Filed under SEC
Rule 424 (b)(2)
Registration No. 33-44271
HILB, ROGAL AND HAMILTON COMPANY
SUPPLEMENT TO
PROSPECTUS DATED FEBRUARY 12, 1992
RELATING TO ACQUISITION OF
GENERAL INSURANCE AGENCY, INC.
The following information is furnished to supplement and complete the
information contained in the Prospectus dated February 12, 1992 ("Prospectus"),
relating to the offering of shares of the Common Stock of Hilb, Rogal and
Hamilton Company ("Company") to the shareholders of General Insurance Agency,
Inc. ("General") of Grand Rapids, Michigan to consummate the merger of
General and the Company.
Terms of the Transaction
(a) (1) Effective November 1, 1995, a subsidiary of the Company will
consummate an Agreement of Merger with General whereby the shareholders of
General will receive 26,600 shares of Common Stock of the Company ("Shares")
plus two future cash payments subject to (i) all necessary corporate
approvals of each corporation, (ii) all authorizations, consents and
approvals of all federal, state, local and foreign governmental agencies and
authorities required to be obtained, and (iii) all other conditions precedent
as outlined in the Agreement of Merger (see Exhibit 2.23). The number of
shares distributed to the shareholders of General will be adjusted based
upon the final determination of net worth as defined in the Agreement of
Merger. The cash payments will be made based upon commission income
realized in the subsequent two year period which will increase the purchase
price by .675 times every $1 in commission income in excess of $290,000 during
the first and second 12 months periods following closing subject to a maximum
payment of $40,500 in each year. The contingent payments include imputed
interest at the lowest applicable federal rate allowed under the Internal
Revenue Code of 1986, as amended.
General Insurance Agency, Inc. will merge into Hilb, Rogal and Hamilton
Company of Grand Rapids, a wholly-owned subsidiary of the Company.
(2) The merger with General by the Company has been agreed upon
because the Company is engaged in the business of owning insurance agencies and
because the shareholders of General have determined that a merger with the
Company is beneficial to the growth of General's insurance operations.
General's operations will add approximately four employees and $290,000 of
revenues to the Company.
(3) General was incorporated in 1976 in the state of Michigan, and
has 1,500 authorized shares of common stock, $1 par value. There are 1,000
issued outstanding shares of common stock.
(4) There are no material differences between the rights of the
security holders of General and the rights of security holders of the Company.
(5) The acquisition will be treated using the purchase method of
accounting for acquisitions under generally accepted accounting principles.
(6) General will be included in the consolidated return of the
Company as of the effective date. The acquisition will be recorded as a tax
free exchange under the rules of I.R.C. Sections 368(a)(1)(A) and 368(a)(2)(D).
(c) The acquisition agreement is incorporated into this supplement as
Exhibit 2.23.
Pro Forma Financial Information
See attached - Schedule A
Material Contracts with Seller
There have been no material contracts between the Company and General
prior to the proposed effective date of the Agreement of Merger.
Information with Respect to
General Insurance Agency, Inc.
General was incorporated in 1976 and operates from an office in Grand
Rapids, Michigan.
General provides insurance brokerage services for personal and commercial
and industrial accounts. Services provided include personal and commercial
property and casualty insurance (99% of commissions and fees) and group and
individual life and health insurance products (1% of commissions and fees).
The shares to be issued represent less than .2% of outstanding shares of
the Company at the time of acquisition and the assets of General as of December
31, 1994 and pre-tax earnings for the year then ended represent approximately
than .2% and .1%, respectively, of the consolidated amounts of the Company.
Accordingly, due to the small size, and closely held nature of the insurance
agency, it is not practical or cost effective to provide financial statements
(other than attached pro forma financial information) and related financial
information and analyses. Accordingly, the shares will be restricted as to
resale until such time as the Company files audited financial statements which
include the results of operations of General. The restriction should end no
later than March 31, 1996 when the Company files its Form 10-K for 1995.
Common Stock and Dividend Data
There is no established public trading market for the stock of General.
There are two shareholders of the corporation. See Shareholder Information
below for information regarding shares held and information regarding authorized
and issued shares.
There have been no common stock dividend distributions during the prior
three years.
Shareholder Information
(a) (1) WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
(2) & (3) General has agreed to submit the Agreement of Merger to its
shareholders for adoption by unanimous written consent after receipt and review
of this supplement to the Prospectus. Since the Agreement of Merger requires
that the merger can be completed only with the unanimous consent of the
shareholders of the company being acquired (General), notice requirements shall
have been met and there shall be no dissenters.
(4) & (5) There are no material interests, direct or indirect of
affiliates, officers or directors of the registrant or of the company being
acquired (General) in the proposed transaction.
(6) General has 1,500 authorized shares of common stock, $1 par
value. Shares issued and outstanding are as follows:
Number of
Shareholder Common Shares Percentage
Daniel J. Jablonski 900 90%
Brian J. Jablonski 100 10%
_____ ____
1,000 100%
===== ====
(7) Upon completion of the proposed acquisition, no shareholder of
General will be serving as a director or executive officer of the registrant.
Hilb, Rogal and Hamilton Company
Date of this Supplement: October 19, 1995
<PAGE>
SCHEDULE A - PRO FORMA CONDENSED
FINANCIAL STATEMENTS (UNAUDITED)
The following pro forma condensed consolidated balance sheet as of June 30,
1995 and the pro forma consolidated income statements for the six months ended
June 30, 1995 and the years ended December 31, 1994, 1993 and 1992 give effect
to the pooling-of-interests merger with R. E. Lipman Insurance Brokers, Inc.
("Lipman," effective on May 1, 1995); the proposed acquisition of General
Insurance Agency, Inc. ("General," expected to be effective on November 1,
1995); and the acquisition of certain assets and liabilities of 12
insurance agencies purchased in 1995 and four insurance agencies purchased in
1994. The pro forma information is based on the historical financial statements
of Hilb, Rogal and Hamilton Company and the acquired agencies, giving effect
to the transactions under the purchase method or pooling-of-interests method
of accounting and the assumptions and adjustments in the accompanying notes
to the pro forma financial statements. The pro forma consolidated income
statements give effect to the purchase method acquisitions and proposed
purchase method acquisitions as if they had occurred on January 1, 1994, and
the pooling-of-interest as if it had occurred prior to all periods presented.
The pro forma condensed consolidated balance sheet gives effect to the business
combinations which occurred or are probable of occurring subsequent to June
30, 1995, as if they had occurred before June 30, 1995.
The pro forma statements have been prepared by management based upon the
historical financial statements of Hilb, Rogal and Hamilton Company, Lipman,
General and other acquired agencies. These pro forma statements may not be
indicative of the results that actually would have occurred if the
combination had been in effect on the dates indicated or which may be
obtained in the future. The pro forma financial statements should be read
in conjunction with the audited financial statements and notes of the Company
included in the Company's 1994 Annual Report to Shareholders which is
incorporated by reference in the Company's Annual Report on Form 10-K, which is
incorporated herein by reference.
<PAGE>
HILB, ROGAL & HAMILTON COMPANY
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
HILB, ROGAL ACQUISITIONS PRO FORMA ADJUSTMENTS PRO FORMA
AND HAMILTON (PURCHASES) FOR PURCHASE ACQUISITIONS CONSOLIDATED
COMPANY
==============================
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $16,214,706 $2,393,464 (6,348,777)(2) $12,259,393
INVESTMENTS 20,145,000 710,629 20,855,629
RECEIVABLES & OTHER 46,954,801 3,437,695 (447,770)(1) 49,944,726
-------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 83,314,507 6,541,788 N/A (6,796,547) 83,059,748
-------------------------------------------------------------------------------
INVESTMENTS 6,635,000 6,635,000
PROPERTY & EQUIPMENT 12,885,434 1,021,170 (1,013,734)(1) 286,000 (3) 13,178,870
INTANGIBLE ASSETS 49,440,482 896,403 (896,403)(1) 13,554,208 (3) 62,994,690
OTHER ASSETS 5,042,526 1,020,286 0 0 6,062,812
-------------------------------------------------------------------------------
TOTAL ASSETS $157,317,949 $9,479,647 N/A $5,133,524 $171,931,120
===============================================================================
LIABILITIES & EQUITY:
PREMIUMS PAYABLE-INS CO $67,074,094 $6,183,738 (971,130)(1) $72,286,702
OTHER ACCRUED LIABILITIES 16,072,831 3,126,132 (269,351)(1) 18,929,612
-------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 83,146,925 9,309,870 N/A (1,240,481) 91,216,314
LONG-TERM DEBT 2,725,640 2,494,969 (1,930,688)(1) 1,406,060 (2) 4,695,981
OTHER LONG-TERM LIAB. 5,002,214 127,041 2,268,000 (3) 7,397,255
SHAREHOLDERS' EQUITY
COMMON STOCK 39,214,439 437,651 (437,651)(4) 2,178,400 (2) 41,392,839
RETAINED EARNINGS 27,228,731 (2,889,884) 2,889,884 (4) 27,228,731
-------------------------------------------------------------------------------
66,443,170 (2,452,233) N/A 4,630,633 68,621,570
-------------------------------------------------------------------------------
$157,317,949 $9,479,647 N/A $5,133,524 $171,931,120
===============================================================================
</TABLE>
(1) TO ADJUST FOR ASSETS AND LIABILITIES NOT ACQUIRED.
(2) TO REFLECT PURCHASE PRICE OF ASSETS AND LIABILITIES ACQUIRED SUBSEQUENT TO
JUNE 30, 1994 IN PURCHASE TRANSACTIONS.
(3) TO ADJUST FOR ASSET VALUATIONS UNDER PURCHASE ACCOUNTING.
(4) TO ELIMINATE SHAREHOLDERS' EQUITY OF ACQUIRED ENTITIES.
<PAGE>
HILB, ROGAL & HAMILTON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1995
-------------------------------------------------------------------
HILB, ROGAL ACQUISITIONS PRO FORMA ADJUSTMENTS PRO FORMA
& HAMILTON CO. (PURCHASES) FOR PURCHASE CONSOLIDATED
ACQUISITIONS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
COMMISSIONS & FEES $71,219,965 $6,826,870 $78,046,835
INTEREST INCOME 1,084,800 101,295 ($196,673) (1) 989,422
OTHER 3,723,218 1,806 3,725,024
-------------------------------------------------------------------
TOTAL REVENUES 76,027,983 6,929,971 (196,673) 82,761,281
-------------------------------------------------------------------
OPERATING EXPENSES:
COMPENSATION AND BENEFITS 41,171,559 3,795,249 44,966,808
OTHER OPERATING EXPENSES 17,575,844 2,606,895 (78,161) (2) 20,104,578
AMORTIZATION OF INTANGIBLES 3,321,578 129,967 451,374 (3) 3,902,919
INTEREST EXPENSE 228,691 125,622 43,599 (4) 397,912
-------------------------------------------------------------------
TOTAL OPERATING EXPENSES 62,297,672 6,657,733 416,812 69,372,217
-------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 13,730,311 272,238 (613,485) 13,389,064
INCOME TAXES 5,492,545 (136,499) (5) 5,356,046
-------------------------------------------------------------------
NET INCOME $8,237,766 $272,238 ($476,986) $8,033,018
===================================================================
NET INCOME PER COMMON SHARE $0.56 $0.54
===================================================================
SHARES ISSUED AND OUTSTANDING 14,392,512 169,326 14,561,838
-------------------------------------------------------------------
WEIGHTED AVERAGE SHARES
OUTSTANDING 14,676,597 223,493 14,900,090
-------------------------------------------------------------------
</TABLE>
(1) TO ADJUST HISTORICAL INTEREST AND TO ADJUST FOR LOST INTEREST EARNED
FROM CASH PAID FOR ACQUIRED AGENCIES.
(2) TO REFLECT ADJUSTMENTS TO COMPENSATION AND OTHER OPERATING EXPENSES TO
REFLECT ADJUSTED COMPENSATION, DEPRECIATION EXPENSE, RENT EXPENSE, ETC.
(3) TO REFLECT ADJUSTMENTS TO AMORTIZATION OF INTANGIBLES DUE TO VALUATION
OF AGENCY ASSETS ON THE PURCHASE BASIS OF ACCOUNTING. INTANGIBLE
ASSETS REPRESENT EXPIRATION RIGHTS, THE EXCESS OF COSTS OVER THE
FAIR VALUE OF NET ASSETS ACQUIRED AND NONCOMPETITION AGREEMENTS.
(4) TO ADJUST HISTORICAL INTEREST AND REFLECT INTEREST ON ACQUISITION DEBT.
(5) TO REFLECT ESTIMATED TAXES AND THE TAX EFFECT OF PROFORMA ADJUSTMENTS
ON NET INCOME.
HILB, ROGAL & HAMILTON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------------------------------------
HILB, ROGAL POOLING-OF- PRO FORMA ACQUISITIONS PRO FORMA ADJUSTMENTS PRO FORMA
& HAMILTON CO. INTERESTS COMBINED (PURCHASES) FOR PURCHASE CONSOLIDATED
MERGER POOLED ACQUISITIONS
TOTAL
- --------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
COMMISSIONS & FEES $132,914,113 $339,483 $133,253,596 $21,986,101 $155,239,697
INTEREST INCOME 1,899,803 9,147 1,908,950 323,936 ($667,082) (1) 1,565,804
OTHER 5,995,698 2,084 5,997,782 27,037 6,024,819
-----------------------------------------------------------------------------------------------
TOTAL REVENUES 140,809,614 350,714 141,160,328 22,337,074 (667,082) 162,830,320
-----------------------------------------------------------------------------------------------
OPERATING EXPENSES:
COMPENSATION AND BENEFITS 78,310,999 240,592 78,551,591 14,044,837 92,596,428
OTHER OPERATING EXPENSES 35,975,715 134,437 36,110,152 7,491,215 (466,582) (2) 43,134,785
AMORTIZATION OF INTANGIBLES 6,436,119 6,436,119 871,742 803,573 (3) 8,111,434
INTEREST EXPENSE 812,216 812,216 418,095 (81,421) (4) 1,148,890
POOLING-OF-INTERESTS EXPENSE 487,986 487,986 487,986
-----------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 122,023,035 375,029 122,398,064 22,825,889 255,570 145,479,523
-----------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 18,786,579 (24,315) 18,762,264 (488,815) (922,652) 17,350,797
INCOME TAXES 7,394,296 (6,350) 7,387,946 (564,587) (5) 6,823,359
-----------------------------------------------------------------------------------------------
NET INCOME $11,392,283 ($17,965) $11,374,318 ($488,815) ($358,065) $10,527,438
===============================================================================================
NET INCOME PER COMMON SHARE $0.77 $0.77 $0.70
===============================================================================================
SHARES ISSUED AND OUTSTANDING 14,679,464 37,000 14,716,464 317,726 15,034,190
-----------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES
OUTSTANDING 14,778,304 37,000 14,815,304 327,101 15,142,405
-----------------------------------------------------------------------------------------------
</TABLE>
(1) TO ADJUST HISTORICAL INTEREST AND TO ADJUST FOR LOST INTEREST EARNED FROM
FROM CASH PAID FOR ACQUIRED AGENCIES.
(2) TO REFLECT ADJUSTMENTS TO OTHER OPERATING EXPENSES TO REFLECT ADJUSTED
DEPRECIATION EXPENSE, RENT EXPENSE, ETC.
(3) TO REFLECT ADJUSTMENTS TO AMORTIZATION OF INTANGIBLES DUE TO VALUATION
OF AGENCY ASSETS ON THE PURCHASE BASIS OF ACCOUNTING. INTANGIBLE
ASSETS REPRESENT EXPIRATION RIGHTS, THE EXCESS OF COSTS OVER THE
FAIR VALUE OF NET ASSETS ACQUIRED AND NONCOMPETITION AGREEMENTS.
(4) TO REFLECT INTEREST ON ACQUISITION DEBT AND TO ADJUST HISTORICAL
INTEREST FOR DEBT NOT ASSUMED.
(5) TO REFLECT ESTIMATED TAXES AND THE TAX EFFECT OF PROFORMA ADJUSTMENTS
ON NET INCOME.
<PAGE>
HILB, ROGAL & HAMILTON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993
------------------------------------------
HILB, ROGAL POOLING-OF- PRO FORMA
& HAMILTON CO. INTERESTS COMBINED
MERGERS POOLED
TOTAL
- --------------------------------------------------------------------------
REVENUES:
COMMISSIONS & FEES $137,662,048 $403,680 $138,065,728
INTEREST INCOME 1,558,982 9,678 1,568,660
OTHER 2,435,150 1,978 2,437,128
------------------------------------------
TOTAL REVENUES 141,656,180 415,336 142,071,516
------------------------------------------
OPERATING EXPENSES:
COMPENSATION AND BENEFITS 82,469,714 286,526 82,756,240
OTHER OPERATING EXPENSES 37,773,552 139,098 37,912,650
AMORTIZATION OF INTANGIBLES 6,581,550 0 6,581,550
INTEREST EXPENSE 1,270,268 0 1,270,268
POOLING-OF-INTERESTS EXPENSE 503,207 503,207
------------------------------------------
TOTAL OPERATING EXPENSES 128,598,291 425,624 129,023,915
------------------------------------------
INCOME BEFORE INCOME TAXES 13,057,889 (10,288) 13,047,601
INCOME TAXES 4,764,496 (3,672) 4,760,824
------------------------------------------
NET INCOME $8,293,393 ($6,616) $8,286,777
==========================================
NET INCOME PER COMMON SHARE $0.57 $0.57
==========================================
SHARES ISSUED AND OUTSTANDING 14,800,904 37,000 14,837,904
------------------------------------------
WEIGHTED AVERAGE SHARES
OUTSTANDING 14,456,055 37,000 14,493,055
------------------------------------------
<PAGE>
HILB, ROGAL & HAMILTON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992
------------------------------------------
HILB, ROGAL POOLING-OF- PRO FORMA
& HAMILTON CO. INTERESTS COMBINED
MERGERS POOLED
TOTAL
- --------------------------------------------------------------------------
REVENUES:
COMMISSIONS & FEES $137,296,081 $423,032 $137,719,113
INTEREST INCOME 1,374,949 12,097 1,387,046
OTHER 1,789,925 677 1,790,602
------------------------------------------
TOTAL REVENUES 140,460,955 435,806 140,896,761
------------------------------------------
OPERATING EXPENSES:
COMPENSATION AND BENEFITS 81,939,724 277,357 82,217,081
OTHER OPERATING EXPENSES 36,208,784 142,421 36,351,205
AMORTIZATION OF INTANGIBLES 6,557,924 0 6,557,924
INTEREST EXPENSE 1,820,819 0 1,820,819
POOLING-OF-INTERESTS EXPENSE 532,960 532,960
------------------------------------------
TOTAL OPERATING EXPENSES 127,060,211 419,778 127,479,989
------------------------------------------
INCOME BEFORE INCOME TAXES 13,400,744 16,028 13,416,772
INCOME TAXES 4,809,342 10,141 4,819,483
------------------------------------------
NET INCOME $8,591,402 $5,887 $8,597,289
==========================================
NET INCOME PER COMMON SHARE $0.65 $0.65
==========================================
SHARES ISSUED AND OUTSTANDING 13,242,808 37,000 13,279,808
------------------------------------------
WEIGHTED AVERAGE SHARES
OUTSTANDING 13,241,030 37,000 13,278,030
------------------------------------------
AGREEMENT OF MERGER
OF
GENERAL INSURANCE AGENCY, INC.
INTO
HILB, ROGAL AND HAMILTON COMPANY OF GRAND RAPIDS
THIS MERGER AGREEMENT ("Agreement"), to be effective as of 12:01
a.m. on November 1, 1995, or at such other time as may be agreed upon by the
parties hereto, is made and entered into by and among HILB, ROGAL AND
HAMILTON COMPANY, a Virginia corporation ("Parent"), its wholly-owned
subsidiary, HILB, ROGAL AND HAMILTON COMPANY OF GRAND
RAPIDS, a Michigan corporation ("Survivor"), and GENERAL INSURANCE
AGENCY, INC., a Michigan corporation ("Merging Entity"), and the two
shareholders of Merging Entity, DANIEL J. JABLONSKI ("Mr. J. Jablonski")
and BRIAN J. JABLONSKI ("Mr. B. Jablonski") (with Messrs.
D. Jablonski and B. Jablonski hereinafter sometimes collectively referred to as
"Shareholders" or any one of the foregoing hereinafter sometimes referred to as
"Shareholder"), with reference to the following facts:
A. Shareholders are the owners and holders of all of the issued and
outstanding shares of the authorized capital stock (referred to below as the
"Common Stock") of Merging Entity which is engaged in the business of owning
and operating a general insurance agency.
B. Parent is engaged in the business of owning and operating insurance
agencies and Survivor is an operating insurance agency.
C. Shareholders, Parent, Survivor and Merging Entity have reached an
understanding with respect to the merger of Merging Entity into Survivor
("Merger") for which Shareholders shall receive that amount of Parent's common
stock, with contingent cash payments possible, as the consideration stated
herein.
D. The parties hereto intend that this Agreement be characterized as a
triangular statutory merger pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Internal Revenue Code of 1986 ("Code") and further be accounted for as a
"purchase" in accordance with the principles of the Financial Accounting
Standards Board and other applicable guidelines.
In consideration of the foregoing facts and of the respective
representations, warranties, covenants, conditions and agreements set forth
below, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. PLAN OF MERGER.
1.1 Effective Date. Subject to fulfillment of the conditions precedent in
Sections 6 and 7 of this Agreement, Merging Entity and Survivor (collectively,
"Constituents") will cause Articles of Merger to be signed, verified and
delivered on or before October 31, 1995 (or at such later time as may be agreed
upon by the parties), to the Secretary of State of the State of Michigan and to
be effective as of 12:01 a.m. on November 1, 1995 (or at such later time as may
be agreed upon by the parties) ("Effective Date"), as provided by the laws of
the State of Michigan. On the Effective Date, the separate existence of each
entity of Constituents shall cease and Merging Entity shall be merged with and
into Survivor, which shall become the Surviving Corporation.
1.2 Organization of Survivor.
(a) On the Effective Date, and thereafter until amended as
provided by law, the articles of incorporation of Survivor in effect on the
Effective Date shall be the articles of incorporation for the Surviving
Corporation.
(b) On the Effective Date, and thereafter until amended as
provided by law, the bylaws of Survivor in effect on the Effective Date shall be
the bylaws for the Surviving Corporation.
(c) On the Effective Date, and thereafter until changed as
provided by law, the names and addresses of the directors for Surviving
Corporation shall be:
Robert H. Hilb
4235 Innslake Drive, P.O. Box 1220
Glen Allen, Virginia 23060-1220
Andrew L. Rogal
Warner Centre
333 Forbes Avenue
Pittsburgh, Pennsylvania 15222
John C. Adams, Jr.
4235 Innslake Drive, P.O. Box 1220
Glen Allen, Virginia 23060-1220
(d) On the Effective Date, and thereafter until changed
as provided by law, the officers of Survivor on the Effective Date
shall be the officers of Surviving Corporation.
1.3 Effect of Merger.
(a) On the Effective Date, the assets and liabilities of
Merging Entity shall be taken on the books of Survivor at the amount
at which they shall at that time be carried on the books of Merging
Entity, subject to such adjustments, if any, as may be necessary to
conform to the accounting procedures of Survivor.
(b) On the Effective Date and thereafter, Survivor shall
possess all the rights, privileges, immunities, powers, franchises and
authority, both public and private, of each of the corporations
comprising Constituents. All property of every description, including
every interest therein and all obligations of or belonging to or due to
each of Constituents shall thereafter be taken and deemed to be
transferred to and vested in Survivor, without further act or deed,
although Merging Entity from time to time, as and when required by
Survivor, shall execute and deliver, or cause to be executed and
delivered, all such deeds and other instruments and shall take, or
cause to be taken, such further action as Survivor may deem
necessary or desirable to confirm the transfer to and vesting in
Survivor of title to and possession of all such rights, privileges,
immunities, franchises and authority. All rights of creditors of each
of Constituents shall be preserved unimpaired, limited in lien to the
property affected by such liens immediately prior to the Effective
Date, and Survivor shall thenceforth be liable for all the obligations
of each of Constituents.
1.4 Conversion of Shares of Common Stock.
(a) All of the outstanding capital stock of Merging
Entity comprises the Common Stock, which is owned, collectively, by
Shareholders. Each of Shareholders owns, free and clear of any liens,
encumbrances, restrictions or adverse claims whatsoever except as set
forth in Schedule 2.4, the number of shares of Merging Entity set
forth below opposite his name and each Shareholder shall receive
therefor for each share of Common Stock the number of shares of no
par value common stock of Parent as described herein:
Shareholder Number of Shares Percentage
Mr. D. Jablonski 900 90
Mr. B. Jablonski 100 10
------ ----
TOTAL 1,000 100%
In exchange for all of the shares of Common Stock, Shareholders
shall collectively receive 26,600 shares of common stock of Parent,
plus the two payments referenced below, subject to adjustment as
provided in Section 14.6 and to all the terms and conditions
contained herein. This Agreement shall not be consummated under
any circumstances unless 100% of the shares of Common Stock are
exchanged for shares of Parent common stock.
(b) The manner and basis of conversion of shares on
the Effective Date shall be as follows:
(i) Each share of common stock of Survivor
which is issued and outstanding on the Effective Date, with all rights
with respect thereto, shall become one (1) share of common stock,
$1.00 par value, of Surviving Corporation.
(ii) Each share of Common Stock which is
issued and outstanding on the Effective Date, with all rights with
respect thereto, shall be converted into 26.6 shares (which number of
shares is subject to adjustment as provided in Section 14.6) of
common stock, no par value, of Parent, plus the right to receive a
share of the two contingent payments described below in subsection
(f), each of which contingent payments shall not in the aggregate
exceed $40,500 nor be less than zero (before any applicable
indemnity). Such deferred payments shall have interest imputed at
the lowest applicable federal rate allowed under the Internal Revenue
Code of 1986, as amended ("Code"). No fractional shares of Parent
common stock will be issued as the number of shares to be issued to
any Shareholder in accordance with the preceding sentence shall be
rounded up or down to the nearest whole number (a fractional share
of 0.5 or more will be rounded up; less than 0.5 will be rounded
down). Each shareholder of Common Stock, upon delivery to Parent
or its duly authorized agent for cancellation of certificates
representing such shares and subject to the ten percent holdback of
shares described later herein, shall thereafter be entitled to receive
certificates representing the number of shares of Parent common
stock to which such Shareholder is entitled.
(c) Appropriate adjustment shall be made on the
number of shares of Parent common stock to be issued upon
conversion if, during the period commencing on September 13, 1995,
and ending on the Effective Date, Parent: (i) effects any dividend
payable in shares of common stock; (ii) splits or combines the
outstanding shares of Parent common stock; (iii) effects any
extraordinary distribution on Parent common stock; (iv) effects any
reorganization or reclassification of Parent common stock; or (v) fixes
a record date for the determination of shareholders entitled to any of
the foregoing.
(d) Upon delivery of Common Stock to Parent
pursuant to subsection 1.4(b)(ii), Parent shall receive all of the shares
of common stock of Surviving Corporation outstanding pursuant to
subsection 1.4(b)(i).
(e) Until its surrender, each certificate comprising
Common Stock referred to in subsection 1.4(b)(ii) herein shall be
deemed for all corporate purposes, other than the payment of
dividends, to evidence ownership of the number of full shares of
Parent common stock into which such shares of Common Stock shall
have been changed by virtue of the merger. Unless and until any
such outstanding certificates of Common Stock shall be so
surrendered, no dividend payable to the holders of record of Parent
common stock, as of any date subsequent to the Effective Date, shall
be paid to the holders of such outstanding certificates, but upon such
surrender of any such certificate or certificates there shall be paid to
the record holder of the certificate or certificates of Parent common
stock into which the shares represented by the surrendered certificate
or certificates shall have been so changed the amount of such
dividends which theretofore became payable with respect to such
shares of Parent.
(f) Contingent Consideration Based on Amount of
Year 1 Revenue and Year 2 Revenue.
(i) As used herein, the term "Revenue" shall mean, for
the twelve month periods ending October 31, 1996 ("Year 1") and
October 31, 1997 ("Year 2"), renewal property and casualty income,
renewal life and group commissions, recurring service fees, and
recurring brokered business (net of commission expense) generated
from the existing book of business of Merging Entity as of November
1, 1995, and specifically excluding contingency income, overrides, first-
year life commissions, and one-time surety and consulting fees, all
determined in accordance with generally accepted accounting
principles of Parent as described in Section 2.7 hereof, applied on a
consistent basis, and applied uniformly in determining the net profit
of each subsidiary of Parent. Parent shall cause the Revenue to be
determined, and the amount thereof communicated to the
Shareholders, as soon as is reasonably practicable after Year 1 and
Year 2, and, in all events, within sixty- two (62) days thereafter. In
the event of a disagreement by the Shareholders, collectively, as to
the computation of Revenue for Year 1 or Year 2, such disagreement
shall be resolved in the same manner as provided in the case of a
disagreement as to the Merger Balance Sheet under the provisions of
Section 14.6.
(ii) To the extent the Year 1 Revenue shall be more
than $290,000 (with such excess being the "Year 1 Excess"), then for
each $1 of Year 1 Excess, Parent shall deliver to Shareholders the
aggregate payment of $0.675 on January 1, 1997 ("Year 1 Payment").
(iii) To the extent the Year 2 Revenue shall be more
than $290,000 (with such excess being the "Year 2 Excess"), then for
each $1 of Year 2 Excess, Parent shall deliver to Shareholders the
aggregate payment of $0.675 on January 1, 1998 ("Year 2 Payment").
(iv) No payment shall be due for Year 1 or Year 2 if
Revenue for such year is $290,000 or less. Neither the Year 1
Payment (if any) or the Year 2 Payment (if any) shall exceed $40,500
in the case of Year 1 Revenue or Year 2 Revenue, respectively, in
excess of $350,000. If any Year 1 Payment or Year 2 Payment is due,
before offset or indemnity, such payment shall be subject to the right
of offset by Surviving Corporation and Parent and any indemnity
obligations of the Shareholders.
1.5 Closing Date. The closing of the transactions
contemplated by this Agreement ("Closing") shall take place at the
offices of Survivor, located at Grand Rapids, Michigan, at 10:00
o'clock a.m. on October 30, 1995, or at such other place and time as
shall be mutually agreed upon by the parties to this Agreement
("Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDERS. Shareholders, jointly and severally, represent
and warrant to Parent as follows:
2.1 Organization and Standing of Merging Entity. Merging
Entity is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan ("Home State") and
has full power and authority to carry on its business as it is now being
conducted and to own or hold under lease the properties and assets it
now owns or holds under lease. Except as set forth in Schedule 2.1
to this Agreement, Merging Entity is not qualified to do business in
any state or other jurisdiction other than Home State. Except as set
forth in Schedule 2.1, the nature of the business conducted by
Merging Entity and the character or ownership of properties owned
by it does not require Merging Entity to be qualified to do business
in any other jurisdiction. Furthermore, except as set forth in
Schedule 2.1 to this Agreement, the nature of the business conducted
by Merging Entity does not require it or any of its employees to
qualify for, or to obtain any insurance agency, brokerage, adjuster, or
other similar license in any jurisdiction other than Home State. The
copy of the articles of incorporation, and all amendments thereto, of
Merging Entity heretofore delivered to Parent and which have been
or will be initialed for identification purposes by the President of
Merging Entity is complete and correct as of the date hereof. The
copy of the bylaws, and all amendments thereto, of Merging Entity
heretofore delivered to Parent and which have been or will be
initialed for identification purposes by the President of Merging
Entity is complete and correct as of the date hereof. The minute
book or minute books of Merging Entity contain a complete and
accurate record in all material respects of all meetings and other
corporate actions of the shareholders and directors of Merging Entity.
2.2 Name. Neither Merging Entity nor any of Shareholders
has granted to anyone any right to use the corporate name or any
name similar to the corporate name of Merging Entity.
2.3 Capitalization of Merging Entity. The capitalization of
Merging Entity is as follows: (a) Merging Entity is
authorized to issue 5,000 shares of voting common stock, $10 par
value. Merging Entity is not authorized to issue, and has not issued,
any shares of any other class. All of the shares comprising Common
Stock outstanding and owned as of the date hereof are as set forth in
Section 1.4(a), supra.
(b) All of the outstanding shares of Common Stock
have been duly and validly issued and are fully paid and
nonassessable. The issuance of all shares of Common Stock was and
has been in compliance with all applicable statutes, rules and
regulations, including, without limitation, all applicable federal and
state securities laws. There is no existing option, warrant, call or
commitment to which Merging Entity is a party requiring the issuance
of any additional shares of common stock of Merging Entity or of any
other securities convertible into shares of common stock of Merging
Entity or any other equity security of Merging Entity of any class or
character whatsoever.
(c) No shares of the authorized stock of Merging
Entity have ever been registered under the provisions of any federal
or state securities law, nor has Merging Entity filed or been required
to file any report with any federal or state securities commission,
department, division or other governmental agency.
(d) No present or prior holder of any shares of the
authorized stock of Merging Entity is entitled to any dividends with
respect to any such shares now or heretofore outstanding.
2.4 Ownership of Common Stock. Except as set forth in
Schedule 2.4, each Shareholder is the record owner, free and clear of
any and all liens, encumbrances, restrictions and adverse claims
whatsoever, of the number of shares of Common Stock set forth
opposite his name in subsection 1.4(a). Each such lien, encumbrance,
restriction or adverse claim can be removed at or prior to the
Closing.
Merging Entity is autonomous and has never been a subsidiary
or division of another enterprise. There has been no change in the
equity interest of Merging Entity in contemplation of effecting this
Agreement, such as excessive distributions or additional issuances,
exchanges or retirements of securities. Any shares of Common Stock
reacquired by Merging Entity were reacquired only for legitimate
purposes other than business combinations. Schedule 2.4 describes all
changes, issuances, exchanges and retirements of equity securities
within the last three years as well as the legitimate purpose (i.e. other
than effecting this Agreement) for each such transaction.
2.5 Authority. Shareholders, individually and collectively,
have full and complete authority to enter into this Agreement and to
transfer in accordance with the terms and conditions of this
Agreement all of the shares of Common Stock, free and clear of all
liens, encumbrances, restrictions and adverse claims whatsoever. The
execution, delivery and performance of this Agreement by Merging
Entity does not violate, result in a breach of, or constitute a default
under, the articles of incorporation or bylaws of Merging Entity or
any indenture, contract, agreement or other instrument to which it is
a party or is bound, or to the best knowledge of Shareholders and
Merging Entity, any applicable laws, rules or regulations.
2.6 Subsidiaries and Other Relationships. Except as disclosed
on Schedule 2.6, Merging Entity does not own any stock or other
interest in any other corporation, nor is it a participant in any joint
entity. Except as disclosed on Schedule 2.6, any stock owned by
Merging Entity in any other entity represents one hundred percent
(100%) ownership of such entity, is owned free and clear of any and
all liens, encumbrances, restrictions and adverse claims, has been duly
and validly issued and is fully paid and nonassessable.
2.7 Financial Statements. Shareholders and Merging Entity
will cause to be delivered to Parent, prior to January 1, 1996, a true
and complete copy of the audited financial statements of Merging
Entity as of and for the period ended October 31, 1995 ("Merger
Balance Sheet"), prepared under the accounting guidelines of Parent,
previously provided to them in the form of Parent's Accounting
Policies and Procedures Manual ("GAAP Policy"). Additionally,
Shareholders and Merging Entity will deliver the unaudited financial
statements for the three most recent calendar years of Merging Entity
including, without limitation, balance sheets and statements of income
(collectively, "Financial Statements"). In addition, Shareholders and
Merging Entity have delivered to Parent a true and complete copy of
the unaudited financial statements of Merging Entity for the most
recent month ended, including, without limitation, a balance sheet
and statement of income for such period then ended ("Interim
Statements"). Each of the Financial Statements is true and correct, is
in accordance with the books and records of Merging Entity, presents
fairly the financial condition and results of operations of Merging
Entity as of the date and for the period indicated, and has been
prepared in accordance with Parent's GAAP Policy consistently
applied throughout the periods covered by such statements (including,
but not limited to, the establishment of reserves for bad debts and
accruals for all outstanding debts and expenses). Furthermore,
neither the Financial Statements nor the Interim Statements
contained any untrue statement of any material fact or omitted to
state any material fact required to be stated to make such Financial
Statements or Interim Statements not misleading. Without limiting
the generality of the foregoing, the commission income reflected in
each of the Financial Statements and the Interim Statements is true
and correct, and the accounts payable reflected in each of the
Financial Statements and the Interim Statements is true and correct.
2.8 Absence of Undisclosed Liabilities. (The term "Most
Recent Balance Sheet," as used in this Agreement, means the balance
sheet of Merging Entity at August 31, 1995. Also, the term "Most
Recent Balance Sheet Date," as used in this Agreement, means
August 31, 1995.) Except as and to the extent specifically reflected,
provided for or reserved against in the Most Recent Balance Sheet or
except as disclosed in any Schedule to this Agreement, Merging
Entity, as of the Most Recent Balance Sheet Date, did not have any
indebtedness, liability or obligation of any nature whatsoever, whether
accrued, absolute, contingent or otherwise, and whether due or to
become due, including, without limitation, tax liabilities due or to
become due, and whether incurred in respect of or measured by the
income of Merging Entity for any period prior to the Most Recent
Balance Sheet Date, or arising out of transactions entered into, or
any state of facts existing, prior thereto, and none of Shareholders
knows or has reasonable grounds to know of any basis for the
assertion against Merging Entity, as of the Most Recent Balance
Sheet Date, of any indebtedness, liability or obligation of any nature
or in any amount not fully reflected or reserved against in the Most
Recent Balance Sheet or otherwise disclosed in any Schedule to this
Agreement.
2.9 No Adverse Change. Since the Most Recent Balance
Sheet Date, there has been no material change in the financial
condition, results of operations or business prospects of Merging
Entity other than changes occurring in the ordinary course of business
or except as otherwise disclosed in any of the Schedules to this
Agreement, which changes have not had a material adverse effect on
the financial condition, results of operations or business prospects of
Merging Entity. Without limiting the generality of the foregoing,
since the Most Recent Balance Sheet Date, there has been no
material adverse change in the insurance accounts included within the
"Book of Business" of Merging Entity, and none of Shareholders
knows or has reasonable grounds to know of any basis for any
material adverse change in such insurance accounts between the date
hereof and the Effective Date. For purposes hereof, "material
adverse change" in the insurance accounts included in the "Book of
Business" of Merging Entity means, without limitation, the loss of any
account generating an aggregate annual gross income (commission or
otherwise) of $2,500 or more.
2.10 Taxes. Merging Entity has filed all federal, state and
local income, withholding, social security, unemployment, excise, real
property tax, tangible personal property tax, intangible personal
property tax and all other tax returns and reports required to be filed
by it to the date hereof and all of such returns and reports are true
and correct. All taxes, assessments, fees, penalties, interest and other
governmental charges which were required to be paid by Merging
Entity on such returns and reports have been duly paid and satisfied
on or before their respective due dates. No tax deficiency or penalty
has been asserted or threatened with respect to Merging Entity. No
federal or state income tax return of Merging Entity has been audited
or, to the knowledge of any Shareholder, proposed to be audited, by
any federal or state taxing authority, including, without limitation, the
U.S. Internal Revenue Service and the Michigan Department of
Treasury, and no waiver of any statute of limitations has been given
or is in effect with respect to the assessment of any taxes against
Merging Entity. The provisions for taxes included in the Most
Recent Balance Sheet and in the Financial Statements were sufficient
for the payment of all accrued and unpaid federal, state and local
income, withholding, social security, unemployment, excise, real
property, tangible personal property, intangible personal property and
other taxes of Merging Entity, whether or not disputed, for the
periods reflected, and for all years and periods prior thereto.
2.11 Real and Personal Property Owned by Merging Entity.
Except as set forth in Schedule 2.11, Merging Entity does not own
any real property ("Real Property"). Merging Entity has good and
marketable title to the Real Property and owns the Real Property
free and clear of any liens, encumbrances or claims, except as further
set forth in Schedule 2.11. Schedule 2.11 also consists of a copy of
the depreciation schedules filed as a part of the two prior annual
Federal income tax returns of Merging Entity (with deletions of any
items disposed of prior to the date of this Agreement), a separate list
of each item of depreciable personal property acquired by Merging
Entity since the Most Recent Balance Sheet Date and having a cost
of $1,000.00 or more, and a separate list of each item of intangible
personal property presently owned by Merging Entity. Merging
Entity also owns various items of disposable type personal property
such as office supplies that are not listed in Schedule 2.11. Merging
Entity has good and marketable title to all such tangible and
intangible personal property, in each case free and clear of all
mortgages, security interests, conditional sales agreements, claims,
restrictions, charges or other liens or encumbrances whatsoever except
as otherwise stated in Schedule 2.11.
2.12 Leases. Schedule 2.12 contains a correct and complete
list and brief description of all leases or other agreements under
which Merging Entity is a tenant or lessee of, or holds or operates
any property, real or personal, owned by any third party. Merging
Entity is the owner and holder of the leasehold estates granted by
each of the instruments described in Schedule 2.12 except as
otherwise stated in Schedule 2.12. Each of said leases and
agreements is in full force and effect and constitutes a legal, valid and
binding obligation of the respective parties thereto, enforceable in
accordance with its terms. Merging Entity enjoys peaceful and
undisturbed possession of all properties covered by all such leases and
agreements, and there is not any existing default or event or
condition, including the Merger contemplated herein, which with
notice or lapse of time, or both, would constitute an event of default
under any of such leases or agreements.
2.13 Insurance. Schedule 2.13 contains a correct and
complete list, as of the date hereof, of all policies of casualty, fire
and extended coverage, theft, errors and omissions, liability, life, and
other forms of insurance owned or maintained by Merging Entity.
All business operations of Merging Entity are and have been
continually insured against errors and omissions. Such policies are in
amounts deemed by Shareholders to be adequate. Each such policy
is, on the date hereof, in full force and effect, and Merging Entity is
not in default with respect to any such policy.
Furthermore, Schedule 2.13 contains a correct and complete
list of all group life, group medical and disability or other similar
forms of insurance which constitute an obligation of or benefit
provided by Merging Entity as well as a list of any material (hospital
or home care) services known by Shareholders and Merging Entity to
have been incurred by Merging Entity's group health plan within 90
days of this date, which list details with reasonable accuracy the
recipients of such services and the date of service. Schedule 2.13 also
contains a list of any former employees or their dependents who are
presently under COBRA continuation coverage and describes with
reasonable particularity the pertinent factors about each such person
listed.
With respect to errors and omissions (professional liability)
insurance policies listed in Schedule 2.13 (which lists for each such
policy the carrier, retrodate, claims made or occurrence policy and
limits), prior to the effective dates of such policies, Merging Entity
had not given notice to any prior insurer of any act, error or omission
in services rendered by any agent or employee of such corporation or
that should have been rendered by any agent or employee of such
corporation arising out of the operations of Merging Entity.
Furthermore, to the best knowledge of Shareholders, no agent or
employee of Merging Entity breached any such professional duty or
obligation prior to the effective dates of such policies. With respect
to such policies, Merging Entity has given notice of any and all claims
for any act, error or omission by any agent or employee of such
corporation with respect to professional services rendered or that
should have been rendered as required by the terms of such policies
(if any such notice has been given, its contents are described in
Schedule 2.13). To the best knowledge of Shareholders, Merging
Entity has not taken, nor has it failed to take, any action which would
provide the insurer with a defense to its obligation under any such
policy; neither Merging Entity nor any Shareholder has received from
any such insurer any notice of cancellation or nonrenewal of any such
policy, and, except as set forth in Schedule 2.13, no Shareholder has
any basis to believe that Merging Entity, or any agent or employee of
Merging Entity, has breached any professional duty or obligation.
2.14 Insurance Companies. Schedule 2.14 contains a correct
and complete list of all insurance companies with respect to which
Merging Entity has an agency contract or similar relationship. Except
as identified in Schedule 2.14, all relations between Merging Entity
and the insurance companies represented by it are good, and no
Shareholder has any knowledge of any proposed termination of, or
modification to, the existing relations between Merging Entity and
any of such insurance companies. Furthermore, except as otherwise
set forth in Schedule 2.14, all accounts with all insurance companies
represented by Merging Entity or with whom it transacts business are
current and there are no disagreements or unreconciled discrepancies
between Merging Entity and any such company as to the amounts
owed by Merging Entity.
2.15 Customers. Except as identified in Schedule 2.15, all
relations between Merging Entity and its present customers are good,
and no Shareholder has any knowledge of any proposed termination
of any insurance account presently written or serviced by Merging
Entity. Also, except as otherwise set forth in Schedule 2.15, all
customer accounts, including, without limitation, those accounts with
respect to which Merging Entity financed any premiums, are current.
For purposes of Section 2.15, the terms "insurance account" and
"customer account" shall be limited to accounts which generate an
aggregate annual gross income (commission or otherwise) of $2,500
or more.
2.16 Officers and Directors; Banks; Powers of Attorney.
Schedule 2.16 contains a correct and complete list of all officers and
directors of Merging Entity, a correct and complete list of the names
and addresses of each bank in which Merging Entity has any account
or safe deposit box, together with the names of all persons authorized
to draw on each such account or having access to any such safe
deposit box, and a correct and complete list of the names of all
persons holding powers of attorney from Merging Entity.
2.17 Compensation and Fringe Benefits. Schedule 2.17
contains a correct and complete list of each officer, director,
employee or agent of Merging Entity in the format as set forth in
Schedule 2.17. Also, Schedule 2.17 contains a description of all fringe
benefits presently being provided by Merging Entity to any of its
employees or agents.
2.18 Patents; Trademarks; Copyrights and Trade Names.
Merging Entity owns or is possessed of or is licensed under such
patents, trademarks, trade names and copyrights (including, without
limitation, software) as are used in, and are of material importance
to, the conduct of its business, all of which are in good standing and
uncontested. Schedule 2.18 contains a correct and complete list of all
material patents, patent applications filed or to be filed, trademarks,
trademark registrations and applications, trade names, copyrights and
copyright registrations and applications owned by or registered in the
name of Merging Entity. There is no material claim pending or, to
the best knowledge of Shareholders, threatened against Merging
Entity with respect to any alleged infringement of any patent,
trademark, trade name or copyright owned or licensed to anyone
other than Merging Entity.
2.19 Indebtedness. Schedule 2.19 contains a correct and
complete list of all instruments, agreements or arrangements pursuant
to which Merging Entity has borrowed any money, incurred any
indebtedness or established any line of credit which represents a
liability of Merging Entity on the date hereof. True and complete
copies of all such written instruments, agreements or arrangements
have heretofore been delivered to, or made available for inspection
by, Parent. Merging Entity has performed all of the obligations
required to be performed by it to date, and is not in default in any
material respect under the terms of any such written instruments,
agreements or arrangements, and no event has occurred which, but
for the passage of time or the giving of notice, or both, would
constitute such a default.
2.20 Employment Agreements and Other Material Contracts.
Schedule 2.20 contains a complete copy of every employment
agreement, independent contractor and brokerage agreement, and a
list and brief description of all other material contracts, agreements
and other instruments to which Merging Entity is a party at the date
hereof. Except as identified in Schedule 2.20, or in any other
Schedule attached to this Agreement, Merging Entity is not a party to
any oral or written: (i) material contract, agreement or other
instrument not made in the ordinary course of business; (ii) contract
for the employment of any person which is not terminable (without
liability) on 30 days or less notice; (iii) license, franchise,
distributorship, dealer, manufacturer's representative, sales agency or
advertising agreement; (iv) contract with any labor organization; (v)
lease, mortgage, pledge, conditional sales contract, security
agreement, factoring agreement or other similar agreement with
respect to any real or personal property, whether as lessor, lessee or
otherwise; (vi) contract to provide facilities, equipment, services or
merchandise to any other person, firm or corporation; (vii) contract
for the future purchase of materials, supplies, services, merchandise
or equipment; (viii) profit-sharing, bonus, deferred compensation,
stock option, severance pay, pension, retirement or other plan or
agreement providing employee benefits; (ix) agreement or
arrangement for the sale of any of its properties, assets or rights or
for the grant of any preferential rights to purchase any of its assets,
properties, or rights; (x) guaranty, subordination or other similar or
related type of agreement; (xi) contract or commitment for capital
expenditures; (xii) agreement or covenant not to compete, solicit or
enter into any particular line of business; or (xiii) agreement for the
acquisition of any business or substantially all of the properties,
assets or stock or other securities of any business under which there
are any continuing or unperformed obligations on the part of Merging
Entity. Merging Entity is not in default in any material respect under
any agreement, lease, contract or other instrument to which it is a
party. No party with whom Merging Entity has any agreement which is of
material importance to its business is in default thereunder.
2.21 Absence of Certain Events. Since the Most Recent
Balance Sheet Date, the business of Merging Entity has been
conducted only in the ordinary course and in substantially the same
manner as theretofore conducted, and, except as set forth in Schedule
2.21 attached to this Agreement, or in any other Schedule attached to
this Agreement, Merging Entity has not, since the Most Recent
Balance Sheet Date: (i) issued any stocks, bonds or other corporate
securities or granted any options, warrants or other rights calling for
the issue thereof; (ii) incurred, or become subject to, any material
obligation or liability (whether absolute or contingent) except (A)
current liabilities incurred in the ordinary course of business, (B)
obligations under contracts entered into in the ordinary course of
business and (C) obligations under contracts not entered into in the
ordinary course of business which are listed in Schedule 2.20; (iii)
discharged or satisfied any lien or encumbrance or paid any obligation
or liability (whether absolute or contingent) other than current
liabilities shown on the Most Recent Balance Sheet and current
liabilities incurred since the Most Recent Balance Sheet Date in the
ordinary course of business; (iv) declared or made any payment of
dividends or distribution of any assets of any kind whatsoever to
stockholders or purchased or redeemed any of its capital stock; (v)
mortgaged, pledged or subjected to lien, charge or any other
encumbrance, any of its assets and properties, real, tangible or
intangible; (vi) sold or transferred any of its assets, properties or
rights, or cancelled any debts or claims, except in each case in the
ordinary course of business, or entered into any agreement or
arrangement granting any preferential rights to purchase any of its
assets, properties or rights or which required the consent of any party
to the transfer and assignment of any of its assets, properties or
rights; (vii) suffered any extraordinary losses (whether or not covered
by insurance) or waived any extraordinary rights of value; (viii)
entered into any transaction other than in the ordinary course of
business except as herein stated; (ix) amended its articles of
incorporation or bylaws; (x) increased the rate of compensation
payable or to become payable by it to any of its employees or agents
over the rate being paid to them at the Most Recent Balance Sheet
Date; (xi) made or permitted any amendment to or termination of
any material contract, agreement or license to which it is a party
other than in the ordinary course of business; or (xii) made capital
expenditures or entered into any commitments therefor aggregating
more than $5,000.00. Except as contemplated by this Agreement, or
the Schedules referred to in this Agreement, between the date hereof
and the Closing Date, Merging Entity will not, without the prior
written consent of Parent, do any of the things listed above in clauses
(i) through (xii) of this Section 2.21.
2.22 Investigations and Litigation. There is no investigation
by any governmental agency pending, or, to the best knowledge of
Shareholders, threatened against or adversely affecting Merging
Entity, and except as set forth on Schedule 2.22, there is no action,
suit, proceeding or claim pending, or, to the best knowledge of
Shareholders, threatened against Merging Entity, or any of its
businesses, properties, assets or goodwill, which might have a material
adverse effect on such corporation, or against or affecting the
transactions contemplated by this Agreement. There is no
outstanding order, injunction, judgment or decree of any court,
government or governmental agency against or affecting Merging
Entity, or any of its businesses, properties, assets or goodwill.
2.23 Overtime, Back Wages, Vacation and Minimum Wages.
To the best knowledge of Shareholders, no present or former
employee of Merging Entity has any claim against Merging Entity
(whether under federal or state law) under any employment
agreement, or otherwise, on account of or for: (i) overtime pay for
any period other than the current payroll period; (ii) wages or salary
for any period other than the current payroll period; (iii) vacation or
time off (or pay in lieu thereof), other than that earned in respect of
the current fiscal year; or (iv) any violation of any statute, ordinance,
rule or regulation relating to minimum wages or maximum hours of
work, except as otherwise set forth in Schedule 2.23.
2.24 Discrimination, Occupational Safety and Other Statutes
and Regulations. To the best knowledge of Shareholders, no persons
or parties (including, without limitation, governmental agencies of any
kind) have any claim, or basis for any claim, action or proceeding,
against Merging Entity arising out of any statute, ordinance, rule or
regulation relating to discrimination in employment or employment
practices or occupational safety and health standards (including,
without limitation, The Occupational Safety and Health Act, The Fair
Labor Standards Act, Title VII of the Civil Rights Act of 1964, The
Civil Rights Act of 1992, The Americans with Disabilities Act, and
The Age Discrimination in Employment Act of 1967, as any of the
same may have been amended).
2.25 Employee Benefit Plans.
(A) There are no employee benefit plans or
arrangements of any type, including but not limited to any retirement,
health, welfare, insurance, bonus, executive compensation, incentive
compensation, stock bonus, stock option, deferred compensation,
commission, severance, parachute, rabbi trust program or plan
described in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), maintained by Merging Entity, or
with respect to which Merging Entity has a liability, other than those
set forth in Schedule 2.25(a) ("Employee Benefit Plans").
(B) With respect to each Employee Benefit Plan, except
as set forth in Schedule 2.25(b): (i) if intended to qualify under
Sections 79, 105, 106, 125, 129, 401(a), 401(k), 403(a), or 409, or
other Sections, of the Internal Revenue Code ("Code"), such plan so
qualifies, and if applicable, its trust is exempt from federal income tax
under Code Section 501(a); (ii) if intended to qualify as an
organization described in Section 501(c)(9) of the Code, such
organization so qualifies and any trusts established pursuant to its
constitution are exempt from federal income tax under Section 501(a)
of the Code; (iii) such plan has been administered and enforced in
accordance with its terms and applicable law; (iv) no breaches of
fiduciary duty by Merging Entity, the Trustees, or, to the best
knowledge and belief of Merging Entity and Shareholders after
reasonable investigation, any other person, have occurred; (v) no
disputes are pending, or, to the knowledge of Merging Entity and
Shareholders, threatened; (vi) no nonexempt prohibited transaction
has occurred; (vii) there has been no reportable event for which the
30-day notice requirement under ERISA has not been waived; (viii)
all contributions and premiums due have been made on a timely basis
(including, if applicable, the time limited established under Code
Sections 404 and 412); (ix) all contributions made or required to be
made meet the requirements for deductibility under the Code; (x) all
contributions which have not been made have been properly recorded
in the financial records of Merging Entity; and (xi) except as set forth
in Schedule 2.25(b), no liability (whether an indebtedness, a fine, a
penalty, a tax or any other amount) has been incurred or will be
incurred by Merging Entity as a result of its maintenance, operation
or termination of any Employee Benefit Plan.
(C) No Employee Benefit Plan is a multiemployer
plan, as defined in Section 4001(a)(3) of ERISA or a multiple
employer plan. The consummation of the transactions contemplated
by this Agreement will not entitle any individual to severance pay,
and will not accelerate the time of payment or vesting, or increase the
amount, of compensation due to any individual.
(D) With respect to each Employee Benefit Plan,
Merging Entity has delivered or caused to be delivered to Parent true
and complete copies, where applicable, of (i) all plan documents,
amendments and trust agreements currently in effect; (ii) all summary
plan descriptions, or other notices or summaries of modifications,
which have been prepared by, or on behalf of Merging Entity; (iii) all
material employee communications; (iv) the five (5) most recent
annual reports (Forms 5500); (v) the most recent annual and any
subsequent periodic accounting of plan assets; and, (vi) the most
recent determination letter received from the IRS.
(E) With respect to each Employee Benefit Plan, there
is no pending claim or lawsuit which has been asserted against that
Employee Benefit Plan, the assets of any of the trusts under such
Employee Benefit Plan, Merging Entity, or any fiduciary of such
Employee Benefit Plan with respect to the operation of such
Employee Benefit Plan. Merging Entity and Shareholders, after
reasonable investigation, know of no facts or circumstances which
could form the basis for any such claim or lawsuit.
(F) All amendments required to have been made to
bring each Employee Benefit Plan into conformity in all material
respects with all of the applicable provisions of the Code, ERISA and
other applicable laws have been made.
(G) Each Employee Benefit Plan has met, by its terms
and in its operation, all applicable requirements for an exemption
from federal income taxation under Section 501(a) of the Code.
(H) Each Employee Benefit Plan has at all times been
maintained in accordance with all applicable laws, has complied with
applicable ERISA or other requirements; and, there are no actions,
audits, suits or claims which are threatened or pending against any
such Employee Benefit Plan, any fiduciary of any of the Employee
Benefit Plans, or against any of the assets of the Employee Benefit
Plans.
(I) Merging Entity has made full and timely payment
of all amounts required to be contributed under the terms of each
Employee Benefit Plan and no event or condition exists regarding any
of the Employee Benefit Plans which could be deemed a "reportable
event" with respect to which the 30-day notice has not been waived
which could result in a material liability to Merging Entity and no
event exists which would subject Merging Entity to a material fine
under Section 4701 of ERISA.
(J) Merging Entity is not subject to any material
liability, tax or penalty and the termination of or withdrawal from any
Employee Benefits Plan will not subject Merging Entity to any
additional contribution requirement and the execution or
performance of the transactions contemplated by this Agreement will
not create, accelerate or increase any obligations under any Employee
Benefit Plan.
(K) Merging Entity has no obligation to any retired or
former employee or any current employee upon retirement under any
Employee Benefit Plan.
(L) Each Employee Benefit Plan maintained by
Merging Entity has at all times been maintained, by its terms and in
operation, in accordance with all applicable laws in all material
respects, including (to the extent applicable) Code Section 4980B.
Further, there has been no failure to comply with applicable ERISA
or other requirements concerning the filing of reports, documents and
notices with the Secretary of Labor and Secretary of Treasury or the
furnishing of such documents to participants or beneficiaries that
could subject any Employee Benefit Plan to any material civil or any
criminal sanction or could require any such person to indemnify any
other person for such a sanction. There are no actions, audit, suits or
claims known to Merging Entity or Shareholders which are pending
or threatened against any Employee Benefit Plan, any fiduciary of any
of the Employee Benefit Plans with respect to the Employee Benefit
Plans or against the assets of any of the Employee Benefit Plans,
except claims for benefits made in the ordinary course of the
operation of such plans.
(M) Merging Entity is not subject to any material
liability, tax or penalty whatsoever to any person whomsoever as a
result of Merging Entity engaging in a prohibited transaction under
ERISA or the Code, and neither Merging Entity nor any of the
Shareholders has knowledge of any circumstances which reasonably
might result in any such material liability, tax or penalty as a result
of
a breach of fiduciary duty under ERISA. The termination of or
withdrawal from any Employee Benefit Plan maintained by Merging
Entity which is subject to Title IV of ERISA, or any other Employee
Benefit Plan, will not subject Merging Entity to any additional
contribution requirement or to any other liability, tax or penalty
whatsoever. The execution or performance of the transactions
contemplated by this Agreement will not create, accelerate or
increase any obligations under any Employee Benefit Plan. Merging
Entity has no obligation to any retired or former employee, or any
current employee upon retirement, under any Employee Benefit Plan.
2.26 Competitors. Except as disclosed in Schedule 2.26, none
of Shareholders has any interest, direct or indirect, as an owner,
partner, agent, shareholder, officer, director, employee, consultant or
otherwise, in any firm, partnership, corporation or other entity that is
engaged in the insurance agency business, or any aspect thereof, other
than Merging Entity or a corporation listed on a national securities
exchange or a corporation whose securities are traded in the
over-the-counter market.
2.27 Accounts and Notes Receivable. The reserve for bad
debts, if any, contained in the Most Recent Balance Sheet and the
Financial Statements was calculated on a consistent basis which, in
the light of past experience, is considered adequate. All accounts
receivable and all notes receivable of Merging Entity reflected in the
Most Recent Balance Sheet are fully collectible when due at the
aggregate amount shown, less the bad debt allowance stated therein,
it being the intent of all of the parties to this Agreement that
Shareholders are hereby representing and warranting to Parent the
full collectibility when due of all of the notes receivable and accounts
receivable of Merging Entity in the aggregate amount shown in each
such balance sheet, less the bad debt allowance stated therein.
Except as set forth in Schedule 2.27, all notes receivable of Merging
Entity are due and payable within one year after the Effective Date.
Any such notes receivable due and payable more than one year after
the Effective Date ("Long Term Notes") are fully collectible when due
at the aggregate amount shown. Except as further set forth in
Schedule 2.27, no Long Term Notes are secured by any interest in
property, whether it be real, personal or intangible. In the event of
any delinquency or nonpayment of any portion of a Long Term Note,
Shareholders shall be obligated to satisfy such deficiency in the same
manner as specified below for all other receivables of Merging Entity.
2.28 Permits and Licenses. All permits, licenses and approvals
of all federal, state or local regulatory agencies, which are required in
order to permit Merging Entity and its employees and agents to carry
on business as now conducted by it, have been obtained by it and are
current. 2.29 No Violation or Default. The execution, delivery
and performance of this Agreement by Shareholders and Merging
Entity will not violate, result in a breach of, or constitute a default
under, the articles of incorporation or bylaws of Merging Entity or of
any indenture, contract, agreement or other instrument to which
Merging Entity is a party or is bound including, without limitation,
any agency contract with any insurance company.
2.30 Common Stock of Parent. Shareholders understand and
acknowledge that the common stock of Parent to be received
pursuant to this Agreement is subject to Rule 145 of the Securities
Exchange Commission ("SEC"); such stock is being acquired for
investment purposes only and not with a view to distribution or
resale; any sale or other disposition of such stock shall be made
pursuant to the regulations promulgated under Rule 145 and in
compliance with all other applicable laws, regulations and
interpretations, including, without limitation, any accounting
interpretations of the SEC with regard to maintenance of the pooling-
of-interests contemplated herein.
2.31 Financing Statements. Except as disclosed on Schedule
2.31, there are no financing statements or other security interests of
any kind filed or required to be filed against Merging Entity's assets
or affecting the use of, or title to, such assets ("Financing
Statements"). Except as further disclosed on Schedule 2.31, there are
no deferred money purchase notes related to Merging Entity's
acquisition of any portion of its assets ("Notes"). Any such liabilities
related to the Financing Statements or Notes can be discharged or
prepaid prior to their stated maturities without penalty, except as
further detailed on Schedule 2.31. The assumption by Surviving
Corporation of such liabilities will not result in a default of any
Financing Statement or Note.
2.32 Brokers. Except as disclosed in Schedule 2.32, neither
Merging Entity nor any Shareholder has employed any broker or
finder for the purposes of completing the transactions contemplated
herein such that no commission, finder's fee, brokerage fee or similar
charge will be incurred for the consummation of the transactions
contemplated herein.
2.33 Disclosure. Shareholders have each received a copy of
Parent's current S-4 registration statement dated February 12, 1992,
most recent annual report, Form 10-K and Form 10-Q and will
acknowledge receipt of an amendment or supplement to such
registration statement.
2.34 Material Misstatements or Omissions. No representation
or warranty by Shareholders or Merging Entity, or any of them,
contained in this Agreement or in any document, statement,
certificate, Schedule or financial statement furnished or to be
furnished to Parent by or on behalf of Shareholders or Merging
Entity, or any of them, pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement contains, or
will when furnished contain, any untrue statements of a material fact,
or omits, or will then omit to state, a material fact necessary to make
the statements contained herein or therein not misleading.
3. COVENANTS OF SHAREHOLDERS AND MERGING
ENTITY PRIOR TO EFFECTIVE DATE. Shareholders and
Merging Entity covenant with Parent that, between the date of the
execution of this Agreement and the Effective Date, unless prior
written consent to the contrary is obtained from Parent:
3.1 Operate in Ordinary Course. Merging Entity will be
operated only in the ordinary course of business.
3.2 Negative Covenants. Except as contemplated by this
Agreement, Merging Entity will not do any of the things listed in
clauses (i) through (xii) of Section 2.21 of this Agreement.
3.3 Continuing Accuracy of Representations. There shall be
no action, or failure to act, which would render any of the
representations and warranties of Shareholders contained in this
Agreement untrue or incorrect in any material respect.
3.4 Preserve Business Organizations. Except as otherwise
requested by Parent, and without making any commitment on
Parent's behalf, Shareholders will use their best efforts to preserve
the business organizations of Merging Entity intact, to keep available
to Parent the services of its present employees, and to preserve for
Parent the goodwill of its customers and others having business
relations with them.
3.5 Corporate Approvals. The board of directors of Merging
Entity will recommend to Shareholders that Shareholders adopt this
Agreement. Merging Entity agrees to submit this Agreement to
Shareholders for adoption by unanimous written consent with waiver
of notice of the terms of this Agreement prior to the Effective Date,
but only after delivery by Parent to Shareholders and Merging Entity
of an amended or supplemented S-4 registration statement for
Parent's common stock to be issued pursuant to this Agreement and
after Shareholders have had an effective opportunity of at least ten
(10) days to review such prospectus. Unless there is a failure of
Parent to fulfill its conditions set forth in Section 7 hereof or there
is a material adverse change in the financial conditions of Parent,
Shareholders covenant to adopt this Agreement and to approve all
aspects of the Merger within the time period contemplated herein.
4. ACCESS AND INFORMATION. Throughout the period
between the date of the
execution of this Agreement by Shareholders and Merging Entity and
the Closing Date, Shareholders shall cause Merging Entity and all its
employees to give to Parent, and any and all authorized
representatives of Parent (including auditors and attorneys), full and
unrestricted access, during normal business hours, to the offices,
assets, properties, contracts, books and records of Merging Entity in
order to give Parent full opportunity to make such investigations as it
deems appropriate with respect to the affairs of Merging Entity, and
shall further cause Merging Entity, and all of its employees to provide
to Parent during such period such additional information concerning
the affairs of Merging Entity as Parent may reasonably request. All
information obtained from any such investigation shall be held in
confidence, and, in the event of the termination of this Agreement,
Parent covenants with Shareholders and Merging Entity that Parent
will use its best efforts to return all such documents, working papers
and other written information concerning Shareholders and Merging
Entity obtained or prepared in connection with any such investigation.
Regardless of any such investigation by Parent, all
representations and warranties of Shareholders contained in this
Agreement shall remain in full force and effect and no such
investigation shall cause or result in a waiver by Parent of any of the
representations and warranties of Shareholders contained herein.
5. REPRESENTATIONS AND WARRANTIES OF
PARENT. Parent represents and warrants to Shareholders as
follows:
5.1 Organization and Standing of Parent and Survivor. Parent
is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia. Survivor is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan.
5.2 Authority. Except for: (i) the approval of the transactions
contemplated hereby by the board of directors of Parent and by the
board of directors and shareholder of Survivor; (ii) amendment or
supplementation of Parent's registration statement pursuant to this
Agreement; (iii) approval by the New York Stock Exchange of the
listing of the shares of Parent common stock to be issued pursuant to
this Agreement; and (iv) the issuance of a certificate of merger to be
issued by the Secretary of State of the State of Michigan, no
governmental or other authorization, approval or consent for the
execution, delivery and performance of this Agreement by Parent or
Survivor is required. The execution, delivery and performance of this
Agreement by Parent and Survivor will not violate, result in a breach
of, or constitute a default under, the articles of incorporation or
bylaws of any such corporation or any indenture, contract, agreement
or other instrument to which such corporation is a party or is bound.
5.3 Capitalization of Parent and Survivor. As of December
31, 1994, the authorized capital stock of Parent consisted of
50,000,000 shares of common stock, no par value, of which 14,679,464
shares were issued and outstanding, fully paid and nonassessable.
The authorized capital stock of Survivor consists of 5,000 shares of
common stock, $1.00 par value, of which 100 shares are issued and
outstanding, fully paid and nonassessable and owned of record and
beneficially by Parent. There are no outstanding options, warrants or
other rights to subscribe for or purchase capital stock of Survivor or
securities convertible into or exchangeable for capital stock of
Survivor.
5.4 Status of Parent common stock. The shares of Parent
common stock to be issued to Shareholders pursuant to this
Agreement will, when so issued, be duly and validly authorized and
issued, fully paid and nonassessable.
5.5 Brokers' or finders' fees. No agent, broker, person, or
firm acting on behalf of Parent or any of its subsidiaries or under the
authority of any of them is or will be entitled to any commission or
broker's or finder's fee or financial advisory fee from Parent or
Survivor in connection with any of the transactions contemplated
herein.
6. CONDITIONS PRECEDENT TO PERFORMANCE BY
PARENT AND SURVIVOR. The obligation of Parent and Survivor
to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction or fulfillment, on or prior to the Closing
Date, of the following conditions precedent, in addition to all other
conditions precedent contained in this Agreement, each of which may
be waived by Parent:
6.1 Representations. Parent shall not have discovered any
material error, misstatement or omission in any of the representations
and warranties made by Shareholders contained in this Agreement, or
in any financial statement, certificate, Schedule, exhibit or other
document attached to or delivered pursuant to this Agreement, and
all representations and warranties of Shareholders contained in this
Agreement and in any financial statement, certificate, Schedule,
exhibit or other document attached to or delivered pursuant to this
Agreement shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect, except as affected
by transactions expressly authorized herein or otherwise approved in
writing by Parent, as though such representations and warranties had
been made on and as of the Closing Date; and Shareholders and
Merging Entity shall have delivered to Parent a certificate, dated the
Closing Date, and signed by all of them, to the foregoing effect, in
form and substance as set forth in Schedule 6.1.
6.2 Covenants. Merging Entity and Shareholders shall have
performed and complied in all material respects with all covenants,
agreements and conditions required under this Agreement to be
performed or complied with by them on or before the Closing Date;
and Merging Entity and Shareholders shall have delivered to Parent a
certificate dated the Closing Date, and signed by all of them, to the
foregoing effect, in form and substance as set forth in Schedule 6.1.
6.3 Litigation. No suit, action or proceeding, or governmental
investigation, against or concerning, directly or indirectly, Merging
Entity, or any of its assets and properties, shall have been instituted
or reinstituted, nor shall any basis therefor have arisen, that might
result in any order or judgment of any court or of any administrative
agency which, in the opinion of counsel for Parent, renders it
impossible or inadvisable for Parent to consummate or cause to be
consummated the transactions contemplated by this Agreement.
6.4 Approval by Counsel. All transactions contemplated
hereby, and the form and substance of all legal proceedings and of all
instruments used or delivered hereunder, shall be reasonably
satisfactory to counsel for Parent.
6.5 Opinion. Parent shall have received a favorable opinion,
dated as of the Closing Date, from the law firm of Rhoades, McKee,
Boer, Goodrich and Titta, counsel for Shareholders and Merging
Entity, in form and substance as set forth in Schedule 6.5 and
otherwise reasonably satisfactory to counsel for Parent.
6.6 Delivery of Common Stock. There shall be duly delivered
for cancellation to Parent at the Closing not less than 100% of the
shares of Common Stock issued and outstanding at the time of the
Closing, free and clear of any liens or encumbrances as required to be
listed on Schedule 2.4.
6.7 Continuation of Agency Contracts. To the extent desired
by Parent, Parent shall have obtained a statement in writing from
each of the insurance companies identified in Schedule 2.14 of this
Agreement, in form satisfactory to Parent and Parent's counsel, by
which each such insurance company agrees that it will not terminate
its insurance agency contract solely by reason of the transactions
contemplated in this Agreement, and further agrees that it will
continue to recognize Survivor, and its successors and assigns, as its
agent under the existing agency contract between such company and
Merging Entity or that it will enter into a substantially similar agency
contract with Survivor, or its successors and assigns.
6.8 Shareholder Employment Agreements. Employment
Agreements between Survivor, as Employer, and each of the
Shareholders, respectively, as Employee, in form and substance as set
forth in Schedule 6.8 attached hereto, shall have been duly executed
by each of them and delivered to Parent.
6.9 Noncompete Agreement. A Noncompete Agreement
between Survivor, as Agency, and Richard D. Jablonski, father of
Shareholders, as Covenantor, shall have been executed, in form and
substance as set forth in Schedule 6.9 attached hereto.
6.10 Employee Benefit Plans. Parent shall have been
furnished evidence satisfactory to Parent that all Employee Benefit
Plans identified in Schedule 2.25 attached to this Agreement have
been, as directed by Parent, either continued, modified in conformity
with Parent's plans or terminated and, in the event of termination,
the benefits thereunder have either been "frozen" or provision has
been made for the distribution thereof in accordance with the terms
of such Employee Benefit Plans.
6.11 Material Adverse Change. There shall have been no
material adverse change in Merging Entity's business, business
prospects, Book of Business, assets and properties, or goodwill
between the date of the execution of this Agreement and the Closing
Date.
6.12 Tail Insurance. Unless notified in writing to the contrary,
Shareholders and Merging Entity shall have delivered to Parent, in
form reasonably satisfactory to Parent and Parent's counsel, evidence
of insurability, to be effective as of the Effective Date, for an
extended reporting period for errors and omissions of a minimum
three year duration with deductible limits reasonably acceptable to
Parent and Parent's counsel, which insurance, if bound, would insure
Merging Entity its agents and employees for the extended reporting
period for claims arising under errors and omissions occurring prior
to the Effective Date.
6.13 Related Party Transactions and Automobiles. All
"related party" (i.e. a Shareholder, a member of a Shareholder's
family, a business or entity affiliated with any of the foregoing)
receivables and payables of Merging Entity, except for the promissory
notes due to Richard D. Jablonski, which Parent expects to cause
Surviving Corporation to pay after the Effective Date, and any
receivables or payables from or to an employee of Merging Entity on
favorable terms shall have been removed from the books of Merging
Entity for their cash equivalent face amounts. Additionally,
Shareholders shall have caused Merging Entity to transfer all
automobiles owned by it and to have replaced such book value for
such automobiles with an equivalent amount of cash.
6.14 Lease. The premises presently occupied by Merging
Entity are not leased and are occupied by Merging Entity on a
month-to-month basis and Merging Entity (or Surviving Corporation
after the effectiveness of the Merger) can terminate such tenancy on
30 days notice to the landlord with no further liability.
6.15 Resolutions. Parent shall receive certified copies of
resolutions of the board of directors and Shareholders of Merging
Entity, to the extent deemed necessary by, and in form satisfactory to,
counsel for Parent, authorizing the execution and delivery of this
Agreement by Merging Entity and the consummation of the
transactions contemplated hereby.
6.16 Approvals. All statutory requirements for the valid
consummation by Merging Entity of the transactions contemplated by
this Agreement shall have been fulfilled; all authorizations, consents
and approvals of all federal, state, local and foreign governmental
agencies and authorities required to be obtained in order to permit
consummation by Merging Entity of the transactions contemplated by
this Agreement and to permit the business presently carried on by
Merging Entity to continue unimpaired immediately following the
Effective Date of this Agreement shall have been obtained.
6.17 Registration Statement. Parent shall have filed an
amended or supplemented S-4 registration statement with the SEC.
7. CONDITIONS PRECEDENT TO PERFORMANCE BY
SHAREHOLDERS AND MERGING ENTITY. The obligation of
Shareholders and Merging Entity to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or
fulfillment on or prior to the Closing Date, of the following
conditions, in addition to any other conditions contained in this
Agreement, each of which may be waived, collectively, by a majority
in interest of Shareholders and Merging Entity:
7.1 Representations. Shareholders shall not have discovered
any material error, misstatement or omission in any of the
representations and warranties made by Parent contained in this
Agreement, and all representations and warranties of Parent
contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and
effect, except as otherwise approved in writing by Shareholders and
Merging Entity, as though such representations and warranties had
been made on and as of the Closing Date; and Parent shall have
delivered to Shareholders and Merging Entity a certificate to the
foregoing effect, dated the Closing Date, in form and substance as set
forth in Schedule 7.1.
7.2 Covenants. Parent shall have performed and complied in
all material respects with all covenants, agreements and conditions
required under this Agreement to be performed and complied with by
Parent and shall have caused all corporate actions necessary for the
consummation of this Agreement to have been taken by it and
Survivor; and Parent shall have delivered to Shareholders and
Merging Entity a certificate to the foregoing effect, dated the Closing
Date, in form and substance as set forth in Schedule 7.2.
7.3 Effective Registration Statement. The registration
statement on Form S-4 under the Securities Act of 1933 referred to
in Section 2.34 hereof shall have been amended or supplemented and
be effective under such Act and not the subject of any "stop order" or
threatened "stop order" and the amended or supplemented prospectus
shall have been delivered to Shareholders and Merging Entity.
7.4 Prospectus Approval. After delivery and review of the
aforementioned amendment or supplement to Parent's S-4
registration statement, and subject to the limitations on disapproval
set forth in Section 3.5, Shareholders and Merging Entity shall have
approved this Agreement and the consummation of all transactions
contemplated thereby.
8. POST-MERGER COVENANTS.
8.1 POST-MERGER COVENANTS OF PARENT. Parent
covenants to Shareholders as follows:
A. Collection. To cause Surviving Corporation to use
its reasonable business efforts, at least comparable in quality to those
of Merging Entity prior to the Effective Date, to collect all notes
receivable and accounts receivable as described in Section 2.27.
B. Payment. Subject to Merging Entity fulfilling its
Tangible Net Worth requirements, as set forth in Section 14.6, and
subject to the fulfillment by Shareholders of their covenants set forth
in Section 8.2, to cause Surviving Corporation to pay timely all
liabilities of Merging Entity which have been properly reserved for in
the Merger Balance Sheet, as defined in Section 8.2.A.
8.2 POST-MERGER COVENANTS OF SHAREHOLDERS.
Shareholders, jointly and severally, covenant to Parent as follows:
A. Delivery of Merger Balance Sheet. To cause to be
delivered to Parent as soon after the Closing Date as is practicable,
and in all events no later than sixty (60) days after the Effective Date,
the Merger Balance Sheet, as defined in Section 14.6(a), and its
related work papers and other financial documents prepared therefor.
The Merger Balance Sheet will be true and correct, will be in
accordance with the books and records of Merging Entity, will present
fairly the financial conditions and results of operations of Merging
Entity as of the date and for the period indicated, will not contain
any untrue statement of a material fact nor will omit to state any
material fact required to be stated to make the Merger Balance Sheet
not misleading.
B. Post-Merger Filings. To cause to be timely filed, at
no expense which has not previously been reserved for in the Merger
Balance Sheet, all federal, state and local tax returns of all kinds
required to be filed by Merging Entity for all tax periods ending on
or prior to the Effective Date ("Post-Merger Filings"). All Post-
Merger Filings will be true and correct and, prior to actual filing
thereof, Shareholders shall deliver drafts of such filings to Parent for
its review.
C. Employee Benefit Plans. Unless written directive
from Parent stating otherwise is delivered to Shareholders prior to
the Closing Date , to cause, at no expense which has not previously
been reserved for in the Merger Balance Sheet, all Employee Benefit
Plans of Merging Entity to have been terminated with any benefits
thereunder having been either "frozen" or provisions having been
made for distribution thereof in accordance with the terms of such
Employee Benefit Plan. Shareholders specifically understand that
they have covenanted hereby to take any and all actions reasonably
required to eliminate any and all potential liability of Surviving
Corporation and Parent with respect to such Employee Benefits
Plans.
D. Bind Tail Coverage. To bind the tail coverage
referenced in Section 6.12 as soon after the Effective Date as is
possible and in no event later than seven (7) days after the Effective
Date, and to pay any and all deductibles accruing under such tail
policy during the period of three years after the Effective Date.
Shareholders acknowledge that Parent shall have the right to bind tail
coverage for Merging Entity if Shareholders do not produce an
appropriate certificate of insurance within thirty (30) days after
Closing. Any costs for such tail coverage shall be reflected on the
Merger Balance Sheet as if such coverage had been bound prior to
the Effective Date.
E. Disposition of Shares. To hold the shares of Parent
common stock received in this Merger and not to dispose of such
shares in either a manner or volume or at a time which would cause
this Merger not to be treated as a merger.
9. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES AND INDEMNIFICATION.
9.1 Survival of Representations and Warranties of Parent.
All representations, warranties and covenants made herein or
pursuant hereto by Parent shall survive the Closing only until
October 31, 1998.
9.2 Survival of Representations and Warranties of
Shareholders. Except for the specific contingencies detailed below in
subparagraphs (ix) through (xiv), inclusive, of Section 9.3 for which
Parent shall be indemnified for the periods stated therein, all
representations, warranties and covenants made herein or pursuant
hereto by Shareholders shall survive the Closing only until October
31, 1998.
9.3 Indemnification Agreement by Shareholders.
Shareholders, jointly and severally, shall indemnify and hold harmless
Parent and Survivor, and their respective successors and assigns, from
and against and in respect of:
(i) All indebtednesses, obligations and liabilities of
Merging Entity of any nature whatsoever, whether accrued, absolute,
contingent or otherwise, existing at the close of business as of the day
prior to the Effective Date to the extent not reflected or reserved
against in full in the Merger Balance Sheet, including, without
limitation, any tax liabilities to the extent not so reflected or
reserved against, accrued in respect of, or measured by the income of
Merging Entity for any period prior to the Effective Date, or arising
out of transactions entered into, or any state of facts existing, prior
to such date;
(ii) Without limiting the generality of the indemnity set
forth in Section 9.3(i) above, any and all tax liabilities of Merging
Entity, whether federal, state, local or otherwise, resulting from a
lawful deficiency for any time period prior to the Effective Date;
(iii) All liabilities of, or claims against, Merging Entity
arising out of any contract or commitment of the character described
in Section 2.20 hereof and not listed or described in Schedule 2.20
attached to this Agreement, or arising out of any contract or
commitment entered into or made by Merging Entity between the
date of the execution of this Agreement and the Closing Date except
as expressly permitted under any of the provisions of this Agreement;
(iv) Subject to the provisions of Section 2.27 hereof, any
nonpayment on demand, when due, of any accounts receivable or
notes receivable of Merging Entity;
(v) Any and all claims, demands, actions and causes of
action arising out of or in any way relating to any health benefit plan
or to any Employee Benefit Plan (as described in Section 2.25)
presently maintained or heretofore maintained by Merging Entity or
arising out of or in any way relating to the termination or "freezing"
of any such Employee Benefit Plan;
(vi) Any loss, damage, liability or deficiency resulting
from any misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of Shareholders or Merging
Entity, or any of them, under the terms of this Agreement, or from
any misrepresentation in or omission from any financial statement,
certificate, Schedule, exhibit or other document proposed by or at the
direction of Shareholders, or any of them, and attached to this
Agreement or delivered or to be delivered to Parent under the terms
of this Agreement;
(vii) Any and all claims, demands, actions and causes of
action arising out of or in any way relating to errors and omissions
and all other types of litigation and claims, which are attributable to
Merging Entity prior to the Effective Date;
(viii) Until October 31, 1998, and to the extent not
previously cured in the manner specified in Section 14.6, the amount
by which Tangible Net Worth (as defined in Section 14.6) shall be
less than the amount of negative $91,515 (-$91,515);
(ix) Until one year after the expiration of the
applicable statute of limitations, any and all tax liabilities arising
out of all open returns of Merging Entity for all periods ending on or
prior to the Effective Date and relating to amortization of intangibles,
deductions for compensation, "listed" property, or travel and
entertainment expenses or the tax characterization of expenses
incident to this Agreement, any and all claims or liabilities arising out
of or in any way relating to any health benefit plan or to any
Employee Benefit Plan (as described in Section 2.25) presently or
heretofore maintained by Merging Entity or arising out of or in any
way relating to the termination, modification or "freezing" of any such
Employee Benefit Plan, and any and all claims or liabilities arising
out of Post-Merger Filings or for a violation of the covenants set
forth in Section 8.E hereof;
(x) Until three (3) years after the Effective Date, all
deductibles arising under the tail coverage referenced in Section 6.12;
(xi) Until October 31, 1998, any and all claims,
demands, actions or causes of action arising out of or in any way
relating to any of the pending or threatened litigation disclosed or
required to be disclosed on Schedule 2.22;
(xii) Until October 31, 1998, any existing unreconciled
discrepancies as or to have been disclosed on Schedule 2.14;
(xiii) Until October 31, 1998, any and all losses, claims,
demands or deficiencies arising out of or in any way relating to the
ownership by Merging Entity of the intangible assets of Merging
Entity;
(xiv) Until one year after the expiration of the
applicable statute of limitations, any and all liabilities, claims,
losses demands or deficiencies of any nature whatsoever arising out of a
"Known Misrepresentation" (a representation or warranty made with
actual knowledge of its falsity or with reckless indifference to the
truth) or due to the ownership of the common stock not being as set
forth in Section 1.4(a); and
(xv) All demands, claims, actions, suits, proceedings,
loss, damage, liability, judgments, costs and expenses (including,
without limitation, court costs, experts' and attorneys' fees at the
trial level and in connection with all appellate proceedings) incident
to any of the foregoing.
9.4 Indemnification Agreement by Parent. Parent shall
indemnify and hold harmless Shareholders, and each of them, and
their respective heirs and personal representatives from and against
and in respect of:
(i) Any loss, damage, liability or deficiency resulting from any
misrepresentation, breach of warranty or nonfulfillment of any
covenant or agreement on the part of the Parent under the terms of
this Agreement;
(ii) All demands, claims, actions, suits, proceedings, loss,
damage, liability, judgments, costs and expenses (including, without
limitation, court costs, experts' and attorneys' fees at the trial level
and in connection with all appellate proceedings) incident to any of
the foregoing.
9.5 Assertion of Indemnification Claim. Either the
Shareholders or Parent, as the case may be (an "Indemnified Party"),
shall give notice to the other (an "Indemnifying Party") as soon as
possible after the Indemnified Party has actual knowledge of any
claim as to which indemnification may be sought and the amount
thereof, if known, and supply any other information in the possession
of the Indemnified Party regarding such claim, and will permit the
Indemnifying Party (at its expense) to assume the defense of any
third party claim and any litigation resulting therefrom, provided that
counsel for the Indemnifying Party who shall conduct the defense of
such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, and provided further that the omission by the
Indemnified Party to give notice as provided herein will not relieve
the Indemnifying Party of its indemnification obligations hereunder
except to the extent that the omission results in a failure of actual
notice to the Indemnifying Party and the Indemnifying Party is
materially damaged as a result of the failure to give notice. The
Indemnifying Party may settle or compromise any third party claim or
litigation with the consent of the Indemnified Party which consent
may not be unreasonably withheld.
The Indemnified Party shall have the right at all times to
participate in the defense, settlement, negotiations or litigation
relating to any third party claim or demand at its own expense. In
the event that the Indemnifying Party does not assume the defense of
any matter as above provided, then the Indemnified Party shall have
the right to defend any such third party claim or demand, and will be
entitled to settle any such claim or demand in its discretion. In any
event, the Indemnified Party will cooperate in the defense of any such
action and the records of each party shall be available to the other
with respect to such defense.
9.6 Limitation of Amount of Indemnity and Escrow of
Parent Common Stock. Except for the provisions of subparagraphs
(ix) through (xiv), inclusive, of Section 9.3 (and so much of
subparagraph (xv) of Section 9.3 as relates to the foregoing) which
shall be unlimited in the amount of indemnity (the "Continuing
Indemnity"), the remainder of indemnity provided to Parent pursuant
to Section 9.3 ("General Indemnity") and the indemnity provided by
Parent to Shareholders pursuant to Section 9.4 shall be limited to an
amount equal to 26,600 shares of Parent's common stock times $12.50
per share, plus $91,515, which is the approximate minimum value
upon which this Agreement is predicated.
Notwithstanding anything in the foregoing to the
contrary, Parent shall retain on the Effective Date from the shares of
its common stock to be delivered to the Shareholders, according to
the percentage ownership each such Shareholder has in Merging
Entity, as security for the indemnity provided to it herein, 2,660
shares of its common stock ("Escrowed Shares"). By their signatures
to this Agreement, each Shareholder has granted to Parent a security
interest in his portion of the Escrowed Shares, and has consented to
the escrow provision described herein and has granted unto Parent a
continuing limited power of attorney to act over his proportionate
number of the Escrowed Shares pursuant to this Agreement, which
power of attorney is coupled with an interest and is not revocable
until the later of: (i) October 31, 1997; (ii) determination and
settlement of any amounts pursuant to Section 14.6; and (iii)
determination and settlement of any amounts claimed by Parent as of
October 31, 1997, pursuant to Section 9.3 ("Release Date").
Between the Effective Date and the Release Date, Parent shall
hold the Escrowed Shares and shall deposit any dividends received
thereon in an interest-bearing account. Upon the Release Date, and
absent a written directive to the contrary from each such Shareholder
not desiring to receive his shares pro rata, Parent shall distribute the
Escrowed Shares, less any decrease in such shares pursuant to this
Agreement, plus any additional shares issued pursuant to this
Agreement, to the Shareholders, pro rata. Dividends on the
Escrowed Shares and the interest earned thereon ("Escrow Funds")
shall be distributed in the same manner determined according to the
immediately preceding sentence. If Escrowed Shares were decreased
to satisfy the indemnity provided herein, the Escrow Funds shall be
reduced by a percentage equal to the fraction established where the
numerator is the number of Escrowed Shares used to satisfy such
indemnity and the denominator is the number of Escrowed Shares.
10. EXPENSES. All expenses (including, without limitation,
legal, auditing, accounting and other related expenses such as
preparation of Post-Merger Filings and the Merger Balance Sheet)
incurred in connection with this transaction by Merging Entity and
Shareholders, or any of them, shall be the sole responsibility of
Merging Entity or Shareholders (depending upon the nature of the
expense), and all expenses incurred by Parent in connection with this
transaction shall be the sole responsibility of Parent.
11. DEFAULT.
11.1 Default by Shareholders or Merging Entity. Except as
otherwise expressly provided in this Agreement, if Shareholders or
Merging Entity, or any of them, shall fail to perform or comply with
any covenant, agreement or condition contained in this Agreement
that is required to be performed or complied with by Shareholders or
Merging Entity on or prior to the Closing Date, then Parent shall
have the option to seek specific performance of this Agreement or to
sue such defaulting party for damages. If Parent elects to sue for
specific performance, Shareholders and Merging Entity expressly
waive any claim or defense that Parent has an adequate remedy at
law. 11.2 Default by Parent. Except as otherwise expressly
provided in this Agreement, if Parent shall fail to perform or comply
with any covenant, agreement or condition contained in this
Agreement that is required to be performed or complied with by
Parent on or prior to the Closing Date, then Shareholders and
Merging Entity, at the unanimous option of Shareholders and
Merging Entity, may seek specific performance of this Agreement or
may elect to sue for damages. If Shareholders and Merging Entity
elect to sue for specific performance, Parent expressly waives any
claim or defense that Shareholders and Merging Entity have an
adequate remedy at law.
12. NOTICES. All notices or other communications
permitted or required to be given hereunder by any party to any
other party shall be in writing and shall be delivered personally or by
telecopier, telex or other similar communication or sent by registered
or certified mail, postage prepaid:
(a) If to Shareholders or Merging Entity:
Mr. Daniel J. Jablonski, President
GENERAL ISNURANCE AGENCY, INC.
956 Innes N.E.
Grand Rapids, Michigan 49503
With copy to:
Edward B. Goodrich, Esquire
RHOADES, MCKEE, BOER, GOODRICH & TITTA
600 Waters Building
Grand Rapids, Michigan 49503
(b) If to Parent or Survivor:
Mr. Robert H. Hilb, President
HILB, ROGAL AND HAMILTON COMPANY
4235 Innslake Drive
Post Office Box 1220
Glen Allen, Virginia 23060-1220
With copy to:
Walter L. Smith, Esquire
HILB, ROGAL AND HAMILTON COMPANY
4235 Innslake Drive
Post Office Box 1220
Glen Allen, Virginia 23060-1220
Notices delivered personally or by telecopier, telex or other
similar communication shall be effective when delivered. Notices
forwarded by registered or certified mail shall be deemed effective
when received or in any event not later than ten (10) days after
deposit in the mails, postage prepaid. Any party wishing to change
any above named person or address may do so by complying with the
notice provisions of this Section.
13. EXTENSION OF TIME AND WAIVER.
(a) Time is of the essence with respect to this
Agreement. However, the parties hereto may, by mutual agreement in
writing, extend the time for the performance of any of the obligations
of the parties hereto.
(b) Each party for whose benefit a representation,
warranty, covenant, agreement or condition is intended may, in
writing: (i) waive any inaccuracies in the warranties and
representations contained in this Agreement; and (ii) waive
compliance with any of the covenants, agreements or conditions
contained herein and so waive performance of any of the obligations
of the other parties hereto, and any default hereunder; provided,
however, that any such waiver shall not affect or impair the waiving
party's rights in respect to any other representation, warranty,
covenant, agreement or condition or any default with respect thereto.
14. MISCELLANEOUS PROVISIONS.
14.1 Counterparts. Any number of counterparts of this
Agreement may be signed and delivered, each of which shall be
considered the original and all of which, together, shall constitute one
and the same instrument.
14.2 Governing Law. EXCEPT FOR THE MERGER OF
THE MERGING ENTITY INTO SURVIVOR, WHICH SHALL BE
GOVERNED BY MICHIGAN LAW, THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
14.3 Entire Agreement. This Agreement constitutes the
entire Agreement and understanding between the parties hereto with
respect to the transactions contemplated hereby, expressly
superseding all prior Agreements and understandings, whether oral or
written, and no change, modification, termination or attempted waiver
of any of the provisions of this Agreement shall be binding unless
reduced to writing and signed by the party or parties against whom
enforcement is sought.
14.4 Section Headings. The section headings in this
Agreement are for convenience of reference only and shall not be
deemed to alter or affect any provision hereof.
14.5 No Assignment. Neither this Agreement, nor any rights
or liabilities hereunder, may be assigned by any party without the
prior written consent of all of the other parties.
14.6 Adjustment Based on Merger Balance Sheet.
(a) Determination of Merger Balance Sheet. For
purposes hereof, "Merger Balance Sheet" means an audited balance
sheet of Merging Entity, as of the close of business on October 31,
1995, computed under Parent's GAAP Policy referenced in Section
2.7 hereof and in accordance with Section 2.27 hereof and after
having reconciled any differences between tax and financial
accounting so that Surviving Corporation shall not be responsible for
any liabilities unless and to the extent the same are reflected on the
Merger Balance Sheet. The Merger Balance Sheet shall be deemed
accepted by Parent if no objections thereto are made within fifteen
(15) days of delivery. If Parent objects to the Merger Balance Sheet
within fifteen (15) days of delivery, then the parties shall have fifteen
(15) days to resolve any objections of Parent to the Merger Balance
Sheet. If the parties are unable to resolve such differences, one
arbitrator shall be selected by Shareholders and one arbitrator shall
be selected by Parent. The two arbitrators shall then pick one
mutually acceptable arbitrator (the "Arbitrator") to resolve all
questions in dispute. The decision of the Arbitrator shall be final and
the fees for his services shall be borne fifty percent (50%) by Parent
and fifty percent (50%) by Shareholders.
Notwithstanding anything in the foregoing to the
contrary, if the Merger Balance Sheet is not submitted within seventy-
five (75) days after the Effective Date, then Parent shall submit a
Merger Balance Sheet within fifteen (15) days thereafter, which shall
be final, conclusive and binding on all parties hereto and not subject
to any of the arbitration provisions described above.
(b) Tangible Net Worth. The term "Tangible Net
Worth" means the remainder arrived at from the Merger Balance
Sheet when total liabilities are subtracted from total assets, and
furniture, fixtures and equipment and intangible assets other than
cash, cash equivalents and net receivables are then subtracted from
that remainder (total assets - total liabilities - furniture, fixtures
and equipment - intangible assets other than cash, cash equivalents and
net receivables).
(c) Adjustment. The number of shares to be delivered by
Parent to Shareholders pursuant to Section 1.4 shall be adjusted as
follows:
(i) If Tangible Net Worth exceeds negative
$91,515 (with such excess being referred to as "Excess Tangible Net
Worth"), then the number of shares shall be increased by the number
of shares determined by dividing Excess Tangible Net Worth by
$12.50; and
(ii) If Tangible Net Worth is less than
negative $91,515 (with such shortfall being referred to as "Insufficient
Tangible Net Worth"), then the number of shares shall be decreased
by the number of shares determined by dividing Insufficient Tangible
Net Worth by $12.50.
In the event of an increase in the number of
shares of common stock of Parent to be issued to Shareholders, such
additional shares shall be issued, promptly after determination of such
number, by Parent to Shareholders in the same proportion as set
forth in Section 1.4(a). In the event of a decrease in the number of
shares of common stock of Parent, such shares shall be assigned,
promptly after determination of such number, to Parent (at Parent's
discretion either from the Escrowed Shares or the Shareholders or
both) in the same proportions as set forth in Section 1.4(a), unless
Parent shall have received a differing written directive pursuant to
Section 9.6. The value of any shares of Parent common stock to be
issued or returned pursuant to this Agreement shall be adjusted to
reflect the occurrence after the Effective Date of any of the events
specified in Section 1.4(c).
14.7 Survival. Notwithstanding anything in the foregoing to
the contrary, any rights which Shareholders or Parent may have at law
or in equity against the other for a misstatement or omission by such
party which should have been made, corrected or disclosed by such
party, at or prior to the Effective Date, shall survive for the
applicable period provided by law or equity for the remedy of such
act or omission.
14.8 Schedules. Schedules referenced in this Agreement are
an integral part of this Agreement and are to be deemed a part of
this Agreement whether attached hereto on execution of this
Agreement or anytime thereafter.
14.9 Nonsolicitation Covenant. Each of the Shareholders, by
signature hereto, covenants that he shall not for a period of three (3)
years after the Effective Date, directly or indirectly, except on behalf
of Surviving Corporation, its successors or assigns, solicit or accept
risk management, insurance or bond business from any of the
customers of Merging Entity as of the moment immediately preceding
the Effective Date. Each of the Shareholders, by signature hereto,
acknowledges: (i) that this covenant is ancillary to this Merger
Agreement, is integral hereto and is independent of any other
provision herein, (ii) that this covenant is reasonably necessary for the
protection of Surviving Corporation's legitimate business interests;
(iii) that this covenant poses no undue hardship on the Shareholders
and is reasonably limited as to duration and scope; and (iv) that this
covenant is in addition to any covenants which Shareholders may
make in any employment or other agreements executed or to be
executed with Surviving Corporation. Further, if any part of this
covenant is deemed overbroad or void as against public policy, each
of the Shareholders, by signature hereto, acknowledges that such
invalid portions shall be severable from this covenant and specifically
requests that, upon such event, this covenant be reformed ("blue-
pencilled") to permit Surviving Corporation to obtain the maximum
permissible benefit from this covenant.
14.10 Acceptance. The binding date of acceptance of this
Agreement shall be the Date on which the last of the parties executes
the same.
EXECUTED by Shareholders and Merging Entity at Grand
Rapids, Michigan, this ___ day of _____________________, 1995.
SHAREHOLDERS:
______________________________
DANIEL J. JABLONSKI
______________________________
BRIAN J. JABLONSKI
MERGING ENTITY:
GENERAL INSURANCE AGENCY, INC.
By___________________________
DANIEL J. JABLONSKI, its
President
EXECUTED by Parent and Survivor at Grand Rapids,
Michigan, this ___ day of _____________________, 1995.
PARENT:
HILB, ROGAL AND HAMILTON COMPANY
By_____________________________________
____________________________________,
its___________________________________
SURVIVOR:
HILB, ROGAL AND HAMILTON COMPANY
OF GRAND RAPIDS
By______________________________________
____________________________________,
its _________________________________
a:\merger.agm [wls] Edited: October 13, 1995 11:48 am Printed:
October 19, 1995 at 10:49 a
