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 - May 31, 1995
ANUHCO, INC.
State of Incorporation - Delaware
Commission File No. - 0-12321
IRS Employer Identification No. - 46-0278762
9393 West 110th Street, Suite 100
Overland Park, Kansas 66210
Telephone Number - (913)-451-2800
</PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 31, 1995, Anuhco, Inc ("Anuhco") completed the acquisition
of all of the issued and outstanding stock of Agency Premium
Resource, Inc. and Subsidiary ("APR"). The purchase price,
together with payments for certain services to be rendered by the
sellers after closing, was approximately $11.5 million. In
addition to the Stock Purchase Agreement by which Anuhco acquired
all of the APR stock, Anuhco entered into a consulting agreement
with Seafield Capital Corporation ("Seafield"), the former majority
shareholder of APR, and an employment agreement with C. Ted
McCarter, APR's president and chief executive officer. Under the
former, Anuhco is entitled to consult with Seafield about APR for
three years. Under the latter, APR is entitled to the continuation
of Mr. McCarter's services as president and chief executive officer
for five years. This transaction will be accounted for as a
purchase. Anuhco utilized a portion of its available cash to
consummate the purchase. Anuhco assumed certain guarantees of the
APR financing arrangements. Such guarantees would have exceeded
$20 million at December 31, 1994. The terms of the acquisition and
the purchase price resulted from negotiations between Anuhco and
the APR shareholders, Seafield and APR's Chief Executive Officer,
C. Ted McCarter.
APR offers premium financing and related services through approved
insurance agencies, primarily throughout the midwestern United
States. Its wholly owned subsidiary, Agency Services, Inc.,
provides motor vehicle report services throughout the same
geographic area.
Anuhco intends for APR to continue its operation as an autonomous
finance company. Existing management will continue, including all
officers, with C. Ted McCarter to continue as Chief Executive
Officer of APR under a five year employment agreement. This
acquisition would provide Anuhco a base from which to grow a
financial services operation. Expansion of the financial services
operation is expected to include continued growth of APR and
possibly the acquisition of units which would complement the
operation of APR. In management's opinion, the acquisition of APR
will not have a dilutive effect on consolidated earnings.
<TABLE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
Page
<S> <C> <C>
(a) Historical Financial Statements of Agency Premium
Resource, Inc. and Subsidiary (business acquired)
Condensed Interim Financial Statements (unaudited)
Consolidated Balance Sheet as of March 31, 1995 4
Consolidated Statement of Earnings for the Three
Months Ended March 31, 1995 5
Consolidated Statement of Cash Flow for the Three
Months Ended March 31, 1995 6
Notes to Condensed Interim Financial Statements 7
Annual Financial Statements
Report of Independent Public Accountants 8
Consolidated Balance Sheets as of December 31,
1994 and 1993 9
Consolidated Statements of Earnings for the
years ended December 31, 1994 and 1993 10
Consolidated Statements of Cash Flows for the
years ended December 31, 1994 and 1993 11
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1994 and 1993 12
Notes to Consolidated Financial Statements 13
(b) Condensed Pro Forma Financial Statements (Unaudited)
Description of Pro Forma Financial Statements 19
Condensed Pro Forma Balance Sheet at March 31, 1995 20
Condensed Pro Forma Statement of Earnings for the
year ended December 31, 1994 21
Condensed Pro Forma Statement of Earnings for the
three months ended March 31, 1995 22
Notes to Pro Forma Financial Statements 23
(c) Exhibits - Filed herewith
2(a) Plan of Acquisition - Stock Purchase Agreement
by and among Anuhco, Inc., Seafield Capital
Corporation, and C. Ted McCarter, dated May 23,
1995.
10(a) Materials Contract - Consulting and Assignment
Agreement by and between Seafield Capital Corpor-
ation and Anuhco, Inc., dated May 31, 1995.
</TABLE>
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Condensed Balance Sheet
(Unaudited)
(in thousands)
<CAPTION>
ASSETS
March 31, 1995
<S> <C>
Current Assets -
Cash & investments $ 990
Finance receivables 7,511
Other 63
Total Current 8,564
Property/Equipment 82
Other Assets 158
Total Assets $ 8,804
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 851
Other Liabilities 21
Total Liabilities 872
Shareholders Equity 7,932
Total Liability &
Shareholder's Equity $ 8,804
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of this statement.
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Statement of Earnings
(Unaudited)
(in thousands)
<CAPTION>
Three Months Ended
March 31, 1995
<S> <C>
Operating Revenue $ 907
Operating Expenses:
Salaries, wages & employee benefits 242
Operating supplies & expenses 454
Depreciation & amortization 42
Total operating expenses 738
Operating Income 169
Nonoperating Income (Expense) -
Income Before Income Taxes 169
Income Tax Provision 60
Net Income $ 109
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of this statement.
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Condensed Statement of Cash Flow
(Unaudited)
(in thousands)
<CAPTION>
Three Months Ended
March 31, 1995
<S> <C>
Operating Activities
Earnings from continuing operations $ 109
Adjustments to reconcile net earnings
to net cash used by operating activities:
Depreciation & amortization 42
Bad debt expense 39
Other, including changes in working capital (267)
Net cash provided (used) by operating
activities ( 77)
Investing Activities
Change in short-term investments (463)
Purchase of securitized receivables 1,000
Additions to accounts receivable (462)
Other ( 10)
Net cash generated investing activities 65
Net Increase In Cash $ ( 12)
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of this statement.
</PAGE>
AGENCY PREMIUM RESOURCE, INC.
Notes to Condensed Financial Statements
(Unaudited)
(1) Condensed Financial Statements:
The condensed financial statements of Agency Premium Resource, Inc.
("APR") included herein have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC")
and have not been examined or reviewed by independent public
accountants. In the opinion of management, all adjustments
necessary to present fairly the results of operations have been
made.
Pursuant to SEC rules and regulations, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted from these statements.
In the opinion of management the disclosures contained herein, when
read in conjunction with the financial statements and notes
included in APR's 1994 audited financial statements filed herewith
are adequate to make the information presented not misleading. It
is suggested, therefore, that these statements be read in
conjunction with the statements and notes included with those
financial statements.
(2) Acquisition:
APR, a premium finance company, was a majority owned subsidiary
of Seafield Capital Corporation ("Seafield"). On May 23, 1995,
Seafield and the minority shareholder and CEO of APR, C. Ted
McCarter, entered into an agreement for the sale of 100% of the
issued and outstanding shares of common stock of APR to Anuhco,
Inc.
The accompanying financial statements do not reflect the costs
associated with the sale.
</PAGE>
KPMG Peat Marwick LLP
1000 Walnut, Suite 1600
P.O. Box 13127
Kansas City, MO. 64199
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Agency Premium Resource, Inc.
and Subsidiary:
We have audited the accompanying consolidated balance sheets of
Agency Premium Resource, Inc. and subsidiary as of December 31,
1994 and 1993 and the related consolidated statements of earnings,
stockholders' equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management,as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Agency Premium Resource, Inc. and subsidiary as of
December 31, 1994 and 1993 and the results of their operations and
their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
February 9, 1995
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Consolidated Balance Sheets
December 31, 1994 and 1993
<CAPTION>
Assets 1994 1993
<S> <C> <C>
Current assets:
Accounts receivable, net of allowance for
uncollectible accounts of $210,970 and
$285,814 and unearned interest of
$177,363 and $114,310 in 1994 and 1993
and sold receivables of $23,000,000 and
$19,000,000 in 1994 and 1993 (note 2) $8,088,077 $5,737,732
Short term investments 1,002,245 2,261,399
Prepaid expenses and other 55,312 41,092
Deferred income tax assets (note 5) 89,260 99,448
Total current assets 9,234,894 8,139,671
Furniture and equipment, net of accumulated
depreciation of $184,467 in 1994 and
$151,500 in 1993 59,501 59,143
Capital lease, net of accumulated amortiza-
tion of $5,592 (note 6) 22,366 - -
Deferred transaction costs, net of accumu-
lated amortization of $145,226 in 1994
and $41,156 in 1993 (note 2) 108,782 144,048
Deferred income tax asset (note 5) - - 29,400
$9,425,543 $8,372,262
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdrafts $ 445,125 $ 381,489
Accounts and premiums payable 664,001 399,139
Current income taxes-payable to parent 149,740 85,251
Accrued expenses and other 318,215 213,456
Capital lease - current (note 6) 5,620 - -
Total current liabilities 1,582,701 1,079,335
Capital lease - noncurrent (note 6) 16,062 - -
Deferred income tax liability (note 5) 3,611 - -
Stockholders' equity:
Common stock, $1 stated value, 30,000
shares authorized; 1,500 shares
issued and outstanding 1,500 1,500
Paid-in capital 8,280,341 8,280,341
Accumulated deficit (458,672) (988,914)
Total stockholders' equity 7,823,169 7,292,927
$9,425,543 $8,372,262
</TABLE>
See accompanying notes to consolidated
financial statements.
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Consolidated Statements of Earnings
Years ended December 31, 1994 and 1993
<CAPTION>
1994 1993
<S> <C> <C>
Revenues:
Interest income $1,252,487 $1,664,049
Service revenue 1,854,780 1,235,122
Other revenue 582,852 549,318
Total revenues 3,690,119 3,448,489
Expenses:
Salaries and benefits (note 7) 931,311 794,969
Service expense 940,143 614,762
Commissions expense 250,125 206,055
Occupancy 42,161 44,993
Depreciation and amortization 142,678 73,982
Other operating expense 429,570 495,383
Total operating expenses 2,735,988 2,230,144
Bad debt expense 119,622 220,400
Interest expense (notes 3 and 4) 9,587 430,087
Other expenses 14,174 7,238
Total expenses 2,879,371 2,887,869
Earnings before income tax expense 810,748 560,620
Income tax expense (note 5) 280,506 194,220
Net earnings $ 530,242 $ 366,400
</TABLE>
See accompanying notes to consolidated
financial statements.
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Consolidated Statements of Cash Flows
Years ended December 31, 1994 and 1993
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 530,242 $ 366,400
Adjustments to reconcile net earnings
to net cash used in operating
activities:
Depreciation and amortization 142,678 73,982
Bad debt expense 119,622 220,400
Changes in assets and liabilities:
Income taxes 107,688 (4,993)
Prepaid expenses (14,220) (14,901)
Accounts and premiums payable 264,862 118,577
Accrued expenses and other 104,759 29,133
Net cash provided by
operating activities 1,255,631 788,598
Cash flows from investing activities:
Sale (purchase) short-term investments 1,259,154 (2,261,399)
Securitization of accounts receivable 4,000,000 19,000,000
Capitalization of transaction costs 68,804) (185,204)
Additions to accounts receivable (6,469,967) (6,840,815)
Additions to furniture and equipment (33,556) (19,729)
Proceeds from sale of furniture and
equipment 182 - -
Net cash provided (used) by
investing activities (1,312,991) 9,692,853
Cash flows from financing activities:
Repayment of note payable to bank,net - - (8,340,000)
Repayment of subordinated notes payable
to related parties, net - - (2,000,000)
Payments on capital lease obligation (6,276) - -
Increase(decrease) in bank overdrafts 63,636 (141,451)
Net cash provided (used) by
financing activities 57,360 (10,481,451)
Net increase in cash - - - -
Cash at beginning of year - - - -
Cash at end of year $ - - $ - -
Supplemental disclosure:
Cash paid for interest $ 9,587 $ 478,963
Cash paid to parent and states for
income taxes $ 172,818 $ 198,554
</TABLE>
See accompanying notes to consolidated
financial statements.
</PAGE>
<TABLE>
AGENCY PREMIUM RESOURCE, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1994 and 1993
<CAPTION>
Common Paid-in Accumulated
stock capital deficit Total
<S> <C> <C> <C> <C>
Balance at
December 31, 1992 $ 1,500 $8,280,341 $(1,355,314) $6,926,527
Net earnings - - 366,400 366,400
Balance at
December 31, 1993 1,500 8,280,341 (988,914) 7,292,927
Net earnings - - 530,242 530,242
Balance at
December 31, 1994 $ 1,500 $8,280,341 $ (458,672) $7,823,169
</TABLE>
See accompanying notes to consolidated financial statements.
</PAGE>
AGENCY PREMIUM RESOURCE, INC.
Notes to Consolidated Financial Statements
December 31, 1994 and 1993
(1) Summary of Significant Accounting Policies
(a) Organization
Agency Premium Resource, Inc., (the Company) a
subsidiary of Seafield Capital Corporation (Seafield),
was formed on January 1, 1989. The Company offers
premium financing and related services through approved
insurance agencies. Agency Services, Inc., a wholly-
owned subsidiary, provides motor vehicle report
services.
(b) Basis of Presentation
The accompanying consolidated financial statements have
been prepared on the accrual basis in conformity with
generally accepted accounting principles. All
significant intercompany transactions have been
eliminated in consolidation.
(c) Furniture and Equipment
Furniture and equipment are stated at cost.
Depreciation of furniture and equipment is provided over
the estimated useful lives of assets (two to ten years)
using the straight-line method.
(d) Income Taxes
The provision for income taxes is based on income
recognized for financial statement purposes and includes
the effects of temporary differences between such income
and that recognized for tax purposes. The operating
results of the Company have been included in
consolidated federal income tax returns with Seafield.
The Company is reimbursed by or pays to Seafield the
current tax benefit or expense as if it filed a separate
return.
(e) Reclassifications
Certain prior year amounts have been reclassified to
conform with the current year presentation.
(2) Securitization of Receivables
In July, 1993, the Company entered into an extendable two-
year agreement whereby it can sell undivided interests in a
designated pool of accounts receivable on an ongoing basis.
The maximum allowable amount of receivables to be sold was
increased by amendment in August 1994 from $22,000,000 to
$30,000,000, subject to voluntary reduction by the seller to
a minimum of $12,000,000. As collections reduce accounts
receivable in the pool, the purchaser permits the Company to
apply such collections to additional purchases up to the
maximum. The Company had securitized receivables of
$23,000,000 at December 31, 1994 and $19,000,000 at December
31, 1993. The net cash proceeds are reported as an investing
activity in the accompanying consolidated statement of cash
flows. The securitized receivables are reflected as sold in
the accompanying consolidated balance sheet. The proceeds
from the initial sale of receivable interests were used to
retire bank debt and subordinated debts to the shareholders
and the Company's Chief Executive Officer.
The Company did not record a gain or loss on the sales as the
costs of receivables sold approximated the proceeds.
Receivables of $2,760,000 and $2,280,000 at December 31, 1994
and 1993, respectively, are subordinated to undivided
interests sold in the event of defaults or delinquencies with
respect to the underlying receivables. A default reserve,
which serves as collateral, is required for the greater of
12% of the accounts receivable sold, or an amount set forth
by a formula based on preceding months' default ratios.
The Company capitalized costs of approximately $69,000 in
1994 and $185,000 in 1993 related to the asset
securitization. These costs are being amortized over a two-
year period, with amortization expense of approximately
$104,000 in 1994 and $41,000 in 1993.
The Company continues to service the securitized receivables
for which it receives a servicing fee. Included in the
service revenue was $822,503 and $543,170 of servicing fees
at December 31, 1994 and 1993, respectively.
(3) Note Payable to Bank
The Company had a $9,000,000 bank line of credit through July
22, 1993 to provide funding for premiums financed. In July,
1993, the Company retired this debt with cash provided from
the securitization of receivables described in note 2.
(4) Related Party Transactions
The Chief Executive Officer owns 5% of the issued and
outstanding shares of common stock of the Company and has
option agreements to purchase an additional 14.9% of the
issued and outstanding shares from Seafield.
In October 1991, Seafield, the majority shareholder, advanced
$2,000,000 to the Company. This advance was subordinate to
the bank debt and carried an interest rate of 5.5%. In
January 1993, Seafield advanced an additional $3,000,000 to
the Company through an amendment to the original agreement.
The Company also borrowed $700,000 from its Chief Executive
Officer in the form of a thirty-day renewable note payable.
In July 1993, the Company retired these debts with cash
provided from the securitization of receivables described in
note 2.
The Company had an open line of credit with Seafield in the
amount of $5,000,000. During 1994, there were draws made on
this line of credit by the Company and all were repaid prior
to year-end. During 1993, there were no draws on this line
of credit.
Interest expense on related party transactions was $8,026 and
$167,641 for 1994 and 1993, respectively.
The Chief Executive Officer purchased approximately $192,000
in receivables from the Company in 1993 at their unpaid
balance. In June 1994, the Company received a settlement
from an insurance company and a portion of the settlement
funds were used to repurchase the $192,000 in receivables
from the Chief Executive Officer.
(5) Income Taxes
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
1994 1993
Current Deferred Total Current Deferred Total
<S> <C> <C> <C> <C> <C> <C>
Federal $231,902 $47,724 $279,626 $195,755 $(3,814) $191,941
State 5,405 (4,525) 880 2,592 (313) 2,279
$237,307 $43,199 $280,506 $198,347 $(4,127) $194,220
</TABLE>
Income tax expense approximates the amounts computed by
applying the U. S. federal income tax rate of 34% to earnings
before income taxes.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred
tax liabilities at December 31, 1994 and 1993 are presented
below:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Deferred tax assets:
Accounts receivable, due to the allow-
ance for uncollectible accounts $81,963 $116,984
Accrued expenses 6,462 28,646
Furniture and equipment, due to
differences in depreciation for
book and tax purposes - - (11,584)
Other 835 9,310
State net operating loss carryforwards 6,881 50,016
Total gross deferred tax assets 96,141 193,372
Less valuation allowance 6,881 64,524
$89,260 $128,848
Deferred tax liabilities:
Furniture and equipment, due to
differences in depreciation for
book and tax purposes $ 3,345 $ - -
Other 266 - -
$ 3,611 $ - -
</TABLE>
The valuation allowance for deferred tax assets as of January
1, 1993 was $104,081. The decrease in the total valuation
allowance for the years ended December 31, 1994 and 1993 was
$57,643 and $39,557, respectively. The decrease each year in
the valuation allowance is primarily attributed to the
utilization of state net operating loss carryforwards.
At December 31, 1994, the Company has net operating loss
carryforwards for state income tax purposes of $116,411 which
are available to offset future state taxable income, if any,
through 2005.
(6) Commitments
Total rent expense was $50,904 and $52,766 in 1994 and 1993,
respectively. The Company is obligated under certain
noncancelable rental agreements which terminate through July
1996. The minimum future payments under these agreements are
as follows:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1995 $50,234
1996 23,347
</TABLE>
In January 1994, the Company entered into a noncancelable
capital lease payable in thirty monthly installments of $580
and a final payment of $12,722. Amortization expense related
to the capitalized asset was $5,592 in 1994.
(7) Retirement Plans
The Company is a member of the Seafield Capital Corporation
401(k) Savings Plan and Trust (401(k) Plan) and the Seafield
Capital Corporation Money Purchase Pension Plan (Pension
Plan), both of which are defined contribution plans. All
full-time employees who have worked 500 hours within the
first six months of employment are eligible to participate in
the Plans.
Participants in the 401(k) Plan may contribute 2% to 10% of
annual compensation. The Company contributes for each
participant an amount equal to 50% of the participant's
contribution up to 10% of annual compensation. A participant
is immediately fully vested with respect to the participant's
contributions and the Company contributions vest over five
years. Participant contributions are invested by the
Trustees of the Plan at the direction of the participants in
one or more of six investment funds, one of which is a
Seafield Stock Fund. The matching contributions made by the
Company were $19,439 and $16,990 in 1994 and 1993,
respectively.
Under the Pension Plan, the Company contributes 7% of each
eligible participant's annual compensation up to the social
security wage base plus 12.7% for any excess up to the salary
limits of $150,000 for 1994 and $235,840 for 1993.
Participants become 100% vested after five years of service,
normal retirement at age sixty-five or in the event of
disability or death while employed by the Company.
Provisions for contributions to the Pension Plan by the
Company were $50,251 and $37,755 in 1994 and 1993,
respectively.
Implementation of Financial Accounting Standards Board
Statement No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", did not have an impact on the
Company's financial condition or results of operations.
</PAGE>
ANUHCO, INC. AND AGENCY PREMIUM RESOURCE, INC.
Description of Condensed Pro Forma
Financial Statements
On May 31, 1995, Anuhco, Inc. ("Anuhco") completed the acquisition
of all of the issued and outstanding stock of Agency Premium
Resource, Inc. and Subsidiary ("APR"). The purchase price,
together with payment for certain services to be rendered by the
sellers after closing, will be approximately $11.5 million. This
transaction will be accounted for as a purchase.
The entities involved in the pro forma financial statements are
Anuhco, the Registrant, and APR. Anuhco's and APR's normal fiscal
year is a calendar year ending December 31.
The pro forma balance sheet was prepared using the historical
balance sheets of Anuhco and APR as of March 31, 1995. Anuhco
previously reported its information on Form 10-Q.
The fiscal year ending December 31, 1994 and three months ending
March 31, 1995, pro forma income statements were prepared using the
historical income statements of Anuhco and APR for the year ended
December 31, 1994, and the three months ended March 31, 1995,
Anuhco's historical information having been previously reported on
Form 10-K and Form 10-Q, respectively.
</PAGE>
<TABLE>
ANUHCO, INC. AND AGENCY PREMIUM RESOURCE, INC.
Condensed Pro Forma Balance Sheet
as of March 31, 1995
(Unaudited)
(in thousands)
<CAPTION>
Historical Pro Forma Pro Forma
Anuhco APR Combined Adjustments Combined
<S> <C> <C> <C> <C> <C>
Current Assets -
Cash & investments $39,189 $ 990 $40,179 $(11,500) 1 $28,679
Finance receivables - 7,511 7,511 - 7,511
Other receivables 9,346 - 9,346 - 9,346
AFS net assets 21,095 - 21,095 - 21,095
Other 1,188 63 1,251 - 1,251
Total Current 70,818 8,564 79,382 (11,500) 67,882
Property/Equipment 15,366 82 15,448 - 15,448
Intangibles - - - 3,568 1 3,568
Other Assets 116 158 274 - 274
Total Assets $86,300 $8,804 $95,104 $ (7,932) $87,172
Current Liabilities $ 7,593 $ 851 $ 8,444 $ - $ 8,444
Other Liabilities - 21 21 - 21
Total Liabilities 7,593 872 8,465 - 8,465
Shareholders' Equity 78,707 7,932 86,639 (7,932) 1 78,707
Total Liability
& Shareholders'
Equity $86,300 $8,804 $95,104 $ (7,932) $87,177
</TABLE>
This pro forma balance sheet should be read in conjunction
with the related Description and Notes to Condensed Pro Forma
Financial Statements and the Registrant's financial
statements contained in its Form 10-Q and Form 10-K filings
with the Commission.
</PAGE>
<TABLE>
ANUHCO, INC. AND AGENCY PREMIUM RESOURCE, INC.
Condensed Pro Forma Statement of Income
For the year ended December 31, 1994
(Unaudited)
(in thousands, except per share amounts)
<CAPTION>
ProForma
Historical Adjust ProForma
Anuhco APR Combined ments Combined
<S> <C> <C> <C> <C> <C>
Operating Revenue $95,772 $3,690 $99,462 $ - $99,462
Operating Expenses
Salaries, wages &
employee benefits 51,732 931 52,663 - 52,663
Operating supplies
& expenses 10,869 1,781 12,650 - 12,650
Operating taxes &
licenses 2,597 - 2,597 - 2,597
Insurance & claims 2,209 - 2,209 - 2,209
Depreciation &
amortization 2,315 143 2,458 350 1 2,808
Purchased transpor-
tation & rents 20,829 - 20,829 - 20,829
Total operating
expenses 90,551 2,855 93,406 350 93,756
Operating Income 5,221 835 6,056 (350) 5,706
Nonoperating
Income (Expense) 274 (25) 249 - 249
Income Before
Income Taxes 5,495 810 6,305 (350) 5,955
Income Tax Provision - 280 280 (80) 1 200
Net Income $ 5,495 $ 530 $ 6,025 $(270) $ 5,755
Average Common
Shares Outstanding 7,545 7,545
Net Income Per Share $0.73 $0.76
</TABLE>
This pro forma statement of income should be read in
conjunction with the related Description and Notes to
Condensed Pro Forma Financial Statements and the Registrant's
financial statements contained in its Form 10-Q and Form 10-K
filings with the Commission.
</PAGE>
<TABLE>
ANUHCO, INC. AND AGENCY PREMIUM RESOURCE, INC.
Condensed Pro Forma Statement of Income
For the three months ended March 31, 1995
(Unaudited)
(in thousands, except per share amounts)
<CAPTION>
ProForma
Historical Adjust ProForma
Anuhco APR Combined ments Combined
<S> <C> <C> <C> <C> <C>
Operating Revenue $24,632 $ 907 $25,539 $ - $25,539
Operating Expenses
Salaries, wages &
employee benefits 13,627 242 13,869 - 13,869
Operating supplies
& expenses 2,999 454 3,453 - 3,453
Operating taxes &
licenses 677 - 677 - 677
Insurance & claims 569 - 569 - 569
Depreciation &
amortization 598 42 640 88 1 728
Purchased transpor-
tation & rents 5,193 - 5,193 - 5,193
Total operating
expenses 23,663 738 24,401 88 24,489
Operating Income 969 169 1,138 (88) 1,050
Nonoperating
Income (Expense) 630 - 630 - 630
Income Before
Income Taxes 1,599 169 1,768 (88) 1,680
Income Tax Provision 320 60 380 (20) 1 360
Net Income $ 1,279 $ 109 $ 1,388 $(68) $ 1,320
Average Common
Shares Outstanding 7,554 7,554
Net Income Per Share $0.169 $0.175
</TABLE>
This pro forma statement of income should be read in
conjunction with the related Description and Notes to
Condensed Pro Forma Financial Statements and the Registrant's
financial statements contained in its Form 10-Q and Form 10-K
filings with the Commission.
</PAGE>
ANUHCO, INC. AND AGENCY PREMIUM RESOURCE, INC.
Notes to Pro Forma Financial Statements
(dollars in thousands)
1. These Notes to Pro Forma Financial Statements are not
intended to disclose all data of significance relative to the
historical financial statements of the entities. The Notes
and the related Pro Forma Financial Statements should be read
in conjunction with the historical interim and annual
financial statements of Anuhco, Inc. ("Anuhco") filed with
the Commission on Forms 10-Q and 10-K. Anuhco knows of no
material non-reoccuring credits or charges from the
acquisition of Agency Premium Resource, Inc. ("APR") from
Seafield Capital Corporation ("Seafield") and C. Ted McCarter
that will be included in Anuhco's statement of income
subsequent to May 31, 1995 (the date of acquisition).
2. Pro Forma balance sheet adjustments.
See Description of Condensed Pro Forma Financial Statements
for a description of the historical balance sheets used to
prepare the Condensed Pro Forma Balance Sheet. The following
descriptions correspond to the numbering of the adjustments
set forth on the Condensed Pro Forma Balance Sheet.
(1) To record acquisition as follows:
<TABLE>
<CAPTION>
<S> <C>
Anuhco cash payment to APR shareholders $11,500
Shareholders' equity acquired 7,932
Intangibles acquired, including goodwill $ 3,568
</TABLE>
3. Pro Forma income statement adjustments.
See Description of Condensed Pro Forma Financial Statements
for a description of the historical income statements used to
prepare the Condensed Pro Forma Income Statements. The
following descriptions correspond to the numbering of the
adjustments and eliminations set forth on the Condensed Pro
Forma Income Statements.
<TABLE>
<CAPTION> Dec 31 Mar 31
1994 1995
<S> <C> <C> <C>
(1) Amortization of intangibles, including
goodwill, arising in acquisition
(see note 2, above) $ 350 $ 88
(2) Income tax benefit of Pro Forma net
adjustments to income before income taxes $ (80) $(20)
</TABLE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
ANUHCO, INC.
By: /s/ Timothy P. O'Neil
Timothy P. O'Neil, President &
Chief Financial Officer
Date: June 15, 1995
<PAGE>
Exhibit 2(a)
STOCK PURCHASE AGREEMENT
By and Among
ANUHCO, INC.,
SEAFIELD CAPITAL CORPORATION,
and
C. TED MCCARTER
Dated May 23 1995
</PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section Page
<S> <C>
1. Sale and Purchase 1
1.1 Number of Shares 1
1.2 Purchase Price 2
2. Computer Software of The Company 2
3. Closing and Deliveries 3
3.1 Closing 3
3.2 Deliveries 3
4. Representations and Warranties of the
Stockholders 4
4.1 Organization, Powers and Qualifications 4
4.2 Capital Stock 5
4.3 Stock Options, Warrants, Etc. 5
4.4 Articles of Incorporation, By-Laws,
Minute Book and Stock Book 5
4.5 Authority; No Violation, Etc. 6
4.6 Books and Records 8
4.7 Compliance with Law 8
4.8 Financial Statements 8
4.9 Liabilities and Obligations 9
4.10 Absence of Adverse Changes or Events 9
4.11 Tax Reports 10
4.12 Dividends and Stock Purchases 10
4.13 Title to Assets; Operating Authorities 11
4.14 Licenses, Permits, Etc. 11
4.15 Contracts 12
4.16 Litigation 12
4.17 Insurance 13
4.18 Overtime, Back Wages, Vacation,
Discrimination, and Occupational
Safety Claims 13
4.19 Contracts for Personal Services 14
4.20 Employee Welfare and Pension
Benefit Plans 14
(a) Plans 14
(b) Compliance with Internal Revenue
Code and ERISA 14
(c) Administration 15
(d) Claims 15
(e) Prohibited Transactions 16
(f) Plan Documents 16
(g) No Multi-Employer Plans and No
Plans for Retirees 17
(h) Contribution Paid 17
4.21 Commission Fees 18
4.22 Disclosure 18
4.23 Trademarks and Similar Rights 18
4.24 Related Party Transactions 19
4.25 Environmental 20
5. Representations and Warranties of Anuhco 21
5.1 Organization, Powers and Qualifications 21
5.2 Authority; No Violation, Etc. 22
5.3 Commission Fees 22
5.4 Disclosure 23
6. Conduct of Business of the Company
and Subsidiary 23
6.1 Business 23
6.2 Adverse Changes 24
6.3 Maintenance of Properties, Permits,
Licenses, Etc. 24
6.4 Maintain Corporate Existence 24
6.5 Capital Stock 24
6.6 Dividends 25
6.7 Employment; Compensation; Benefits 25
6.8 Liabilities and Obligations 25
6.9 Capital Expenditures 26
6.10 Sale of Assets 26
6.11 Leases; Contracts 26
6.12 Insurance 26
6.13 Books and Records 26
6.14 Compliance with the Laws and Regulations 27
6.15 Encumbrances 27
6.16 Amendment to Articles of Incorporation
and By-Laws 27
7. Covenants of the Stockholders and Anuhco 28
7.1 Update of Information 28
7.2 Access to Business and Records 28
7.3 Efforts to Consummate 28
7.4 Non-Competition 29
7.5 Confidentiality 30
7.6 Public Announcement 31
7.7 Adjustments Because of
Regulatory Disapproval 31
7.8 Pension Plans 32
7.9 Welfare Plans 35
7.11 Income Tax Matters and Agreements 36
(a) Consolidated federal and state
income tax returns 36
(b) Separately filed state and local
income and franchise tax returns 38
(c) Audits 38
7.12 Accreditation, Due Diligence and
Sophistication Matters 40
7.13 Access to Company Records Post Closing 42
7.14 Related Party Agreements 42
8. Conditions to Obligations of Anuhco to
Consummate Acquisition 43
8.1 Representations and Warranties
True at Closing 43
8.2 Opinion of Counsel for Stockholders 43
8.3 Resignations 43
8.4 Consulting and Assignment Agreement 43
8.5 Employment Agreement 43
8.6 Bank Financing 43
8.7 Licenses, Permits, Etc. 44
8.8 Performance of Covenants 44
9. Conditions to Obligation of Stockholders to
Consmmate the Acquisition 44
9.1 Representations and Warranties
True at Closing 44
9.2 Opinion of Counsel for Anuhco 44
9.3 Consulting and Employment Agreements 45
9.4 Performance of Covenants 45
9.5 Bank Financing 45
10. Termination 45
11. Counterparts 46
12. Contents of Agreement, Parties in Interest,
Assignment, Etc. 46
13. Indemnification 47
13.1 General Indemnification 47
13.2 Claims Procedure 49
(a) Third Party Claims 49
(b) Non-Third Party and Other Claims 51
13.3 Timing of Claim Notice 52
13.4 Change of Control of Seafield 52
13.5 Indemnity Claims 53
14. Notices 54
15. Confidentiality 55
16. Governing Law 56
</TABLE>
</PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), is dated May 23,
1995, by, between and among ANUHCO, INC., a Delaware corporation
("Anuhco"), SEAFIELD CAPITAL CORPORATION, a Missouri corporation
("Seafield"), and C. TED MCCARTER of Johnson County, Kansas
("McCarter") (Seafield and McCarter being sometimes herein
collectively referred to as ("Stockholders").
W I T N E S S E T H:
WHEREAS, the authorized capitalization of Agency Premium
Resource, Inc. ("Company") consists of 30,000 shares of voting
stock, without par value, of which 1,500 shares are issued and
outstanding (the "Share(s)");
WHEREAS, Seafield and McCarter, respectively, own or will own
on the Closing Date, as hereinafter defined in Section 3.1, 1202
shares and 298 shares of stock of the Company;
WHEREAS, Anuhco wishes to acquire the Shares and the
Stockholders are willing to sell the same to Anuhco, but only on
the terms and provisions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties
hereto, intending to be legally bound, agree as follows:
1. Sale and Purchase.
1.1 Number of Shares.
(a) Seafield agrees to sell and cause to be transferred
to Anuhco at the Closing, as hereinafter defined in Section 3.1,
and Anuhco agrees to purchase at the Closing, the 1202 shares of
stock of the Company owned by it.
(b) McCarter agrees to sell and cause to be transferred
to Anuhco at the Closing, and Anuhco agrees to purchase at the
Closing, 298 shares of stock of the Company.
1.2 Purchase Price.
(a) With respect to Shares sold and purchased at the
Closing, Anuhco shall pay Seafield and McCarter at the Closing, and
upon delivery of the certificates therefor duly endorsed and in
proper form for transfer, $6,833.33 per share, for a total purchase
price of $10,250,000.
(b) The payments provided in subsection (a) hereof shall
be made in immediately available funds or by transfer vested on the
Closing Date of U.S. Treasury bills with a maturity of June 15,
1995 and valued at the mean between the Closing bid and asked
prices reported by The Wall Street Journal on the second business
day preceding the Closing.
2. Computer Software of The Company. The operation of the
business of the Company is heavily dependent upon use of computer
software which has been developed and customized over a period of
years. Such software has not been capitalized on the balance
sheets of the Company. Seafield agrees, at the Closing, to assign
to the Company any and all of its ownership of and rights in such
software, if any, for the consideration and upon the terms provided
in the Consulting and Assignment Agreement in the form of Exhibit
1 attached hereto.
3. Closing and Deliveries.
3.1 Closing. The Closing shall be at the offices of Hillix,
Brewer, Hoffhaus, Whittaker & Wright, L.L.C., 2420 Pershing Road,
Suite 400, Kansas City, Missouri 64108, at 10:00 a.m., C.D.T., on
such date, after the conditions herein specified have been
satisfied or waived, as Anuhco shall specify by written notice to
Stockholders, delivered not less than three (3) days before Closing
but in no event more than 10 days after satisfaction or waiver of
the last such condition to be fulfilled, or on such other date or
at such other place or time as is agreed upon in writing by the
parties, provided however that in no event shall the Closing occur
or the Closing Date be established later than May 31, 1995. If
Closing does not occur on or before May 31, 1995, this Contract,
the Letter of Intent and any other arrangements or obligation among
the parties (other than confidentiality obligations) shall
terminate and be of no further force and effect.
3.2 Deliveries. At the Closing, (a) the Stockholders shall
deliver to Anuhco certificates representing record ownership of the
Shares, duly endorsed and in proper form for transfer, free and
clear of all encumbrances; (b) Anuhco shall deliver to Seafield and
McCarter the purchase price and Anuhco may, at the direction of
McCarter, deliver such portion of the purchase price owing to
McCarter to Seafield in payment of any amounts owed to Seafield by
McCarter; (c) Anuhco shall deliver to Seafield and McCarter any and
all contract payments due at Closing under the Consulting Agreement
and Employment Agreement respectively, in immediately available
funds or by transfer vested on the Closing Date of U.S. Treasury
bills with a maturity of June 15, 1995 and valued at the mean
between the Closing bid and asked prices reported by The Wall
Street Journal on the second business day preceding the Closing;
and (d) the parties shall deliver such other documents as are
required pursuant to this Agreement to be then executed and
delivered, or shall previously have been, executed and delivered.
4. Representations and Warranties of the Stockholders.
Stockholders, jointly and severally, represent and warrant to
Anuhco as follows:
4.1 Organization, Powers and Qualifications. The Company and
its wholly owned subsidiary, Agency Services, Inc. ("Subsidiary"),
are duly organized, validly existing and in good standing under the
laws of the State of Kansas, have all requisite corporate power and
authority to own their properties and assets and carry on their
businesses as now conducted, and are qualified as foreign
corporations to do business and are in good standing in every
jurisdiction in which such qualification is necessary because of
the nature or extent of their operations or property owned, leased
or operated, unless the failure to so qualify would not have a
material adverse impact on the ability of the Company to own its
assets and conduct its operations, all of which jurisdictions are
separately listed for each on Schedule 4.1. The Company does not
own any interest, directly or indirectly, in any corporation,
partnership, proprietorship, association, trust, or other business
or entity, other than Subsidiary.
4.2 Capital Stock. The Company has authorized capital stock
consisting of 30,000 shares of stock, without par value, of which
1,500 shares are issued and outstanding, all of which are owned of
record by the Stockholders. Except as set forth in Schedule 4.2,
the Shares are duly authorized, validly issued and outstanding,
fully paid and nonassessable, and were not issued in violation of
pre-emptive or other statutory or contractual rights.
4.3 Stock Options, Warrants, Etc. Except as disclosed in
Schedule 4.3, the Company does not have outstanding any options,
warrants, calls, convertible securities, rights, agreements, or
obligations to purchase, redeem, issue, sell, distribute, dividend,
or otherwise acquire or dispose of any shares of its stock, and
neither of the Stockholders has any right or obligation to sell,
acquire or otherwise trade in any of the Shares.
4.4 Articles of Incorporation, By-Laws, Minute Book and Stock
Book. The Articles of Incorporation and all amendments thereto and
the by-laws, as amended, of the Company and Subsidiary which have
been made available to Anuhco for its inspection are true, correct
and complete, and such Articles and by-laws shall be the Articles
and by-laws in effect at the Closing. The minute books of the
Company and Subsidiary which have been made available to Anuhco for
its inspection contain accurate minutes of all meetings and
accurate consents in lieu of meetings of the Board of Directors
(and any committee thereof) and of the stockholders of the Company
and Subsidiary since their respective incorporations, and
accurately reflect all transactions referred to in such minutes and
consents in lieu of meetings during the periods reflected therein.
Except as reflected in such minute books, there are no minutes of
meetings or consents in lieu of meetings of the Board of Directors
(or any committee thereof) or of the stockholders of the Company or
Subsidiary, except for minutes or consents which may be missing but
which would evidence actions that have been consented to by the
Stockholders and Directors and which reflect transactions that are
not material to the Company. The stock ledgers of the Company and
the Subsidiary, which have been made available to Anuhco for its
inspection, contain accurate records of all issuances and transfers
of record of the capital stock of the Company and Subsidiary since
their respective dates of incorporation.
4.5 Authority; No Violation, Etc. Except as reflected in
Schedule 4.5, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of the
Stockholders, and this Agreement is a valid and binding obligation
of the Stockholders, enforceable in accordance with its terms
(except as may be limited by general principles of equity as to the
enforcement of remedies or applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights
generally, now or hereafter in effect). Neither the execution and
delivery by the Stockholders of this Agreement nor the consummation
by them of the transactions contemplated hereby will cause a
default (or give rise to any right or termination, cancellation or
acceleration) under (a) any of the terms, conditions or provisions
of any agreement, instrument or obligation to which either
Stockholder or the Company or Subsidiary is a party, or by which
any of them or any of their respective properties or assets may be
bound, except for such conflict, breach or default as to which
requisite waivers or consents shall have been obtained prior to the
Closing (all of which are identified in Schedule 4.5, or 4.15),
including a waiver by the Bank of America with respect to sale of
the Shares by Seafield; (b) the required licenses or approvals of
the state regulatory authorities referred to in Section 4.14
hereof, provided however that the states of Florida, Illinois and
Arizona each impose separate requirements and limitations on a
transaction contemplated herein and Anuhco and Company will be
subject to the limitations and requirements imposed by the laws and
regulations of such states on this transaction; or (c) any statute,
rule or regulation or any judgment, order, writ, injunction or
decree of any court, arbitrator, mediator, administrative agency or
governmental body, in each case applicable to either Stockholders,
the Company or Subsidiary or any of their properties or assets.
4.6 Books and Records. To the best of Stockholders'
knowledge, the books and records of the Company and Subsidiary
fairly reflect the transactions to which either is a party or by
which the properties of either are subject or bound, and such books
and records have been kept and maintained accurately and in
sufficient detail to permit the preparation of periodic financial
statements in accordance with generally accepted accounting
principles consistently applied.
4.7 Compliance with Law. To the best of Stockholders'
knowledge, the Company and Subsidiary and their use and occupancy
of their assets and properties wherever located are in substantial
compliance with all federal, state and local laws and ordinances
and any order, rule or regulation of any federal, state, local or
other governmental agency or body, except where the failure to
comply, individually or in the aggregate, would not have a
materially adverse effect on their respective business or
operations.
4.8 Financial Statements. The Stockholders have delivered to
Anuhco true and complete copies of the audited consolidated
financial statements of the Company and Subsidiary as of and for
the fiscal years ended December 31, 1993 and 1994, certified by
KPMG Peat Marwick LLP. The Stockholders have also delivered to
Anuhco true and complete copies of the unaudited financial
statements of the Company as of and for the three months ended
March 31, 1995. Except, with respect to the unaudited March 31,
1995 financial statements, for (i) the absence of notes, (ii) the
absence of certain adjustments normally made at year end, and (iii)
exceptions set forth therein, if any, all such financial statements
(the "Financial Statements") and information, including the related
notes, have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the
Company's consolidated financial condition, results of operations,
and changes in financial position at the dates and for the periods
indicated.
4.9 Liabilities and Obligations. Except as described in
Schedule 4.9 and except for federal and state income tax
liabilities provided for separately herein, neither the Company nor
the Subsidiary has any material liability or obligation (direct or
indirect, contingent or fixed, matured or unmatured) of any nature,
whether arising out of contract, tort, statute or otherwise, except
liabilities and obligations in the amounts and categories
reflected, reserved against or given effect to in the Financial
Statements, and liabilities subsequently incurred in the ordinary
course of business consistent with past practice.
4.10 Absence of Adverse Changes or Events. Since December
31, 1994, the Company has been operated in all material respects in
the ordinary course of its business consistent with past practice
in prior periods and has not changed or altered its past practices
with respect to (i) reserves for uncollectible accounts, (ii) sale
of undivided interests in accounts, payment of liabilities and
(iii) payment of management fees, expenses and other charges, if
any, to Seafield.
4.11 Tax Reports. Except as disclosed in Schedule 4.11 to
the best of Stockholders' knowledge, (a) all federal, state and
local tax returns and reports (or timely extensions thereof)
(including but not limited to all income tax, unemployment
compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any
other tax under the laws of the United States or any state or
municipal or political subdivision thereof) required to be filed by
or for the Company or the Subsidiary (the "Tax Returns") have been
filed with and the taxes paid to the appropriate governmental
agencies in all jurisdictions in which such returns and reports are
required to be filed and taxes paid, and all such returns and
reports correctly reflect to the best of Stockholders' knowledge
the taxes of the Company and Subsidiary for the periods covered
thereby; (b) neither the Company, the Subsidiary, nor Seafield has
received any notice of assessment or proposed assessment by the
Internal Revenue Service or any other taxing authority in
connection with any Tax Returns except as specified on Schedule
4.11; and (c) there are no pending tax examinations of or tax
claims asserted against the Company or Subsidiary or their
properties or operations.
4.12 Dividends and Stock Purchases. Except as indicated in
Schedule 4.12, since December 31, 1994, neither the Company nor
Subsidiary has declared, set aside or made payment of any dividend
or other distribution in respect of any shares of its capital
stock, repurchased, redeemed or otherwise acquired any shares of
its capital stock.
4.13 Title to Assets; Operating Authorities. Except as
disclosed in Schedule 4.13, the Company and Subsidiary have good
and marketable title to all of their properties and assets material
to the operation of their business and reflected in the audited
December 31, 1994 balance sheet and those acquired by the Company
or Subsidiary thereafter, except properties and assets sold or
otherwise disposed of in the ordinary course of business consistent
with past practice in prior periods, free and clear of all
mortgages, liens, pledges, charges or encumbrances or other third
party interests of any nature whatsoever, except (a) as reflected
or reserved for in the Financial Statements, or (b) the lien of
current taxes not yet due and payable (collectively "Permitted
Liens").
4.14 Licenses, Permits, Etc. The Company has delivered or
made available to Anuhco true and complete copies of the Company's
licenses and permits, (all of which are listed on Schedule 4.14),
each of which is properly and validly issued, and in full force and
effect, and all of which permit the operation of the Company's
business as now and in the past conducted, except where the failure
to secure such a permit would not have a materially adverse effect
on the Company's business or operations.
4.15 Contracts. All written contracts, agreements, leases,
mortgages or commitments, excluding such as involve payments of
less than $5,000 on an annualized basis or such as are terminable
by the Company or Subsidiary without penalty on 30 days or less
written notice, to which the Company or Subsidiary is a party or
may be bound or to which their assets are subject are listed on
Schedule 4.15 ("Contracts"). All Contracts are valid, binding on
the parties to them, and in full force and effect on the date
hereof, and neither the Company nor Subsidiary has violated any
provision of, or committed or failed to perform any act which with
notice, lapse of time or both would constitute a material default
under the provisions of any Contract. Copies of all Contracts
disclosed on Schedule 4.15 have been made available to Anuhco for
inspection. Schedule 4.15 also separately identifies all Contracts
otherwise required to be listed thereon which require the consent
or approval of third parties to the execution and delivery of this
Agreement or to the consummation and performance of the
transactions contemplated hereby, and the Stockholders agree to use
their best efforts to obtain prior to the Closing all such consents
or approvals.
4.16 Litigation. Except as disclosed in Schedule 4.16, (a)
no claim, action, suit, arbitration, investigation or other
proceeding, whether civil or criminal in nature, is pending, or to
Stockholders' knowledge, contemplated against the Company or
Subsidiary or any of their properties or with respect to the
transactions pursuant to this Agreement before any court,
governmental agency, authority or commission, arbitrator or
mediator; and (b) there are no judgments, consent decrees,
injunctions, or any other judicial or administrative or other
mandates outstanding against or which might be expected to
adversely affect the Company or Subsidiary or their assets,
liabilities, income, financial condition, results of operations or
business prospects or their right to conduct their business as
presently conducted.
4.17 Insurance. Schedule 4.17 lists all policies of
insurance held by or maintained on behalf of the Company or
Subsidiary. Copies of all such insurance policies disclosed on
Section 4.17 have been made available to Anuhco for inspection.
All such policies of insurance are in full force and effect. No
notices of cancellation or nonrenewal have been received and all
premiums to date have been paid in full. Stockholders have
furnished to Anuhco a list of all claims notices which have been
given to any of the Company's insurers.
4.18 Overtime, Back Wages, Vacation, Discrimination, and
Occupational Safety Claims. Except as disclosed in Schedule 4.18
or as fully reserved in the Financial Statements, to the best of
Stockholders' knowledge there are no outstanding or contemplated
claims against the Company or Subsidiary (whether under federal or
state law, under any employment agreement or otherwise) asserted by
any applicant for employment, or present or former employee, on
account of or for (a) overtime pay, other than overtime pay for
work done on the current payroll period; (b) wages or salary for
any period other than the current payroll period; (c) any amount of
vacation pay or pay in lieu of vacation time off; or (d) any
material violation of any other term or condition of employment or
of any statute, ordinance or regulation relating to discrimination,
occupational safety, leave, disability or employment practices.
4.19 Contracts for Personal Services. Neither the Company
nor Subsidiary is a party to or bound by any contract, agreement,
or undertaking with any person for or related to personal services
rendered or to be rendered by any person. Other than as disclosed
in Schedule 4.19, neither the Company nor Subsidiary has, or since
1991 has had, any policy for payment of severance pay.
4.20 Employee Welfare and Pension Benefit Plans.
(a) Plans. Attached hereto as Schedule 4.20 is a true
and complete list of all plans, funds and programs that are or
within the three year period preceding the date hereof have been
maintained by Company, or for which Company contributes or is
required to contribute, which constitute "employee welfare benefit
plans" or "employee pension benefit plans" within the meaning of
Section 3(1) and (2) of "ERISA". Such plans, funds and programs
are hereinafter collectively referred to as the "Plans".
(b) Compliance with Internal Revenue Code and ERISA.
With respect to all such Plans, and all related trust agreements,
annuity contracts or other funding instruments, to the best
knowledge of Stockholders, Company is now in material compliance
with, and has materially complied in the past, both as to form and
operation, with all applicable provisions of ERISA and of the
Internal Revenue Code, as amended (the "Code"), including sections
of the Code relating to coverage, where required in order to be
tax-qualified. All necessary governmental approvals for such Plans
have been obtained, or applied for, and a favorable determination
as to the qualification under the Code of each employee pension
benefit plan and each material amendment thereto has been made by
the Internal Revenue Service or a request for such a determination
has been, or will be, filed, at the expense of Seafield, with the
Internal Revenue Service within the remedial amendment period
provided by Code 401(b) and regulatory guidance thereunder.
Seafield agrees to indemnify the Company and Anuhco from all loss
or liability resulting from the failure to timely obtain any such
approval.
(c) Administration. To the best of Stockholders'
knowledge, each such Plan has been administered to date in material
compliance with the requirements of the Code and of ERISA, and all
reports required by any governmental agency with respect thereto
have been timely filed.
(d) Claims. There is no litigation and there are no
proceedings before the U.S. Department of Labor, the Internal
Revenue Service or any other commission or administrative or
regulatory authority pending against the Company or against any
fiduciary of any such Plan relating to claims for benefits
thereunder or relating in any way to the maintenance or operation
of such Plans; and, to the knowledge of Stockholders, no such
litigation or proceeding has been threatened. Except for IRS
audits of Seafield that are ongoing, there are no audits now being
conducted of any such Plan by the Department of Labor or Internal
Revenue Service, and, to the knowledge of Stockholders, none have
been scheduled or noticed.
(e) Prohibited Transactions. To the best of
Stockholders' knowledge, the Company has not engaged in (A) any
transactions in violation of Section 406 of ERISA for which no
exemption exists under Section 408 of ERISA, or (B) any "prohibited
transaction", as that term is defined in Section 4975(c) of the
Code, for which no exemption exists under Section 4975(d) of the
Code. To the knowledge of Stockholders, no fiduciary of any of the
Plans has engaged in any such transactions.
(f) Plan Documents. Stockholders have delivered to
Anuhco, with respect to each of the Plans, correct and complete
copies of (A) all current Plan documents and amendments, trust
agreements and insurance contracts, (B) the most recent IRS
determination letter, (C) the Annual Report (Form 5500 Series) and
accompanying schedules, for each of the last three years as filed,
(D) the current summary plan description and summaries of material
modifications relating to each Plan, and (E) the most recent
financial statements.
(g) No Multi-Employer Plans and No Plans for Retirees.
Except as set forth in Schedule 4.20(g), the Company is not now and
in the preceding six (6) years has not been obligated to contribute
to a multi-employer pension plan as defined in Section 37(A) and
ERISA, and has not incurred any liability on account of a "partial
withdrawal" or a "complete withdrawal" (within the meaning of
Sections 4203 and 4205, respectively, of ERISA) with respect to any
multi-employer plan, and no Plan provides medical or death benefits
(whether or not insured) with respect to current or former
employees of the Company beyond their retirement or other
termination of service (other than (A) coverage mandated by law, or
(B) death benefits under any Plan intended to qualify under Section
401(a) of the Code.
(h) Contribution Paid. All accrued obligations of the
Company whether arising by operation of law, by contract or by past
custom, for payments to trusts or other funds or to any
governmental body, with respect to unemployment compensation,
social security, any Plan or any other benefits for employees of
the Company as of the date hereof, have been paid when due, or
adequate accruals therefor have been provided on the Financial
Statements. All reasonably anticipated obligations of the Company
(whether arising by operation of law, by contract, by past custom
or otherwise) for salaries, vacation, sick pay, personal day and
holiday pay, bonuses and other forms of compensation which were
payable to the employees of the Company as of date hereof have been
paid or adequate accruals therefor have been made in the Financial
Statements.
4.21 Commission Fees. In connection with the transactions
contemplated by this Agreement, no broker, finder or similar agent
has been employed by or on behalf of Stockholders, the Company or
the Subsidiary, and no person with which any of them has had
dealings or communications of any kind is entitled to a commission
or other compensation for which Anuhco may be liable.
4.22 Disclosure. No representation or warranty herein,
including the Schedules hereto prepared by Stockholders, nor any
information contained in the Financial Statements, the Exhibits to
this Agreement or any certificate, statement, or other document
delivered by the Stockholders, the Company or the Subsidiary
hereunder, contains any untrue statement of material fact or omits
to state a material fact necessary in order to make the statements
contained therein or herein, in light of the circumstances under
which they were made, not misleading.
4.23 Trademarks and Similar Rights. The Company or the
Subsidiary own or are licensed or otherwise have the right to use
all patents, trademarks, service marks, common trade names,
copyrights, inventions, trade secrets, proprietary processes and
other industrial and intellectual property rights listed on
Schedule 4.23. To the best of Stockholders' knowledge, no person
or party has asserted or threatened to assert, any claim that the
rights used by the Company or Subsidiary in the operation of their
businesses infringes any rights owned or held by any other person,
and there is no pending, or to Stockholders' knowledge,
contemplated claim or litigation against the Company or Subsidiary
contesting their right to use such.
4.24 Related Party Transactions.
(a) Except as disclosed in Schedule 4.24, neither the
Company nor Subsidiary is a party to or bound by any oral or
written contract, agreement or understanding with or affecting
McCarter, Seafield or any Affiliate of Seafield (as hereinafter
defined) (i) with or affecting any person or entity related to the
sharing of employees, services, or facilities or other assets; (ii)
with any person or entity related to expense (including tax)
sharing or the provision of management services; (iii) whereby they
or either of them guarantee or otherwise assume a contingent
obligation in respect of the obligation of another [except with
respect to Bank of America which has been otherwise disclosed]; or
(iv) whereby they or either of them are co-debtor, co-insured or
share joint or common ownership of property with another.
(b) Except as disclosed in Schedule 4.24, neither
McCarter nor Seafield nor any Affiliate of Seafield has any direct
or indirect interest in, or serves as an officer, director,
employee or consultant of any competitor, client or supplier
(whether present or potential) of the Company. Relationships
described in this Section 4.24 (a) or (b) are herein collectively
referred to as "Related Party Transactions".
(c) For purposes of this Section 4.24, an Affiliate is
one who controls, is controlled by, or is under common control with
Seafield.
4.23 Environmental. Neither the Company nor Subsidiary,
since their respective dates of incorporation, has owned any
interest in real property, been the operator of any site
containing, or transported any hazardous materials. For purposes
of this Section 4.25, "hazardous materials" means without
limitation any substance: (i) the presence of which requires
investigation or remediation under any federal, state or local
statute, regulation, order, ordinance, action, guideline,
requirement, permit, notice or policy; or (ii) which is reasonably
considered to pose an actual or potential threat to the health or
safety of persons entering the real property included as a part of
the Purchased Assets; or (iii) which is or at any time becomes
regulated as "hazardous," "toxic," a "pollutant", or a
"contaminant" under any local, state or federal governmental
authority; or (iv) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous which is or becomes regulated by any governmental
authority; or (v) that contains gasoline, diesel fuel or other
petroleum hydrocarbons or fraction thereof. Such terms also
includes, without limitation: (i) asbestos and PCB-containing and
polychlorinated biphenyl-containing equipment including
transformers; (ii) any material, substance or waste defined as
"hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.); (iii) any
material, substance or waste defined as "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. 9601, et
seq.) or (iv) any material, substance or waste defined as
"regulated substance" pursuant to Subchapter 9 of the Solid Waste
Disposal Act (42 U.S.C. 6991, et seq.) or (v) any material,
substance or waste regulated by the hazardous Materials
Transportation Act (49 U.S. C. Appendix 1801, et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act, Federal
Pesticide Act (7 U.S.C. 136, et seq.), the Federal Safe Drinking
Water Act (42 U.S.C. 300(f), et seq.), the Toxic Substances
Control Act (15 U.S.C. 2061, et seq.), the Clean Air Act (42
U.S.C. 7401, et seq.) or the Clean Water Act (33 U.S.C. 1251,
et seq.), and all other federal, state and local laws, statutes and
ordinances applicable to Hazardous Materials, or any regulations
promulgated pursuant thereto as well as any judicial or
administrative interpretation thereof; all of the foregoing of
which are hereinafter collectively referred to as the "laws".
5. Representations and Warranties of Anuhco. Anuhco represents
and warrants to Stockholders as follows:
5.1 Organization, Powers and Qualifications. Anuhco is duly
organized, validly existing and in good standing under the laws of
the State of Delaware, has all requisite corporate power and
authority to own its properties and assets and carry on its
business as now conducted.
5.2 Authority; No Violation, Etc. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary action on the part of Anuhco, and this Agreement is a
valid and binding obligation of Anuhco, enforceable in accordance
with its terms (except as may be limited by general principles of
equity to the enforcement of remedies or applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting
creditors' rights generally now or hereafter in effect). Neither
the execution and delivery by Anuhco of this Agreement nor the
consummation by it of the transactions contemplated hereby will
violate, cause a default (or give rise to any right or termination,
cancellation or acceleration) under or require any consent,
approval, notice or filing, pursuant to (a) any of the terms,
conditions or provisions of any agreement, instrument or obligation
to which Anuhco is a party, or by which it or any of its respective
properties or assets may be bound, (b) the Articles or Bylaws of
Anuhco, or (c) any statute, rule or regulation or any judgment,
order, writ, injunction or decree of any court, arbitrator,
mediator, administrative agency or governmental body, in each case
applicable to either Anuhco, or any of its properties or assets.
5.3 Commission Fees. In connection with this Agreement or
the transactions contemplated hereby, no broker, finder or similar
agent has been employed by or on behalf of Anuhco, and no person
with which Anuhco has had any dealings or communications of any
kind is entitled to any brokerage commission, finder's fee or any
similar compensation for which Stockholders would be liable.
5.4 Disclosure. No representation or warranty herein,
including the Schedules hereto prepared by Anuhco, nor any
information contained in the Exhibits to this Agreement or any
certificate, statement, or other document delivered by Anuhco
hereunder, contains any untrue statement of material fact or omits
to state a material fact necessary in order to make the statements
contained therein or herein, in light of the circumstances under
which they were made, not misleading.
6. Conduct of Business of the Company and Subsidiary.
Stockholders, jointly and severally, warrant and covenant that,
from and after the date hereof through the Closing, they will cause
the Company and Subsidiary to conduct their businesses as follows:
6.1 Business. The Company and Subsidiary will conduct and
operate their businesses diligently and substantially in the
ordinary course consistent with past practice so as to protect and
maintain such businesses and the goodwill they now enjoy. The
Company and Subsidiary will preserve intact their present business
organizations, keep available the services of their present
officers and employees, and make good faith efforts to preserve
their relationships with customers and others having business
dealings with them. Except with the written approval of Anuhco, no
Stockholder will execute, agree to, or allow to continue any
Related Party Transaction except those disclosed in Schedule 4.24.
6.2 Adverse Changes. Neither the Company nor Subsidiary will
take or omit to take any action which action or omission would
cause any adverse change to occur in any material respect in their
businesses, assets, liabilities, income, financial conditions,
results of operations or prospects or waive any statute of
limitations so as to expand any tax or other liability.
6.3 Maintenance of Properties, Permits, Licenses, Etc. The
Company and Subsidiary will maintain all of their properties,
assets, licenses and permits, used or useful in their businesses in
present or better repair, order, and condition, except for
reasonable wear and use and damage by fire and unavoidable casualty
(subject, however, to the provisions of Section 6.12).
6.4 Maintain Corporate Existence. The Company and Subsidiary
will maintain their corporate existences in good standing in their
state of incorporation and their due qualifications in good
standing in all jurisdictions in which they are qualified to do
business.
6.5 Capital Stock. Neither the Company nor Subsidiary will
make any change in their authorized, issued or outstanding capital
stock or other securities or grant any options or other right to
acquire, whether directly or contingently, any of their capital
stock or other securities.
6.6 Dividends. Neither the Company nor Subsidiary will
declare, set aside, or pay any dividend or make any redemption,
repurchase or other distribution in respect of their capital stock
and other securities.
6.7 Employment; Compensation; Benefits. Neither the Company
nor Subsidiary will enter into any employment contract, increase
the rate of compensation payable or to become payable by it to any
officer or any other employee, or accrue or pay to any of its
officers or employees any bonus, profit-sharing, retirement pay,
insurance, death benefit, fringe benefit or other compensation,
except that which shall have accrued in the ordinary course in
connection with increases in compensation of non-officer employees
or the operation of the existing employee benefit plans disclosed
in Schedule 4.20, none of which shall be terminated or cancelled
except as contemplated by this Agreement or as approved by Anuhco
in writing.
6.8 Liabilities and Obligations. Neither the Company nor
Subsidiary will incur or otherwise become liable for any
liabilities or obligations (direct or indirect, contingent or
fixed, matured or unmatured) of any material nature, whether
arising out of contract, tort, statute or otherwise, including
federal or state income tax liabilities, except (a) liabilities and
obligations which are in the ordinary course of business consistent
with past practice in prior periods and which do not have a
material adverse effect on their financial condition and (b)
liabilities and obligations fully covered by insurance other than
any retained amounts.
6.9 Capital Expenditures. Neither the Company nor Subsidiary
will, without the prior written approval of Anuhco, enter into or
make commitments of a capital expenditure nature in excess of
$5,000 in the aggregate.
6.10 Sale of Assets. Neither the Company nor Subsidiary will
sell or dispose of any of their assets other than in the ordinary
course consistent with past practice in prior periods.
6.11 Leases; Contracts. Neither the Company nor Subsidiary
will enter into any lease or do any act or omit to do any act, or
permit any act or omission to act, which act or omission will cause
a breach of or a default in any Contract.
6.12 Insurance. The Company and Subsidiary will maintain in
full force and effect all policies of insurance listed in Schedule
4.17. If any of the assets or properties owned or used by the
Company or Subsidiary are damaged or destroyed by fire or other
casualty, whether insured or uninsured, then, subject to the
rights, if any, of the lessors or mortgagees thereof, either the
Company or Subsidiary, as is the case, will promptly proceed with
the repair, restoration or replacement thereof in such manner and
at such location as Anuhco shall determine.
6.13 Books and Records. The Company and Subsidiary will
maintain their books and records in the manner in which they are
presently maintained. After the Closing, Seafield agrees not to
destroy any records or other documents maintained by it with
respect to the Company without 30 days prior written notice to
Anuhco and the Company, which notice shall provide to Anuhco and
the Company the opportunity to review, copy or take possession of
all or such portion of the records to be destroyed as they, in
their discretion, shall determine.
6.14 Compliance with the Laws and Regulations. The Company
and Subsidiary will operate their businesses in compliance in all
material respects with all laws, rules and regulations applicable
to them and to the conduct of their businesses.
6.15 Encumbrances. Except for Permitted Liens, neither the
Company nor Subsidiary will mortgage, pledge or otherwise subject
to any lien, security interest, encumbrance or charge of any nature
any of their property or assets, or become committed so to do, or
permit or suffer any of such property or assets to become subject
to any mortgage, pledge, lien, security interest, encumbrance or
charge of any nature.
6.16 Amendment to Articles of Incorporation and By-Laws.
Neither the Company nor Subsidiary will amend its Articles of
Incorporation or By-Laws.
7. Covenants of the Stockholders and Anuhco. Each Stockholder and
Anuhco covenant and agree to and with each other as follows:
7.1 Update of Information. Between the date hereof and the
Closing, if this Agreement is not executed at Closing, the
Stockholders will promptly disclose to Anuhco in writing, and
Anuhco will promptly disclose to Stockholders in writing,
information of which they have knowledge (i) concerning any event
that would render any representation or warranty of the
Stockholders or Anuhco, respectively, untrue if made as of the date
of such event, (ii) which renders any information set forth in the
Exhibits or Schedules to be no longer correct in all material
respects or (iii) which is known to arise after the date hereof and
which would have been required to be included in the Exhibits and
Schedules if such information had existed on the date hereof.
7.2 Access to Business and Records. Between the date hereof
and the Closing, Anuhco and its officers, employees, attorneys,
accountants and agents shall have full reasonable access to and the
right to inspect, audit and copy the books, records, contracts,
properties, and assets of the Company and Subsidiary, and to
consult with officers, employees, attorneys, accountants and agents
of the Company and Subsidiary.
7.3 Efforts to Consummate. Subject to the terms and
provisions of this Agreement, each of the parties shall use its or
his best efforts to take or cause to be taken all action and to do
or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective,
on or before May 31, 1995 the transactions contemplated hereby,
including, without limitation, the obtaining of all consents,
authorizations, orders and approvals of any third party, whether
private or governmental, required or appropriate in connection with
such parties' performance of such transactions, and each of the
parties hereto shall cooperate with the others in all of the
foregoing. If the parties are unable to consummate this
transaction on or before May 31, 1995 neither party shall be
obligated to pursue or close this transaction beyond such date.
7.4 Non-Competition.
(a) For and in consideration of Anuhco's agreement to
acquire Seafield's stock in the Company pursuant to this Agreement,
Seafield agrees, whether acting directly or indirectly,
individually or in concert with others, or through the medium of a
corporation, partnership, proprietorship, syndication, association,
joint venture, or otherwise, for five years from the Closing,
within the states in which the Company is then conducting its
business, not to compete with the Company or Subsidiary, or solicit
or induce any employee, customer or potential customer of the
Company to terminate his or its relationship with the Company or
refrain from doing business with it.
(b) Seafield acknowledges that the provisions of Section
7.4(a) are reasonable and necessary to protect the legitimate
interests of Anuhco and, after the Closing, the Company and
Subsidiary, and that any violation of any provision of such Section
7.4(a) will cause irreparable injury to Anuhco and the Company.
Seafield acknowledges that Anuhco and the Company are entitled to
appropriate injunctive relief in any court of competent
jurisdiction to enforce their rights hereunder, in addition to any
other rights available to them at law or in equity, and further
agrees that in the event any court of competent jurisdiction shall
finally hold that any provision of Section 7.4(a) is void or
constitutes an unreasonable restriction, the provisions of Section
7.4(a) shall not be rendered void but shall apply with respect to
such extent as such court may judicially determine constitutes a
reasonable restriction under the circumstances.
7.5 Confidentiality. From and after the Closing, Seafield
will keep secret and confidential all trade secrets and
confidential information heretofore or hereafter possessed by it
concerning the Company, and further agrees that it will at no time
use for any purpose whatsoever or disclose to any person, firm or
corporation (other than the Company) any such information, except
to the extent that such information is no longer a trade secret or
confidential. Unless this Agreement is fully consummated, Anuhco
will (i) keep secret and confidential all trade secrets and
confidential information heretofore or hereafter acquired by it
concerning the Company, and (ii) will at no time use or disclose
any such information to any person, firm or corporation, except to
the extent that such information is no longer a trade secret or
confidential.
7.6 Public Announcement. No party hereto shall, prior to
Closing, make any public announcement regarding the transaction
contemplated hereby without prior notice to the other parties
hereto.
7.7 Adjustments Because of Regulatory Disapproval.
(a) The parties agree that in the event any license or
permit required in the operation of the Company's business is
revoked, suspended, terminated or otherwise affected as a result of
the transaction contemplated hereby, or any act occurring before
the Closing, the Purchase Price shall be adjusted and the
corresponding amount immediately repaid by Stockholders, pro-rata,
to Anuhco, in accordance with the following procedure: For each
month, or major fraction thereof, not to exceed 12 months, in which
any such license shall be so suspended, terminated or otherwise so
affected as to prevent the Company from conducting its normal
business in the state issuing the same, the purchase price shall be
reduced, and the Stockholders shall repay to Anuhco, an amount
equal to the actual loss incurred by the Company which for purposes
of this Agreement shall be defined as the amount of loans in place
by the Company in the jurisdiction in which the license or permit
is revoked, suspended, terminated or otherwise affected multiplied
by 6% designed to represent the financing spread of the Company for
the period between revocation, suspension, or termination and the
date that a validly issued permit or license is reinstated. In no
event shall the purchase price adjustment exceed $500,000. This
purchase price adjustment shall not be subject to or reduce the
Maximum Claim Amount set forth in Section 13.5, nor shall the
purchase price adjustment be subject to the $50,000 threshold set
forth in Section 13.5. In the event of any such suspension,
termination or other affect, Anuhco and the Company agree to use
their best efforts and all due diligence to promptly obtain
re-licensure.
(b) Stockholders acknowledge that Company does not
currently have a properly and validly issued license or permit
which permits the operation of the Company's business as now and in
the past conducted in Arizona. In addition to the purchase price
adjustment set forth in Section 7.7 and not subject to the maximum
liability set forth in either Section 7.7(a) or Section 13.5,
Stockholders agree to pay for all fees, costs, fines and expenses
incurred in securing or reinstating a properly and validly issued
license or permit which permits the operation of the Company's
business as now and in the past conducted in Arizona.
7.8 Pension Plans.
(a) Stockholders shall cause the Seafield 401(K) Savings
Plan and the Seafield Money Purchase Pension Plan ("Seafield
Plans") to provide (1) for full vesting of the accounts of all
employees of Company in the Seafield Plans as of the Closing, (2)
for retention of the account balances of all employees of Company
in the Seafield Plans until the "trustee to trustee" transfer
hereinafter described, (3) for a prohibition of new participant
plan loans after the Closing for employees of the Company, and (4)
for the "trustee to trustee" transfer to be made as hereinafter
described. Stockholders shall cause a "trustee to trustee"
transfer of the account balances of all employees of Company who
after the Closing remain employees of Company and participants in
its qualified employee pension benefit plans, from the trustee of
the Seafield 401(K) Savings Plan and the trustee of the Seafield
Money Purchase Pension Plan to the trustee(s) of qualified employee
pension benefit plans established by Company on or after the
Closing. Anuhco agrees to cause the Company to establish such
qualified employee pension benefit plans within 30 days of Closing
and to apply for and secure within the remedial amendment period of
Code Section 401(b) favorable determination letters from the
Internal Revenue Service on such plans. Such "trustee to trustee"
transfer shall occur as soon as practical after the Seafield Plans'
valuation date which next follows the earlier of (i) Company's
receipt of favorable determination letters on its newly established
plans, (ii) nine months after the Closing (iii) or termination of
the Seafield Plans. The Stockholders shall ensure that the
transfer satisfies all requirements of Code Section 414(l) and the
regulations thereunder, and Anuhco shall ensure that the transfer
satisfies all requirements of Code Section 411(d) and the
regulations thereunder. Such transferred account balances shall be
in amounts equal to the entire account balances of such employees
of the Company as of the valuation date described above. Company
agrees to reimburse Seafield for all additional expenses borne by
Seafield resulting from the retention of the account balances of
employees of Company after the Closing as set forth above.
Stockholders, Anuhco and Company acknowledge that Company shall no
longer be a Participating Employer in the Seafield Plans after the
Closing and shall execute such documents as necessary to accomplish
that result. The Company agrees to cooperate with the Seafield
Plans' plan administrator to payroll deduct after the Closing all
outstanding participant loan payments when due and owing by
employees of Company.
(b) Anuhco shall not cause Company or Subsidiary to take
any action with respect to the BMA Agency Software Division, Inc.
Profit Sharing Plan and Trust (a/k/a Agency Resources, Inc. Profit
Sharing Plan) without the express written consent of Stockholders,
which consent shall not be unreasonably withheld. Stockholders
shall take all necessary actions, on behalf of Company (excluding,
however execution of documents), to complete the termination of the
BMA Agency Software Division, Inc. Profit Sharing Plan and Trust
(a/k/a Agency Resources, Inc. Profit Sharing Plan) as soon as
practical, and Company shall cooperate with Stockholders for such
purpose.
7.8 Welfare Plans.
(a) The parties acknowledge and agree that certain
health and welfare benefits are presently provided by the Company
to its employees under insurance policies between the Company and
Business Mens Assurance Company of America ("BMA"), that such
policies are group experienced rated with certain health and
welfare policies between Seafield and/or Seafield's Subsidiaries
and BMA, and that under such policies an experience credit may be
paid or made available by BMA based upon the group experience of
all such policies. The parties agree that any experience credit,
which may be paid or made available by BMA under all or any such
policies for policy years ending on or before July 31, 1995 is, and
shall remain, the sole property of Seafield and/or Seafield's
Subsidiaries, and Company waives any rights to such credit.
(b) The parties acknowledge that Seafield and its
Subsidiaries provide certain employee health benefits under an
insurance policy with BMA which is subject to a minimum premium
funding amendment. The parties also acknowledge that the Company's
health insurance policy with BMA has been funded under such minimum
premium funding amendment. The parties agree that any premium
adjustment (increase or decrease) under the minimum premium funding
amendment resulting from the claims of the Company's employees,
former employees or their dependents incurred on or prior to the
Closing shall be the sole responsibility of Seafield to BMA and/or,
if applicable, be paid or credited to the sole benefit of Seafield
by BMA. The parties further agree that any premium adjustment
under the minimum premium funding amendment or other costs
resulting from claims incurred by the Company's employees, former
employees or their dependents after the Closing shall be the sole
responsibility of the Company, and Anuhco agrees to cause the
Company to timely pay to BMA such amounts as determined by BMA.
7.10 Line of Credit. Anuhco agrees that (a) Seafield will,
at the Closing, terminate the line of credit which it has
heretofore provided to the Company, and that (b) it will repay to
Seafield any amounts drawn by the Company upon such line of credit
as of the Closing.
7.11 Income Tax Matters and Agreements.
(a) Consolidated federal and state income tax returns.
Under that certain tax sharing agreement entered into by and among
Seafield, Company and the other Seafield subsidiaries on August 1,
1990 (the "Tax Sharing Agreement"), Company is responsible for the
payment of its share of consolidated federal income taxes and any
combined, consolidated or unitary state income taxes for all tax
years or portions of tax years in which Company joins with Seafield
in such income tax returns. Company's rights and obligations under
the Tax Sharing Agreement shall terminate upon the payment by
Company to Seafield of the amount accrued on the Company's books,
as of the Closing, for federal income tax and state income taxes
with respect to which the Company joins with Seafield in filing of
returns therefor, which payment Anuhco shall cause the Company to
make promptly after finalization of such accruals. The parties
have agreed that the accrued amount of federal income tax through
the Closing is $30,911. After said payment is made, Company shall
have no further payment obligations under the Tax Sharing Agreement
for amounts due to Seafield or any taxing authority and shall have
no ownership rights in any overpayments Company may have made to
Seafield or any taxing authority under the Tax Sharing Agreement,
or in any amounts that may be due to Company from Seafield under
the Tax Sharing Agreement for reasons including, without
limitation, any net operating losses used by the Seafield
consolidated group attributable to Company tax items for all tax
periods ending on or prior to the Closing Date and after the
Closing Date. Furthermore and regardless of any provision of this
Agreement to the contrary notwithstanding, any adjustments to such
income tax returns for tax periods ending on or prior to the
Closing Date and after the Closing Date made after their original
filing which are attributable to Company tax items and which result
in either an assessment or a refund of state or federal income tax
will be paid or collected by Seafield. Company will have no
further payment obligations resulting from any such deficiency or
ownership rights in any refunds resulting from such adjustments.
Company shall have no right to amend or otherwise alter the
Seafield consolidated federal income tax returns or state combined,
consolidated or unitary income tax returns for any reason
including, without limitation, to carry back Company post Closing
net operating losses into such returns.
(b) Separately filed state and local income and
franchise tax returns. Company shall file all required separate
state and local income and franchise tax returns and shall pay any
and all applicable income and franchise taxes due and owing for all
separate return tax periods ending both on or before the Closing
Date and after the Closing Date. Provided, however, that in the
event Company, with Seafield's written approval, or any taxing
authority makes any adjustments to such Company tax returns for tax
periods ending on or prior to the Closing Date which result in an
assessment or refund of taxes, Seafield shall reimburse Company for
any said taxes paid by Company and Company shall remit to Seafield
any refund received by Company attributable to such tax returns.
Said payment or remittance shall be made within five (5) days after
payment of taxes or receipt of a refund by Company as the case may
be. Company shall not amend or otherwise adjust any such tax
returns for any tax periods ending on or prior to the Closing Date
without Seafield's written approval.
(c) Audits.
(1) Consolidated Audits. In the event of a
consolidated federal income tax audit or state combined,
consolidated or unitary income tax audit, Anuhco shall cause
Company to cooperate with and assist Seafield in any negotiations,
appeals or other proceedings with the Internal Revenue Service and
other taxing authorities and shall provide Seafield with any
documents or other information requested by Seafield. Consistent
with such assistance and cooperation, Anuhco shall cause Company to
make available to Seafield all reasonably necessary records and
documents of Company including attorney and accountant privileged
and confidential information necessary to respond to and defend
such audits and shall not waive Company's privileges with respect
to such information unless requested to do so by Seafield.
Seafield shall take all actions necessary to maintain the privilege
with respect to privileged documents supplied to it hereunder, and
shall not waive such privilege without prior notice to and consent
of the Company, which consent shall not be unreasonably withheld.
(2) Separate Return Audits. In the event Company
is notified of a review or audit of a state or local income or
franchise tax return (collectively the "Audit Notice"), Company
shall provide Seafield with a copy of the Audit Notice within five
(5) days of its receipt. Company shall permit Seafield to
participate in the audit review, appeals, negotiations or any other
proceedings with any and all tax authorities affecting Company's
state or local income or franchise tax returns for all tax periods
ending on or prior to the Closing Date. Company shall cooperate
fully with Seafield in any and all information required to
successfully complete such proceedings. Company shall not enter
into any closing agreements, compromises, waivers, protests,
extensions, elections, agreements or any other documents affecting
Company's state or loan income or franchise tax liability without
written approval from Seafield.
7.13 Accreditation, Due Diligence and Sophistication Matters.
(a) Anuhco has been provided an opportunity to ask
questions of, and Anuhco has received answers thereto satisfactory
to it from the Stockholders and their representatives regarding the
terms and conditions of this Agreement and other matters pertaining
to this transaction, and Anuhco has obtained all additional
information requested of the Stockholders and their
representatives. Anuhco has investigated and is familiar with the
affairs, financial condition and prospects of the Company and
Subsidiary and has been given sufficient access to and has acquired
sufficient information including the Schedules to this Agreement
and all other information and documents as requested by Anuhco
including but not limited to financial information, corporate
records, tax returns, contracts, forms, leases and premium finance
contracts and related documents about the Company and Subsidiary to
reach an informed and knowledgeable decision to acquire the Shares.
(b) Anuhco has such knowledge and experience in
financial affairs that it is capable of evaluating the merits and
risks of this transaction. Anuhco has not relied in connection
with this transaction upon any representations, warranties or
agreements other than those set forth in this Agreement and the
Schedules and Exhibits hereto. Anuhco's financial situation is
such that it can afford to bear the economic risk of holding the
Shares for an indefinite period of time.
(c) Anuhco is acquiring the Shares pursuant to this
Agreement for its own account and not with a view to or for sale in
connection with any distribution of all or any part of the Shares.
Anuhco acknowledges the Stockholders' understanding that the sale
of the Shares hereunder is intended to be exempt from registration
under the Securities Act of 1933, as amended (the "Securities
Act").
(d) Anuhco is an "Accredited Investor" within the
definitions set forth in Securities Act Rule 501(a).
(e) No stockholder or any officer, employee, agent or
affiliate of any Stockholder has made an representations or
warranties to Anuhco, other as set forth herein.
(f) The Stockholders shall have no responsibility or
liability for the Company's financial status or financial results
of operations after Closing. Anuhco shall not have any rights or
remedies, except as provided herein, against the Stockholders based
on the status or results of the Company after Closing, and no other
representations or warranties are being made by Stockholders than
those set forth herein. Stockholders further disclaim any
responsibility or liability with respect to projections made prior
to Closing of financial results after Closing and Anuhco
acknowledges that it has not relied on such projections in making
the investment reflected herein.
(g) Nothing contained in this Section 7.12 is intended
to limit in any way (i) any representation, warranty or covenant of
the Stockholders, contained herein or in any document delivered
pursuant hereto, or (ii) Anuhco's right to rely thereon.
7.13 Access to Company Records Post Closing. Anuhco shall
cause Company to provide all reasonably necessary access and
provide copies of business records or documents of Company to
Stockholders, at their cost and expense, for any reasonably
necessary business or regulatory need of Stockholders post closing.
Anuhco will provide to Stockholders copies of the Company's May 31,
1995, financial statements promptly after the same are available in
final form. Such access shall include attorney and accountant
privileged or confidential information. Stockholders shall take
all actions necessary to maintain the privilege with respect to
privileged documents supplied to it hereunder, and shall not waive
such privilege without prior notice to and consent of the Company
which shall not be unreasonably withheld.
7.14 Related Party Agreements. All agreements between or
among Company, Seafield or McCarter shall terminate as of the
Closing unless otherwise expressly provided herein. Any transfer
between or among Company, Seafield, or McCarter occurring under
such agreements or otherwise as of the Closing shall not violate
any of the Representations or Warranties of the Stockholders.
8. Conditions to Obligations of Anuhco to Consummate Acquisition.
The obligations of Anuhco to consummate the transactions
provided for in this Agreement shall be subject to satisfaction, on
or before the Closing, of the following conditions:
8.1 Representations and Warranties True at Closing. All
representations and warranties of the Stockholders shall be true on
and as of the Closing as though such representations and warranties
were made at and as of such date, except as otherwise expressly
stated herein.
8.2 Opinion of Counsel for Stockholders. Anuhco shall have
received an opinion of counsel for Stockholders, reasonably
satisfactory to Anuhco and its counsel.
8.3 Resignations. Anuhco shall have received signed
resignations of such of the directors of the Company as Anuhco
designates.
8.4 Consulting and Assignment Agreement. Seafield shall have
executed the Consulting and Assignment Agreement in the form of
Exhibit 1.
8.5 Employment Agreement. McCarter shall have executed the
Employment Agreement in the form of Exhibit 2.
8.6 Bank Financing. Bank of America shall either a) have
agreed in writing to amendments to the Receivables Purchase
Agreement of July 16, 1993, as set forth in the letter of such Bank
to McCarter, dated May 11, 1995, and attached hereto as Exhibit 3;
or b) Anuhco and Stockholders shall have mutually agreed to extend
the period of time within which Bank of America shall make such
agreement.
8.7 Licenses, Permits, Etc. Each state or other governmental
unit identified on Schedule 8.7 by which the Company, as of the
date hereof, is licensed to conduct its business, and which shall
require, as a condition of such license, prior notice or
application for approval of the transactions contemplated hereby,
shall be so notified or a request for approval shall be filed with
such state or governmental unit prior to the Closing.
8.8 Performance of Covenants. Stockholders shall have
performed each and every obligation to be performed by them
hereunder at or before the Closing.
9. Conditions to Obligation of Stockholders to Consummate the
Acquisition.
The obligation of Stockholders to consummate this
transaction shall be subject to satisfaction, on or prior to the
Closing, of the following conditions:
9.1 Representations and Warranties True at Closing. The
representations and warranties of Anuhco shall be true on and as of
the Closing, as though such representations and warranties were
made at and as of such date, except as is otherwise expressly
contemplated herein.
9.2 Opinion of Counsel for Anuhco. Stockholders shall have
received an opinion of counsel for Anuhco, reasonably satisfactory
to Stockholders and their counsel.
9.3 Consulting and Employment Agreements. Anuhco shall have
executed, or caused the Company to execute and deliver, the
Consulting and Assignment Agreement and Employment Agreement
referred to in Sections 8.4 and 8.5 hereof.
9.4 Performance of Covenants. Anuhco shall have performed
each and every obligation to be performed by it hereunder at or
before the Closing.
9.5 Bank Financing. Seafield shall have received from Bank
of America an unconditional release from any and all liability,
fixed or contingent, under the Receivables Purchase Agreement dated
July 16, 1993, among Company, Seafield and Bank of America.
10. Termination.
On or prior to Closing
(a) Stockholders, by written notice to Anuhco, may
terminate this Agreement in the event that any of the conditions
precedent contained in Section 9 hereof to the performance of their
obligations which are to be performed at or prior to such date
shall not have been fulfilled prior to and cannot be fulfilled
concurrent with the Closing and shall not have been waived by
Stockholders, which termination shall not prejudice any claim for
damages or other relief which Stockholders may have at law or in
equity against Anuhco; and
(b) Anuhco, by written notice to Stockholders, may
terminate this Agreement in the event that any of the conditions
precedent contained in Section 8 hereof to the performance of
Anuhco's obligations shall not have been fulfilled prior to and
cannot be fulfilled concurrent with the Closing and shall not have
been waived by Anuhco, which termination shall not prejudice any
claim for damages or other relief which Anuhco may have at law or
in equity against Stockholders.
(c) Except as otherwise provided herein, each of the
parties to this Agreement shall pay all of its or his expenses
incurred in connection with this Agreement and the transactions
contemplated hereby, including without limitation the expenses of
lawyers, accountants, investment bankers, appraisers, environmental
consultants, and other advisors.
(d) Either party may terminate this Agreement if the
transaction contemplated herein does not close on or before May 31,
1995.
11. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, but all of
such counterparts together shall be deemed to be one and the same
instrument. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any
of the other counterparts.
12. Contents of Agreement, Parties in Interest, Assignment, Etc.
This Agreement and the Exhibits and Schedules which are
attached hereto and are incorporated herein set forth the entire
understanding of the parties with respect to the subject matter
hereof. Any previous agreements or understandings between the
parties regarding the subject matter hereof, including without
limitation, the Confidentiality Agreement and Letter of Intent, are
merged into and superseded by this Agreement; provided however that
if this transaction is not closed Anuhco will continue to be bound
by the confidentiality terms and conditions of the Letter of
Intent. This Agreement may not be assigned without the written
consent of the parties. All representations, warranties,
covenants, terms and conditions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing herein express or implied is intended or shall be construed
to confer upon or to give any person, other than the parties and
their respective successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
13. Indemnification.
13.1 General Indemnification. Subject to the terms and
conditions hereinafter set forth, the Company, Subsidiary and
Anuhco, and their respective officers and directors, and the
successors and assigns of all thereof, shall be indemnified by
Stockholders, jointly and severally, from and against any and all
damages, losses, liabilities and expenses resulting from (a) the
continued existence of, and the completion of the termination of,
the BMA Agency Software Division, Inc. Profit Sharing Plan and
Trust (a/k/a Agency Resources, Inc. Profit Sharing Plan) and/or the
failure to maintain and operate said plan in material compliance
with Section 401 of the Code and/or ERISA, (b) any inaccuracy in or
breach or nonfulfillment of any representation, warranty,
obligation, covenant, or agreement made or undertaken in or under
this Agreement by Stockholders; (c) any third party claims arising
from or as the result of any inaccuracy in or breach or
nonfulfillment of any of the foregoing; and (d) all actions, suits,
judgments, costs and expenses (including, without limitation,
attorneys' fees) incident to items (a), (b) or (c) of this
sentence. Subject to the terms and conditions hereinafter set
forth, Stockholders, fiduciaries of the Seafield Plans, and their
successors, representatives and permitted assigns, shall be
indemnified by Anuhco from and against any and all damages, losses,
liabilities and expenses resulting from (a) any inaccuracy in or
breach or nonfulfillment of any representation, warranty,
obligation, covenant or agreement made or undertaken in or under
this Agreement by Anuhco; (b) any third party claims arising from
or as the result of any inaccuracy in or breach or nonfulfillment
of any of the foregoing; (c) claims made by, or on behalf of,
employees of Company, or third parties but only to the extent
claiming on behalf of, or as beneficiaries of, employees of
Company, directly or indirectly relating or resulting from the
retention of the account balances of employees of Company in the
Seafield Plans after the Closing and until the "trustee to trustee"
transfer described in Section 7.8 including, without limitation,
claims relating to the administration of such account balances for
such period; and (d) all actions, suits, judgments, costs and
expenses (including, without limitation, attorneys' fees) incident
to items (a), (b) or (c) of this sentence.
13.2 Claims Procedure. Claims for indemnification hereunder
shall be made as follows:
(a) Third Party Claims. In the event that any claim or
demand for which any party hereto would be entitled to
indemnification under this Agreement is asserted or sought to be
collected by a third party, the party(ies) seeking indemnity shall
give a Claim Notice (as described in Section 13.3 hereof) to the
party or parties from whom indemnity is sought. The party(ies)
from whom indemnity is sought shall have thirty (30) days from the
date of delivery of the Claim Notice (the "Notice Period") to
notify the party(ies) seeking indemnity whether or not the right to
indemnity for such claim is disputed and, if disputed, the reasons
therefor.
(1) If the right to indemnity is not disputed by
the party(ies) from whom indemnity is sought, such party(ies) shall
assume the control and defense and/or settlement of such claim or
demand, and the amount of any settlement or judgment and the costs
and expenses of such defense shall be paid by such party(ies). If
the party(ies) seeking indemnity shall desire to participate in any
such defense, such party(ies) may do so at its or their sole cost
and expense, in which event no settlement of any claim or demand
which would adversely affect the rights of the party(ies) seeking
indemnity may be made without the written consent(s) of such
party(ies), which consent(s) may not be unreasonably withheld.
Without limiting the generality of the foregoing, it shall not be
deemed unreasonable to withhold consent to a settlement involving
injunctive or other relief against the party(ies) seeking indemnity
or their respective assets, employees or businesses. The
party(ies) seeking indemnity shall be kept fully informed of the
status of any such claim or demand at all stages thereof,
regardless of whether or not they participate in any such defense.
(2) If the right to indemnity is disputed by the
party(ies) from whom indemnity is sought or if such party(ies)
shall fail to respond within the Notice Period, the party(ies)
seeking indemnity shall have the right to control the defense
and/or settlement of such claim or demand, and the amount of any
settlement or judgment and the costs and expenses of such defense
(including, without limitation, attorneys' fees incurred in
connection therewith) may be the subject of a claim for
indemnification under Section 13.2(b) hereof. Nothing herein
contained shall prohibit or limit the right of the party(ies)
seeking indemnity hereunder to pursue such legal remedies as may be
available to it or them to enforce such right of indemnity prior to
or after the resolution of the third party's claim or demand.
(3) The party(ies) seeking indemnity shall make
available to the party(ies) from whom indemnity is sought and their
attorneys and accountants all books and records of the party(ies)
seeking indemnity relating to any such claim or demand and the
parties agree to render each other such assistance as they may
reasonably require in order to ensure the proper and adequate
defense of any such claim or demand.
(b) Non-Third Party and Other Claims. In the event of
a claim or demand for which any party hereto would be entitled to
indemnification under this Agreement which does not involve a claim
or demand being asserted or sought to be collected by a third
party, the party(ies) seeking indemnity shall give a Claim Notice,
or in the case of claims or demands which have proceeded in the
manner described in Section 13.2(a)(2), a second Claim Notice, with
respect to such claim or demand to the party(ies) from whom
indemnity is sought. Unless disputed by the party(ies) from whom
indemnity is sought by written notice within thirty (30) days of
receipt of the claim notice to the party(ies) seeking indemnity
stating the reasons therefor, each claim under this Section shall
be paid within forty-five (45) days after the date of receipt of
the Claim Notice therefor. If any claim under this Section shall
not be paid within such forty-five (45) day period, or if the
party(ies) from whom indemnity is sought dispute such claim by
written notices within such thirty (30) day period to the
party(ies) seeking indemnity stating the reasons therefor, the
party(ies) seeking indemnity shall have the right to commence legal
proceedings for the enforcement of their rights hereunder, and
shall be entitled to recover interest thereon at the rate of ten
percent (10%) per year.
13.3 Timing of Claim Notice. Each Claim Notice shall be
given by the party(ies) seeking indemnity as promptly as
practicable after such party(ies) becomes or become aware of the
claim or demand and the facts indicating that a claim for
indemnification in respect of the same may be warranted; provided,
however, that no such claim notice may be sent after the expiration
of the time period provided in Section 13.5 herein. Each Claim
Notice shall specify the nature of the claim or demand, the
applicable provision(s) of this Agreement or other instrument under
which the claim for indemnity arising and the amount or the
estimated amount thereof. No failure or delay in giving a Claim
Notice and no failure to include any specific information or any
reference to the provisions of this Agreement or other instrument
under which the claim for indemnification arises shall affect the
obligation of the party(ies) from whom indemnification is sought,
except to the extent that such failure or delay shall adversely
affect the ability of such party(ies) to defend, settle or satisfy
the claim or demand.
13.4 Change of Control of Seafield. If Seafield shall, prior
to the expiration of its representations and warranties or prior to
final resolution of any claims for indemnity made against it
pursuant to this Section 13, be a party to a reorganization in
which it is not the surviving corporation, or be subject to a
change in its control, Seafield shall, unless the surviving
corporation or new controlling person, as the case may be, shall in
writing confirm to Anuhco the continuing liability of Seafield or
such survivor by virtue of the terms hereof, deposit in escrow,
with a bank in the Greater Kansas City Metropolitan Area as Anuhco
shall specify, the sum of $250,000, as security for, and until the
expiration of, its indemnity obligations hereunder, but in no event
after expiration of the time period provided in Section 13.5,
unless a claim is pending and unresolved.
13.5 Indemnity Claims. The maximum aggregate joint and
several liability of Stockholders for Damages incurred by Anuhco
with respect to claims arising from breaches of warranty or
representation, together with related legal expenses ("Warranty
Claims") shall be $500,000 (the "Maximum Claim Amount"). All
Warranty Claims against Stockholders under this Article 13 must be
asserted in writing by Purchaser within one (1) year from the
Closing Date, except that claims for breach of any warranty with
respect to compliance by the Company with the Code or ERISA may be
brought within the time provided in the statute of limitation
applicable thereto. Anuhco may not make any Warranty Claims
against Stockholders until Anuhco has incurred Damages with respect
to Warranty Claims that collectively exceed $50,000 in the
aggregate. Indemnity claims with respect to a breach by
Stockholders of any covenant (as opposed to an alleged breach of
warranty or representation) contained herein or with respect to the
BMA Agency Software Division, Inc. Profit Sharing Plan and Trust
(a/k/a Agency Resources, Inc. Profit Sharing Plan), shall not be
subject to such Maximum Claim Amount, or the $50,000 threshold, but
shall be brought within the above-mentioned one year period, except
as earlier herein provided with respect to tax and ERISA matters.
Additionally, indemnity claims with respect to the purchase price
adjustment set forth in Section 7.7(a) and for fees, costs and
expenses incurred in securing or reinstating a license to operate
in Arizona as set forth in Section 7.7(b) shall not be subject to
such Maximum Claim Amount, or the $50,000 threshold.
14. Notices. Any notices or other communications required or
permitted hereunder shall be deemed to have been given when sent by
certified or registered mail, postage prepaid, addressed as
follows:
if to Seafield, to: James R. Seward
Seafield Capital Corporation
2600 Grand Avenue, Suite 500
P.O. Box 410949
Kansas City, MO 64141
with a copy to: James A. Polsinelli, Esq.
Polsinelli, White, Vardeman
& Shalton
700 W. 47th Street, Suite 1000
Kansas City, MO 64112
if to McCarter: 2340 Guilford Lane
Mission Hills, KS 66208
and if to Anuhco: Anuhco, Inc.
Attn: President
9393 W. 110th Street, Suite 100
Overland Park, KS 66210
with a copy to: Kent E. Whittaker, Esq.
Hillix, Brewer, Hoffhaus,
Whittaker & Wright, L.L.C.
2420 Pershing Road, Suite 400
Kansas City, MO 64108
or to such other persons and addresses as have been furnished by
either party to the other in writing. No notice, waiver, consent
or approval required or permitted hereunder shall be deemed
effective unless given in writing.
15. Confidentiality. Until the Closing, (i) any party may make
such disclosures as it reasonably considers are required by law,
but each party will notify the other parties in advance of any such
disclosure, (ii) advisors to the parties may place "tombstone"
notices of the transaction in financial and legal newspapers and
periodicals and (iii) the parties may disclose this Agreement, but
not its terms, in such manner as such party deems in the exercise
of good faith necessary or appropriate. In the event that the
transactions contemplated by this Agreement are not consummated for
any reason whatsoever, the parties hereto agree not to disclose or
use any confidential information they may have concerning the
affairs of the other parties, except for information which is
required by law to be disclosed. Confidential information
includes, but is not limited to: customer lists and files, prices
and costs, business and financial records, surveys, reports, plans,
proposals, financial information, information relating to personnel
contracts, stock ownership, liabilities and litigation.
16. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Kansas
without reference or regard to the conflicts of laws and rules of
said state.
IN WITNESS WHEREOF, this Agreement has been executed on the
day and year first above written.
ANUHCO, INC.,
By: /s/ Timothy P. O'Neil
Timothy P. O'Neil
SEAFIELD CAPITAL CORPORATION
By: /s/ James R. Seward
James R. Seward
/s/ C. Ted McCarter
C. Ted McCarter
</PAGE>
Exhibit 10(a)
CONSULTING AND ASSIGNMENT AGREEMENT
This Consulting Agreement is entered into this 31st day of
May, 1995, by and between Seafield Capital Corporation, a Missouri
corporation ("Seafield"), and Anuhco, Inc., a Delaware corporation
("Anuhco").
WITNESSETH:
WHEREAS, the parties hereto have entered into a Stock Purchase
Agreement (the "Agreement"), providing for the sale from Seafield
to Anuhco of shares of capital stock of Agency Premium Resource,
Inc., a Kansas corporation (the "Company"), and
WHEREAS, prior to such sale Seafield has been involved in and
familiar with the business of the Company, including membership on
the Company's Board of Directors of three executive officers of
Seafield, and
WHEREAS, Seafield has also provided to or assisted the Company
with a number of matters involved in the Company's operations,
including, but not limited to negotiation and administration of
bank financing, software development, insurance, employee benefit
plans, taxes, internal audit and controls and the audit of
financial statements (collectively the "Consulting Services"), and
WHEREAS, Anuhco desires to have the services of Seafield
available for the benefit of the Company, and Seafield is willing
to consult on the same, and
WHEREAS, Seafield has agreed to assign to the Company all of
its ownership of and rights in computer software.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements hereinafter set forth, the parties hereto
do hereby as follows:
1. Anuhco hereby engages Seafield, upon the terms and conditions
herein set forth, to consult on the services herein specified, and
Seafield accepts such engagement.
2. Seafield agrees, through one or more of its officers, to
provide to the Company such advise with respect to the Consulting
Services as may be reasonably requested from time to time by the
chief executive officers of the Company or Anuhco, and further
agrees to take all action necessary to transfer the assets and
liabilities of the Company's employee benefit plans, and assist in
obtaining required governmental approvals thereof, as set forth in
the Agreement.
3. Seafield agrees to assign to the Company any and all of its
ownership of and rights in the computer software referred to in
Section 2 of the Agreement.
4. In consideration of the agreement to provide such consultation
and the assignment of the computer software, Anuhco agrees to pay
to Seafield, contemporaneously with the execution hereof, the sum
of $1 million in cash, and to additionally hereafter pay, during
the term hereof, all reasonable travel and other related expenses
incurred by Seafield at the request of Anuhco or the Company and
incident to Consulting Services provided hereunder.
5. The term of this Agreement shall be three (3) years from and
after the date hereof.
6. This Agreement constitutes the full and complete agreement of
the parties with respect to the subject matter hereof, and may be
modified or amended only by a subsequent written and executed
document.
7. The rights and obligations of the parties under this Agreement
shall inure to the benefit of and be enforceable by the parties
hereto and the Company, and the respective successors and assigns
of all thereof.
8. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas.
IN WITNESS WHEREOF, the parties hereto have caused this
Consulting and Assignment Agreement to be executed as of the day
and year first above written.
SEAFIELD CAPITAL CORPORATION
By: /s/ James R. Seward
James R. Seward
ANUHCO, INC.
By: /s/ Timothy P. O'Neil
Timothy P. O'Neil
</PAGE>
