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Exhibit 99.3
STOCK PURCHASE AGREEMENT
BY AND AMONG
CENTURY BUSINESS SERVICES, INC.
AND
CBSI MANAGEMENT, INC.
AND
AVALON NATIONAL CORPORATION
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF THE SHARES.............................................................1
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SECTION 1.1. PURCHASE OF THE SHARES FROM SELLER...................................................1
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SECTION 1.2. PURCHASE PRICE FOR THE SHARES........................................................1
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SECTION 1.3. CLOSING..............................................................................2
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................................2
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SECTION 2.1. ORGANIZATION AND AUTHORITY...........................................................2
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SECTION 2.2. AUTHORIZATION........................................................................2
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SECTION 2.3. LITIGATION...........................................................................3
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SECTION 2.4. BROKERS AND FINDERS..................................................................3
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SECTION 2.5. ACCURACY OF REPRESENTATIONS, WARRANTIES AND OTHER STATEMENTS MADE....................3
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ARTICLE III REPRESENTATIONS OF SELLER AND CBIZ REGARDING SELLER, CBIZ AND THE SHARES...................3
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SECTION 3.1. ORGANIZATION AND AUTHORITY...........................................................3
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SECTION 3.2. AUTHORIZATION........................................................................4
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SECTION 3.3. TITLE AND POWER TO SELL..............................................................5
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SECTION 3.4. LITIGATION...........................................................................5
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SECTION 3.5. BROKERS AND FINDERS..................................................................5
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND CBIZ WITH RESPECT TO THE COMPANY..............6
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SECTION 4.1. ORGANIZATION AND AUTHORITY...........................................................6
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SECTION 4.2. COMPANY SUBSIDIARIES.................................................................7
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SECTION 4.3. CAPITALIZATION OF THE COMPANY AND THE COMPANY SUBSIDIARIES...........................7
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SECTION 4.4. COMPANY FINANCIAL STATEMENTS.........................................................8
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SECTION 4.5. PROPERTIES...........................................................................8
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SECTION 4.6. TAXES................................................................................9
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SECTION 4.7. EMPLOYEES AND AGENTS................................................................11
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SECTION 4.8. CONTRACTS...........................................................................12
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SECTION 4.9. LITIGATION AND OTHER PROCEEDINGS....................................................12
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SECTION 4.10. ABSENCE OF UNDISCLOSED LIABILITIES..................................................13
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SECTION 4.11. DIVIDENDS...........................................................................13
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SECTION 4.12. INSURANCE COVERAGE..................................................................13
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SECTION 4.13. BOOKS AND RECORDS...................................................................13
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SECTION 4.14. AGREEMENTS WITH AFFILIATES..........................................................13
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SECTION 4.15. RESERVES............................................................................14
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SECTION 4.16. ACCURACY OF REPRESENTATIONS, WARRANTIES AND OTHER STATEMENTS MADE...................14
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ARTICLE V ADDITIONAL COVENANTS AND AGREEMENTS........................................................14
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SECTION 5.1. CONDUCT PRIOR TO CLOSING............................................................14
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SECTION 5.2. CONSENTS AND APPROVALS..............................................................16
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SECTION 5.3. COVENANT NOT TO NEGOTIATE SALE OF THE COMPANY AND THE COMPANY SUBSIDIARIES..........16
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SECTION 5.4. SETTLEMENT OF INTERCOMPANY ACCOUNTS.................................................17
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SECTION 5.5. NO DIVIDENDS OR DISTRIBUTIONS.......................................................17
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SECTION 5.6. EXPENSES............................................................................17
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SECTION 5.7. ST. JAMES TRANSFER..................................................................17
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SECTION 5.8. PUBLIC ANNOUNCEMENTS................................................................17
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SECTION 5.9. CONFIDENTIALITY.....................................................................17
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SECTION 5.10. EMPLOYEE STAND STILL BONUSES........................................................18
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SECTION 5.11. HSR FILING..........................................................................18
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ARTICLE VI TAX MATTERS................................................................................18
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SECTION 6.1. PAYMENTS IN RESPECT OF TAXES AND TAX RETURNS FOR STUB PERIOD PRIOR TO AND
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INCLUDING THE CLOSING DATE..........................................................18
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SECTION 6.2. MUTUAL COOPERATION..................................................................20
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ARTICLE VII CONDITIONS TO CLOSING......................................................................20
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SECTION 7.1. GENERAL CONDITIONS..................................................................20
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SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER..............................................21
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SECTION 7.3. CONDITIONS TO OBLIGATIONS OF CBIZ AND SELLER........................................21
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ARTICLE VIII INDEMNIFICATION............................................................................22
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SECTION 8.1. DEFINITIONS.........................................................................22
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SECTION 8.2. TAX INDEMNIFICATION.................................................................23
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SECTION 8.3. GENERAL INDEMNIFICATION.............................................................24
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SECTION 8.4. METHOD OF ASSERTING CLAIMS..........................................................25
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SECTION 8.5. SUBROGATION.........................................................................28
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SECTION 8.6. TAX TREATMENT OF PAYMENTS...........................................................28
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SECTION 8.7. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS..........................................28
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ARTICLE IX TERMINATION................................................................................29
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SECTION 9.1. TERMINATION.........................................................................29
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SECTION 9.2. EFFECT OF TERMINATION...............................................................29
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ARTICLE X GENERAL PROVISIONS.........................................................................29
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SECTION 10.1. CERTAIN DEFINITIONS.................................................................29
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SECTION 10.2. FURTHER ASSURANCES..................................................................30
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SECTION 10.3. TIME LIMITATIONS....................................................................30
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SECTION 10.4. NOTICES.............................................................................31
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SECTION 10.5. NO THIRD PARTY BENEFICIARIES........................................................32
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SECTION 10.6. SUCCESSORS AND ASSIGNS..............................................................32
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SECTION 10.7. ENTIRE AGREEMENT....................................................................32
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SECTION 10.8. AMENDMENT...........................................................................33
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SECTION 10.9. WAIVER..............................................................................33
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SECTION 10.10. SEVERABILITY........................................................................33
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SECTION 10.11. ARTICLE AND SECTION HEADINGS, CONSTRUCTION..........................................33
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SECTION 10.12. GOVERNING LAW.......................................................................33
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SECTION 10.13. COUNTERPARTS........................................................................33
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SCHEDULES
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Schedule 4.2 OWNERSHIP OF COMPANY SUBSIDIARIES
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Schedule 4.6 TAXES
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Schedule 4.7(A) EMPLOYEE BENEFITS
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Schedule 4.7(B) EMPLOYMENT CONTRACTS
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Schedule 4.8 CONTRACTS AND CONSENTS
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Schedule 4.9 LITIGATION
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Schedule 4.12A INSURANCE COVERAGE MAINTAINED BY CBIZ AND SELLER
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Schedule 4.12B INSURANCE COVERAGE MAINTAINED BY THE COMPANY
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Schedule 4.14 AGREEMENTS WITH AFFILIATES
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Schedule 8.3 ADDITIONAL INDEMNIFICATION MATTERS
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INDEX TO DEFINITIONS
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Term Section Reference
Affiliate Section 10.1(A)
Agreement Introductory Paragraph
AIA Recital B
CBIZ Introductory Paragraph
CHIC Recital B
Claim Notice Section 8.1(A)
Closing Date Section 1.3
Closing Section 1.1
Code Section 4.7(A)
Company Subsidiary Recital B
Company Recital A
Compromise Notice Section 8.1(B)
Consolidated Financial Statements Section 4.4
Contract Section 4.8
Control Section 10.1(A)
CSC Agency Recital B
Damages Section 8.1(C)
ERISA Plans Section 4.7(A)
ERISA Section 4.7(A)
Evergreen Recital B
Expenses Section 8.1(D)
GAAP Section 4.4
Indemnifiable Claim Section 8.1(E)
Indemnifiable Losses Section 8.1(F)
Indemnified Party Section 8.1(G)
Indemnifying Party Section 8.1(H)
Indemnity Notice Section 8.4(F)
Knowledge Section 10.1(B)
Lease Section 4.5(B)
March 31, 2000 Balance Sheet Section 4.4
NEWCO Section 10.6
Notice Period Section 8.4(B)
Pension Plan Section 4.7(A)
Person Section 10.1(C)
Plans Section 4.7(A)
Purchase Price Section 1.2
Purchaser Introductory Paragraph
Purchaser's Regulatory Filings Section 2.2(C)
Reportable Event Section 4.7(A)
Seller Introductory Paragraph
Settlement Sum Section 8.1(I)
Shares Recital A
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Stand Still Bonuses Section 5.10
Subsidiary Section 4.2
Tax Claim Section 8.2(C)
Tax Returns Section 4.6(D)
Taxes Section 4.6(C)
Third Party Claim Section 8.1(J)
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STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement (the "Agreement") is made as of the 26th
day of June, 2000 by and among Century Business Services, Inc., a Delaware
corporation ("CBIZ"), CBSI Management, Inc., an Ohio corporation ("Seller") and
Avalon National Corporation, an Ohio corporation ("Purchaser").
RECITALS
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A. CBIZ owns all of the issued and outstanding capital stock of
Seller, and Seller owns all of the issued and outstanding
capital stock (the "Shares") of Century Surety Company, an
Ohio domiciled property and casualty insurance corporation
(the "Company").
B. The Company owns all of the issued and outstanding capital
stock of Evergreen National Indemnity Company, an Ohio
domiciled property and casualty insurance corporation
("Evergreen"), Continental Heritage Insurance Company, an Ohio
domiciled property and casualty insurance corporation ("CHIC")
(except as disclosed on SCHEDULE 4.2), American Inspection and
Audit Services, Inc., an Ohio corporation ("AIA"), and CSC
Insurance Agency, Inc., an Ohio corporation ("CSC Agency")
(Evergreen, CHIC, AIA and CSC Agency hereinafter sometimes
collectively referred to as the "Company Subsidiaries" and
each individually referred to as a "Company Subsidiary").
C. Purchaser desires to purchase, and Seller desires to sell, the
Shares for the consideration set forth below, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
SECTION 1.1. PURCHASE OF THE SHARES FROM SELLER. Subject to and upon the terms
and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), Seller shall sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser shall purchase, acquire
and accept from Seller, all of the Shares, free and clear of any claims, liens,
restrictions on transfer or encumbrances with respect thereto. At the Closing,
Seller shall deliver to Purchaser certificates evidencing the Shares owned by it
duly endorsed in blank or with stock powers duly executed in proper form for
transfer.
SECTION 1.2. PURCHASE PRICE FOR THE SHARES. The purchase price to be paid by
Purchaser to Seller for the Shares shall be Thirty One Million Dollars
($31,000,000.00) (the "Purchase
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Price"). The Purchase Price shall be payable at the Closing by wire transfer of
immediately available funds to an account designated in writing not less than
two (2) business days prior to the Closing Date by Seller.
SECTION 1.3. CLOSING. The Closing shall take place at the offices of Bricker &
Eckler LLP, 100 South Third Street, Columbus, Ohio at 10:00 a.m. two (2)
business days after all of the conditions precedent set forth in Article VII
hereof are satisfied or waived, or at such other place, time or date as may be
mutually agreed upon in writing by the parties (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to CBIZ and Seller that the
representations and warranties contained in this Article II are true and
complete on the date of this Agreement and will be true and complete as of the
Closing Date (except that any representation or warranty that is given as of a
particular date and relates solely to a particular date or period is given as of
such date or period). Acknowledging that CBIZ and Seller will be relying upon
such representations and warranties in connection with the transactions
contemplated hereby, Purchaser hereby represents and warrants to CBIZ and Seller
as follows:
SECTION 2.1. ORGANIZATION AND AUTHORITY.Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio and has full corporate power, right and authority to own its properties and
assets and to carry on its business as it is now being conducted, to purchase
the Shares and to enter into and carry out the transactions contemplated by this
Agreement. Purchaser has all necessary governmental authorizations to own or
lease its properties and assets and to carry on its business as now being
conducted in all respects material to the financial condition or business of
Purchaser and its subsidiaries taken as a whole.
SECTION 2.2. AUTHORIZATION.
(A) This Agreement has been duly authorized, executed and
delivered by Purchaser, and no further corporate proceedings
on the part of Purchaser are or will be necessary to authorize
this Agreement and the transactions contemplated hereby. This
Agreement is the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with
its terms.
(B) Neither the execution, delivery and performance of this
Agreement by Purchaser, nor the consummation of the
transactions contemplated hereby, will violate, conflict with,
or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or the
creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Purchaser under any of
the terms, conditions or provisions of (1) the Articles of
Incorporation or Code of Regulations of Purchaser; (2) any
note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which
Purchaser is a party or by which Purchaser may be bound, or
2
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to which the properties or assets of Purchaser may be subject;
or (3) except for the filings, approvals and notices
referenced in Section 2.2(C), any judgment, ruling, order,
writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or to the properties or assets of
Purchaser.
(C) Except for (1) filings with the Ohio Department of Insurance
and (2) pre-acquisition filings that may be required to be
filed with various of the state insurance regulators of the
jurisdictions in which the Company, Evergreen and CHIC are
licensed to do business (collectively, "Purchaser's Regulatory
Filings"), no filing with, authorization of, exemption by, or
consent or approval of, any regulatory authority is necessary
for the consummation by Purchaser of the transactions
contemplated by this Agreement.
SECTION 2.3. LITIGATION. There is no action, suit or proceeding pending against,
or to the Knowledge of Purchaser threatened against or affecting, Purchaser or
any Affiliate of Purchaser or any of their respective properties before any
court or arbitrator or any governmental authority, agency or official which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay any
of the transactions contemplated hereby.
SECTION 2.4. BROKERS AND FINDERS. Neither Purchaser nor its officers, agents or
other representatives have incurred any obligation, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
SECTION 2.5. ACCURACY OF REPRESENTATIONS, WARRANTIES AND OTHER STATEMENTS MADE.
The representations and warranties of Purchaser set forth in this Agreement, and
in any certification delivered pursuant hereto, do not, as of the date hereof,
and will not, as of the Closing Date, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made,
in light of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS OF SELLER AND CBIZ REGARDING
SELLER, CBIZ AND THE SHARES
Seller and CBIZ represent and warrant to Purchaser that the
representations and warranties contained in this Article III are true and
complete on the date of this Agreement and will be true and complete as of the
Closing Date (except that any representation or warranty that is given as of a
particular date and relates solely to a particular date or period is given as of
such date or period). Acknowledging that Purchaser will be relying upon such
representations and warranties in connection with the transactions contemplated
hereby, Seller and CBIZ hereby represent and warrant to Purchaser as follows:
SECTION 3.1. ORGANIZATION AND AUTHORITY.
(A) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio and has
full corporate power, right and authority to own its
properties and assets, including but not limited to the Shares
of the
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Company, and to carry on its business as it is now being
conducted, and to enter into and carry out its obligations
under this Agreement. Seller has all necessary governmental
authorizations to own or lease its properties and assets and
to carry on its business as now being conducted in all
respects material to the financial condition or business of
Seller and its subsidiaries taken as a whole.
(B) CBIZ is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has
full corporate power, right and authority to own its
properties and assets, to carry on its business as it is now
being conducted, and to enter into and carry out its
obligations under this Agreement. CBIZ has all necessary
governmental authorizations to own or lease its properties and
assets and to carry on its business as now being conducted in
all respects material to the financial condition or business
of CBIZ and its subsidiaries taken as a whole.
SECTION 3.2. AUTHORIZATION.
(A) This Agreement has been duly authorized, executed and
delivered by Seller and no further corporate proceedings on
the part of Seller are or will be necessary to authorize this
Agreement and the transactions contemplated hereby. This
Agreement is the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its
terms.
(B) This Agreement has been duly authorized, executed and
delivered by CBIZ and no further corporate proceedings on the
part of CBIZ are or will be necessary to authorize this
Agreement and the transactions contemplated hereby. This
Agreement is the legal, valid and binding obligation of CBIZ,
enforceable against CBIZ in accordance with its terms.
(C) Neither the execution, delivery and performance of this
Agreement by Seller, nor the consummation of the transactions
contemplated hereby, will violate, conflict with, or result in
a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a
right of termination or acceleration under, or the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Seller, the Company or any Company
Subsidiary under any of the terms, conditions or provisions of
(1) the Articles of Incorporation and Code of Regulations of
Seller, the Company, or any Company Subsidiary; (2) any note,
bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Seller is
a party, or to the Knowledge of Seller, to which the Company
or any Company Subsidiary is a party or by which Seller may be
bound, or to the Knowledge of Seller, by which the Company or
any Company Subsidiary may be bound, or to which the
properties or assets of Seller may be subject, or to the
Knowledge of Seller, to which the properties or assets of the
Company or any Company Subsidiary may be subject; or (3)
except for the filings, approvals and notices referenced in
Section 3.2(E), any judgment, ruling,
4
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order, writ, injunction, decree, statute, rule or regulation
applicable to Seller, the Company or any Company Subsidiary,
or to the properties or assets of Seller, the Company, or any
Company Subsidiary.
(D) Neither the execution, delivery and performance of this
Agreement by CBIZ, nor the consummation of the transactions
contemplated hereby, will violate, conflict with, or result in
a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a
right of termination or acceleration under, or the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of CBIZ under any of the terms,
conditions or provisions of (1) the Articles of Incorporation
and Code of Regulations of CBIZ; or (2) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which CBIZ is a party or
by which CBIZ may be bound, or to which the properties or
assets of CBIZ may be subject; or (3) any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation
applicable to CBIZ, or to the properties or assets of CBIZ.
(E) Except for Purchaser's Regulatory Filings, no filing with,
authorization of, exemption by, or consent or approval of, any
regulatory authority is necessary for the consummation by
Seller or CBIZ of the transactions contemplated by this
Agreement.
SECTION 3.3. TITLE AND POWER TO SELL. At the Closing, Seller will have good
title to the Shares which are to be transferred to Purchaser by Seller pursuant
hereto, free and clear of any adverse claims, liens, proxies, voting trusts,
restrictions on transfer or encumbrances with respect thereto. The Shares are
validly issued, fully paid and nonassessable. Seller has the full corporate
power, right and authority to transfer, convey and sell the Shares to Purchaser
at the Closing. The certificates representing the Shares do not contain any
restrictive legend or reference to any agreement, except for a legend concerning
the status of the Shares under the Securities Act of 1933, as amended, and under
any applicable state securities laws.
SECTION 3.4. LITIGATION. There is no action, suit or proceeding pending against,
or to the Knowledge of CBIZ or Seller threatened against or affecting, CBIZ,
Seller or any Affiliate of CBIZ or Seller or any of their respective properties
before any court or arbitrator or any governmental authority, agency or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay any of the transactions contemplated hereby.
SECTION 3.5. BROKERS AND FINDERS. None of CBIZ, Seller, the Company nor any
Company Subsidiary, nor any of their respective officers, agents or other
representatives, have incurred any obligation, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND CBIZ
WITH RESPECT TO THE COMPANY
Seller and CBIZ jointly and severally represent and warrant to
Purchaser that the representations and warranties contained in this Article IV
are true and complete on the date of this Agreement and will be true and
complete as of the Closing Date (except that any representation or warranty that
is given as of a particular date and relates solely to a particular date or
period is given as of such date or period). Any information contained in one or
more schedules attached to this Agreement shall be deemed disclosed on, and a
part of any other schedule attached to this Agreement to the extent such
information is required to be disclosed on such other schedule. Acknowledging
that Purchaser will be relying upon such representations and warranties in
connection with the transactions contemplated by this Agreement, Seller and CBIZ
hereby jointly and severally represent and warrant to Purchaser as follows:
SECTION 4.1. ORGANIZATION AND AUTHORITY.
(A) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Ohio. The
Company has the full corporate power, right and authority to
own its properties and assets and to carry on its business as
it is now being conducted in all respects material to the
financial condition or business of the Company. The Company
has all necessary governmental authorizations to own or lease
its properties and assets and to carry on its business as now
being conducted in all respects material to the financial
condition or business of the Company. The Company is not
required to qualify to do business in any state or foreign
jurisdiction where not already so qualified except where a
failure to so qualify would not have a material adverse effect
on the financial condition or business of the Company. The
Company has all necessary governmental authorizations to own
or lease its properties and assets, to underwrite insurance
and to otherwise carry on its business as now being conducted.
(B) Each of the Company Subsidiaries is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Ohio. Each of the Company Subsidiaries
has the full corporate power, right and authority to own its
properties and assets and to carry on its business as it is
now being conducted in all respects material to its financial
condition or business. Each Company Subsidiary has all
necessary governmental authorizations to own or lease its
properties and assets and to carry on its business as now
being conducted in all respects material to its financial
condition or business. No Company Subsidiary is required to
qualify to do business in any state or foreign jurisdiction
where not already so qualified except where a failure to so
qualify would not have a material adverse effect on the
financial condition or business of such Company Subsidiary.
Each Company Subsidiary has all necessary governmental
authorizations to own or lease its properties and assets and
(in the case of Evergreen and CHIC) to underwrite insurance,
and to otherwise carry on its business as now being conducted.
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SECTION 4.2. COMPANY SUBSIDIARIES. Except as otherwise disclosed on Schedule
4.2, the Company beneficially and of record owns all the shares of the
outstanding capital stock of each of the Company Subsidiaries, which will
constitute the only Subsidiaries of the Company as of the Closing Date. As used
in this Agreement, a "Subsidiary" shall mean any trust, joint venture,
corporation, limited liability company, partnership or other entity or
association of which the Company directly or indirectly owns at least 10% of the
capital stock or other equity interest.
SECTION 4.3. CAPITALIZATION OF THE COMPANY AND THE COMPANY SUBSIDIARIES.
(A) The authorized capital stock of the Company consists of 500
shares of common stock, $10,000.00 par value, of which 300 are
issued and outstanding and owned by Seller and constitute the
Shares. The Company holds no shares of common stock in its
treasury. There are no other shares of capital stock or other
equity securities of the Company outstanding and no
outstanding options, warrants, scrips, rights to subscribe to,
proxies, voting trusts, puts, calls, commitments or agreements
of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of capital
stock of the Company. All of the Shares are validly issued,
fully paid and nonassessable and owned by Seller free and
clear of any adverse claim, lien, proxies, voting trusts,
restrictions on transfer or encumbrance thereto, and neither
Seller nor the Company has any liability to any former holder
of any shares of capital stock of the Company or to any other
Person or governmental authority relating to the purchase,
sale, redemption, retirement or cancellation thereof.
(B) The authorized capital stock of Evergreen consists of 10,000
shares of common stock, $500.00 par value, of which 6,000 are
issued and outstanding and owned by the Company. The
authorized capital stock of CHIC consists of 1,000,000 shares
of common stock, $7.00 par value, of which 221,786 are issued
and outstanding and, except as disclosed on SCHEDULE 4.2, are
owned by the Company. The authorized capital stock of AIA
consists of 750 shares of common stock, no par value, of which
100 are issued and outstanding and owned by the Company. The
authorized capital stock of CSC Agency consists of 750 shares
of common stock, no par value, of which 400 are issued and
outstanding and owned by the Company. The Company is the sole
shareholder of each Company Subsidiary and no Person other
than the Company has any legal or beneficial right to or in
any of the capital stock of any Company Subsidiary, except as
is otherwise disclosed on SCHEDULE 4.2. Without limiting the
generality of the foregoing, except as is otherwise disclosed
on SCHEDULE 4.2, to the Knowledge of Seller and CBIZ, there
are (1) no shares of capital stock or other equity securities
of any Company Subsidiary outstanding, other than those owned
by the Company; and (2) no outstanding options, warrants,
scrips, rights to subscribe to, proxies, voting trusts, puts,
calls, commitments or agreements of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of capital stock of any Company
Subsidiary. To the Knowledge of Seller and CBIZ, all of the
shares of capital stock of each Company Subsidiary are validly
issued, fully paid and nonassessable and owned by the Company
free and clear of any adverse claim, lien, proxies, voting
trusts, restrictions on transfer or encumbrance
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thereto, and none of CBIZ or Seller, or to the Knowledge of
Seller and CBIZ, the Company or any Company Subsidiary, has
any liability to any former holder of any shares of capital
stock of any Company Subsidiary or to any other person or
governmental authority relating to the purchase, sale,
redemption, retirement or cancellation thereof.
SECTION 4.4. COMPANY FINANCIAL STATEMENTS. The consolidated balance sheets of
the Company as of December 31, 1999, December 31, 1998, and December 31, 1997,
the related consolidated income statements, statements of shareholders' equity
and statements of cash flow for the years ended December 31, 1999, December 31,
1998, and December 31, 1997, and the consolidated balance sheet of the Company
as of March 31, 2000 (the "March 31, 2000 Balance Sheet") and the related
consolidated income statement, statement of shareholders' equity and statement
of cash flow for the three-month period then ended (collectively, the
"Consolidated Financial Statements") have been prepared on a basis consistent
with generally accepted accounting principles consistently applied ("GAAP") and
fairly present the consolidated financial position and results of operations of
the Company and the Company Subsidiaries as of the dates thereof and for the
periods covered thereby. In the case of interim fiscal periods, all adjustments,
consisting only of normal recurring items, have been made, subject to year-end
adjustments none of which, individually or in the aggregate, will be material.
SECTION 4.5. PROPERTIES.
(A) Except (1) as may be reflected in the Consolidated Financial
Statements; (2) for any lien for current taxes not yet
delinquent; and (3) for such other encumbrances and
imperfections of title as do not materially affect the value
of any individual item or parcel of personal property, the
Company and the Company Subsidiaries have good and marketable
title, free and clear of any liens, claims, charges, options
or other encumbrances, to all of the personal property
reflected in the Company Consolidated Financial Statements,
and all personal property acquired since the respective dates
of the Consolidated Financial Statements, except such personal
property as has been disposed of in the ordinary course of
business.
(B) Since January 1, 2000, to the Knowledge of Seller and CBIZ,
there has not occurred any event which would constitute a
breach by the Company or any Company Subsidiary of, or default
by the Company or any Company Subsidiary in, the performance
of any covenant, agreement or condition contained in any real
property lease to which the Company or any Company Subsidiary
is a party (either as tenant or landlord) (each, a "Lease"),
which breach or default would have a material adverse effect
on the rights or obligations of the Company or any Company
Subsidiary under any such Lease. To the Knowledge of Seller
and CBIZ, no Lease is or will be terminable by any Person as a
result of the consummation of the transactions contemplated by
this Agreement.
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SECTION 4.6. TAXES.
(A) Since October, 1996, the Company has been included in
consolidated federal income Tax Returns filed by CBIZ.
(B) Except as set forth in SCHEDULE 4.6:
(1) All Tax Returns required to be filed by the Company
or any Company Subsidiary and all Tax Returns of any
consolidated, combined or unitary group which
includes the Company or any Company Subsidiary are
complete and accurate in all respects material to the
financial condition or the business of the Company or
any Company Subsidiary and have been timely filed,
and the Taxes shown thereon as due to be paid or
withheld have been paid or withheld.
(2) The statute of limitations for the assessment of
federal income taxes of the Company and each Company
Subsidiary has expired for each period through
December 31, 1996.
(3) No deficiency or adjustment for any Taxes of the
Company or any Company Subsidiary not yet paid has
been proposed in writing to Seller or CBIZ or, to the
Knowledge of Seller and CBIZ, assessed.
(4) All Taxes of the Company and of each Company
Subsidiary required to be paid by the Company or such
Company Subsidiary on all Tax Returns required to be
filed have been paid and all such Taxes for the
periods since the last Tax Returns were filed through
the Closing Date for which Tax Returns are required
to be filed in the future, and all other Taxes for
periods through the Closing Date for which Tax
Returns are not required to be filed, and all
interest and penalties thereon, whether disputed or
not, have been duly paid or reserved for in
accordance with GAAP on the Consolidated Financial
Statements through the dates thereof and thereafter
reserved for on the books and records of the Company
and the Company Subsidiaries, and neither the Company
nor any Company Subsidiary has any liability for
Taxes in excess of the amounts so paid or reserved
for in accordance with GAAP on the Consolidated
Financial Statements through the dates thereof and
thereafter reserved for on the books and records of
the Company and the Company Subsidiaries.
(5) All Taxes of the Company and the Company Subsidiaries
for that portion of the current Tax year occurring
prior to and including the Closing Date, whether or
not they have become payable, have been (or at or
prior to the Closing Date shall be) paid in full or
adequately reserved for in accordance with GAAP, and
to the extent liabilities for Taxes have been accrued
but not become payable, they are adequately reflected
in accordance with GAAP on the Consolidated Financial
Statements through
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<PAGE> 17
the dates thereof and thereafter on the books and
records of the Company and the Company Subsidiaries.
(6) There are no federal, state or local Tax liens upon
any property or assets of the Company or any Company
Subsidiary other than liens for Taxes not yet due and
payable.
(7) Neither the Company, any Company Subsidiary, nor any
member of any consolidated, combined or unitary group
which includes the Company or any Company Subsidiary,
has any current or pending request for any extension
of time within which to file any Tax Returns for
which Tax Returns have not yet been filed with the
taxing authority.
(8) Neither the Company, any Company Subsidiary nor any
consolidated, combined or unitary group which
includes the Company or any Company Subsidiary, has
any pending or, to the Knowledge of Seller and CBIZ,
proposed audit of any Tax Returns with respect to
which either the Company or any Company Subsidiary
has or would have any liability. No deficiencies for
Taxes have been claimed, assessed or, to the
Knowledge of Seller and CBIZ, proposed by any taxing
authority against either the Company, any Company
Subsidiary or any member of any consolidated,
combined or unitary group which includes the Company
or any Company Subsidiary with respect to which the
Company or any Company Subsidiary would have any
liability, and, to the Knowledge of Seller and CBIZ,
there is no basis for any such deficiency or claim
for which adequate reserves in accordance with GAAP
have not been established on the Consolidated
Financial Statements through the date thereof and
thereafter on the books and records of the Company
and the Company Subsidiaries.
(C) For purposes of this Agreement "TAXES" shall mean all material
taxes, charges, fees, levies or other assessments of whatever
kind or nature, including without limitation, all net income,
gross income, gross receipts, premium, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupancy or
property taxes, custom duties, fees, assessments or charges of
any kind whatsoever (together with any interest, penalty, or
addition to tax), including any obligation to contribute to
the payment of a Tax determined upon a consolidated, combined
or unitary basis with respect to a group of corporations that
includes or included the Company.
(D) For purposes of this Agreement "TAX RETURNS" shall mean all
returns, amended returns, declarations, reports, estimates,
information returns and statements required to be filed under
federal, state or local law relating to Taxes by, or
including, the Company.
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SECTION 4.7. EMPLOYEES AND AGENTS.
(A) SCHEDULE 4.7(A) sets forth a complete list of all pension
plans, as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained
by or with respect to any of the employees of the Company or
any Company Subsidiary (each, a "Pension Plan"), all welfare
plans, as defined in Section 3(1) of ERISA, maintained by or
with respect to any of the employees of the Company or any
Company Subsidiary (such welfare plans and the Pension Plans
being hereinafter referred to as "ERISA Plans"), and all other
incentive, fringe benefit, vacation, or leave plans, policies
or arrangements maintained by the Company or any Company
Subsidiary (collectively, the "Plans"). Except as set forth on
SCHEDULE 4.7(A), neither the Company nor any Company
Subsidiary has, since January 1, 1997, maintained or
contributed, or has been required to contribute, to any
"multiemployer plan" as that term is defined at Section
4001(a)(3) of ERISA or incurred, or will incur with respect to
any event occurring prior to the Closing Date, any liability
under Sections 4062, 4063 or 4201 of ERISA. There has been no
amendment to, written interpretation or announcement (whether
or not written) by the Company or any Company Subsidiary
relating to any Plan which would materially increase the
expense of maintaining such Plan above the level of the
expenses incurred in respect thereof for the fiscal year ended
immediately prior to the Closing Date. There are no liens,
material actions, suits or claims pending or, to the Knowledge
of Seller and CBIZ, threatened against any of the Plans or the
assets of any of the Plans. The Century Business Services,
Inc. 401(k) Pension Plan is intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and CBIZ and Seller have no reason to
believe that such qualification will not be obtained; provided
further, that in the event that such Plan is determined not to
be so qualified, CBIZ and Seller shall take all steps which
are reasonably necessary to correct the deficiencies which
prevent such qualification, and shall bear all costs and
expenses relating to such corrective action. Nothing has been
done or omitted to be done with respect to any ERISA Plan that
would result in any material liability on the part of the
Company or the Company Subsidiary under Part 5 of Title I of
ERISA or Section 4975 of the Code. No "reportable event" as
defined in Section 4043 of ERISA, other than any such event
for which the thirty-day notice period has been waived, has
occurred with respect to any Pension Plan subject to Title IV
of ERISA. Except for continuation of health coverage to the
extent required under Section 4980B of the Code, and except as
otherwise set forth in SCHEDULE 4.7(A), there are no unfunded
obligations under any ERISA Plan. There is no accumulated
funding deficiency as defined in Section 302 of ERISA or
Section 412 of the Code with respect to any Pension Plan.
Seller has made all quarterly contributions required under
Section 412(m) of the Code, and has made or will make prior to
the Closing Date all payments and contributions (including
insurance premiums) due and payable before the Closing Date to
each ERISA Plan as required under the terms of such Plan and
neither the Company nor any Company Subsidiary shall have any
liability to any person after the Closing Date with respect to
any such payment or contribution. With respect to each Pension
Plan which is subject to Title IV of
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ERISA, as of the Closing Date, the current fair market value
of the Plan assets exceeds the present value of all benefit
liabilities as defined in Section 4001(a)(16) of ERISA. Except
as set forth on SCHEDULE 4.7(A), each ERISA Plan which CBIZ,
Seller, the Company or any Company Subsidiary maintains with
respect to employees of the Company or any Company Subsidiary
has, since January 1, 1997, at all times been administered in
material compliance with all applicable requirements of ERISA
and the Code, including all reporting requirements with
respect to the Internal Revenue Service, the U. S. Department
of Labor and the Pension Benefit Guaranty Corporation, and
including all disclosure requirements with respect to plan
participants and beneficiaries. Except as set forth on
SCHEDULE 4.7(A), all returns on Forms 5500 required to be
filed with respect to each ERISA Plan have been duly filed and
complied in all material respects with the requirements of the
Code and ERISA as of the dates so filed.
(B) To the Knowledge of Seller and CBIZ, there are no employment,
incentive, bonus, or other employee merit agreements or
arrangements between the Company or any Company Subsidiary, on
the one hand, and any current or former employee thereof, on
the other, other than (1) Plans identified in SCHEDULE 4.7(A),
or (2) contracts identified on SCHEDULE 4.7(B).
SECTION 4.8. CONTRACTS. Except as set forth on Schedule 4.8, to the Knowledge of
Seller and CBIZ, in the case of any contract, agreement, option, instrument,
commitment or understanding to which the Company or any Company Subsidiary is a
party or to which it is subject (each, a "Contract"): (1) neither the Company
nor any Company Subsidiary, nor any other party to a Contract, is in default
thereunder, except for such defaults as have been cured or waived in writing by
an appropriate party (provided that neither the Company nor any Company
Subsidiary has waived any material default under any provision of any Contract
which will not be terminated prior to the Closing Date) or such defaults which
are not material to the financial condition or business of the Company or such
Company Subsidiary; (2) all such Contracts, to the extent the same give rights
to the Company or a Company Subsidiary, are enforceable by the Company or such
Company Subsidiary in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization or other laws of general applicability
affecting creditor's rights generally, and the effect of laws governing specific
performance, injunctive relief and other equitable remedies on the
enforceability of such documents, and neither CBIZ nor Seller has received
written notice of any claim to the contrary; and (3) each Contract is in full
force and effect and constitutes a legal, valid and binding obligation of the
respective parties thereto. To the Knowledge of Seller and CBIZ, except as
provided in Schedule 4.8, no consent or other authorization from any Person
(other than the Company or a Company Subsidiary) who is a party to any such
Contract is required to consummate the transactions contemplated by this
Agreement. CBIZ and Seller shall use all reasonable commercial efforts to obtain
each consent and other authorization from any Person (other than the Company or
any Company Subsidiary) who is a party to any such Contract if such consent or
other authorization is required to consummate the transactions contemplated by
this Agreement.
SECTION 4.9. LITIGATION AND OTHER PROCEEDINGS. Except as set forth on Schedule
4.9, to the Knowledge of Seller and CBIZ, there is no pending claim, action,
suit, investigation or
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proceeding (A) that has been commenced by or against the Company or any Company
Subsidiary or that otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Company or any Company Subsidiary, other than
policyholder claims brought in the ordinary course of business made under
insurance policies issued by the Company or the Company Subsidiaries none of
which (1) if determined adversely could reasonably be expected to have a
material adverse effect on the Company or any Company Subsidiary or (2) involves
claims of bad faith, extra-contractual claims, or claims giving rise to punitive
damages (in each case, excluding any and all damages based on amounts
recoverable under the terms of the applicable insurance policy); or (B) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the transactions contemplated hereby. To
the Knowledge of CBIZ and Seller, no such claim, action, suit, investigation or
proceeding has been threatened. To the Knowledge of CBIZ and Seller, no event
has occurred or circumstance exists which is material to the financial condition
or business of the Company or any Company Subsidiary that may give rise to or
serve as a basis for the commencement of any such claim, action, suit,
investigation or proceeding.
SECTION 4.10. ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of Seller and
CBIZ, the Company and the Company Subsidiaries have no material obligations or
liabilities of any nature (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and
due or to become due), other than (A) those set forth or adequately provided for
in the March 31, 2000 Balance Sheet or in the footnotes thereto that are of a
nature required by GAAP to be set forth therein; (B) those incurred in the
ordinary course of business since the date of the March 31, 2000 Balance Sheet
and consistent with past practice (only if such obligations or liabilities do
not arise out of, result from or relate to any breach of contract, breach of
warranty, tort, infringement or violation of law); and (C) those incurred in
connection with the execution of this Agreement.
SECTION 4.11. DIVIDENDS. The Company has not declared or paid any dividend or
made any distribution to Seller since December 31, 1999.
SECTION 4.12. INSURANCE COVERAGE. Schedule 4.12A contains a complete and correct
list of all insurance policies maintained by CBIZ, Seller or any Affiliate
thereof which provide coverage for the Company, any Company Subsidiary, or their
respective officers and directors. Schedule 4.12B contains a complete and
correct list of all insurance policies maintained by the Company. Such policies
are in full force and effect and all premiums which are due thereon have been
paid. Each insurance policy listed on Schedule 4.12A as to the interests of the
Company and the Company Subsidiaries will be canceled as of the Closing. None of
the insurance policies listed on Schedule 4.12B will be canceled as of the
Closing.
SECTION 4.13. BOOKS AND RECORDS. The books of account of the Company and each
Company Subsidiary reflect all material items of income and expense and all
material assets, liabilities and accruals, and are prepared and maintained in
form and substance adequate for preparing audited financial statements in
accordance with GAAP.
SECTION 4.14. AGREEMENTS WITH AFFILIATES. Except as set forth in Schedule 4.14,
neither the Company nor any Company Subsidiary is a party to or bound by any
contract, commitment or understanding with CBIZ, Seller or any Affiliate of CBIZ
or Seller, and no agreement with CBIZ
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or Seller or any such Affiliate of CBIZ or Seller which was previously in force
has been terminated by the Company since January 1, 2000, except as expressly
contemplated by this Agreement.
SECTION 4.15. RESERVES. CBIZ and Seller have provided to Purchaser the Company's
independent actuary's opinion and analysis of the loss reserves of the Company,
Evergreen and CHIC as of December 31, 1999.
SECTION 4.16. ACCURACY OF REPRESENTATIONS, WARRANTIES AND OTHER STATEMENTS MADE.
The representations and warranties of CBIZ and Seller set forth in this
Agreement, and in any certification delivered pursuant hereto, do not, as of the
date hereof, and will not, as of the Closing Date, contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading. Notwithstanding anything to the contrary contained in this
Agreement, the parties acknowledge that neither Seller nor CBIZ has made or is
making any representation or warranty regarding the adequacy or amount of any
loss reserves.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 5.1. CONDUCT PRIOR TO CLOSING.
(A) Except as required or expressly permitted by this Agreement,
during the period from the date hereof until the Closing Date,
CBIZ and Seller shall not cause the Company or any Company
Subsidiary to take any action intended to prevent any such
party from: (1) carrying on its business in the usual, regular
and ordinary course in substantially the same manner as
heretofore conducted; (2) paying debts and Taxes when due
subject to good faith disputes over such debts or Taxes; (3)
paying or performing other obligations when due; and (4) using
all reasonable efforts consistent with past practice and
policies to (a) preserve intact its present business
organizations; (b) keep available the services of its present
officers and key employees; and (c) preserve its relationships
with all insurance regulatory authorities, independent
insurance agents, reinsurers, customers, suppliers, licensors,
licensees and others having business dealings with it, such
that its goodwill and ongoing businesses shall be unimpaired
at the Closing; provided however, that Purchaser hereby
acknowledges that Purchaser shall be solely responsible for
any action taken by Roswell P. Ellis, Joseph E. LoConti, John
A. Marazza, Charles Hamm or any other officer or director of
the Company or any Company Subsidiary (other than actions
taken at the express direction of Seller or CBIZ) with respect
to any of the foregoing.
(B) Without limiting the generality of Section 5.1(A), except as
expressly contemplated by this Agreement, CBIZ and Seller
shall not take any action intended to cause the Company or any
Company Subsidiary to do any of the following, without the
prior written consent of Purchaser; provided however, that
Purchaser hereby acknowledges that Purchaser shall be solely
responsible for any action taken by Roswell P. Ellis, Joseph
E. LoConti, John A. Marazza, Charles
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Hamm or any other officer or director of the Company or any
Company Subsidiary (other than actions taken at the express
direction of Seller or CBIZ) with respect to any of the
following:
(1) amend its Articles of Incorporation or Code of
Regulations;
(2) declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in
respect of any of its capital stock;
(3) enter into any Contract or commitment, or violate,
terminate, amend or otherwise modify or waive any of
the terms of any of its Contracts, other than in the
ordinary course of business consistent with past
practice;
(4) change the number of shares of its authorized or
issued capital stock, or issue or grant any option,
warrant, call, commitment, subscription, right of
purchase or other agreement or arrangement of any
kind or character relating to its capital stock, or
any securities convertible into shares of such stock,
or split, combine or reclassify any shares of its
capital stock;
(5) sell, lease, license or otherwise dispose of or
encumber any properties or assets which are material,
individually or in the aggregate, to its business,
except in the ordinary course of business consistent
with past practice;
(6) incur any indebtedness for borrowed money or
guarantee any such indebtedness or sell any debt
securities or warrants or rights to acquire debt
securities or guarantee the debt securities of
others;
(7) make any capital expenditures, capital additions or
capital improvements, except in the ordinary course
of business and consistent with past practice;
(8) pay, discharge, satisfy, settle or compromise any
amount in excess of $5,000 in any case, claim,
liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than
claims of or against insurance policyholders arising
in the ordinary course of business consistent with
past practice, and payment, discharge or satisfaction
of liabilities reflected or reserved against in the
Consolidated Financial Statements;
(9) terminate or waive any material right, other than in
the ordinary course of business consistent with past
practice;
(10) modify or readjust any insurance reserves of any kind
or nature, other than in the ordinary course of
business consistent with past practice;
(11) fail to continue in force through the Closing Date
all policies, certificates or contracts of insurance
covering the activities and assets of the Company,
the Subsidiaries or their respective officers or
directors thereof, with financially sound and
reputable insurance companies in substantially
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the same character, amount and coverage as those in
force on the date hereof;
(12) make or propose to make any material change in its
investment, accounting, Tax or other practices in any
respect from those in effect on December 31, 1999;
(13) establish, adopt, enter into or amend in any material
respect any bonus, profit sharing, thrift,
compensation, stock option, pension, retirement,
deferred compensation, employment, termination,
severance or other plan, trust, fund, policy or
arrangement for the benefit of directors, officers or
employees;
(14) hire any new officer-level employee, pay any special
bonus or special remuneration to any officer,
employee or director, or increase the salaries or
wage rates of employees other than pursuant to
ordinary annual employee reviews consistent with past
practice;
(15) revalue any of its assets, including writing off
notice or accounts receivable other than in the
ordinary course of business consistent with past
practice;
(16) enter into or agree to enter into any merger,
consolidation, redomestication, reinsurance
arrangement or any similar reorganization,
arrangement or business combination; or
(17) agree to take (a) any of the actions described in
Sections 5.1(B)(1) through (16) or (b) any action
which would make any of the representations and
warranties of CBIZ and Seller contained in this
Agreement untrue or incomplete or could prevent CBIZ
and Seller from performing their covenants and
obligations hereunder.
SECTION 5.2. CONSENTS AND APPROVALS. Each of the parties hereto agrees to use
all commercially reasonable efforts to take, or cause to be taken, all actions
and to do or cause to be done all things necessary, proper or advisable under
applicable law to consummate and make effective as expeditiously as practicable
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, CBIZ and Seller shall promptly furnish to Purchaser upon
request all information which Purchaser reasonably deems to be necessary or
proper to enable it to prepare and file Purchaser's Regulatory Filings.
SECTION 5.3. COVENANT NOT TO NEGOTIATE SALE OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. Until such time, if any, as this Agreement is terminated pursuant
to Article Nine hereof, none of CBIZ, Seller or any of their Affiliates
(including any director, officer, employee, representative, agent, attorney or
other person acting for or on behalf of CBIZ, Seller or any such Affiliate)
shall, and CBIZ and Seller shall not take any action intended to cause the
Company or any Company Subsidiary to, encourage, assist, solicit, invite,
initiate or participate in discussions or negotiations with any Person, or
provide any information to any Person (other than to Purchaser or to
governmental authorities as contemplated herein) with respect to any transaction
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<PAGE> 24
directly or indirectly involving any disposition of all or any portion of the
Shares or any portion of the assets of the Company or any Company Subsidiary,
including, without limitation, any transaction concerning the acquisition of any
equity interest in the Company or any Company Subsidiary or concerning any
merger, consolidation, liquidation, dissolution or like transaction involving
the Company Subsidiary. Notwithstanding the foregoing, in the event that the
directors of Seller and CBIZ determine that they are required by their fiduciary
duties to consider any such proposal from another party, Seller and CBIZ may
consider such proposal. In the event that the directors of Seller and CBIZ
further determine that they are required by their fiduciary duties to cause
Seller and CBIZ to enter into a transaction with a party other than Purchaser
for a sale of the Shares or substantially all of the assets of the Company or
for a sale of the common shares or substantially all of the assets of any
Company Subsidiary, Seller and CBIZ may terminate this Agreement; provided,
however, that concurrently with such termination, CBIZ and Seller shall pay to
Purchaser a break-up fee of Two Million Dollars ($2,000,000.00).
SECTION 5.4. SETTLEMENT OF INTERCOMPANY ACCOUNTS. All intercompany accounts
between the Company and/or any Company Subsidiary, on the one hand, and Seller,
CBIZ or any of their other Affiliates, on the other, shall be finally settled,
compromised or paid in full on or prior to the Closing Date, unless such
relationship will continue after the Closing.
SECTION 5.5. NO DIVIDENDS OR DISTRIBUTIONS. Between and including the date of
this Agreement and the Closing Date, neither the Company nor any Company
Subsidiary shall pay a dividend or make a distribution to or for the benefit of
Seller, CBIZ or any Affiliate thereof, except as may be necessary to effect the
transfer contemplated by Section 5.7 of this Agreement. CBIZ and Seller shall
cause all revenues of the Company and the Company Subsidiaries which are not
needed for the operation of the business of the Company and the Company
Subsidiaries to be used to increase the loss reserves of the Company and the
Company Subsidiaries, except as otherwise expressly agreed to by Purchaser.
SECTION 5.6. EXPENSES. Each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement. Neither the
Company nor any Company Subsidiary shall bear any expenses incident to the
transactions contemplated hereby, it being understood and agreed that all such
expenses of either of them shall be borne by Seller.
SECTION 5.7. ST. JAMES TRANSFER. Prior to the Closing, CBIZ and Seller shall
cause Evergreen to transfer its ownership interest in St. James General Agency,
Inc., a Texas corporation, to Seller or Seller's designee.
SECTION 5.8. PUBLIC ANNOUNCEMENTS. Unless otherwise permitted by this Agreement,
Purchaser, on the one hand, and Seller and CBIZ, on the other, shall consult
with each other before issuing any press release regarding the terms of this
Agreement and the transactions contemplated hereby, and neither shall issue any
such press release without the prior approval of the other (which approval shall
not be unreasonably withheld) except as may be required by law, by obligations
pursuant to any listing agreement with any securities exchange, or as may be
requested by an insurance regulator or A.M. Best.
SECTION 5.9. CONFIDENTIALITY. Between the date of this Agreement and the Closing
Date, Purchaser, Seller and CBIZ will maintain in confidence, and will cause
their respective directors,
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officers, employees, agents and advisors to maintain in confidence, and not use
to the detriment of any other party any written, oral, or other information
obtained in confidence from any party in connection with this Agreement or the
transactions contemplated thereby, unless (A) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party; (B) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereby; or (C) the furnishing or use of such
information is required by legal proceedings. In the event that the transactions
contemplated hereby are not consummated, each party will return or destroy as
much of such written information as the other party may reasonably request.
SECTION 5.10. EMPLOYEE STAND STILL BONUSES. Purchaser shall be solely
responsible for, and shall pay on or promptly after the Closing Date, any and
all amounts which CBIZ, Seller or any Affiliate of CBIZ and Seller (including
the Company and the Company Subsidiaries) have agreed to pay to any employee of
the Company or any Company Subsidiary in order to induce such employee to
continue his or her employment until or through the Closing Date (the "Stand
Still Bonuses"). In addition, with respect to any employee who would be entitled
to a Stand Still Bonus but whose employment is terminated by Seller for
Purchaser's benefit prior to Closing, the Purchase Price shall be increased by
the amount of any severance benefits paid or payable by Seller to such employee.
SECTION 5.11. HSR FILING. Within five (5) business days after the date of this
Agreement, Purchaser will provide to Seller and CBIZ an officer's certificate,
executed by the President or Secretary of Purchaser, which sets forth in
reasonable detail (A) the stock ownership of Purchaser; (B) the prospective
stock ownership of NEWCO; (C) the revenues of Purchaser and NEWCO; and (D) any
other factual information reasonably requested by Seller and CBIZ in order to
permit Seller and CBIZ to determine whether the transactions contemplated by
this Agreement require Seller and CBIZ to file any notice or other document
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(an "HSR Filing"). Within five (5) business days after the date of this
Agreement, Purchaser shall also provide to Seller and CBIZ, in the form of a
memorandum or letter prepared by Purchaser's counsel, Purchaser's counsel's
analysis regarding the need for the parties to make an HSR Filing in connection
with the transactions contemplated by this Agreement. In the event that Seller
and CBIZ determine in good faith that an HSR Filing is required in connection
with the transactions contemplated by this Agreement, then they shall set forth
in a written notice delivered to Purchaser the basis for that determination
within fifteen (15) days after the date of this Agreement. Upon such notice,
Purchaser, Seller and CBIZ shall cooperate in good faith either (A) to reach the
mutually acceptable conclusion that no HSR Filing is required or (B) to make an
HSR Filing.
ARTICLE VI
TAX MATTERS
SECTION 6.1. PAYMENTS IN RESPECT OF TAXES AND TAX RETURNS FOR STUB PERIOD PRIOR
TO AND INCLUDING THE CLOSING DATE.
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(A) Purchaser acknowledges that CBIZ has included the Company and
the Company Subsidiaries as members of its affiliated group in
its consolidated federal income Tax Return for the calendar
years 1997 though 1999 and will include the Company in its
consolidated federal income Tax Return for the portion of 2000
which is prior to and including the Closing Date. The Company
and each Company Subsidiary files its own state and local tax
returns.
(B) Any Tax allocation or sharing agreement or arrangement,
whether or not written, that may have been entered into by
Seller, CBIZ, or any affiliate of CBIZ and the Company shall
be terminated as to the Company as of the Closing Date, and no
payments which are owed by or to the Company pursuant thereto
shall be made thereunder; provided, however, that immediately
prior to such termination, any intercompany accounts shall be
paid and settled effective as of the Closing Date.
(C) All Taxes attributable to Company and each Company Subsidiary
for the Tax period ending on or prior to the Closing Date
shall be accrued and paid by Seller and CBIZ. Seller and CBIZ
shall be liable for and shall pay all transfer taxes arising
from the sale of the Shares. Whenever it is necessary to
determine the liability for Taxes of the Company or any
Company Subsidiary for a portion of a taxable year or period
that begins before and ends after the Closing Date, the
determination of the Taxes of the Company or such Company
Subsidiary for the portion of the year or period ending on,
and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the Company
or such Company Subsidiary had a taxable year or period which
ended at the close of the Closing Date, except the exemptions,
allowances or deductions that are calculated on an annual
basis, such as the deduction for depreciation, shall be
apportioned on a time basis. CBIZ and Seller agree, with
respect to Tax attributes of the Company and any Company
Subsidiary, not to take any actions inconsistent with the
Company's or such Company Subsidiary's Tax accounting methods
applied on a consistent basis which have the effect of
accelerating a deduction otherwise attributable to the period
on or after the Closing Date to the period before such date or
the effect of deferring a Tax liability otherwise attributable
to the period before or on the Closing Date to the period
after such date.
(D) CBIZ and Seller shall file or cause to be filed when due all
Tax Returns with respect to Taxes that are required to be
filed by or with respect to the Company and each Company
Subsidiary for taxable years or periods ending on or before
the Closing Date; provided, however, that (1) any such Tax
Return relating to a taxable year or period that begins before
and ends after the Closing Date shall be prepared in
accordance with the Company's or the Company Subsidiary's past
practices applied on a consistent basis; (2) Purchaser shall
have a reasonable opportunity to review and comment upon each
such Tax Return; and (3) CBIZ and Seller shall make, or cause
to be made, such revisions to such Tax Returns as are
reasonably requested by Purchaser. Purchaser shall file or
cause to be filed when due all Tax Returns with respect to
Taxes that are required to be filed by or with respect to the
Company and each Company Subsidiary for taxable years or
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periods ending after the Closing Date; provided, however, that
(1) any such Tax Return relating to a taxable year or period
that begins before and ends after the Closing Date shall be
prepared in accordance with the Company's or the Company
Subsidiary's past practices applied on a consistent basis; (2)
CBIZ and Seller shall have a reasonable opportunity to review
and comment upon each such Tax Return; and (3) Purchaser shall
make, or cause to be made, such revisions to such Tax Returns
as are reasonably requested by CBIZ or Seller. CBIZ and Seller
shall pay Purchaser the Taxes for which CBIZ and Seller are
liable pursuant to Section 6.1(C) but which are payable with
Tax Returns to be filed by Purchaser pursuant to the previous
sentence within ten (10) days prior to the date for the filing
of such Tax Returns. Purchaser shall pay to CBIZ and Seller
within ten (10) days after receipt by Purchaser any refund or
credit of Taxes for which CBIZ and Seller are liable, which
refund or credit is received by Purchaser with respect to Tax
Returns to be filed by Purchaser pursuant to this Section
6.1(D).
SECTION 6.2. MUTUAL COOPERATION. Purchaser, on the one hand, and Seller and
CBIZ, on the other, shall provide each other with such assistance as may
reasonably be requested by either of them in connection with the preparation and
execution of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each will retain and, upon the request of the other, provide the
other with any records or information which may be relevant to such return,
audit or examination or proceedings. Such assistance shall include making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder and shall include
providing copies of any relevant Tax Returns (or portions thereof) and
supporting work schedules. The party requesting such assistance hereunder shall
reimburse the other for out-of-pocket expenses (but not including any salary or
other compensation, or any other overhead or administrative expenses) actually
and reasonably incurred by the other in providing such assistance.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1. GENERAL CONDITIONS. The obligations of each party to consummate the
Closing shall be subject to the satisfaction, at or before the Closing, of the
following terms and conditions:
(A) All of Purchaser's Regulatory Filings (1) in the case of
approvals, shall have been obtained, without material or
substantial qualification or condition, and shall not have
been rescinded in any respect, and shall remain in full force
and effect through the Closing Date; and (2) in the case of
notices or other filings, shall have been made and accepted,
and all waiting periods prescribed by applicable law shall
have expired or terminated in accordance with applicable law;
(B) None of Purchaser, Seller, CBIZ, the Company or any Company
Subsidiary shall be subject to any order, decree or injunction
of a court, agency or other governmental authority of
competent jurisdiction which enjoins or prohibits the
consummation of the Closing; and
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(C) There shall be no action, suit or other proceeding in
progress, pending or threatened by any Person, which questions
or seeks to enjoin or prohibit the consummation of the
Closing.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated hereby shall be subject to
the satisfaction or waiver at or prior to the Closing of the following
conditions:
(A) CBIZ and Seller shall have performed in all material respects
all covenants and obligations contained herein to be performed
by them at or prior to the Closing, and Purchaser shall have
received certificates executed by the respective Presidents of
CBIZ and Seller to that effect;
(B) The representations and warranties of CBIZ and Seller
contained herein shall be true and accurate in all material
respects on and as of the Closing Date as if made on such
date, except as contemplated or permitted by this Agreement,
and Purchaser shall have received certificates executed by the
respective Presidents of CBIZ and Seller to that effect;
(C) Purchaser shall have received the following:
(1) a copy of the resolutions of the Board of Directors
of CBIZ, and of the Board of Directors of Seller,
each certified as of the Closing Date by their
respective Secretaries, authorizing and approving the
negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby;
and
(2) a copy of the resolutions of Seller, in its capacity
as sole shareholder of the Company, certified as of
the Closing Date by its Secretary, authorizing and
approving the negotiation and execution of this
Agreement and the consummation of the transactions
contemplated hereby;
(D) Seller shall have delivered to Purchaser, upon receipt of the
Purchase Price, the certificate(s) evidencing ownership of the
Shares by Seller, endorsed in blank or accompanied by separate
stock power(s) duly executed in blank.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF CBIZ AND SELLER. The obligations of
CBIZ and Seller to consummate the transactions contemplated hereby shall be
subject to the satisfaction or waiver, at or prior to the Closing, of the
following conditions:
(A) Purchaser shall have performed in all material respects all
covenants and obligations contained herein to be performed by
Purchaser at or prior to the Closing, and Seller shall have
received a certificate executed by the President of Purchaser
to that effect;
(B) The representations and warranties of Purchaser contained
herein shall be true and accurate in all material respects on
and as of the Closing Date as if made on such date, except as
contemplated or permitted by this Agreement, and CBIZ
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and Seller shall have received a certificate executed by the
President of Purchaser to that effect;
(C) Seller and CBIZ shall have received the following:
(1) a copy of the resolutions of the Board of Directors
of Purchaser, certified as of the Closing Date by
Purchaser's Secretary, authorizing and approving the
negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby;
and
(2) the timely and complete payment of the Purchase
Price.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(A) The term "Claim Notice" shall mean the written notification by
an Indemnified Party to an Indemnifying Party pursuant to
Section 8.4 hereof, which notification shall include a copy of
all papers served, if any;
(B) The term "Compromise Notice" shall mean a written notice given
by each party to an Indemnifiable Claim stating that such
party desires to accept a proposed compromise or settlement
with respect to such Indemnifiable Claim;
(C) The term "Damages" shall mean all losses, damages,
obligations, liabilities, judgments and settlements,
including, without limitation, costs (including court costs
and costs of any third party arbitrator) and Expenses, as well
as any resulting fines, penalties, assessments or Taxes;
(D) The term "Expenses" shall mean all out-of-pocket expenses
reasonably incurred under the circumstances or for the
purposes in question or to enforce rights or obligations
hereunder, including, without limitation, costs of
investigation, court costs, costs of arbitration or mediation
and reasonable attorneys', accountants' and expert witnesses'
fees and out-of-pocket expenses;
(E) The term "Indemnifiable Claim" shall mean a claim for which an
Indemnified Party is making a claim under this Article VIII
for Indemnifiable Losses;
(F) The term "Indemnifiable Losses" shall mean any and all Damages
for which an Indemnified Person is entitled to
indemnification;
(G) The term "Indemnified Party" shall mean any Person entitled to
receive indemnification under this Agreement;
(H) The term "Indemnifying Party" shall mean any Person required
to provide indemnification under this Agreement;
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(I) The term "Settlement Sum" shall mean the sum of: (1) the
amount of a proposed compromise or settlement of an
Indemnifiable Claim agreed to by all parties to such
Indemnifiable Claim (other than the Indemnified Party); and
(2) the amount of all other Indemnified Losses to which the
Indemnified Party is entitled with respect to such
Indemnifiable Claims outstanding at the expiration of the
thirty day calendar period beginning on the date on which the
last Compromise Notice relating to such indemnified claim has
been received by the Indemnified Party;
(J) The term "Third Party Claim" shall mean a claim or demand
asserted against or sought to be collected from an Indemnified
Party by a Person other than CBIZ, Seller, the Company,
Purchaser or any Affiliates of Seller or Purchaser.
SECTION 8.2. TAX INDEMNIFICATION.
(A) Seller and CBIZ shall be jointly and severally liable for,
shall pay, and shall defend, indemnify and hold Purchaser and
its Affiliates (and their respective officers, directors,
employees, agents and representatives) harmless from and
against any and all Taxes due from the Company or any Company
Subsidiary for any taxable period (or portion thereof) ending
on or before the Closing Date, together with all Expenses
related thereto; provided, however, that Seller and CBIZ shall
not be liable for such Expenses or to indemnify Purchaser or
its Affiliates on account thereof to the extent Section 8.2(E)
expressly states that an action by Purchaser shall be at its
Expense. Seller and CBIZ shall be entitled to all refunds of
Taxes payable with respect to the Company or any Company
Subsidiary for taxable periods (or portions thereof) ending on
or before the Closing Date.
(B) Purchaser shall be liable for, shall pay, and shall defend,
indemnify and hold CBIZ, Seller and their Affiliates (and
their respective officers, directors, employees, agents and
representatives) harmless from and against any and all Taxes
due from the Company or any Company Subsidiary for any taxable
period (or portion thereof) beginning after the Closing Date,
together with all Expenses related thereto; provided, however,
that Purchaser shall not be liable for such Expenses to the
extent Section 8.2(E) expressly states that any action by CBIZ
or Seller shall be at its Expense. Purchaser shall be entitled
to all refunds of Taxes payable with respect to the Company or
any Company Subsidiary for such taxable periods (or portions
thereof).
(C) The Indemnified Party shall notify the Indemnifying Party
promptly of the commencement of any claim, action, suit or
proceeding or other proposed charge or adjustment by any
taxing authority concerning Taxes or other Damages for which
the Indemnifying Party is liable pursuant to Section 8.2(A) or
8.2(B) hereof ("Tax Claim").
(D) The Indemnified Party shall furnish the Indemnifying Party in
a timely manner with copies of all correspondence (including,
without limitation, notices, requests, explanations,
determinations, schedules, charts and lists) received from any
taxing
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authority in connection with any Tax Claim for which the
Indemnified Party is seeking indemnification hereunder.
(E) At its option (following reasonable notice and consultation
with the Indemnified Party), the Indemnifying Party may, at
its Expense, contest any Tax Claim in any legally permissible
manner until such time as any payment for Taxes or such other
Damages with respect to such Tax Claim is due or, upon the
Indemnifying Party's payment of such Taxes and other Damages,
may sue for a refund thereof where permitted by applicable
law. Except as provided in the last sentence of this
subsection, the Indemnifying Party shall control all actions,
suits and proceedings taken in connection with any such
contest or refund suit, and may pursue or forego any and all
administrative appeals, actions, suits and proceedings and
conferences with the taxing authority in respect to such Tax
Claim. Notwithstanding the foregoing, if such contest or
refund suit has or would reasonably be expected to have a
material adverse effect on the Indemnified Party or on the
liability of the Indemnified Party for Taxes, if the
Indemnified Party is Purchaser or an Affiliate thereof, with
respect to any period (or portion thereof) ending after the
Closing Date, and, if the Indemnified Party is CBIZ or Seller,
with respect to any period (or portion thereof) ending on or
prior to the Closing Date, then the Indemnified Party may, at
its Expense, participate in any such contest or refund suit
and no party shall compromise or settle such contest or refund
suit without the consent of the other parties, which consent
shall not be unreasonably withheld.
SECTION 8.3. GENERAL INDEMNIFICATION. The indemnification required under any
subsection of this Section 8.3 is in addition to the indemnification required
under any other subsection of this Section 8.3 and to any rights to
indemnification elsewhere provided for in this Agreement.
(A) CBIZ and Seller jointly and severally hereby agree to
indemnify, defend and hold Purchaser and its Affiliates (and
their respective officers, directors, employees, agents and
representatives) harmless from and against and in respect of,
and shall on demand pay or reimburse Purchaser and its
Affiliates (and their respective officers, directors,
employees, agents and representatives) for any and all
Damages, whether or not involving a Third Party Claim:
(1) based upon or arising out of the breach of any
representation or warranty or the non-performance,
partial or total, of any covenant or agreement of
CBIZ or Seller contained in this Agreement;
(2) based upon or arising out of:
(a) the items of litigation (and the facts
underlying such litigation) which are
identified with an asteric (*) on SCHEDULE
4.9; and
(b) any matter identified on SCHEDULE 8.3.
(B) Purchaser hereby agrees to indemnify, defend and hold CBIZ,
Seller and their Affiliates (and their respective officers,
directors, employees, agents and
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representatives of each) harmless from and against and in
respect of, and shall on demand pay or reimburse CBIZ, Seller
and their Affiliates (and their respective officers,
directors, employees, agents and other representatives) for
any and all Damages whether or not involving a Third Party
Claim, based upon or arising out of the breach of any
representation or warranty (without giving effect to any
Knowledge qualifier therein) or the non-performance, partial
or total, of any covenant or agreement of Purchaser contained
in this Agreement.
SECTION 8.4. METHOD OF ASSERTING CLAIMS. All claims for indemnification by any
Indemnified Party under Section 8.3 shall be asserted and resolved as follows:
(A) In the event any claim or demand for which an Indemnifying
Party would be liable for Damages to an Indemnified Party
under Section 8.3 hereof is a Third Party Claim, the
Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party; provided, however, that
except as set forth in Section 8.4(D) hereof, no Claim Notice
will be required with respect to any action, suit or
proceeding that is in existence and of which the Indemnifying
Party has Knowledge on the Closing Date. If the Indemnified
Party fails to provide the Indemnifying Party with the Claim
Notice required by the preceding sentence at least ten (10)
calendar days before the date on which the Indemnifying
Party's ability to defend against the Third Party Claim is
materially prejudiced by the Indemnified Party's failure to
provide such Claim Notice, the Indemnifying Party will not be
obligated to indemnify the Indemnified Party with respect to
such portion of the Third Party Claim as to which the
Indemnifying Party's ability to defend has been prejudiced by
such failure of the Indemnified Party, except where the
Indemnified Party itself did not receive the Claim Notice in
time to meet the ten (10) day prior notice requirement.
(B) Upon receipt of a Claim Notice, the Indemnifying Party shall
notify the Indemnified Party with reasonable promptness, but
in all events within fifteen (15) calendar days after receipt
thereof ("Notice Period"), of whether the Indemnifying Party
disputes its liability to the Indemnified Party hereunder with
respect to such Third Party Claim and whether the Indemnifying
Party desires, at the sole cost and Expense of the
Indemnifying Party, to defend the Indemnified Party against
such Third Party Claim.
(C) If the Indemnifying Party notifies the Indemnified Party
within the Notice Period or at any time thereafter that the
Indemnifying Party does not dispute its liability to the
Indemnified Party and that the Indemnifying Party desires to
defend the Indemnified Party with respect to the Third Party
Claim pursuant to this Article VIII, then the Indemnifying
Party shall have the right to defend, at its sole cost and
Expense, such Third Party Claim by all appropriate actions,
suits and proceedings. Such actions, suits and proceedings
shall be diligently prosecuted by the Indemnifying Party to a
final conclusion or will be settled at the discretion of the
Indemnifying Party (with the prior written consent of the
Indemnified Party, which consent will not be unreasonably
withheld or delayed). From the date of such notice, the
Indemnifying Party shall have full control of such defense
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and actions, suits and proceedings, including any compromise
or settlement thereof; provided, however, that the Indemnified
Party may, at any time prior to its receipt of such notice
from the Indemnifying Party, file any motion, answer, or other
pleadings that the Indemnified Party may deem necessary or
appropriate to protect its interests or those of the
Indemnifying Party and not materially prejudicial to the
Indemnifying Party (it being understood and agreed that,
except as provided in Section 8.4(D) hereof, if an Indemnified
Party takes any such action that is materially prejudicial and
conclusively causes a final adjudication that is materially
adverse to the Indemnifying Party, the Indemnifying Party will
be relieved of its obligations hereunder with respect to the
portion of such Third Party Claim prejudiced by the
Indemnified Party's action); and provided further, that if
requested by the Indemnifying Party, the Indemnified Party
agrees, at the sole cost and Expense of the Indemnifying Party
(except that the Indemnifying Party shall not be responsible
for any attorneys fees of the Indemnified Party unless the
retention of such attorneys is requested by the Indemnifying
Party), to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, or if appropriate and
related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party
Claim, or any cross-complaint against any Person (other than
the Indemnified Party or any of its Affiliates). The
Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this Subsection (C), and
except as provided in the preceding sentence, the Indemnified
Party shall bear its own Expenses with respect to such
participation.
(D) If the Indemnifying Party fails to notify the Indemnified
Party that the Indemnifying Party does not dispute its
liability to the Indemnified Party and that the Indemnifying
Party desires to defend the Indemnified Party with respect to
the Third Party Claim pursuant to this Article VIII, or if the
Indemnifying Party gives such notice but fails diligently and
promptly to prosecute or settle the Third Party Claim, then
the Indemnified Party shall have the right to defend, at the
sole Expense of the Indemnifying Party, the Third Party Claim
by all appropriate actions, suits and proceedings. Such
actions, suits and proceedings shall be promptly and
vigorously prosecuted by the Indemnified Party to a final
conclusion or will be settled at the discretion of the
Indemnified Party (with the prior consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or
delayed). The Indemnified Party shall have full control of
such defense and actions, suits and proceedings, including any
compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party
agrees, at the sole Expense of the Indemnifying Party, to
cooperate with the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party
is contesting, or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim against
the Person asserting the Third Party Claim, or any
cross-complaint against any Person (other than the
Indemnifying Party or any of its Affiliates). The Indemnifying
Party may participate in, but not control, any defense or
settlement controlled by the
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Indemnified Party pursuant to this Section 8.4(D), and the
Indemnifying Party shall bear its own Expenses with respect to
such participation.
(E) Notwithstanding the foregoing provisions of this Section 8.4,
if the Indemnifying Party has notified the Indemnified Party
within the Notice Period that the Indemnifying Party disputes
its liability to the Indemnified Party and if such dispute is
resolved in favor of the Indemnifying Party by a final,
non-appealable order, ruling, judgment or decree of a court of
competent jurisdiction, the Indemnifying Party shall not be
required to provide any indemnification hereunder and shall
not be required to bear any Expenses of the Indemnified
Party's defense pursuant to Section 8.4(D) or of the
Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all Expenses incurred by the
Indemnifying Party in connection with such claim.
(F) In the event any Indemnified Party has a claim against any
Indemnifying Party hereunder that does not involve a Third
Party Claim being asserted against or sought to be collected
from the Indemnified Party, the Indemnified Party shall notify
the Indemnifying Party with reasonable promptness of such
claim by the Indemnified Party, specifying the nature of and
specific basis for such claim and the amount or the estimated
amount of such claim (the "Indemnity Notice"). If, within
sixty (60) days after the date of the Indemnity Notice, the
Indemnifying Party does not notify the Indemnified Party that
the Indemnifying Party disputes the claim, the amount of such
claim specified by the Indemnified Party will be conclusively
deemed a liability of the Indemnifying Party hereunder. If the
Indemnifying Party timely disputes such claim, the
Indemnifying Party and the Indemnified Party shall proceed in
good faith to attempt to negotiate a resolution of such
dispute, and if not resolved through negotiations, either
party may pursue whatever remedies it may have under
applicable law.
(G) An Indemnified Party shall not compromise or settle a claim
for which an Indemnified Party is making an Indemnifiable
Claim under this Section 8.4 without the prior written consent
of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed). The Indemnifying Party
shall not compromise or settle an Indemnifiable Claim without
the prior written consent of the Indemnified Party, but in the
event: (1) a firm offer is made to compromise or settle an
Indemnifiable Claim in a manner that will not subject the
Indemnified Party to liability and will not otherwise
adversely affect the rights of the Indemnified Party, and (2)
all parties to the Indemnifiable Claim (other than the
Indemnified Party) deliver a Compromise Notice to the
Indemnified Party, but (3) the Indemnified Party does not
elect (within thirty (30) calendar days after its receipt of
the last Compromise Notice from the other parties to the
Indemnifiable Claim) to accept or agree to such compromise or
settlement, then the indemnity obligation of the Indemnifying
Party arising from or relating to the Indemnifiable Claim
shall be limited to the Settlement Sum, and thereafter the
Indemnified Party shall either pay directly or reimburse the
Indemnifying Party promptly following the final,
non-appealable conclusion of the action, suit or proceeding
with respect
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to the Indemnifiable Claim for the amount by which the
liability and Expenses incurred by the Indemnifying Party
after the date of the Indemnified Party's election exceeds the
Settlement Sum.
SECTION 8.5. SUBROGATION. An Indemnifying Party shall be subrogated to any right
of action which the Indemnified Party may have against any other person with
respect to any matter giving rise to a claim for indemnification hereunder,
other than a claim in respect of Taxes.
SECTION 8.6. TAX TREATMENT OF PAYMENTS. All payments made pursuant to this
Article VIII shall be treated for tax purposes as adjustments to the Purchase
Price.
SECTION 8.7. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
(A) Notwithstanding any provision to the contrary contained in
this Agreement, CBIZ and Seller shall have no obligation to
indemnify Purchaser and its Affiliates (and their respective
officers, directors, employees agents and representatives)
from and against any Damages resulting from, arising out of or
caused by the breach of any representation, warranty or
covenant of CBIZ or Seller under this Agreement until the
total of all Damages with respect to such matters exceeds
Three Hundred Thousand Dollars ($300,000.00), and then only
for the amount by which such Damages exceed Three Hundred
Thousand Dollars ($300,000.00); provided that in no event
shall CBIZ and Seller be obligated to pay under this Article
VIII, in the aggregate, an amount greater than an amount equal
to the Purchase Price.
(B) Notwithstanding any provision to the contrary contained in
this Agreement, Purchaser shall have no obligation to
indemnify CBIZ and Seller and their Affiliates (and their
respective officers, directors, employees agents and
representatives) from and against any Damages resulting from,
arising out of or caused by the breach of any representation,
warranty or covenant of Purchaser under this Agreement until
the total of all Damages with respect to such matters exceeds
Three Hundred Thousand Dollars ($300,000.00), and then only
for the amount by which such Damages exceed Three Hundred
Thousand Dollars ($300,000.00); provided that in no event
shall Purchaser be obligated to pay under this Article VIII,
in the aggregate, an amount greater than an amount equal to
the Purchase Price.
(C) Notwithstanding any provision to the contrary contained in
this Agreement, CBIZ and Seller shall have no obligation to
indemnify Purchaser and its Affiliates (and their respective
officers, directors, employees agents and representatives)
from and against any Damages resulting from, arising out of or
caused by the breach of any representation or warranty of CBIZ
or Seller under this Agreement if (1) Purchaser has Knowledge
of the existence of the breach either prior to the execution
of this Agreement or, if the events giving rise to the breach
occur between the date of this Agreement and the Closing,
prior to the Closing; and (2) neither CBIZ nor Seller has any
Knowledge of the existence of the breach or the events giving
rise thereto.
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ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may, by written notice, be terminated
at any time prior to the Closing:
(A) by mutual consent of Purchaser, on the one hand, and Seller
and CBIZ, on the other;
(B) by either Purchaser, on the one hand, or Seller and CBIZ, on
the other, at any time after December 31, 2000, if the Closing
shall not have occurred on or prior to such date;
(C) by either Purchaser, on the one hand, or Seller and CBIZ, on
the other, in the event of the material breach by the other
party of any representation, warranty or agreement contained
herein or in any schedule or document delivered herewith which
cannot be or has not been cured within ten (10) days after
written notice to the party committing such breach; or
(D) by either Purchaser, on the one hand, or Seller and CBIZ, on
the other, at any time after a governmental authority having
jurisdiction over the Company, any Company Subsidiary, CBIZ,
Seller or Purchaser has notified any of them that it will not
provide regulatory approval to consummate the transactions
contemplated by the Agreement or will otherwise intervene to
prevent the consummation of such transactions.
Notwithstanding the foregoing, a party in material breach of any provision of
the Agreement may not terminate the Agreement pursuant to Section 9.1(B).
SECTION 9.2. EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 5.8 and 5.9 shall survive; provided, however,
that if this Agreement is terminated by a party because of the breach of the
Agreement by another party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of such other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
(A) The term "Affiliate" shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with
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any Person or beneficially owns or has the power to vote or
direct the vote of ten percent (10%) or more of any class of
voting stock (or of any form of voting equity interest in the
case of a Person that is not a corporation) of such other
Person. For purposes of this definition, "control" shall mean
the power to direct or cause the direction of the management
and policies of a Person, directly or indirectly, whether
through the ownership of securities or partnership or other
ownership interests, by contract or otherwise. The Company and
the Company Subsidiaries shall be deemed to be Affiliates of
CBIZ and Seller prior to the Closing and Affiliates of
Purchaser at and after the Closing.
(B) "Knowledge" of a particular fact or other matter shall,
(1) in the case of CBIZ or Seller, be deemed to exist if
any individual who is or was a director or officer of
CBIZ or Seller at any time since January 1, 2000
(other than Roswell P. Ellis, Joseph E. LoConti, John
A. Marazza, Charles Hamm or any other officer or
director of the Company or any Company Subsidiary)
(i) is actually aware of such fact or other matter;
or (ii) could be reasonably expected to discover or
otherwise become aware of such fact or other matter
in the course of conducting a reasonably
comprehensive investigation concerning the existence
of such fact or other matter (other than by
requesting information from, observing, reviewing
files under the sole custody and control of,
questioning or otherwise investigating Roswell P.
Ellis, Joseph E. LoConti, John A. Marazza, Charles
Hamm or any other officer or director of the Company
or any Company Subsidiary); and
(2) in the case of Purchaser, be deemed to exist if
Roswell P. Ellis, Joseph E. LoConti, John A. Marazza,
Charles Hamm or any other officer or director of
Purchaser, the Company or any Company Subsidiary at
any time since January 1, 2000 (i) is actually aware
of such fact or other matter; or (ii) could be
reasonably expected to discover or otherwise become
aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation
concerning the existence of such fact or other
matter.
(C) The term "Person" means any individual, corporation, general
or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other
entity or governmental authority.
SECTION 10.2. FURTHER ASSURANCES. The parties agree, both before and after the
Closing: (A) to furnish upon request to each other such further information; (B)
to execute and deliver to each other such other documents; and (C) to do such
other acts and things, all as the other party may reasonably request for the
purpose of carrying out the intent of this Agreement and the transactions
contemplated hereby.
SECTION 10.3. TIME LIMITATIONS. If the Closing occurs, Seller and CBIZ shall
have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or
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covenant or obligation to be performed and complied with prior to the Closing
Date unless Purchaser shall provide notice to Seller and CBIZ pursuant to
Section 8.4 on or before the date which is eighteen (18) months after the
Closing Date; provided, however, that Seller's and CBIZ's liability (for
indemnification or otherwise) with respect to Taxes (including all matters
described in Section 4.6 or Article VI hereof) shall survive until (A) for a Tax
which the Company or a Company Subsidiary is primarily liable, the later to
occur of (1) the lapse of the statute of limitations for the assessment of such
Tax against the Company or a Company Subsidiary or (2) sixty (60) days after the
administrative or judicial determination of such Tax; and (B) for a tax for
which the Company or a Company Subsidiary is not primarily liable, the later to
occur of (1) the lapse of the statute of limitations for the collection of such
Tax against the Company or a Company Subsidiary or (2) sixty (60) days after the
final administrative or judicial determination of the collectibility of such Tax
against the Company or a Company Subsidiary. If the Closing occurs, Purchaser
shall have no liability (for indemnification or otherwise) with respect to any
representation or warranty or covenant or obligation to be performed and
complied with prior to the Closing Date, unless Seller and CBIZ shall provide
notice to Purchaser pursuant to Section 8.4 on or before the date which is
eighteen (18) months after the Closing Date.
SECTION 10.4. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly received (A) on the date given
if delivered personally or by cable, telegram, telex or telecopy (confirmation
requested) or (B) on the date received if mailed by registered or certified mail
(return receipt requested), to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(A) if to Purchaser:
Avalon National Corporation
2400 Corporate Exchange Drive
Suite 290
Columbus, Ohio 43231
Attention: Roswell P. Ellis, President
Telephone: (614) 895-2000
Telecopier: (614) 895-2707
with a copy to:
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215
Attention: Laurie A. Briggs, Esq.
Telephone: (614) 227-2355
Telecopier: (614) 227-2390
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(B) if to CBIZ or Seller:
Century Business Services, Inc.
6480 Rockside Woods Boulevard, South
Suite 330
Cleveland, Ohio 44131
Attn: Jerome P. Grisko, President
Telephone: (216) 447-9000
Telecopier: (216) 447-9007
with a copy to:
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
Attn: James A. Yano, Esq.
Telephone: (614) 464-6473
Telecopier: (614) 719-5046
SECTION 10.5. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended nor shall it be construed to give any Person, other than the parties
hereto and their respective successors and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provisions hereof.
SECTION 10.6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither CBIZ, Seller nor Purchaser may assign any of
their respective rights and obligations under this Agreement; provided, however,
that Purchaser may assign its rights and obligations under this Agreement and
all Schedules hereto to any Affiliate of Purchaser at any time prior to or after
the Closing Date upon written notice of such assignment to CBIZ and Seller;
provided further, that upon such assignment Purchaser shall continue to be
subject to its obligations under this Agreement. Except as provided in the
immediately preceding sentence, permitted assigns shall mean only those Persons
who become assignees by operation of law as a result of a merger or other
reorganization. Notwithstanding anything herein to the contrary, CBIZ and Seller
acknowledge and agree that Purchaser is contemplating the sale of all or
substantially all of Purchaser's assets, and/or the sale of the stock of
Purchaser's wholly owned subsidiary, Century Workers Compensation Agency, Inc.,
to an as-yet-to-be-formed corporation ("NEWCO"), and, concurrently with such
sale, intends to assign all of its rights and obligations under this Agreement
to NEWCO. CBIZ and Seller further agree that, upon the effective time of the
contemplated assignment of this Agreement to NEWCO, (A) Avalon National
Corporation shall be released from all of its obligations under this Agreement
and (B) NEWCO, as assignee, shall thereafter become the Purchaser for all
purposes under this Agreement.
SECTION 10.7. ENTIRE AGREEMENT. This Agreement (together with all Schedules
hereto) represents the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof, both written and oral, and
supersedes all prior agreements related to such subject matter.
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SECTION 10.8. AMENDMENT. This Agreement may be amended, supplemented or changed
only by a written instrument making specific reference to this Agreement and
signed by the all of the parties hereto.
SECTION 10.9. WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege. To the maximum extent permitted by applicable law: (A) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(B) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (C) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the Schedules hereto.
SECTION 10.10. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
SECTION 10.11. ARTICLE AND SECTION HEADINGS, CONSTRUCTION. The headings of
Articles and Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require.
SECTION 10.12. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Ohio without regard to conflicts of laws principles.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, taken together, will be deemed to constitute one and
the same agreement.
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SIGNATURES
IN WITNESS WHEREOF, Purchaser, CBIZ and Seller have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CENTURY BUSINESS SERVICES, INC. AVALON NATIONAL CORPORATION
BY: /s/ Jerome P. Grisko, Jr. BY: /s/ Roswell P. Ellis
---------------------------------- ----------------------------------
ITS: President ITS: President
--------------------------------- ---------------------------------
CBSI MANAGEMENT, INC.
BY: /s/ Jerome P. Grisko, Jr.
----------------------------------
ITS: President
---------------------------------
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