutory requirements for the valid consummation by The
Merrion Shareholders of the transactions contemplated by this Agreement
shall have been fulfilled.
(c) To the extent necessary to complete the transactions
contemplated hereby, the Merrion Shareholders shall cooperate with the
management of RealAmerica to resign offices or directorships as the case
may be and to take other action necessary and requisite in the discretion
of management of RealAmerica to effect the Trucat acquisition.
7. Actions at Closing.
-------------------
7.01 TRANSACTIONS AT THE CLOSING. At the Closing the following events
shall occur, each event under the control of one party hereto being a condition
precedent to the events under the control of the other party, and each event
being deemed to have occurred simultaneously with the other events.
7.02 DELIVERIES BY THE MERRION SHAREHOLDERS. At Closing, The Merrion
Shareholders will deliver to RealAmerica:
(a) a certificate(s) for the RealAmerica Shares, properly
endorsed;
7.03 DELIVERIES BY REALAMERICA. At Closing, RealAmerica shall deliver to
The Merrion Shareholders:
(a) The stock certificates and other instruments of transfer,
assignment and conveyance as The Merrion Shareholders shall reasonably
request to vest in The Merrion Shareholders good and marketable title to
the Acquired Assets; and
(b) certified copies of corporate resolutions and other corporate
proceedings taken by RealAmerica to authorize the execution, delivery and
performance of this Agreement; and
8. Termination.
------------
8.01 TERMINATION OF THE AGREEMENT. The parties may terminate this
Agreement as provided below:
(a) The Merrion Shareholders and RealAmerica may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) The Merrion Shareholders may terminate this Agreement by
giving written notice to RealAmerica on or before the Closing Date if The
Merrion Shareholders are not satisfied with the results of their continuing
business, legal and accounting due diligence regarding RealAmerica;
(c) The Merrion Shareholders may terminate this Agreement by
giving written notice to RealAmerica at any time prior to the Closing (i)
in the event RealAmerica has breached any material representation,
<PAGE>
warranty or covenant contained in this Agreement in any material respect,
The Merrion Shareholders have notified RealAmerica of the breach and the
breach has continued without cure for a period of 10 days after the notice
of breach or (ii) if the Closing shall not have occurred on or before June
30, 1999, or such later date as may be agreed to by The Merrion
Shareholders and RealAmerica in writing, by reason of the failure of any
condition precedent under Section 6.01 hereof (unless the failure results
primarily from The Merrion Shareholders itself breaching any
representation, warranty or covenant contained in this Agreement); and
(d) RealAmerica may terminate this Agreement by giving written
notice to The Merrion Shareholders at any time prior to the Closing (i) in
the event The Merrion Shareholders have breached any material
representation, warranty or covenant contained in this Agreement in any
material respect, RealAmerica has notified The Merrion Shareholders of the
breach and the breach has continued without cure for a period of 10 days
after the notice of breach or (ii) if the Closing shall not have occurred
on or before June 30, 1999, or such later date as may be agreed to by The
Merrion Shareholders and RealAmerica in writing, by reason of the failure
of any condition precedent under Section 6.02 hereof (unless the failure
results primarily from RealAmerica itself breaching any representation,
warranty or covenant contained in this Agreement).
8.02 EFFECT OF TERMINATION. If either The Merrion Shareholders or
RealAmerica terminates this Agreement pursuant to Section 8.01 above, all rights
and obligations of the parties hereunder shall terminate without any liability
of any party to any other party.
9. Miscellaneous.
--------------
9.01 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. Except as
otherwise specifically provided, the covenants, representations and warranties
contained herein shall expire and be terminated and extinguished at the Closing
Date.
9.02 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Delaware.
9.03 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by registered mail or certified
mail, postage prepaid if addressed as follows:
To: The Merrion Shareholders
The Merrion Shareholders
C/o Merrion Reinsurance Company Ltd.
9 Clanwilliam Terrace,
Grand Canal Quay
Dublin 2, Ireland
Attention: Mr. Darren Thomas,
Managing Director
To: RealAmerica
RealAmerica Co.
100 NW Second Street
Suite 312
Evansville, IN 47708
<PAGE>
Attention: Mr. Jeffrey T. Wilson
Director
9.04 NO ASSIGNMENT. This Agreement may not be assigned by either party or
by operation of law or otherwise unless expressly agreed to in advance and in
writing by both parties hereto and, in the event of an attempted assignment,
this Agreement shall terminate.
9.05 ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
9.06 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.07 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.08 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by The
Merrion Shareholders and RealAmerica. No waiver by an party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
9.09 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.10 EXPENSES. Except as otherwise expressly provided herein, each of the
parties will bear his or its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
9.11 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
The Merrion Shareholders
By: /s/ Officer of the Cuff Foundation
_________________________________________
By: /s/ Officer of the Speed 3105 Foundation
_________________________________________
By: /s/ Officer of the Total Foundation
_________________________________________
By: /s/ Darren Thomas
_________________________________________
RealAmerica Co.
By: /s/ Jeffrey T. Wilson
_________________________________________
Jeffrey T. Wilson
Director
EXHIBIT 1.2
AGREEMENT TO EXCHANGE STOCK
---------------------------
THIS AGREEMENT TO EXCHANGE STOCK (the "Agreement"), dated as of the 2nd day of
June 1999, by and between RealAmerica Company, a Delaware corporation
(hereinafter "RealAmerica"), Trucat Holding Company, Inc., a Delaware
corporation (hereinafter "TRUCAT"), and those persons listed on Exhibit "A"
attached hereto (such persons listed on Exhibit "A" being sometimes
collectively referred to herein as the "TRUCAT Stockholders").
W I T N E S S E T H
WHEREAS, the TRUCAT Stockholders and the Board of Directors of
RealAmerica deem it advisable and in the best interests of (i) TRUCAT, (ii)
the TRUCAT Stockholders and (iii) RealAmerica that RealAmerica acquire 100% of
the issued and outstanding capital stock of TRUCAT, in exchange for (1.)
5,273,000 shares of RealAmerica Class B common stock and (2.) 91,000 shares of
Series A Convertible Preferred Stock pursuant to this Agreement and applicable
provisions of law (such transaction being hereinafter referred to as the
"TRUCAT Acquisition"); and
WHEREAS, RealAmerica, TRUCAT and the TRUCAT Shareholders each acknowledge
that RealAmerica will dispose of its wholly-owned subsidiary, Merrion
Reinsurance Company, Ltd., prior to closing of the TRUCAT Acquisition and that
actions and agreements in connection with that sale will be available to
TRUCAT and the TRUCAT Shareholders; and
WHEREAS, the Board of Directors of RealAmerica and TRUCAT, respectively,
have approved and adopted this Agreement; and
WHEREAS, the TRUCAT Stockholders own and have the right to sell, transfer
and exchange 100% of the issued and outstanding capital stock of TRUCAT to
RealAmerica in accordance with the terms of this Agreement and applicable
provisions of law.
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto
hereby agree as follows:
1. Exchange of Common Stock.
-------------------------
1.01 EXCHANGE. Subject to the terms and conditions herein set forth,
at the time of closing set forth in Section 1.02 hereof, RealAmerica will
issue and deliver or cause to be issued and delivered to the TRUCAT
Stockholders the following: (1.) a total of 5, 273, 000 shares of
RealAmerica's authorized Class B voting common stock, par value $0.001 per
share, representing approximately 51 percent (51%) of the issued and
outstanding Class B voting common stock in RealAmerica and (2.) a total of
91,000 shares of the Series A Preferred Stock, par value $10.00 per share,
(together the "RealAmerica Shares"), in exchange for the conveyance by the
TRUCAT Stockholders to RealAmerica of a total of shares of TRUCAT common stock
(the "TRUCAT Shares"), representing 100% of the issued and outstanding capital
stock of TRUCAT.
1.02 TRUCAT (1998 INCENTIVE) STOCK OPTION PLAN. On the Closing Date
RealAmerica shall assume the obligations of TRUCAT under its existing Stock
Option Plan, and further agrees that the outstanding TRUCAT stock options
listed on Schedule 1.02 attached hereto and made a part hereof shall be
exercisable for and into RealAmerica Common Stock at an exercise price of
$2.00 per share. As soon as practical after the Closing Date, RealAmerica
shall issue replacement stock options for the TRUCAT stock options listed on
Schedule 1.02 attached hereto and made a part hereof and shall take all other
necessary actions to effectuate the provisions of this Section 1.02.
1.03 CLOSING. Subject to the terms and provisions of this Agreement,
the closing of the RealAmerica Acquisition will be at 10:00 a.m. at the
offices of RealAmerica , 100 NW Second Street, Suite 312, Evansville, IN 47708
on or before June 15, 1999, or at such earlier or later date or such other
place as shall be mutually agreed upon by RealAmerica and the TRUCAT
Stockholders, such date and time sometimes being referred to herein as the
"Closing" or "Closing Date."
<PAGE>
2. Representations and Warranties of the TRUCAT Stockholders.
----------------------------------------------------------
Each of the TRUCAT Stockholders severally, and not jointly, represents
and warrants to RealAmerica that, with respect to the TRUCAT shares owned by
such TRUCAT Stockholder as set forth on Exhibit "A" attached hereto, the
statements contained in this Section 2 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date as
through made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Section 2.
2.01 AUTHORIZATION. The TRUCAT Stockholder has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the TRUCAT Stockholder, enforceable in accordance with its terms and
conditions. The TRUCAT Stockholder need not give any notice to, make any
filing with, or obtain any authorization, consent or approval of any
government, governmental agency, or other person in order to consummate the
transactions contemplated by this Agreement which have not been obtained.
2.02 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge or other restriction of any government,
governmental agency or court to which the TRUCAT Stockholder is subject or
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, security interest, or other
arrangement to which the TRUCAT Stockholder is a party or by which he is bound
or to which any of his assets are subject.
2.03 OWNERSHIP. The TRUCAT Stockholder holds of record and owns
beneficially the number of TRUCAT Shares set forth opposite his name as set
forth on Exhibit "A" attached hereto. The TRUCAT Stockholder holds his TRUCAT
Shares free and clear of any restrictions on transfer (other than restrictions
under federal and state securities laws), claims, taxes, security interests,
options, warrants, rights, contracts, calls, commitments, equities and
demands. The TRUCAT Stockholder is not a party to any option, warrant,
contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any capital stock of TRUCAT (other than this
Agreement). The TRUCAT Stockholder is not a party to any voting trust, proxy
or other agreement or understanding with respect to the voting of any capital
stock of TRUCAT.
2.04 SPECULATIVE NATURE AND RISK. The TRUCAT Stockholders each
understand and acknowledge the speculative nature of and substantial risk of
loss associated with an investment in the RealAmerica Shares which may be
subject to substantial dilution. The TRUCAT Stockholders each represent and
warrant that the RealAmerica Shares constitute an investment which is suitable
and consistent with their respective financial conditions and that they are
each able to bear the risks of this investment for an indefinite period of
time, which may include the total loss of their investment in RealAmerica. The
TRUCAT Stockholders each further represent that they have adequate means of
providing for their respective current financial needs and corporate and
personal contingencies and no need for liquidity in their investment in
RealAmerica and that they each have sufficient financial and business
experience to evaluate the merits and risks of an investment in RealAmerica.
2.05 FEDERAL OR STATE SECURITIES LAWS. The TRUCAT Stockholders each
understand and acknowledge that the RealAmerica Shares have not been, and will
not be, registered under the Securities Act of 1933, as amended (the "1933
Act"), or applicable state securities laws and the TRUCAT Stockholders are
each aware that no federal or state agency has made any review, finding or
determination regarding the terms of their acquisition of the RealAmerica
Shares nor any recommendation or endorsement of the RealAmerica Shares as an
investment, and the TRUCAT Stockholders must each forego the security, if any,
that such a review would provide.
2.06 ACQUISITION FOR OWN ACCOUNT. The TRUCAT Stockholders each
understand and acknowledge that the RealAmerica Shares are being offered and
sold under exemptions from registration provided by the Act and
<PAGE>
exemptions provided by applicable state securities laws and the TRUCAT
Stockholders each warrant and represent that the RealAmerica Shares are being
acquired by them solely for their own account, for investment purposes only,
and not with a view to or for the resale, distribution, subdivision or
fractionalization thereof. The TRUCAT Stockholders each represent and warrant
that they have no agreement or other arrangement, formal or informal, with any
person to sell, transfer or pledge any part of the RealAmerica Shares or which
would guarantee them any profit or protect them against any loss with respect
to the RealAmerica Shares. Further, the TRUCAT Stockholders have no plans to
enter into any such agreement or arrangement, and, consequently, they must
each bear the economic risk of an investment in the RealAmerica Shares for an
indefinite period of time.
2.07 LIMITATIONS ON RESALE OR TRANSFER. The TRUCAT Stockholders each
understand and acknowledge that the RealAmerica Shares will be "restricted" as
defined in Rule 144 under the Act and that therefore they cannot offer to
sell, sell or otherwise transfer or distribute the RealAmerica Shares without
registration thereof, which RealAmerica is not obligated to do, under both the
Act and any applicable state securities laws, or unless an exemption is, in
the opinion of RealAmerica's counsel, available to them under the Act and any
applicable state securities laws. Such exemption is not now available and it
is not anticipated that any such exemption will become available in the
future. The TRUCAT Stockholders each further understand and acknowledge that
the restrictions on the transfer of the RealAmerica Shares will be noted on
the books of RealAmerica and that the stock certificate representing the
RealAmerica Shares will bear a written legend setting forth the restriction on
the transferability of the RealAmerica Shares in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
3. Representations and Warranties Concerning TRUCAT.
-------------------------------------------------
TRUCAT represents and warrants to RealAmerica that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date except as
set forth in the disclosure schedule delivered by TRUCAT to RealAmerica on the
date hereof and initialed by the parties (the "TRUCAT Disclosure Schedule").
The TRUCAT Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3.
3.01 GOOD STANDING. TRUCAT is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with
full corporate power to own and operate its properties and to carry on its
business as and in places where such properties are owned, operated and
conducted.
3.02 CAPITALIZATION. The entire authorized capital stock of TRUCAT
consists of 10,000,000 shares of common stock, par value $0.01 per share, of
which 3,396,425 shares are issued and outstanding. All of the issued and
outstanding shares of TRUCAT common stock have been duly authorized, are
validly issued, fully paid, and nonassessable.
3.03 FINANCIAL STATEMENTS. Attached as Section 3.03 of the TRUCAT
Disclosure Schedule are the following financial statements (collectively, the
TRUCAT Financial Statements"): (i) audited balance sheets of TRUCAT as of
December 31, 1995, 1996 and 1997 and compiled (unaudited) balance sheet as of
December 31, 1998 ("Most Recent TRUCAT Balance sheet"); and (iii) audited
statements of operations, retained earnings and cash flows for the years ended
December 31, 1995, 1996 and 1997 and unaudited statements of operations for
the twelve (12) months ended December 31, 1998. The TRUCAT Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered
thereby, are correct and complete in all material respects, and are consistent
with the books and records of TRUCAT which books and records are also correct
and complete in all material respects. Provided, however that the TRUCAT
financial statements including the Most Recent Trucat Balance Sheet are
subject to normal year-end adjustments, which will not be material; and they
lack footnotes and other presentation items.
<PAGE>
3.04 UNDISCLOSED LIABILITIES. Except to the extent reflected or
reserved against in the Most Recent TRUCAT Balance Sheet on the dates shown,
or as set forth in Section 3.04 of the TRUCAT Disclosure Schedule, as of those
dates, TRUCAT had no liabilities or obligations of any material nature,
whether accrued, absolute, contingent or otherwise and, as of such dates,
knows nor has reasonable grounds to know any basis for the assertion against
TRUCAT of any liability of any nature or in any amount not fully reflected or
reserved against in the Most Recent TRUCAT Balance Sheet which could have a
materially adverse effect.
3.05 EVENTS SUBSEQUENT. Subsequent to the Most Recent TRUCAT Balance
Sheet and except as set forth in Section 3.05 of the TRUCAT Disclosure
Schedule, TRUCAT has not (i) incurred any material liabilities or obligations,
absolute or contingent, except current liabilities and obligations under
contracts entered into in the ordinary course of business; (ii) declared or
made any payment or distribution to stockholders or purchased or redeemed any
of its capital stock; (iii) mortgaged or pledged or subjected to lien, charge
or any other encumbrance, any of its assets, tangible or intangible, excepting
extensions or renewals of liens for liabilities set forth on the Most Recent
TRUCAT Balance Sheet; (iv) sold or transferred any of its tangible assets or
cancelled any debts or claims except in each case in the ordinary course of
business; W made any capital expenditures other than in the ordinary course of
business; or (vi) incurred any material or adverse losses or damages, to be
involved in strikes, or other labor disputes.
3.06 LITIGATION. Except as set forth in Section 3.06 of the TRUCAT
Disclosure Schedule, there are no actions, suits or proceedings at law or in
equity pending or, to the knowledge of TRUCAT and/or any of the officers or
directors of TRUCAT, threatened against TRUCAT seeking damages; nor are there
any suits threatened or pending before any federal, state or municipal
government or any board, department or agency thereof involving TRUCAT. To the
best of TRUCAT's knowledge, TRUCAT has no pending violation proceedings
relating to state or federal environmental regulations.
3.07 EMPLOYMENT MATTERS. Except as disclosed in the TRUCAT
Disclosure Schedule, TRUCAT is not a party to any employment contract with any
officer, director or other employee. TRUCAT is not bound by a contract with a
labor union, pension or profit share plan or employee benefit plan, other than
as listed in Section 3.07 of the TRUCAT Disclosure Schedule.
3.08 SUBSIDIARIES. Except as disclosed on the TRUCAT Disclosure
Schedule, TRUCAT has no subsidiaries.
3.09 TAX MATTERS. TRUCAT has no knowledge or any reasonable grounds
to know of any tax deficiencies which might be asserted against TRUCAT which
could have a materially adverse effect. Since the date of the TRUCAT
Financial Statements, TRUCAT has paid or has provided for payment of all
federal and state withholding and unemployment insurance taxes and has filed
all federal, state and local tax returns and reports when due; provided,
however that certain expatriate contract workers are paid by a non-U.S. TRUCAT
subsidiary and, in their respective capacities working abroad, may not be
subject to the same withholding for U.S. income tax purposes as domestic
contract workers or employees.
3.10 PROPERTIES. Section 3.10 of the TRUCAT Disclosure Schedule sets
forth a true and complete list of all material leases, contracts,
understandings, commitments, plans or mortgages now in effect, to which TRUCAT
is a party, or under which it is obligated, or which materially affect its
properties. TRUCAT has complied with all material provisions of such leases,
contracts, understandings, commitments, plans and mortgages and is not in
material default with respect to any thereof.
3.11 ADVERSE CHANGES. There has been no material adverse change in
the condition, financial or otherwise, of TRUCAT from that set forth in the
Most Recent TRUCAT Balance Sheet other than certain operating losses in the
approximate estimated amount of $750,000 incurred in the first Quarter of
1999. To the best of TRUCAT's knowledge, TRUCAT is not aware of any facts that
might result in any actions, suit or other proceeding that would result in any
adverse change in the financial condition of TRUCAT. The business, properties
and assets reflected in the TRUCAT Financial Statements have not been
materially and adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, requisition or taking of property by
any government or agency thereof, flood, drought, embargo, riot, activities of
armed forces or acts of God or the public.
<PAGE>
3.12 BOOKS AND RECORDS. All of the minute books, stock certificate
books and stock transfer ledgers of TRUCAT are complete and accurate in all
material respects.
3.13 INDEPENDENT INVESTIGATION OF REALAMERICA. TRUCAT confirms that
it has received, reviewed, understands and has fully considered (including,
without limitation, the financial statements contained therein) for purposes
of its acquisition of the RealAmerica Shares, the business prospects and
leases of RealAmerica. TRUCAT acknowledges that (i) RealAmerica has limited
financial resources and will need additional sources of capital to implement
its current business plan, the availability of which is uncertain and cannot
be assured, and (ii) the RealAmerica Shares are a highly speculative
investment with a high degree of risk of loss by TRUCAT of its investment
therein. TRUCAT represents and warrants that in making the decision to acquire
the RealAmerica Shares, it has relied upon the representations and warranties
set out in Paragraph 4 below and on its own independent investigation of
RealAmerica and the independent investigations by its representatives,
including its own professional legal, tax and business advisors, and that
TRUCAT and its representatives have been given the opportunity to examine all
relevant documents and to ask questions of and to receive answers from
RealAmerica, or person(s) acting on its behalf, concerning the terms and
conditions of acquisition by TRUCAT of the RealAmerica Shares and any other
matters concerning an investment in RealAmerica, and to obtain any additional
information TRUCAT deems necessary to verify the accuracy of the information
provided.
3.14 DISCLOSURE. The representations and warranties contained in this
Section 3 do not contain any materially untrue statement of a fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
4. Representations and Warranties of RealAmerica
---------------------------------------------
RealAmerica represents and warrants to the TRUCAT Stockholders and TRUCAT that
the statements contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
except as set forth in the disclosure schedule delivered by RealAmerica to the
TRUCAT Stockholders and TRUCAT on the date hereof and initialed by the parties
(the "RealAmerica Disclosure Schedule"). RealAmerica, TRUCAT and the TRUCAT
Shareholders each acknowledge that RealAmerica will dispose of its wholly-
owned subsidiary, Merrion Reinsurance Company, Ltd., prior to closing of the
TRUCAT Acquisition and that actions and agreements in connection with that
sale will be available to TRUCAT and the TRUCAT Shareholders and the
warranties and representations made herein are made in connection with the
completion of that transaction. The RealAmerica Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
4.01 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. RealAmerica is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. RealAmerica is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of its business or the ownership or leasing of its properties
requires such qualification. RealAmerica has full corporate power and
authority to carry on the business in which it is engaged and to own and use
the properties owned and used by it. Section 4. 01 of the RealAmerica
Disclosure Schedule lists the directors and officers of RealAmerica.
RealAmerica has made available for inspection by the TRUCAT Stockholders
correct and complete copies of the Certificate of Incorporation and Bylaws of
RealAmerica (as amended to date). The minute books containing the records of
meetings of the stockholders, the Board of Directors and any committees of the
Board of Directors, the stock certificate books and the stock record books of
RealAmerica are correct and complete. RealAmerica is not in default under or
in violation of any provision of its Certificate of Incorporation or Bylaws.
4.02 CAPITALIZATION. The entire authorized capital stock of
RealAmerica consists of (i) 50,000,000 shares of Class A common stock, par
value $0.001 per share, of which no shares are issued and outstanding and no
shares are held in treasury; (ii) 10,500,000 shares of Class B common stock,
par value $0.001 per share of which 5,048,000 shares are issued and
outstanding and (iii) 15,000,000 shares of preferred stock of which 91,000
shares of Series A preferred stock, par value $10.00 per share, are issued and
outstanding. All of the issued and outstanding shares have been duly
authorized, are validly issued, fully paid, and non-assessable and are held of
record by the respective RealAmerica shareholders as set forth in
RealAmerica's stock record books. There are no outstanding or authorized
options, warrants, rights, contracts, calls, puts, rights to subscribe,
conversion rights or other agreements or commitments to which RealAmerica is a
party or which are binding upon RealAmerica providing for the
<PAGE>
issuance, disposition or acquisition of any of its capital stock, except as
disclosed in Section 4.02 of the RealAmerica Disclosure Schedule. There are
no outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to RealAmerica. There are no voting trusts, proxies or any
other agreements or understandings with respect to the voting of the capital
stock of RealAmerica. Upon issuance, the RealAmerica Shares to be issued to
the TRUCAT Stockholders pursuant to this Agreement will be duly authorized,
validly issued, fully paid and non-assessable.
4.03 NON-CONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge or other restriction of any government,
governmental agency or court to which the RealAmerica is subject or any
provision of its Certificate of Incorporation or Bylaws of RealAmerica or (ii)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, security interest or other
arrangement to which RealAmerica is a party or by which it is bound or to
which any of its assets is subject or result in the imposition of any security
interest upon any of its assets. RealAmerica is not required to give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any government, governmental agency or other person in order for
RealAmerica to consummate the transactions contemplated by this Agreement.
4.04 SUBSIDIARIES. RealAmerica does not own, directly or indirectly,
any capital stock, security, partnership interest or other interest of any
kind in any corporation, partnership, joint venture, association or other
entity. RealAmerica has no subsidiaries.
4.05 COMMON STOCK TRADING MARKET. The common stock of RealAmerica is
eligible for quotation and is quoted on the National Association of Securities
Dealers ("NASD") OTC Bulletin Board in accordance with the applicable rules of
the NASD and Securities and Exchange Commission ("SEC") and is in compliance
with applicable NASD and SEC rules for continuing quotation on the NASD
Bulletin Board. The broker-dealers which are market-makers in the common stock
of RealAmerica are Paragon Capital ("Market-Makers"). RealAmerica has
furnished each Market-maker and each other broker-dealer effecting
transactions in the Company's common stock with all information required by
SEC Rule 15c2-11. RealAmerica, its officers, directors and affiliates have
fully complied with any and all requests for information by the Market-Makers
and all other broker-dealers, whether or not acting in the capacity of a
market-maker, pursuant to SEC Rule 15c2-11. Any and all information provided
by RealAmerica to the Market-Makers and all other broker-dealers, whether or
not acting in the capacity of a market-maker, was, at the time if was
furnished, accurate in all material respects.
4.06 FINANCIAL STATEMENTS. Attached as Section 4.06 of the
RealAmerica Disclosure Schedule are the following RealAmerica financial
statements (collectively, the "RealAmerica Financial Statements") : (i)
audited consolidated balance sheets as of the fiscal years ended November 30,
1994 and unaudited consolidated balance sheets as of November 30, 1995, 1996,
and 1997 and audited consolidated statements of income, changes in
stockholders' equity and cash flow as of and for the fiscal year ended
November 30, 1994, and the unaudited statements of operations for the fiscal
years ending November 30, 1995, 1996, and 1997 (the "Most Recent RealAmerica
Fiscal Quarter ") for RealAmerica. The RealAmerica Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby, are
correct and complete and are consistent with the books and records of
RealAmerica which books and records are correct and complete; provided,
however, that the Interim RealAmerica Financial Statements are subject to
normal year-end adjustments (which will not be material) and lack complete
footnotes and other presentation items. RealAmerica is delinquent in its
filings with the NASD and the SEC, which delinquency until it is cured
precludes RealAmerica to enjoy the availability of Rule 144 for the issuance
and treatment of its capital stock; and, notwithstanding any cure to said
delinquency by filing required statements with the SEC, RealAmerica may not be
able to enjoy availability of an S-3 registration, an S-8 registration, or
similar.
4.07 EVENTS SUBSEQUENT. Subsequent to the Most Recent RealAmerica
Balance Sheet and except as set forth in Section 4.07 of the RealAmerica
Disclosure Schedule, RealAmerica has not (i) incurred any material liabilities
or obligations, absolute or contingent, except current liabilities and
obligations under contracts entered into in the ordinary course of business;
(ii) declared or made any payment or distribution to stockholders or
<PAGE>
purchased or redeemed any of its capital stock; (iii) mortgaged or pledged or
subjected to lien, charge or any other encumbrance, any of its assets,
tangible or intangible, excepting extensions or renewals of liens for
liabilities set forth on the Most Recent RealAmerica Balance Sheet; (iv) sold
or transferred any of its tangible assets or cancelled any debts or claims
except in each case in the ordinary course of business; (v) made any capital
expenditures other than in the ordinary course of business; or (vi) incurred
any material or adverse losses or damages, to be involved in strikes, or other
labor disputes.
4.08 UNDISCLOSED LIABILITIES. RealAmerica has no liability (and
there is no basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand against it giving rise to
any liability), except for (i) liabilities set forth on the face of the
RealAmerica Financial Statements (rather than in any notes thereto) and (ii)
liabilities which have arisen after the Most Recent RealAmerica Fiscal Year
End in the ordinary course of business, none of which relates to any breach of
contract, breach of warranty, tort, infringement or violation of law or arose
out of any charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand.
4.09 TAX MATTERS. Except as disclosed in the RealAmerica Disclosure
Schedule, RealAmerica has no knowledge or any reasonable grounds to know of
any tax deficiencies which might be asserted against RealAmerica. RealAmerica
has paid or has provided for payment of all federal and state withholding and
unemployment insurance taxes and has filed all federal, state and local tax
returns and reports when due.
4.10 TITLE TO PROPERTIES. RealAmerica has good and marketable title
to, or valid leasehold interests in, all its properties and assets, real,
personal and intangible, including without limitation, the assets reflected in
the RealAmerica Financial Statements (except as since sold or otherwise
disposed of in the ordinary course of business) free and clear of all
mortgages, pledges, conditional sales agreements, claims, liens, security
interests and encumbrances, except (i) as referred to or reflected in the
Interim RealAmerica Financial Statements or in the notes thereto, and (ii)
statutory liens for taxes not yet due and payable. RealAmerica has not
received notice of violation of any applicable law, ordinance, regulation,
order or requirement relating to such properties or assets. All leases
pursuant to which RealAmerica leases any real or personal property are valid
and effective in accordance with their respective terms and there is not,
under any of such leases, any existing default or event of default or event
which, with notice or lapse of time, or both, would constitute a default which
has been noticed to RealAmerica or of which RealAmerica is aware.
4.11 REAL PROPERTY LEASES. RealAmerica is not a party to any lease
or sublease of real property.
4.12 INTELLECTUAL PROPERTY.
(a) Except as disclosed in Section 4.12 of the RealAmerica
Disclosure Schedule, RealAmerica does not own any Intellectual Property
and is not a party to any license, sublicense, agreement, or permission
with respect to any Intellectual Property (as defined below) necessary
for the operation of its business as presently conducted and as presently
proposed to be conducted. RealAmerica has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and none of the directors
and officers (and employees with responsibility for Intellectual Property
matters) of RealAmerica have ever received any charge, complaint, claim,
or notice alleging any such interference, infringement, misappropriation,
or violation.
(b) As used herein, "Intellectual Property" means all (i)
patents, patent applications, patent disclosures, and improvements
thereto, (ii) trademarks, service marks, trade dress, logos, trade names,
and corporate names and registrations and applications for registration
thereof, (iii) copyrights and registrations and applications for
registration thereof, (iv) mask works and registrations and applications
for registration thereof, (v) computer software, data, and documentation,
(vi) trade secrets and confidential business information (including
ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing
plans, and customer and supplier lists and information), (vii) other
proprietary rights, and (viii) copies and tangible embodiments thereof
(in whatever form or medium).
<PAGE>
4.13 TANGIBLE ASSETS. Except as set forth on the RealAmerica
Financial Statements, RealAmerica does not own or lease any tangible assets of
any kind or nature.
4.14 INVENTORY. RealAmerica has no inventory of products, raw
materials or other supplies.
4.15 LITIGATION. RealAmerica (i) is not subject to any unsatisfied
judgment, order, decree, stipulation, injunction or charge, and (ii) is a not
party and, to the knowledge of any of the directors and officers (and
employees with responsibility for litigation matters) of RealAmerica, is not
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasijudicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator.
4.16 ADVERSE CHANGES. There has been no material adverse change in
the condition, financial or otherwise, of RealAmerica from that set forth in
the Most Recent RealAmerica Balance Sheet. To the best of RealAmerica's
knowledge, RealAmerica is not aware of any facts that might result in any
actions, suit or other proceeding that would result in any adverse change in
the financial condition of RealAmerica. The business, properties and assets
reflected in the RealAmerica Financial Statements have not been materially and
adversely affected as a result of any fire, explosion, earthquake, accident,
strike, lockout, requisition or taking of property by any government or agency
thereof, flood, drought, embargo, riot, activities of armed forces or acts of
God or the public.
4.17 BOOKS AND RECORDS. All of the minute books, stock certificate
books and stock transfer ledgers of RealAmerica are complete and accurate in
all material respects.
4.18 CERTAIN BUSINESS RELATIONSHIPS WITH REALAMERICA. None of the
TRUCAT shareholders and their affiliates has been involved in any business
arrangement or relationship with RealAmerica within the past 36 months, and
none of the TRUCAT shareholders and their affiliates owns any property or
right, tangible or intangible, which is used in the business of RealAmerica
other than Davis Martin who, in his capacity of shareholder of RealAmerica and
a former director, has advised or counselled with RealAmerica management and
directors on an informal basis on the course of action to take in the
operations capital structure of RealAmerica including re-capitalization and
the transaction contemplated hereby.
4.19 INDEPENDENT INVESTIGATION OF TRUCAT. RealAmerica confirms that
it has received, reviewed, understands and has fully considered (including,
without limitation, the financial statements contained therein) for purposes
of its acquisition of the TRUCAT Shares, the business prospects and leases of
TRUCAT. RealAmerica acknowledges that (i) TRUCAT has limited financial
resources and will need additional sources of capital to implement its current
business plan, the availability of which is uncertain and cannot be assured,
and (ii) the TRUCAT Shares are a highly speculative investment with a high
degree of risk of loss by RealAmerica of its investment therein. RealAmerica
represents and warrants that in making the decision to acquire the TRUCAT
Shares, it has relied upon its own independent investigation of TRUCAT and the
independent investigations by its representatives, including its own
professional legal, tax and business advisors, and that RealAmerica and its
representatives have been given the opportunity to examine all relevant
documents and to ask questions of and to receive answers from TRUCAT, or
person(s) acting on its behalf, concerning the terms and conditions of
acquisition by RealAmerica of the TRUCAT shares and any other matters
concerning an investment in TRUCAT, and to obtain any additional information
RealAmerica deems necessary to verify the accuracy of the information
provided.
4.20 DISCLOSURE. The representations and warranties contained in
this Section 4 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information contained
in this Section 4 not misleading.
<PAGE>
5. Survival and Indemnity.
-----------------------
5.01 SURVIVAL. All of the representations and warranties of the
parties contained in this Agreement shall survive the Closing Date, even if
the damaged party knew or had reason to know of any misrepresentation or
breach of warranty at the time of the Closing Date, and shall continue in full
force and effect for a period of one year thereafter.
5.02 INDEMNIFICATION FOR BENEFIT OF THE TRUCAT STOCKHOLDERS. In the
event RealAmerica breaches any of its representations, warranties and
covenants contained herein, and provided that any TRUCAT Stockholder or TRUCAT
makes a written claim for indemnification against RealAmerica pursuant to
Section 10.05, then RealAmerica agrees to and does hereby indemnify TRUCAT and
the TRUCAT Stockholders from and against the entirety of any Adverse
Consequences it may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences that TRUCAT or the TRUCAT
Stockholders may suffer after the end of the applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by
the breach.
5.03 INDEMNIFICATION FOR BENEFIT OF REALAMERICA. In the event any of
the TRUCAT Stockholders breach any of their respective representations,
warranties and covenants contained herein, and provided that RealAmerica makes
a written claim for indemnification against the TRUCAT Stockholder in breach
pursuant to Section 10.05, then the TRUCAT Stockholders severally, and not
jointly, agree to indemnify RealAmerica from and against the entirety of any
Adverse Consequences RealAmerica may suffer through and after the date of the
claim for indemnification resulting from, arising out of, relating to, in the
nature of, or caused by the breach.
5.04 MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any party to this Agreement (the "Indemnified Party") with respect to
any matter which may give rise to a claim for indemnification against any
other party (the "Indemnifying Party") under this Section 5, then the
Indemnified Party shall notify each Indemnifying Party thereof promptly;
provided however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
liability or obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is damaged. In the event any Indemnifying Party
notifies the Indemnified Party within 10 days after the Indemnified party has
given notice of the matter that the Indemnifying Party is assuming the defense
thereof, (i) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may retain separate co-counsel
at its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party concludes reasonably that the counsel the Indemnifying
Party has selected has a conflict of interest), (iii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement
with respect to the matter without the written consent of the Indemnifying
Party not to be withheld unreasonably, and (iv) the Indemnifying Party will
not consent to the entry of any judgment with respect to the matter, or enter
into any settlement which does not include a provisions whereby the plaintiff
or claimant in the matter releases the Indemnified Party for all liability
with respect thereto, without the written consent of the Indemnified Party not
to be withheld unreasonably. In the event no Indemnifying Party notifies the
Indemnified Party with 10 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof,
however, the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deem
appropriate.
5.05 DETERMINATION OF LOSS. The parties shall make appropriate
adjustment for tax benefits and insurance proceeds (reasonably certain of
receipt and utility in each case) and for the time cost of money in
determining the amount of loss for purposes of this Section 5.
5.06 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory or
common law remedy any party may have for breach of representation, warranty or
covenant.
5.07 DEFINITION OF ADVERSE CONSEQUENCES. As used in this Section 5,
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
(including costs incurred to comply with applicable rules and regulations of
the National Association of Securities Dealers and the Securities and Exchange
<PAGE>
Commission) amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses and fees, including all attorneys' fees, accountants'
fees and court costs.
6. Conduct and Transactions Prior to Closing.
------------------------------------------
6.01 INVESTIGATION; OPERATION OF BUSINESS OF TRUCAT. Between the
date of this Agreement and the Closing Date:
(a) TRUCAT agrees to give RealAmerica, its agents and
representatives, full access to all of TRUCAT's premises and books and
records, and to cause TRUCAT's officers to furnish RealAmerica with such
financial and operating data and other information with respect to its
business and properties as RealAmerica shall from time to time request.
Provided, however, that any such investigation shall not affect any of
the representations and warranties of TRUCAT hereunder and provided
further, that any such investigation shall be conducted in such manner as
not to interfere unreasonably with the operation of the business of
TRUCAT. In the event of termination of this Agreement, RealAmerica will
return to TRUCAT all documents, work papers, and other material obtained
from TRUCAT in connection with the transactions contemplated hereby and
will keep confidential any information obtained pursuant to this
Agreement unless such information is ascertainable from public or
published information or trade sources.
(b) Except as set forth in the TRUCAT Disclosure Schedule,
TRUCAT, to the extent required for continued operation of the business of
TRUCAT without impairment, will use reasonable efforts to preserve
substantially intact the business organization of TRUCAT, to keep
available the services of the present officers and employees of TRUCAT,
and to preserve the present relationships of TRUCAT with persons having
significant business relationships with TRUCAT.
(c) Except as set forth on the TRUCAT Disclosure Schedule,
prior to Closing, TRUCAT will conduct its business only in the ordinary
course and, by way of amplification and not limitation, TRUCAT will not,
without the prior written consent of RealAmerica (i) issue any capital
stock, or (ii) grant any stock options or warrants or other rights to
purchase or otherwise acquire any shares of TRUCAT capital stock or issue
any securities convertible into shares of TRUCAT capital stock, or (iii)
adopt any employee benefit plans or modify or alter any existing employee
benefit plan, or (iv) declare, set aside, or pay any dividend or
distribution with respect to the capital stock of TRUCAT, or (v) directly
or indirectly redeem, purchase or otherwise acquire any capital stock of
TRUCAT, or (vi) effect a split or reclassification of any capital stock
of TRUCAT or a recapitalization of TRUCAT, or (vii) amend or change the
Certificate of Incorporation or Bylaws of TRUCAT or, (viii) grant any
increase in the compensation payable or to become payable by TRUCAT to
officers or salaried employees of TRUCAT or any increase regardless of
amount, in any bonus, insurance, pension or other benefit plan, program,
payment or arrangement made to, for or with any officers or employees, or
(ix) borrow or agree to borrow any funds, or guarantee or agree to
guarantee the obligations of others except in the ordinary course of
business, or (x) waive any rights of substantial value, or (xi) except in
the ordinary course of business, enter into an agreement, contract or
commitment.
6.02 INVESTIGATION; OPERATION OF BUSINESS OF REALAMERICA. Between
the date of this Agreement and the Closing Date:
(a) RealAmerica agrees to give to the TRUCAT Stockholders, their
agents and representatives, full access to all premises and books and
records, and to cause RealAmerica's officers to furnish the TRUCAT
Stockholders with such financial and operating data and other information
with respect to the business and properties of RealAmerica as the TRUCAT
Stockholders shall from time to time request. Provided, however, that
any such investigation shall not affect any of the representations and
warranties of RealAmerica hereunder; and provided further, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of RealAmerica. In the
event of termination of this Agreement, the TRUCAT Stockholders will
return to RealAmerica all documents, work papers and other material
obtained from RealAmerica in connection with the transactions
contemplated hereby and will use all reasonable efforts to keep
confidential any information obtained
<PAGE>
pursuant to this Agreement unless such information is ascertainable from
public or published information or trade sources.
(b) RealAmerica, to the extent required for continued operation
of the business of RealAmerica without impairment, will use reasonable
efforts to preserve substantially intact the business organization of
RealAmerica, to keep available the services of the present officers and
employees of RealAmerica, and to preserve the present relationships of
RealAmerica with persons having significant business relationships to
RealAmerica.
(c) Prior to closing, RealAmerica will cause RealAmerica to,
conduct its business only in the ordinary course and, by way of
amplification and not limitation, RealAmerica will not, without the prior
written consent of the TRUCAT Stockholders, (i) issue any capital stock,
or (ii) grant any stock options or warrants or other rights to purchase
or otherwise acquire any shares of RealAmerica capital stock or issue any
securities convertible into shares of RealAmerica capital stock, or (iii)
adopt any employee benefit plans or modify or alter any existing employee
benefit plan, or (iv) declare, set aside, or pay any dividend or
distribution with respect to the capital stock of RealAmerica, or (v)
directly or indirectly redeem, purchase or otherwise acquire any capital
stock of RealAmerica, or (vi) effect a split or reclassification of any
capital stock of RealAmerica or a re-capitalization of RealAmerica, or
(vii) amend or change the Certificate of Incorporation or Bylaws of
RealAmerica, or, (viii) grant any increase in the compensation payable or
to become payable by RealAmerica to officers or salaried employees of
RealAmerica or any increase regardless of amount, in any bonus,
insurance, pension or other benefit plan, program, payment or arrangement
made to, for or with any officers or employees, or (ix) borrow or agree
to borrow any funds, or guarantee or agree to guarantee the obligations
of others except in the ordinary course of business, or (x) waive any
rights of substantial value, or (xi) except in the ordinary course of
business, enter into an agreement, contract or commitment. RealAmerica,
TRUCAT and the TRUCAT Shareholders each acknowledge that RealAmerica will
dispose of its wholly-owned subsidiary, Merrion Reinsurance Company,
Ltd., prior to closing of the TRUCAT Acquisition and that actions and
agreements in connection with that sale will be available to TRUCAT and
the TRUCAT Shareholders.
7. Consents.
---------
Prior to Closing, the TRUCAT Stockholders and RealAmerica shall each use his
or its respective reasonable efforts to obtain the consent or approval of each
person whose consent or approval shall be required in order to permit the
TRUCAT Stockholders or RealAmerica, as the case may be, to consummate the
RealAmerica Acquisition.
8. Conditions to Closing.
----------------------
8.1 General Conditions. The obligations of the parties to effect the
RealAmerica Acquisition shall be subject to the following conditions:
(a) The Board of Directors and, to the extent required by law,
the shareholders of RealAmerica and TRUCAT, shall have approved this
Agreement in accordance with applicable provisions of state law.
(b) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling,
filing or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (iii) affect adversely the right of RealAmerica to acquire
and own the TRUCAT Shares, (iv) affect adversely the right of the TRUCAT
Stockholders to acquire and own the RealAmerica Shares; or M affect
adversely the right of either RealAmerica or TRUCAT to own its assets and
to operate its businesses (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect).
<PAGE>
(c) All governmental approvals, the absence of which would have
a materially adverse effect on RealAmerica or TRUCAT, respectively, on a
consolidated basis, after the Closing Date, shall have been received.
8.02 CONDITIONS OF OBLIGATIONS OF REALAMERICA. The obligation of
RealAmerica to effect the RealAmerica Acquisition and to proceed with the
Closing on the Closing Date shall at all times be subject to the following
conditions precedent, any of which may be waived by RealAmerica in writing:
(a) (i) the representations and warranties of the TRUCAT
Stockholders and TRUCAT contained herein shall be true and correct in all
material respects at the Closing Date with the same effect as though made
at such time, and (ii) the TRUCAT Stockholders shall have each performed
all material obligations and complied with all material covenants
required by this Agreement to be performed or complied with by him or it
prior to the Closing Date.
(b) The TRUCAT Stockholders shall have each obtained and
delivered to RealAmerica consents to the transactions contemplated by
this Agreement from the parties to all material contracts, referred to in
the TRUCAT Disclosure Schedule attached hereto in accordance with this
Agreement, which require such consent.
(c) There shall not have occurred (i) any material adverse
change, since the Most Recent TRUCAT Fiscal Year End, in the business,
properties, results of operations or financial condition of TRUCAT, or
(ii) any loss or damage to any of the properties or assets (whether or
not covered by insurance) of TRUCAT which will materially affect or
impair the ability of TRUCAT to conduct. after the RealAmerica
Acquisition the business now being conducted by RealAmerica.
(d) All statutory requirements for the valid consummation by the
TRUCAT Stockholders of the transactions contemplated by this Agreement
shall have been fulfilled and all authorizations, consents and approvals
of all federal, state or local governmental agencies and authorities
required to be obtained in order to permit consummation by the TRUCAT
Stockholders of the transactions contemplated by this Agreement and to
permit the business presently carried on by TRUCAT to continue unimpaired
to any material degree immediately following the Closing Date shall have
been obtained. Between the date of this Agreement and the Closing Date,
no governmental agency, whether federal, state or local, shall have
instituted (or threatened to institute in a writing directed to the
TRUCAT Stockholders, TRUCAT, RealAmerica or any of their subsidiaries or
affiliates) an investigation which is pending at the Closing Date
relating to the RealAmerica Acquisition and between the date of this
Agreement and the Closing Date no action or proceeding shall have been
instituted or, to the knowledge of the TRUCAT Stockholders, shall have
been threatened by any party (public or private) before a court or other
governmental body to restrain or prohibit the transactions contemplated
by this Agreement or to obtain damages in respect thereof.
(e) The stockholders of TRUCAT shall have each acknowledged to
RealAmerica in writing (i) that the shares of RealAmerica common stock to
be issued to them pursuant to the RealAmerica Acquisition will be issued
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state in reliance upon
available exemptions from the registration requirements thereof; (ii)
that all such shares of RealAmerica common stock will be subject to
restrictions on transferability and may not be offered for sale, sold or
otherwise transferred unless subsequently registered under the Securities
Act and all other applicable securities laws or unless exemptions from
the registration requirements of the Securities Act and all other
applicable securities laws are available, as established to the
satisfaction of RealAmerica, and (iii) the certificates evidencing such
RealAmerica common stock will bear an appropriate legend evidencing the
above referenced restrictions on transferability.
(f) TRUCAT shall have furnished RealAmerica with a certificate,
dated the Closing Date, stating that the respective representations and
warranties of TRUCAT contained in Section 3 are true and correct on the
Closing Date in all material respects as if then made.
<PAGE>
(g) all papers, documents, agreements and other items required
to be delivered at Closing pursuant to Section 9.03 shall be delivered at
Closing.
8.03 CONDITIONS OF OBLIGATION OF THE TRUCAT STOCKHOLDERS. The
obligation of the TRUCAT Stockholders to effect the RealAmerica Acquisition
and to proceed with the Closing on the Closing Date shall at all times be
subject to the following conditions precedent, any of which may be waived by
the TRUCAT Stockholders in writing:
(a) RealAmerica shall have furnished the TRUCAT Stockholders
with (i.) certified copies of resolutions duly adopted by its Board of
Directors and, to the extent required by law, the shareholders of
RealAmerica, authorizing all necessary and proper corporate action to
enable RealAmerica to comply with terms of this Agreement and approving
the execution, delivery and performance of this Agreement, including the
issuance of the RealAmerica Shares, and (ii) an Incumbency Certificate
for the appropriate officers of RealAmerica.
(b) (i) the representations and warranties of RealAmerica herein
shall be true in all material respects at the Closing Date with the same
effect as though made at such time; and (ii) RealAmerica shall have
performed all material obligations and complied with all material
covenants required by this Agreement to be performed or complied with by
it prior to the Closing Date.
(c) RealAmerica shall have obtained and delivered to the TRUCAT
Stockholders consents to the transactions contemplated by this Agreement
from the parties to all material contracts, referred to in the
RealAmerica Disclosure Schedule attached hereto in accordance with this
Agreement, which require such consent.
(d) There shall not have occurred (i) any material adverse
change since the Most Recent RealAmerica Fiscal Quarter in the business,
properties, results of operations or financial condition of RealAmerica,
or (ii) any loss or damage to any of the properties or assets (whether or
not covered by insurance) of RealAmerica which will materially affect or
impair the ability of RealAmerica to conduct, after the RealAmerica
Acquisition, the business now being conducted by RealAmerica.
(e) All statutory requirements for the valid consummation by
RealAmerica of the transactions contemplated by this Agreement shall have
been fulfilled and all authorizations, consents and approvals of all
federal, state, local and foreign governmental agencies and authorities
required to be obtained in order to permit consummation by RealAmerica of
the transactions contemplated by this Agreement shall have been obtained.
Between the date of this Agreement and the Closing Date, no governmental
agency, whether federal, state or local, shall have instituted (or
threatened to institute in a writing directed to the TRUCAT Stockholders,
TRUCAT, RealAmerica or any of their subsidiaries or affiliates) an
investigation which is pending at the Closing Date relating to the
RealAmerica Acquisition and between the date of this Agreement and the
Closing Date no action or proceeding shall have been instituted or, to
the knowledge of RealAmerica shall have been threatened by any party
(public or private) before a court or other governmental body to restrain
or prohibit the transaction contemplated by this Agreement or to obtain,
the damages in respect thereof.
(f) RealAmerica shall have furnished TRUCAT with a certificate,
dated the Closing Date, stating that the representations and warranties
of RealAmerica contained in Section 4 are true and correct on the Closing
Date in all material respects as if then made.
(g) all papers, documents, agreements and other items required
to be delivered at Closing pursuant to Section 9.02 shall have been
delivered at Closing.
9. Actions at Closing.
-------------------
9.01 ACTIONS AT THE CLOSING. At the Closing, RealAmerica and the
TRUCAT Stockholders will each deliver, or cause to be delivered to the other,
the securities to be exchanged in accordance with Section 1.01 of this
Agreement, and each party shall pay any and all federal and state taxes
required to be paid in connection with the
<PAGE>
issuance of delivery of their own securities. Certificates representing the
RealAmerica Shares shall be issued and delivered as set forth on Exhibit "A"
attached hereto. Certificates representing the TRUCAT Shares shall be duly
endorsed by each of the TRUCAT Stockholders for transfer to RealAmerica or in
blank, or have appropriately executed powers of attorney attached, and
signatures shall be witnesses.
9.02 DELIVERIES BY REALAMERICA. At Closing, RealAmerica will deliver
to the TRUCAT Stockholders:
(a) certificates for the RealAmerica Shares as provided by
Section 9.01 hereof;
(b) certified copies of corporate resolutions and other
corporate proceedings taken by RealAmerica to authorize the execution,
delivery and performance of this Agreement and the appointment of to the
Board of RealAmerica;
(c) a board action electing a new slate of directors to the
RealAmerica board comprised by the persons determined at the sole
discretion of TRUCAT, together with subsequent resignations of the
current Board of Directors of RealAmerica.
9.03 DELIVERIES BY THE TRUCAT STOCKHOLDERS. At Closing, the TRUCAT
Stockholders shall deliver to RealAmerica:
(a) certificates for the TRUCAT Shares as provided by Section
9.01 hereof;
(b) certified copies of corporate resolutions and other
corporate proceedings taken by TRUCAT to authorize the execution,
delivery and performance of this Agreement;
(c) a certificate of Incumbency and signatures of the Board of
Directors of TRUCAT dated as of the date of this Agreement.
10. Termination.
------------
10.01 TERMINATION OF THE AGREEMENT. The parties may terminate this
Agreement as provided below:
(a) RealAmerica, TRUCAT and the TRUCAT Stockholders may
terminate this Agreement by mutual written consent at any time prior to
the Closing;
(b) the either party may terminate this Agreement by giving
written notice to other party on or before the Closing Date if the either
party is not satisfied with the results of their continuing business,
legal and accounting due diligence regarding each other;
(c) TRUCAT and/or the TRUCAT Stockholders may terminate this
Agreement by giving written notice to RealAmerica at any time prior to
the Closing (i) in the event RealAmerica has breached any representation,
warranty or covenant contained in this Agreement in any material respect,
TRUCAT and/or the TRUCAT Stockholders has notified RealAmerica of the
breach and the breach has continued without cure for a period of 10 days
after the notice of breach, or (ii) if the Closing shall not have
occurred on or before March 31, 1999, or such later date as may be agreed
to by TRUCAT, the TRUCAT Stockholders and RealAmerica, in writing, by
reason of the failure of any condition precedent under Section 8.03
hereof (unless the failure results primarily from TRUCAT or the TRUCAT
Stockholders themselves breaching any representation, warranty or
covenant contained in this Agreement); and
(d) RealAmerica may terminate this Agreement by giving written
notice to TRUCAT and the TRUCAT Stockholders at any time prior to the
Closing (i) in the event TRUCAT or any TRUCAT Stockholder has breached
any representation, warranty or covenant contained in this Agreement in
any material respect, RealAmerica has notified TRUCAT and the TRUCAT
Stockholders of the breach and the breach has continued without cure for
a period of 10 days after the notice of breach or (ii) if the Closing
shall not have occurred on or before March 31, 1999, or such later date
as may be agreed to by TRUCAT, the TRUCAT Stockholders and RealAmerica in
writing, by reason of the failure of any condition precedent
<PAGE>
under Section 8.02 hereof ('unless the failure results primarily from
RealAmerica itself breaching any representation, warranty or covenant
contained in this Agreement).
10.02 EFFECT OF TERMINATION. If either TRUCAT and/or the TRUCAT
Stockholders or RealAmerica terminates this Agreement pursuant to Section
10.01 above, all rights and obligations of the parties hereunder shall
terminate without any liability of any party to any other party.
11. General.
--------
11.1 BROKERS AND FINDERS. Each Party hereto represents that no
broker, agent, finder or other party has been retained by either Party, and no
brokerage or finder's fees or agent's commissions or other like payment has
been agreed to be paid by him or it in connection with this Agreement or on
account of the transactions contemplated by this Agreement. Each Party agrees
to indemnify and hold harmless the other parties from and against any and
every claim arising by breach of the aforesaid representation and warranty and
all costs and. expenses, legal or otherwise, which any such party may incur as
the result of any such claim.
11.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Parties. Provided however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable efforts to advise the other Party
prior to making the disclosure.
11.03 SCHEDULES. The TRUCAT and RealAmerica Disclosure Schedules
delivered pursuant to the terms of this Agreement shall be bound together,
initialed by RealAmerica and TRUCAT and deemed attached hereto and made a part
hereof.
11.04 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. Except
as otherwise specifically provided, the covenants, representations and
warranties contained herein shall expire and be terminated and extinguished at
the Closing Date.
11.05 GOVERNING LAW. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the laws of
the State of Delaware.
11.06 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by registered mail or
certified mail, postage prepaid if addressed as follows:
If to RealAmerica:
RealAmerica Co.
100 NW Second Street
Suite 312
Evansville, IN 47708
Attn: Mr. Jeffrey T. Wilson
President
If to TRUCAT and TRUCAT Stockholders:
Trucat Holding Company, Inc.
5210 McKinney Avenue, Suite 300
Dallas, TX 75205
Attn: Mr. George E. Burch III
President
11.07 No Assignment. This Agreement may not be assigned by operation of
law or otherwise, without the express written consent of each party hereto.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly signed by the TRUCAT
Stockholders as is required by the TRUCAT By-Laws and applicable law as of the
day and year first written above.
REALAMERICA Co.
By: /s/ Jeffrey T. Wilson
_______________________________________________
Jeffrey T. Wilson, President
TRUCAT HOLDING CO., INC.
By: /s/ George E. Burch III
_______________________________________________
George E. Burch III, President
THE TRUCAT SHAREHOLDERS
Corsan, Ltd.
By: /s/ Davis Martin /s/ George E. Burch III
_________________________________ __________________________________
Davis Martin, AIF William H. Bruyere
By George E. Burch III, AIF
/s/ George E. Burch III /s/ George E. Burch III
_______________________________ __________________________________
George E. Burch III Bryan Burch
By George E. Burch III, AIF
/s/ Charles P. Miller
__________________________________
Charles P. Miller
Primos N.V.
By: /s/ Davis Martin
_______________________________________________
Davis Martin, V.P.
Frontier Freight Forwarders, Inc.
By: /s/ J. H. Raymond
_______________________________________________
J. H. Raymond, AIF
EXHIBIT 7.1 p.1
Russian Gateway Holding Company, Inc.
Audited Balance Sheets of December 31, 1996, 1997,
And Unaudited Proforma Balance Sheet of December 31, 1998
12/31/98 12/31/97 12/31/96
(Unaudited) (Audited) (Audited)
Assets
Current Assests:
Cash and cash equivalents $93,172 $116,343 $27,052
Restricted cash 526,303 512,779 --
Accounts receiveable
Trade, net allowance for doubtful
Accounts 865,769 1,759,079 182,817
Other 135,931 45,000 --
Employee advances 45,293 78,823 2,632
Prepaid expenses 85,785 52,232 20,168
--------- --------- ---------
Total Current Assets 1,752,253 2,564,256 232,669
Property and equipment, net 423,804 445,948 245,625
Other assets, net 68,922 165,690 40,593
--------- --------- ---------
Total Assets 2,244,979 3,175,894 518,887
<PAGE>
EXHIBIT 7.1 p.2
Russian Gateway Holding Company, Inc.
Audited Balance Sheets of December 31, 1996, 1997,
And Unaudited Proforma Balance Sheet of December 31, 1998
12/31/98 12/31/97 12/31/96
(Unaudited) (Audited) (Audited)
Liabilities and Stockholders' Deficit
Current liabilities
Notes payable 528,863 497,000 30,000
Notes payable - related parties 1,783,779 168,000 --
Capitial lease obligation -
Current portion 2,650 2,650 2,113
Due to factor, net of reserve 201,692 863,752 --
Accounts payable
Trade 1,058,461 496,941 137,630
Related parties 397,930 121,898 --
Accrued expenses
Other 526,718 858,359 260,998
Related parties 381,066 195,932 145,226
--------- --------- ---------
Total Current Liabilities 4,881,159 3,204,532 575,967
--------- --------- ---------
Other liabilities
Capital lease obligation -
Long-term portion 3,958 3,983 6,879
Notes payable - related parties -
Long-term portion 199,337 1,479,212 552,297
--------- --------- ---------
203,295 1,483,195 559,176
Stockholders' deficit
Preferred stock, no par value,
20,000,000 authorized, none issued
and outstanding
Common stock, $.01 par value,
20,000,000 authorized, 3,396,425
and 3,137,500 shares issued and
outstanding 33,964 33,964 31,375
Additional paid-in capital 2,679,689 2,928,276 2,430,865
Convertible Debentures 2,100,000 -- --
Accumulated deficit (7,653,129) (4,474,073) (3,078,496)
--------- --------- ---------
Total Stockholders' deficit (2,839,475) (1,511,833) (616,256)
--------- --------- ---------
Total liabilites and stockholders'
Deficit 2,244,979 3,175,894 518,887
==============================================================================
<PAGE>
EXHIBIT 7.1 p.3
Russian Gateway Holding Company, Inc.
Audited Statements of Operations at December 31, 1996, 1997,
And Unaudited Proforma Statement of Operations at December 31, 1998
(Unaudited) (Audited) (Audited)
Years ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------
Net revenues 12,059,008 10,146,166 3,033,116
Cost of revenues 9,072,498 6,875,828 2,380,237
- ------------------------------------------------------------------------------
Gross profit 2,986,510 3,270,338 652,879
General and administrative expenses 5,949,868 4,446,933 2,709,992
- ------------------------------------------------------------------------------
Loss from operations (2,963,358) (1,176,595) (2,057,113)
Interest expense (218,583) (218,982) (16,336)
- ------------------------------------------------------------------------------
Net Loss (3,181,941) (1,395,577) (2,073,449)
- ------------------------------------------------------------------------------
<PAGE>
