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EXHIBIT 2.1
FIRST AMENDED AGREEMENT
AND PLAN OF MERGER
THIS FIRST AMENDED AGREEMENT AND PLAN OF MERGER ("AMENDED AGREEMENT")
entered into this 15th day of June, 2001 by and among UNB Corp., an Ohio
corporation, United Insurance Agency, Inc., an Ohio corporation ("United
Insurance"), all of the outstanding stock of which is owned by UNB Corp., Xxxxx
Financial Advisors Corp., and Ohio corporation (the "Company"), and Xxxxxx X.
Xxxxx ("Bob"), Xxxx X. Xxxxx ("Xxxx"), and Xxxx X. Xxxxx ("Xxxx"), who are all
of the shareholders of the Company (collectively, the "Shareholders").
WHEREAS, the parties entered into an Agreement and Plan of Merger,
dated June 12, 2001, (the "Merger Agreement"), setting forth the terms and
conditions under which the Company would be merged into United Insurance.
WHEREAS, the parties wish to amend certain provisions of the Merger
Agreement.
NOW, THEREFORE, the parties hereto have agreed and, by these presence
do hereby agree as follows:
1. Section 2.1 of the Merger Agreement is hereby amended to read as
follows:
"2.1 CONVERSION RATIO. All the common shares of the Company
(the "Company Shares") issued and outstanding immediately prior to the
Effective Date shall, by virtue of the Merger and without any action on
the part of the holder thereof, automatically be converted on the
Closing Date (as herein defined) into that number of duly issued, fully
paid, and non-assessable UNB Shares determined in the following manner:
the total number of UNB Shares to be issued to the Shareholders shall
be determined by dividing $255,348.14 by the average of the closing
price (the "Average Price") of the UNB Shares as listed on
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NASDAQ for the five (5) business days immediately preceding the date
the parties issue a press release announcing the execution of this
Agreement (the "Measuring Period") subject, however, to any adjustment
on account of combinations, subdivisions, reclassifications or
distributions with respect to UNB Shares as provided in Section 2.2
below. The UNB Shares to be distributed pursuant to the terms of this
Agreement shall come from treasury stock held by UNB Corp."
2. Section 8.7 of the Agreement is hereby deleted in its entirety.
3. All other provisions and Sections of the Agreement, other than
Sections 2.1 and 8.7, are unaffected by this Amendment and remain valid and
enforceable.
IN WITNESS WHEREOF, the Parties have caused this Amended Agreement to
be executed as of the date and year first set forth above.
UNB CORP.
BY: /s/ Xxxxx X. Xxxxxxxx
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Its: Executive Vice President & CFO
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UNITED INSURANCE AGENCY
BY: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: Secretary & Treasurer
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XXXXX FINANCIAL ADVISORS CORP.
BY: /s/ Xxxx X. Xxxxx
---------------------------------
Its: President
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/s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER ("Agreement") entered into this 12th
day of June, 2001, by and among UNB Corp., an Ohio corporation, United Insurance
Agency, Inc., an Ohio corporation ("United Insurance"), all of the outstanding
stock of which is owned by UNB Corp., Xxxxx Financial Advisors Corp., an Ohio
corporation (the "Company"), and Xxxxxx X. Xxxxx ("Xxx"), Xxxx X. Xxxxx
("Xxxx"), and Xxxx X. Xxxxx ("Xxxx"), who are all of the shareholders of the
Company (collectively, the "Shareholders").
WITNESSETH THAT:
WHEREAS, the Boards of Directors of UNB Corp., United Insurance, and
the Company, respectively, deem it to be in the best interests of UNB Corp.,
United Insurance, and the Company and their respective shareholders that United
Insurance acquire all of the common shares of the Company in exchange for common
shares of UNB Corp., no par value (the "UNB Shares") and cash pursuant to a plan
of merger of the Company with and into United Insurance in accordance with this
Agreement and Section 368(a)(1)(A) of the Internal Revenue Code; and
WHEREAS, the respective Boards of Directors of UNB Corp., United
Insurance, and the Company have approved and authorized the execution of this
Agreement;
NOW, THEREFORE, the parties hereto have agreed and, by these presents
do hereby agree as follows:
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ARTICLE I
PLAN OF MERGER
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1.1 AGREEMENT TO MERGE. Subject to the terms and conditions of this
Agreement and Section 368(a)(1)(A) of the Internal Revenue Code, the Company
shall merge with and into United Insurance (the "Merger"). The effective date of
the Merger (the "Effective Date") shall be the close of business on the day the
Certificate of Merger attached hereto as EXHIBIT A (the "Certificate of Merger")
is filed with the office of the Secretary of State of Ohio. United Insurance and
the Company shall execute the Certificate of Merger upon satisfaction of all
conditions precedent to their obligations hereunder, pursuant to Article 8 and 9
hereof, respectively. The adoption and approval of the Certificate of Merger
shall not in any way supersede, amend or modify any of the terms, covenants and
conditions of this Agreement, all of which shall remain in full force and
effect. The Company and United Insurance are hereafter sometimes referred to as
the "Constituent Corporations" and United Insurance, the Constituent Corporation
surviving the Merger is hereinafter sometimes referred to as the "Surviving
Corporation".
1.2 TERMS OF MERGER.
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(a) ADDITIONAL ACTIONS. If, at any time after the Effective
Date, the Surviving Corporation shall consider or be advised that any
conveyance, assignment, transfer, deed, or other instrument or act is necessary
or desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either Constituent Corporation as a result of, or in
connection with, the Merger or to otherwise carry out this Agreement, the
officers and directors of the Surviving Corporation shall
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and will be authorized to execute, acknowledge and deliver, in the name and on
behalf of the Constituent Corporations or otherwise, all such instruments and do
such acts.
(b) ARTICLES OF INCORPORATION. The Articles of Incorporation
of United Insurance in effect immediately prior to the Effective Date shall be
the Articles of Incorporation of the Surviving Corporation unless and until
altered, amended or repealed in accordance with the provisions thereof and the
Ohio Revised Code ("ORC").
(c) CODE OF REGULATIONS. The Code of Regulations of United
Insurance in effect immediately prior to the Effective Date shall be the Code of
Regulations of the Surviving Corporation unless and until altered, amended or
repealed in accordance with the provisions thereof and the ORC.
(d) OFFICERS. The officers of the Surviving Corporation upon
the Effective Date shall be:
(i) Xxxxx X. Xxxx - Chairman of the Board & CEO
(ii) Xxxx X. Xxxxx - President & COO
(iii) Xxxxxx X. Xxxxx - Vice President - Sales
(iv) Xxxxx X. Xxxxxxxx - Secretary / Treasurer
(e) DIRECTORS. The directors of the Surviving Corporation upon
the Effective Date shall be:
Xxxxx X. Xxxx
X. Xxxx D'Xxxx
Xxxxx X. Xxxxxxx, III
Xxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxx
1.3 MANAGEMENT OF SURVIVING CORPORATION.
(a) All power and authority to manage and control the
Surviving Corporation shall be vested in the Board of Directors of the Surviving
Corporation, except for the right to authorize those corporate actions which
would require the approval of the shareholders under ORC Chapter 1701.
(b) Notwithstanding the foregoing, any action by United
Insurance or UNB Corp. to materially alter or modify the Operating Agreement
between Lincoln Financial Advisors Corporation ("LFAC") and United Insurance
between the Effective Date and January 1, 2004, shall only be taken with the
unanimous consent of Bob and Xxxx.
1.4 NAME CHANGE.
Upon the filing of the Certificate of Merger, United
Insurance's corporate name shall be changed to "United Financial Advisors Inc.".
ARTICLE 2.
CONVERSION AND EXCHANGE OF STOCK
--------------------------------
2.1. CONVERSION RATIO. All the common shares of the Company (the
"Company Shares") issued and outstanding immediately prior to the Effective Date
shall, by virtue of the Merger and without any action on the part of the holder
thereof, automatically be converted on the Closing Date (as herein defined) into
that number of duly issued, fully paid, and non-assessable UNB Shares determined
in the following manner: the total number of UNB Shares to
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be issued to the Shareholders shall be determined by dividing $300,000 by the
average of the closing price (the "Average Price") of the UNB Shares as listed
on NASDAQ for the five (5) business days immediately preceding the date the
parties issue a press release announcing the execution of this Agreement (the
"Measuring Period") subject, however, to any adjustment on account of
combinations, subdivisions, reclassifications or distributions with respect to
UNB Shares as provided in Section 2.2 below. The UNB Shares to be distributed
pursuant to the terms of this Agreement shall come from treasury stock held by
UNB Corp.
2.2 ADJUSTMENTS OF UNB SHARES. If UNB Corp. shall effect a split,
consolidation, or reclassification of UNB Corp. common shares outstanding or
make any other distribution of UNB Corp. common shares, or of any security
convertible into UNB Corp. common shares to the holders of UNB Corp. common
shares, generally, after the date hereof and on or before the Closing Date, the
Shareholders shall have the right to receive at Closing (as herein defined) such
additional number of UNB Corp. common shares or convertible security as they
would have been entitled to receive upon such split, consolidation,
reclassification or distribution had the Closing been held immediately prior to
such split, consolidation, reclassification or distribution.
2.3. EXCHANGE. After the Effective Date the holders of an outstanding
certificate or certificates thereto representing the Company Shares shall be
entitled, upon surrender of all such certificates to United Insurance, or such
other agent or agents as may be appointed by United Insurance, which is to occur
at Closing, to receive therefore certificates representing the number of whole
UNB Shares into which the Company Shares theretofore represented by the
certificate or certificates so surrendered shall have been converted as
determined above, which UNB Shares will be allocated as follows: Bob 25.5%; Xxxx
25.5%; Xxxx 49%. Until so surrendered, each
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such outstanding certificate which prior to the Effective Date represented
Company Shares shall be deemed for all corporate purposes to evidence ownership
of the number of shares of UNB Corp. into which such shares of the Company shall
have been so converted. After the Effective Date, there shall be no further
record of transfers on the records of the Company of Company Shares outstanding
immediately prior to the Effective Date, and, if certificates representing such
shares are presented to the Surviving Corporation they shall be cancelled and
exchanged for certificates representing UNB Shares as herein provided. No
dividends or distributions will be paid to persons entitled to receive
certificates for UNB Shares until such persons shall have surrendered their
certificates which represented Company Shares, provided, however, that when
certificates which prior to the Effective Date represented Company Shares shall
have been so surrendered, there shall be paid to the holders thereof, but
without interest thereon, all dividends and other distributions payable
subsequent to the Effective Date on the UNB Shares into which such certificates
shall have been so converted together with any UNB Shares the Shareholders would
be entitled to receive pursuant to a post-closing event described in Section 2.2
above.
2.4. FRACTIONAL SHARES. No certificates for fractional shares of UNB
Corp. will be issued as part of the Merger. Rather, any holder of Company Shares
who otherwise would be entitled to receive a fractional share of UNB Corp. shall
within five (5) days of surrender of the Company Shares receive the cash value
of any fractional share based upon the Average Price.
2.5 CERTIFICATES REPRESENTING UNB SHARES. Certificates representing UNB
Shares delivered to the Shareholders at Closing will not be registered under the
Securities Act of 1933, as amended (the "1933 Act"), and will bear the legend
set forth below reflecting that such shares
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are not issued in a transaction registered under the 1933 Act, and cannot be
resold in the absence of a registration under said 1933 Act or pursuant to an
exemption thereto.
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
ARTICLE 3.
CASH CONSIDERATION
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3.1 ADDITIONAL CONSIDERATION. In addition to the UNB Shares, the
Shareholders shall be eligible to receive in proportion to their ownership
listed in Section 2.3 an additional consideration of $300,000 (the "Cash
Consideration") payable as follows:
(a) Beginning on the Closing Date, United Insurance, or any
successor to United Insurance, shall engage in the financial
consulting/financial services business. Beginning January 1, 2002, during each
calendar year, United Insurance shall account for all "revenues" and "net
income", as those terms are defined in Article 10 of this Agreement. For each
calendar year in which the revenues of United Insurance shall equal or exceed
$600,000, and the net income of United Insurance shall equal or exceed $100,000,
the Shareholders shall receive a total of $60,000 (the "Installment Payment").
(b) If during any calendar year, in which an Installment
Payment is owed, United Insurance shall produce NO net income, then the
Shareholders shall not be entitled to receive the Installment Payment for that
year.
(c) If during any calendar year, in which an Installment
Payment is owed, United Insurance shall produce less than $600,000 of revenue
and/or less than $100,000 of net
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income, but greater than $0 of net income, the Installment Payment for that
calendar year shall be calculated by adding that percentage of $600,000 of gross
revenue received by United Insurance with that percentage of $100,000 of net
income earned by United Insurance, which sum shall then be divided by 2 and that
percentage (not to exceed 100%) shall be multiplied by $60,000.
(d) The calculation of revenue and net income shall be based
solely on the results of the calendar year in question based on the accrual
method of accounting. The results from previous years performance shall not be
included in the calculation.
(e) Installment Payments shall be made by UNB Corp. no later
than March 31st of the following year. The first payment shall be due no later
than March 31, 2003, for the results obtained in 2002, and the last payment
shall be due no later than March 31, 2007, for the results obtained in 2006.
3.2 CHANGE OF CONTROL. The term "Change in Control" shall mean the
occurrence of any of the following events prior to December 31, 2006:
(a) UNB Corp. is merged or consolidated with another
corporation and as a result of such merger or consolidation less than 75% of the
outstanding voting securities of the surviving or resulting corporation are
owned in the aggregate by the former stockholders of UNB Corp., other than
"Affiliates" (within the meaning of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) of any party to such merger or consolidation , as the
same existed immediately prior to such merger or consolidation; or
(b) UNB Corp. sells all or substantially all of its assets to
another corporation, which is not a wholly-owned subsidiary of UNB Corp.; or
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(c) There is an acquisition of 25% or more of the outstanding
voting securities of UNB Corp. (whether directly, indirectly, beneficially or of
record) pursuant to any transaction or combination of transactions by any person
or group within the meaning of the 1934 Act; or
(d) The individuals who, at the beginning of any period of two
consecutive calendar years, constituted the Directors of UNB Corp. cease for any
reason to constitute at least a majority thereof unless the nomination for
election by UNB Corp.'s stockholders of each new Director of UNB Corp. was
approved by a vote of at least two-thirds of the Directors of UNB Corp. still in
office who were Directors of UNB Corp. at the beginning of any such period.
3.3 UNB TERMINATION EVENT. The term "UNB Termination Event" shall mean
any of the following events:
(a) The death of Bob or Xxxx during the Employment Period (as
defined below);
(b) If Bob and/or Xxxx shall become eligible during the
Employment Period to receive and actually do receive disability benefits under
UNB Corp.'s disability plan as in effect immediately prior to the Closing Date
or any successor plan thereto;
(c) Termination of the employment of either Bob or Xxxx during
the Employment Period without cause. Termination shall be deemed to have been
for "Cause" only if based on the fact that Bob or Xxxx (hereinafter, the
"Executive") committed any of the following acts during the Employment Period:
(i) Fraud, Embezzlement or Theft: An intentional act
of fraud, embezzlement or theft in connection with his or her duties or in the
course of his or her employment with United Insurance,
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(ii) Intentional Harm: Intentional wrongful damage to
property of United National Bank & Trust Co. (the "Bank"), or United Insurance
causing harm to the Bank, or United Insurance,
(iii) Disclosure of Trade Secrets: Intentional
wrongful disclosure of secret processes or confidential information of UNB
Corp., the Bank or United Insurance causing harm to UNB Corp., the Bank, or
United Insurance,
(iv) Competing with the Corporation: Intentional
wrongful engagement in any competitive activity. For purposes of this Agreement,
competitive activity means the Executive's participation, without the written
consent of an officer of UNB Corp., in the management of any business enterprise
if (a) the enterprise engages in substantial and direct competition with the
Bank or United Insurance, (b) the enterprise's revenues derived from any product
or service competitive with any product or service of the Bank or United
Insurance amounted to 10% or more of such enterprise's revenues for its most
recently completed fiscal year, or (c) the Bank's revenues from the product or
service amounted to 10% of the enterprise's revenues for its most recently
completed fiscal year, or United Insurance's revenues from the product or
service amounted to 10% or more of the enterprise's revenues for its most
recently completed fiscal year. A competitive activity does not include mere
ownership of securities in any such enterprise and the exercise of rights
appurtenant thereto, provided the Executive's share ownership does not give him
or her practical or legal control of the enterprise. For this purpose, ownership
of less than 5% of the enterprise's outstanding voting securities shall
conclusively be presumed to be insufficient for practical or legal control, and
ownership of more than 50% shall conclusively be presumed to constitute
practical and legal control.
If the Executive is now or hereafter becomes subject
to an agreement not to compete or not to solicit with the Bank or United
Insurance, a material breach by the Executive of that agreement shall be grounds
for termination for Cause under this clause (iv) of Section 3.3(c). This clause
(iv) is not intended to and shall not be construed to supersede or amend any
provision of an employment or non-competition agreement to which the Executive
is or may become subject. This clause (iv) does not grant to the Executive any
right or privilege to
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engage in other activities or enterprises, whether in competition with UNB Corp.
or United Insurance Agency, Inc. or otherwise.
(v) Materially breaches this Agreement or the
Employment Agreement and does not cure the breach within 10 days after notice by
United Insurance to the Executive of the breach.
(vi) Materially breaches this Agreement or the
Employment Agreement three times within any one calendar year whether or not the
breaches are cured.
(vii) Commits a crime other than traffic violations
and minor misdemeanors not involving moral turpitude.
(viii) Engages in dishonesty, fraud, gross
negligence, or malfeasance in the performance of his or her duties to United
Insurance.
(ix) Engages in conduct that in the reasonable
judgment of United Insurance materially and adversely affects the reputation of
the Executive or United Insurance.
(x) Abuses alcohol or drugs so that, in United
Insurance's reasonable judgment, the Executive's ability to perform his or her
duties to United Insurance is impaired.
(xi) Fails to maintain licensure to market and sell
financial products, including insurance and all other products offered by United
Insurance to its customers.
(d) Breach of or failure to perform any material condition,
term or provision of this Agreement by UNB Corp. or United Insurance or any
Employment Agreements entered into between United Insurance and Bob and Xxxx, as
referenced in Section 8.6 and failure on the
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part of UNB Corp. or United Insurance to commence corrective action within 60
days receipt of written notice of breach.
(e) Determination by the Executive made in good faith that
upon or after the occurrence of a Change in Control, there has occurred (i) a
material reduction in the Executive's compensation or other employee benefits;
(ii) a significant reduction or other adverse change in the nature or scope of
the responsibilities and authorities of the Executive attached to the
Executive's position, or (iii) a change of more than 15 miles in the location of
the Executive's principal office, as in effect immediately prior to the date of
the occurrence of the Change in Control.
(f) A termination or material modification of the Operating
Agreement between LFAC and United Insurance by United Insurance and UNB Corp.
which occurs prior to January 1, 2004, without the consent of Bob and Xxxx.
3.4 EMPLOYMENT PERIOD. The term "Employment Period" shall mean that
period of time during which either Bob or Xxxx are parties to the Employment
Agreements with United Insurance referenced in Article 8.6 of this Agreement.
3.5 ACCELERATION OF INSTALLMENT PAYMENTS.
(a) In the event of a Change of Control, UNB Corp. shall
within 10 business days pay to the Shareholders 50% of any remaining Installment
Payments of the Cash Consideration, without regard to any prior performance of
the Surviving Corporation. The Shareholders shall continue to be eligible to
receive the remaining 50% by the Surviving Corporation fulfilling the conditions
set forth in Article 3.1.
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(b) In the event of the occurrence of a UNB Termination Event
described in subparagraphs a, b, c, or f in Section 3.3 of this Agreement, prior
to January 1, 2004, then UNB Corp. shall within ten (10) business days pay to
the Shareholders 100% of any remaining Installment Payments of the Cash
Consideration, without regard to any prior performance of the Surviving
Corporation.
(c) In the event of the occurrence of a UNB Termination Event,
described in subparagraphs a, b, or c, in Section 3.3 of this Agreement, after
January 1, 2004, then UNB Corp. shall within ten (10) business days pay only to
the Shareholder who has died, become disabled or whose employment has been
terminated without Cause 100% of any remaining Installment Payments of the Cash
Consideration owed to said Shareholder without regard to any prior performance
of the Surviving Corporation. The remaining Shareholder shall continue to be
eligible to receive the remaining Installment Payments of the Cash Consideration
in accordance with subparagraph 3.1 of this Agreement.
(d) In the event of the occurrence of a UNB Termination Event described
in subparagraphs d and e in Section 3.3 of this Agreement, then UNB Corp. shall
within ten (10) business days pay to the Shareholders 100% of any remaining
Installment Payments of the Cash Consideration, without regard to any prior
performance of the Surviving Corporation.
(e) In the event Bob and/or Lora's employment with United Insurance is
terminated for Cause, as that term is defined in Section 3.3(c)(i-xi) of this
Agreement, then UNB Corp. shall within ten (10) business days pay to the
terminated Shareholder 100% of any remaining Installment Payments of the Cash
Consideration owed to said Shareholder without regard to any prior performance
of the Surviving Corporation.
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(f) Any Installment Payment of the Cash Consideration made to Bob under
the provisions of Article 3 shall automatically require that Xxxx receive her
share of any Installment Payment of the Cash Consideration.
(g) The accelerated Installment Payments described in Article 3.5 are
not intended to be exclusive of any other remedy now or hereafter available to
the Shareholders, whether existing at law, in equity, by statute or otherwise.
ARTICLE 4.
AFFECT OF MERGER
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Except as herein specifically set forth, the identity, existence,
purposes, powers, objects, franchises, privileges, licenses, rights, and
immunities of the Company shall continue unaffected and unimpaired by the Merger
and the corporate franchise, existence and rights of the Company shall be merged
into United Insurance and United Insurance shall, as the Surviving Corporation,
be fully vested therewith. At the Effective Date, the separate existence of the
Company shall cease and in accordance with the terms of this Agreement, the
Surviving Corporation shall possess all the rights, privileges, powers, and
assets, including, but not limited to, the customer lists and be subject to all
the restrictions, disabilities and duties, of each of the Constituent
Corporations, and all rights, powers and franchises and all property, real,
personal and mixed, and all debts due on whatever account, and all other things
in action and all and every other interest of or belonging to or due to each of
the Constituent Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed. At the
Effective Date all property, rights, privileges, powers and franchises and all
and every other interest shall thereafter be effectively the property of the
Surviving Corporation as they
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were the respective Constituent Corporations. The Surviving Corporation shall
upon the Effective Date be responsible and liable for all the liabilities and
obligations of the Constituent Corporations, and any claim existing or action or
proceeding pending by or against either of said Constituent Corporations may be
prosecuted with the Surviving Corporation substituted in its place. Neither the
rights of creditors, nor any liens upon the property of either the Constituent
Corporations shall be impaired by the Merger, and all debts, liabilities and
duties of each of said Constituent Corporations shall attach to the Surviving
Corporation and may be forced against it to the same extent as if said debts,
liabilities and duties have been incurred or contracted by it.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and Bob, Gail, and Xxxx, jointly and severally, represent
and warrant to UNB Corp. and United Insurance, as of the date of this Agreement
and as of the Closing, as follows:
5.1 AUTHORITY. The execution and delivery of this Agreement and the
Certificate of Merger and the consummation of the transactions contemplated
herein have been duly and validly authorized by the board of directors of the
Company and, subject to the approval of this Agreement and the Certificate of
Merger by the Shareholders, no other corporate action on its part is necessary
to authorize this Agreement or the consummation of the transactions contemplated
herein. This Agreement is a valid and binding obligation of the Company and the
Shareholders enforceable in accordance with its terms except as enforceability
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, or
similar laws of general application relating to or affecting the enforcement of
creditor's rights or (ii) general principles of equity.
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Neither the execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will, in any material respect (i)
conflict with or result in a violation of or breach or default under the
articles of incorporation or the Code of Regulations of the Company (ii) cause a
default (or give rise to any right of termination, cancellation or acceleration)
under any note, bond, lease, mortgage, indenture, license, permit or other
agreement to which the Company is a party, by which it or its properties are
bound or which is necessary for the continued operation of the Company's
business as presently conducted; or (iii) violate any law, statute, rule or
regulation or order, writ, or injunction or decree applicable to the Company or
any of its properties or assets. To the Company's knowledge, no consent or
approval by any governmental authority is required in connection with the
execution and delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby.
5.2 ORGANIZATION AND STANDING. The Company is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Ohio, and has full corporate power and authority to own and hold its properties
and to carry on its business as presently conducted.
5.3 CAPITALIZATION. The authorized capital stock of the Company
consists in its entirety of 850 Common Shares, without par value, of which 200
Common Shares are validly issued and outstanding, fully paid and non-assessable
and the remaining 650 Common Shares are authorized but unissued. There are no
outstanding obligations, options or rights entitling others to acquire shares of
capital stock of the Company or any outstanding securities or other instruments
convertible into shares of capital stock of the Company. SCHEDULE 5.3 contains a
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complete list of the names and residence addresses of all the Shareholders and
the number of Common Shares held by each, as reflected on the records of the
Company as of the date of this Agreement. There will be no changes in the record
stock ownership of the Company through the Closing.
5.4 SUBSIDIARIES. The Company does not own, directly or indirectly, any
interest in any corporation, partnership, joint venture or other business
venture or entity and is not obligated to provide funds to or make any
investment in any such entity or venture.
5.5 ARTICLES OF INCORPORATION AND CODE OF REGULATIONS. The Company has
delivered to UNB Corp. true and complete copies of the Articles of Incorporation
and Code of Regulations of the Company.
5.6 FINANCIAL STATEMENTS. Company has delivered to UNB Corp. the
balance sheets of the Company as at September 30, 1999, September 30, 2000, and
the related statements of income for the twelve months then ended (the
"Financial Statements"). The Financial Statements fairly present the financial
condition and results of operations of the Company as of the dates of and for
the periods therein set forth in accordance with the Company's accounting
principles applied on a consistent basis throughout the periods involved. Except
as otherwise noted in the Financial Statements or SCHEDULE 5.6, no additional
adjustments are necessary to said financial statements to fairly present the
financial position of the Company as of the various dates thereof.
5.7 ABSENCE OF CHANGES. Since September 30, 2000, the Company has
conducted its business in the ordinary course and has not (i) undergone any
change in its financial condition, assets, liabilities, business or operations
other than changes in the ordinary course of business which have not been,
either in any one case or in the aggregate, materially adverse, (ii) declared,
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set aside, made or paid any dividend or other distribution in respect of its
capital stock or equity securities, or purchased or issued or sold any shares of
its capital stock or equity securities, (iii) incurred any indebtedness for
borrowed money or issued or sold any debt securities, (iv) mortgaged, pledged or
subjected to any lien, lease, security interest or other charge or encumbrance
any of its properties or assets, tangible or intangible, (v) forgiven or
cancelled any debts or claims, except in the ordinary course of business and not
involving any shareholder, director or officer of the Company or waived any
material rights, (vi) suffered any loss of employees, customers or suppliers
which materially and adversely affects its business or operations, (vii)
incurred any liability or obligation (whether absolute, accrued, contingent or
otherwise) except in the ordinary course of business, (viii) suffered any
damage, destruction or loss (whether or not covered by insurance) which
materially and adversely affects (in any case or in the aggregate) its assets,
business or operations, or (ix) made or declared any contribution to any
employee benefit plan, except for payments for life and medical insurance in the
ordinary course and consistent with past practices.
5.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as reflected, noted or
adequately reserved in the Financial Statements, as of the dates thereof, the
Company did not have any debts, liabilities or obligations (whether accrued,
absolute, contingent or otherwise) of a nature required by generally accepted
accounting principles to be reflected as a liability in such balance sheets, and
at such dates did not have any other material debts, liabilities or obligations
(whether accrued, absolute, contingent or otherwise).
5.9 LITIGATION. There is no litigation, investigation or proceeding
pending, or, to the knowledge of the Company, threatened involving the Company
or any of its properties, and there
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are no outstanding orders, writs, injunctions or decrees of any court,
governmental agency or arbitration tribunal materially affecting or materially
limiting the conduct of the business of the Company. To the best knowledge of
the Company and the Shareholders, there are no facts or conditions presently
existing that could give rise to any litigation, investigation or proceeding
which, if determined adversely to the Company, would have a material adverse
effect on the assets or business of the Company.
5.10 TITLE TO AND CONDITION OF ASSETS. The Company has good title to
all property and assets used in the conduct of its business as now conducted,
including the property and assets reflected in the Financial Statements or
acquired subsequent to the dates thereof (other than leased property as to which
the Company has a valid interest as lessee and property and assets disposed of
in the ordinary course of business), free and clear of all liens or encumbrances
other than as reflected in such balance sheets. The leasehold improvements,
machinery, equipment and office equipment of the Company are in good operating
condition and repair, subject to ordinary wear and tear, and such leasehold
improvements, machinery, equipment and office equipment conform, to the
knowledge of the Company and the Shareholders, in all material respects with all
applicable laws, ordinances and regulations, including, as to all real property,
all building, zoning, and other laws, the failure to comply with which, either
singly or in the aggregate, would materially detract from the value of the
assets affected thereby or materially impair the use thereof by the Company. The
Company owns or has the right to use all properties and assets necessary to the
conduct of its business as now conducted.
5.11 ACCOUNTS RECEIVABLE. The accounts receivable of the Company, as
reflected in the Financial Statements (except those collected before the
Closing), will not, to the knowledge
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of the Company, be subject to any rightful counterclaims or set-offs and shall
be good and collectible at the aggregate recorded amounts thereof (less the
amounts of any bad-debt reserves or allowances which are reflected in such
balance sheets).
5.12 REAL ESTATE OWNED AND LEASED. Other than a lease dated May 12,
1998, with PRK, Inc., regarding the property located at 0000 Xxxxx Xxxxxx X.X.,
Xxxxx Xxxxxx, Xxxx 00000, the Company has entered into no lease regarding any
other real estate. The Company has no ownership interest in any real estate.
5.13 TAXES. The Company has filed all income, excise, sales, use, gross
receipts, franchise, real property, personal property, employment and payroll
related and all other tax returns, reports and declarations required to be filed
by it and has paid all taxes, penalties and interest which have become due
pursuant thereto or which became due pursuant to assessments. The Company has
not received any notice of deficiency or assessment of additional taxes and, to
the knowledge of the Company and the Shareholders, no tax audits are in process.
The Company has not granted any waiver of any statute of limitation with respect
to, or any extension of a period for the assessment of, any federal, state,
county, municipal or foreign income tax. The accruals and reserves for taxes
which are reflected in the Financial Statements will be adequate to cover all
taxes due and payable by the Company (including interest and penalties, if any,
thereon) as a result of its operations for all periods prior thereto.
5.14 MATERIAL CONTRACTS. Except as disclosed in the Financial
Statements of the Company (including the notes thereto) and Schedule 5.14, the
Company is not a party to or bound by any of the following types of contracts or
commitments, written or, to the knowledge of the Company, oral: (i) mortgages,
indentures, security agreements and other agreements and
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instruments relating to the borrowing of money or extension of credit or
imposition of an encumbrance on any of the assets of the Company, (ii) bonus,
profit-sharing, compensation, stock option, pension, retirement, deferred
compensation, insurance or other plans, agreements, trusts, funds or
arrangements for the benefit of employees (whether or not legally binding),
(iii) sales agency, manufacturer's representative or distributorship agreements,
(iv) contracts, orders or commitments for the purchase of services, other than
those made in the ordinary course of business and not exceeding $75,000, (v)
contracts and commitments not related to the provision of services by the
Company whether or not made in the ordinary course of business which in any case
involve payments or receipts of more than $5,000, (vi) any contract for the
purchase, sale or lease of real property as vendor or vendee or as lessor or
lessee, (vii) any contract for the lease of personal property which provides for
annual rentals in excess of $5,000, or any group of contracts for the lease of
similar kinds of property from third parties which provides in the aggregate for
annual rentals in excess of $5,000, (viii) any contract in which any officer,
director, shareholder or employee has any direct or indirect interest, or (ix)
any guarantee, obligation to provide funds or assume the debt, obligation or
liability of another. The Company has provided United Insurance with accurate
and complete descriptions of all oral agreements and with correct copies of all
written contracts and commitments, together with all amendments thereto set
forth in Schedule 5.14. To the knowledge of the Company, except as set forth in
SCHEDULE 5.14 or reserved for on the Financial Statements or designated thereon
as xxxxxxxx in excess of cost, (i) all such contracts and commitments are in
full force and effect, and (ii) all parties to such contracts and commitments
have in all material respects performed all obligations required to be performed
by them and are not in default in any material respect.
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5.15 INSURANCE. All insurance policies maintained by the Company, have
been previously furnished to United Insurance. The Company has not received
notice of cancellation or non-renewal of any such policies. No premium for any
insurance policy listed thereon is, pursuant to the terms thereof, subject to
retroactive adjustment based upon claim or loss experience. The Financial
Statements accurately reflect, in all material respects, all liabilities of the
Company as at the date hereof with respect to adjustments to insurance premiums
by reason of claim or loss experience for periods prior thereto and by reason of
the sales volume of the Company or payroll volume of the Company for periods
prior thereto. As of the date of this Agreement, to the knowledge of the
Company, there are no claims pending under such insurance policies.
5.16 OFFICERS, DIRECTORS AND EMPLOYEES. Effective immediately prior to
the Merger, the Company shall have no more than 4 employees. All agreements and
all compensation commitments of the Company with said employees have been
disclosed to UNB Corp. and United Insurance. There are no controversies pending
or to the knowledge of the Company, threatened between the Company and any of
its current or former employees.
5.17 CONFLICTS OF INTEREST. Except as set forth in SCHEDULE 5.17, no
officer, director or shareholder of the Company (i) is an officer, director,
consultant or employee of, or owns, directly or indirectly, any debt or equity
or other interest (excluding affiliate interests in publicly held corporations)
in any corporation, firm or other business entity which is a competitor, lessor,
lessee, customer, or supplier of the Company; (ii) has any cause of action or
other claim whatsoever against or owes any material amount to, or is owed any
material amount by the
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Company (other than salaries and bonuses); or (iii) has any interest in or owns
any property or right used by the Company in the conduct of its business.
5.18 CUSTOMERS. To the Company's knowledge, no single customer
accounted for more than 5% of the revenues of the Company for its last fiscal
year.
5.19 COMPLIANCE WITH LAWS, GOVERNMENTAL AUTHORIZATIONS. To the
knowledge of the Company and the Shareholders, the Company is in compliance, in
all material respects, with all statutes, laws, ordinances, rules, regulations,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses
or other governmental authorizations or approvals applicable to it or any of its
properties. To the knowledge of the Company and the Shareholders, all of the
permits, concessions, grants, franchises, licenses and other governmental
authorizations and approvals necessary for the conduct of its business
("Government Rights"), have been duly obtained and are in full force and effect
(except those which would not have a material adverse effect on the financial
condition, results of operations or business of the Company if not obtained or
maintained in full force and effect). There are no proceedings pending or, to
the knowledge of the Company, threatened which may result in the revocation,
cancellation or suspension, or any materially adverse modification of any of the
Government Rights and (ii) the Company has not received notice from any
government body concerning any alleged violation of any law or government
regulation and to the knowledge of the Company no such notice is pending or
threatened.
5.20 NO FINDER. The Company has not paid or become obligated to pay any
fee or commission to any investment banker, broker, finder or intermediary for
or on account of the transactions contemplated herein.
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5.21 BENEFIT PLANS. The Company has no employee benefit plans which are
subject to the provisions of the Employee Retirement Income Security Act of
1974.
5.22 LIABILITY TO SHAREHOLDERS. Neither the Company nor any of its
officers or directors has any liability to any of the Shareholders, in their
capacity as such.
5.23 CONSENTS. SCHEDULE 5.23 contains a true and complete list of all
consents or authorizations required from third parties in order to secure for
the Surviving Corporation the benefits of, without any material change in the
terms thereof, all (i) leases, subleases and other agreements described in
SECTION 5.12; (ii) all contracts or commitments described in SCHEDULE 5.14;
(iii) all insurance policies described in Section 15; (iv) all licenses of the
Company or of its Shareholders to sell financial products including, but not
limited to, insurance products, annuities, and financial investments such as
stocks and bonds; (v) all insurance companies, financial institutions and third
parties for which the Company and Shareholders are licensed as agents, brokers
or representatives; and, (vi) all Government Rights described in SECTION 5.19.
Except as set forth on SCHEDULE 5.23, (i) upon obtaining said consents or
authorizations, the Surviving Corporation shall secure the benefits of all
matters referred to in clauses (i) through (vi) inclusive, and (ii) neither the
Company nor United Insurance will incur any additional material expense in
connection with obtaining said consents or authorizations. Upon the Effective
Date, United Insurance shall be able to conduct the business formerly conducted
by the Company, including the sale of financial products, insurance products,
and provision of financial planning services.
5.24 INVESTMENT INTENT. Shareholders represent and warrant that the
securities which the Shareholders shall receive at Closing will be held for
their own account, for investment and
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with no present intention of reselling or making any distribution or sale of the
securities. All documents, records and books pertaining to an investment in UNB
Corp. have been made available or delivered to them. Shareholders understand
that the shares which they will be receiving at Closing have not been registered
under the 1933 Act or any applicable Ohio Securities Act in reliance on an
exemption from registration for private offerings contained in Section 4(2) of
the 1933 Act and Section 3-0 of the Ohio Blue Sky Law. Shareholders understand
that they are receiving said shares without being furnished any offering
literature or prospectus. Shareholders also understand that said securities are
"restricted securities" and that any sale or distribution of said securities may
only take place in compliance with 17CFR230.144 as issued by the Securities and
Exchange Commission.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
------------------------------
OF UNB CORP. AND UNITED INSURANCE
---------------------------------
UNB Corp. and United Insurance, jointly and severally, represent and
warrant to the Company and the Shareholders, as of the date hereof and as of the
Closing, as follows:
6.1 AUTHORITY. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of UNB Corp. and United
Insurance. This Agreement is a valid and binding obligation of UNB Corp. and
United Insurance enforceable in accordance with its terms. Neither the
execution, delivery and performance of this Agreement nor the consummation of
the transactions contemplated hereby nor compliance by UNB Corp. or United
Insurance with any of the provisions will (i) conflict with or result in a
breach of any provision of UNB Corp.'s Articles of Incorporation or Code of
Regulations, United Insurance's Articles of Incorporation or Code
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of Regulations, or cause a default (or give rise to any right of termination,
cancellation or acceleration) under any note, bond, lease, mortgage, indenture,
license or other agreement to which UNB Corp. or United Insurance is a party, or
by which either of them or any of their properties or assets may be bound, or
(ii) violate any law, statute, rule, regulation, order, writ, injunction or
decree applicable to UNB Corp. or United Insurance or any of their properties or
assets. No consent or approval by any governmental authority is required in
connection with the execution and delivery by UNB Corp. or United Insurance of
this Agreement or the consummation by UNB Corp. and United Insurance of the
transactions contemplated hereby.
6.2 ORGANIZATION AND STANDING. UNB Corp. or United Insurance are
corporations, duly organized, validly existing and in good standing under the
laws of the State of Ohio, and have full power and authority to own and hold
their properties and to carry on their present business.
6.3 CAPITALIZATION. As of December 31, 2000, the authorized capital
stock of UNB Corp. consists of 50,000,000 Common Shares, no par value, of which
10,436,892 Common Shares are validly issued and outstanding, fully paid and
non-assessable, 1,209,382 Common Shares are held by UNB Corp. as Treasury Stock,
with the remaining 38,353,726 Common Shares constituting authorized but unissued
shares. Except with respect to (i) options issued or to be issued pursuant to
UNB Corp's stock option plan or employee stock purchase plan as of the date
hereof, there are no outstanding obligations, options or rights entitling others
to acquire shares of capital stock of UNB Corp. or any outstanding securities or
other instruments convertible into capital stock of UNB Corp.
6.4 FINANCIAL STATEMENTS. UNB Corp.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 2000 (the "UNB 10-K"), and its Quarterly
Report on Form 10-Q for
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the period ended March 30, 2001 (the "UNB 10-Q"), copies of which have been
furnished to the Company, and each other report filed with the Securities and
Exchange Commission ("SEC") during the period from December 31, 2000 to the
Closing Date were, on the dates of their respective filings with the SEC,
accurate in all material respects and did not include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading. The consolidated balance sheet of UNB Corp. and its
subsidiaries as at December 31, 2000, and the related consolidated statements of
income, statements of shareholders' equity and statements of cash flows for the
fiscal year then ended, audited by Crowe, Chizek, certified public accountants,
fairly present the consolidated financial condition and results of operations of
UNB Corp. and its subsidiaries as of the date and for the period therein set
forth in accordance with generally accepted accounting principles applied on a
consistent basis throughout, except as specifically noted therein. Except as
otherwise noted therein, no additional adjustments are necessary to said
financial statements to fairly present the financial position of UNB Corp. and
its subsidiaries as of the date thereof. Since December 31, 2000, there has not
been a material adverse change in the financial condition or the results of
operations of UNB Corp. which would have a material adverse effect on its
ability to consummate the transactions contemplated by or fulfill its
obligations under this Agreement.
6.5 LITIGATION. There is no litigation, suit, claim or governmental
investigation pending or, to the best knowledge of United Insurance or UNB
Corp., threatened against United Insurance or UNB Corp. which may have a
material adverse effect on United Insurance or UNB Corp. or prevent or hinder
the consummation of the transactions contemplated by this Agreement.
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6.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as reflected, noted or
adequately reserved in the December 31, 2000 financial statements, as of the
date thereof, UNB Corp. did not have any debts, liabilities or obligations
(whether accrued, absolute, contingent or otherwise) of a nature required by
generally accepted accounting principles to be reflected as a liability in such
balance sheets, and at such date did not have any other material debts,
liabilities or obligations (whether accrued, absolute, contingent or otherwise)
except as disclosed in SCHEDULE 6.6.
6.7 COMPLIANCE WITH LAWS. UNB Corp and United Insurance are in
substantial compliance with the laws and regulations which apply to the conduct
of their businesses, including, without limitation, laws and regulations
relating to employment, occupational safety, zoning, environmental and ERISA
matters. There has never been a material citation, fine or penalty imposed or
asserted against United Insurance or UNB Corp under any federal, state or local
law or regulation relating to employment, occupational safety, zoning,
environmental or ERISA matters.
6.8 ISSUANCE OF SHARES. The offer, sale and issuance of the UNB Shares
in conformity with the terms of this Agreement will not result in the violation
of the requirements of Section 5 of the 1933 Act and when so issued, will be
duly authorized, validly issued, fully paid and non-assessable.
6.9 CONTINUITY OF BUSINESS. It is the present intention of UNB Corp.
(a) to cause United Insurance, subsequent to the consummation of the Merger, to
continue the business that the Company currently conducts, and, (b) not to
dispose of the shares of or liquidate United Insurance.
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6.10 BROKERS. Negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by UNB Corp. and United
Insurance without the assistance of any broker, finder or investment banker and
no amount is payable by UNB Corp. or United Insurance by way of brokerage or
finders' commission or fees, or otherwise, to any such party on account of this
Agreement or the transactions contemplated hereby.
6.11 DISCLOSURE. Except as such representation or warranty may be
qualified herein to the best knowledge of UNB Corp. or United Insurance, no
representation or warranty made by UNB Corp. or United Insurance herein, nor any
written statement or certificate furnished to the Company or any Shareholder
pursuant hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein and
therein not misleading.
ARTICLE 7.
COVENANTS
---------
7.1 CONDUCT OF BUSINESS. From the date hereof to the Closing, except as
otherwise consented to by UNB Corp. in writing, the Company shall: (i) carry on
its business in, and only in, the ordinary course in substantially the same
manner as heretofore and, to the extent consistent with such business, use all
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees, and preserve its
relationship with customers and others having business dealings with it, (ii)
maintain all its material structures, equipment and other tangible personal
property in good repair, order and condition, except for depletion,
depreciation, ordinary wear and tear and damage by unavoidable casualty, (iii)
keep in full force and effect the insurance now carried by it, (iv) perform in
all
29.
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material respects all of its obligations under agreements, contracts and
instruments relating to or affecting its properties, assets and business, (v)
maintain its books of account and records in the usual, regular and ordinary
manner, (vi) comply in all material respects with all statutes, laws,
ordinances, rules and regulations applicable to it and to the conduct of its
business, (vii) not amend its Articles of Incorporation or Code of Regulations,
(viii) not enter into or assume any contract or commitment of the character
referred to in SECTION 5.14 hereof except in the ordinary course of business,
(ix) not merge or consolidate with, or agree to merge or consolidate with, or
purchase substantially all of the assets of, or otherwise acquire any business
or any corporation, partnership, association or other business organization or
division thereof, (x) not take, or permit to be taken, any action which is
represented and warranted in SECTION 5.7 hereof as not having been taken, (xi)
promptly advise UNB Corp. in writing of any material adverse change in its
financial condition, operations, business or prospects and of any proposed
action or transaction which the Company proposes to take or to enter into if
such action or transaction would be in breach of any of the covenants of the
Company contained in this Agreement.
7.2 UNDERTAKINGS OF THE COMPANY AND SHAREHOLDERS. The Shareholders
hereby irrevocably agree to (a) execute an unanimous written consent of
shareholders approving this Agreement and the Certificate of Merger, and (b)
refrain from selling, transferring or otherwise disposing of any Company Shares
held by them, without the prior written consent of UNB Corp. The Company and the
Shareholders shall each use all reasonable efforts to cause fulfillment of the
conditions precedent to the obligations of UNB Corp. and United Insurance set
forth in Article 8 hereof, and the Shareholders shall use all reasonable efforts
to cause the Company to perform and to observe all of its covenants contained in
this Agreement, such actions to include,
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without limitation, the execution of the Employment Agreements required pursuant
to SECTION 8.6 hereof and the Certificate of Merger by the Shareholders as soon
as practicable after the date hereof. Unless and until this Agreement is
terminated pursuant to SECTION 11.12 hereof, the Company and the Shareholders
covenant and agree that they will not participate in any discussions or
negotiations with any third party concerning a possible sale of any interest in
the assets or capital stock of the Company.
7.3 UNDERTAKINGS OF UNB CORP. AND UNITED INSURANCE.
(a) TRADING BY UNB CORP. During the period beginning three
trading days prior to the first day of the Measuring Period and through the end
of the Measuring Period, neither UNB Corp. nor any Affiliate thereof as defined
in the 1933 Act will purchase UNB Corp. common shares.
(b) COOPERATION; SATISFACTION OF CONDITIONS. UNB Corp. and
United Insurance shall (i) give assistance, to the extent within their
respective control, to each other in the preparation of required filings and the
seeking of required consents in any manner reasonably requested and (ii) use
their respective best efforts to pursue, to the extent within their control, the
satisfaction of all other conditions to the consummation of the Merger.
7.4 ACCESS AND INFORMATION. From the date hereof until the Closing:
(a) The Company shall give UNB Corp., its counsel, accountants
and other representatives full access, during normal business hours, throughout
the period prior to the Closing, to all the books, leases, patents, contracts,
commitments, minutes and records of the Company and shall cause to be furnished
to UNB Corp. and its representatives during such period all such information
concerning the affairs of the Company as they may reasonably
31.
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request, provided, however that such due diligence review does not materially
disrupt the day-to-day operations of the Company.
(b) UNB Corp. shall give the Company, its counsel, accountants
and other representatives full access, during normal business hours, throughout
the period prior to the time of Closing its accounting records and financial
statements.
(c) Each party and their representatives shall hold in strict
confidence all such information in accordance with the Confidentiality Agreement
dated February 15, 2001 between them.
7.5 SUBSEQUENT FINANCIAL STATEMENTS. From the date of the most recent
Financial Statement to April 30, 2001, the Company shall prepare and deliver to
UNB Corp. the internal interim financial statements normally prepared by or for
them.
ARTICLE 8.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
------------------------------------------
UNB CORP. AND UNITED INSURANCE
------------------------------
All obligations of UNB Corp. and United Insurance under this Agreement
are subject to the fulfillment of each of the following conditions, except to
the extent any such conditions are expressly waived in writing by UNB Corp. and
United Insurance at or prior to the Closing.
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by the Company and the Shareholders shall be
true, in all material respects, as of the date of this Agreement and shall
likewise be true, in all material respects, as of the Closing as if made at and
as of such date.
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8.2 COVENANTS PERFORMED. Each of the Company and the Shareholders shall
have performed or complied with all covenants and agreements required to be
performed or observed by each of them under this Agreement.
8.3 OPINION OF COUNSEL. The Company shall have furnished to UNB Corp.
an opinion of Buckingham, Xxxxxxxxx & Xxxxxxxxx, counsel for the Company, in
form and substance reasonably satisfactory to UNB Corp., to the effect that, as
of the Closing: (a) the Company is a corporation validly existing and in good
standing under the laws of the State of Ohio and has full corporate power to own
and hold its properties and to carry on its present business; (b) the authorized
capital stock of the Company consists exclusively of 850 Common Shares, without
par value, of which 200 Common Shares are validly issued and outstanding, fully
paid and non-assessable; none of which shares are held of record as treasury
shares and the remaining 650 Common Shares are authorized but unissued; (c) to
such counsel's knowledge, there are no outstanding obligations, options or
rights of any kind entitling others to acquire from the Company any shares of
capital stock of the Company and there are no outstanding securities or other
instruments of any kind convertible into shares of capital stock of the Company;
(d) the Company has full corporate power to execute and deliver this Agreement,
and the Certificate of Merger, and to carry out the transactions contemplated
thereby, all corporate actions required to be taken by the Company and its
directors and shareholders to authorize the execution and delivery of this
Agreement, and the Certificate of Merger, and the performance of the
transactions contemplated thereby have been taken in compliance with all
applicable corporation laws and regulations, including those related to notice
of dissenter rights; (e) this Agreement has been duly executed and delivered by
the Company and the Shareholders and the Certificate of
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Merger has been duly executed and delivered by the Company, and each of them
constitute valid and binding obligations of the Company and/or the Shareholders,
as the case may be, enforceable against each of them, as the case may be, in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, or similar laws of general
application relating to or affecting the enforcement of creditor's rights or
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (f) the consummation of this
Agreement by the Company will not violate the Articles of Incorporation or the
Code of Regulations of the Company and, to knowledge of such counsel, will not
violate any applicable statute, rule or regulation, order, or decree, to which
the Company is a party or by which it or its properties are bound; or, to such
counsel's knowledge, violate, give rise to a default under or to any right to
terminate any material contract, indenture, permit or license to which the
Company is a party, or by which it or its properties are bound; and (g) to the
knowledge of such counsel, there is no action, suit or proceeding pending or
threatened against the Company except as disclosed in this Agreement or any
Schedule hereto.
8.4 INSURANCE. UNB Corp. shall have received certificates of insurance
confirming the continuation of all insurance policies held by Company.
8.5 CONSENT. The Company shall have delivered to UNB Corp. all consents
and authorizations identified in SECTION 5.23.
8.6 EMPLOYMENT AGREEMENTS. Xxxx and Xxx shall have executed and
delivered employment agreements with United Insurance in forms attached hereto
as Exhibits C-1 and C-2 (the "Employment Agreements").
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8.7 MINIMUM EQUITY VALUATION. The parties agree that at the time of
Closing the Company shall have a minimum equity value of at least $40,000.00.
8.8 ADDITIONAL CONDITIONS.
(a) UNB Corp. shall be reasonably satisfied with the results
of its due diligence examination of the books, records and files of the Company,
including but not limited to the Subsequent Financial Statements referenced in
Section 7.4 of this Agreement.
(b) No material adverse change shall have occurred in the
financial condition or results of operations of the Company since the date of
the most recent Financial Statements and the Subsequent Financial Statements
referenced in Section 7.4 of this Agreement.
(c) UNB Corp. shall have received a customary form of letter
from Xxxxx, Xxxxx & Company providing comfort as to their examination of the
Financial Statements of the Company.
(d) The minute books, stock certificate books, stock ledgers
and corporate seal of the Company shall have been delivered to UNB Corp.
(e) UNB Corp. shall have received: (i) copies of the Articles
of Incorporation of the Company, including all amendments, certified by the
Secretary of State of Ohio; (ii) a Good Standing Certificate of the Company as
of a date within thirty days of the Closing, issued by the Secretary of State of
Ohio.
(f) Certified copies of resolutions duly adopted by the Board
of Directors and Shareholders of the Company approving the execution and
delivery of this Agreement and the Certificate of Merger and consummation of the
transactions contemplated hereby shall have been delivered to UNB Corp.
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(g) United Insurance will have executed an Agreement with LFAC
or one of its related or affiliated organizations substantially similar to the
one currently in effect with the Company for the provision of comprehensive
financial planning services and products.
(h) United Insurance will have received from the Company a
termination of the Medical Reimbursement Plan adopted by the Company on January
6, 1997. Said termination shall be effective on the Closing Date.
8.9 CHALLENGE TO TRANSACTIONS. There shall not have been, to the
Company's knowledge, threatened or instituted any action, suit or proceeding by
any governmental agency or any other party to restrain, prohibit or otherwise
challenge, in any material respect, the legality of the transactions
contemplated by this Agreement or the Certificate of Merger.
8.10 LEASE. Written consent to the assignment of the Company's lease to
United Insurance from its current landlord shall have been delivered to UNB
Corp.
ARTICLE 9.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
------------------------------------------------------
All obligations of the Company and Shareholders under this Agreement
shall be subject to the fulfillment of each of the following conditions, except
to the extent any such conditions are expressly waived in writing by the Company
and Shareholders.
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by UNB Corp. and United Insurance shall be
true as of the date of this Agreement and shall likewise be true in all material
respects as of the Closing.
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9.2 COVENANTS PERFORMED. UNB Corp. and United Insurance shall have
performed or complied with all covenants and agreements required to be performed
or observed by them under this Agreement prior to the Closing.
9.3 STATUTORY REQUIREMENTS. All statutory requirements for the valid
consummation by UNB Corp., United Insurance and the Company of the transactions
contemplated by this Agreement shall have been fulfilled, including, without
limitation (a) filing of the Certificate of Merger with the office of the Ohio
Secretary of State on the Closing Date, and (b) the obtaining of all other
authorizations, consents and approvals of all other federal, state and local
governmental agencies and authorities required to be obtained in order to permit
consummation by UNB Corp., United Insurance and the Company of the transactions
contemplated by this Agreement and to permit the business presently carried on
by the Company to continue substantially unimpaired immediately following the
Closing Date.
9.4 OPINION OF COUNSEL. UNB Corp. shall have furnished to the Company
an opinion of Black, McCuskey, Xxxxxx & Xxxxxxx, counsel for UNB Corp., in form
and substance satisfactory to the Company, to the effect that, as of the
Closing: (i) UNB Corp. and United Insurance are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Ohio, and have full corporate power to own and hold their properties and to
carry on their present business; (ii) following the Merger, United Insurance
shall have all necessary governmental and regulatory licenses and permits
necessary to allow it to continue the business of the Company as presently
conducted; (iii) UNB Corp. and United Insurance have full corporate power and
authority to execute and deliver this Agreement and the Employment Agreements
(and the Certificate of Merger with respect to United Insurance) and to carry
out the
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transactions contemplated thereby, all corporate actions required to be taken by
UNB Corp. and United Insurance to authorize the execution and delivery of this
Agreement (and the Certificate of Merger with respect to United Insurance) and
the performance of the transactions contemplated thereby have been taken in
compliance with all applicable corporation laws, and this Agreement (and the
Certificate of Merger with respect to United Insurance), have been duly executed
and delivered by UNB Corp. and United Insurance and constitute the valid and
binding obligation of UNB Corp. and United Insurance enforceable in accordance
with their terms; (iv) the consummation of this Agreement will not violate the
articles or certificate of incorporation or the by-laws or code of regulations
of UNB Corp. or United Insurance or, to the knowledge of such counsel, any
applicable statute, rule or regulation by which they are bound; (v) the offer,
sale and issuance of the UNB Shares in conformity with the terms of the
Agreement will not result in the violation of the requirements of Section 5 of
the 1933 Act and no consent, approval, authorization, registration, or
qualification under any state securities or Blue Sky laws is required in
connection with the offer or issuance of the UNB Shares; and (vi) United
Insurance has taken all necessary action to authorize the execution, delivery
and performance of the Employment Agreements and the Employment Agreements are
valid and binding obligations of United Insurance enforceable in accordance with
their terms; (vii) all currently issued shares of UNB Corp. common stock have
been duly authorized, are validly issued and outstanding and are fully paid and
non-assessable; (viii) the UNB Shares to be issued pursuant to this Agreement
have been duly authorized and, when issued in accordance with this Agreement on
the Closing Date, will be validly issued, fully paid non-assessable, and duly
listed on NASDAQ; (ix) neither the execution and delivery by UNB Corp. or United
Insurance of this Agreement, the Certificate of
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Merger or the Employment Agreements nor compliance by UNB Corp. or United
Insurance with the terms and provisions of any such agreements to which it is a
party, will conflict with or result in a breach of any of the terms, conditions,
or provisions of any judgment, order, injunction, decree, or ruling of which
such counsel is aware, of any domestic court or domestic governmental authority
to which UNB Corp. or United Insurance is subject, or constitute a material
default thereunder or under any other agreement or instrument by which UNB Corp.
or United Insurance is bound; (x) to the best of such counsel's knowledge after
due inquiry, all filings with and all authorizations, consents and approvals of
all governmental agencies and authorities of the United States and the State of
Ohio required in order to permit consummation by United Insurance of the Merger
as contemplated by this Agreement have been made or obtained; (xi) with the
filing of the Certificate of Merger with the Secretary of State of the State of
Ohio, the Merger is effective under Ohio law; (xii) the issuance of the UNB
Shares to the Shareholders in accordance with the terms of this Agreement shall
constitute a "tax-free exchange" to the Shareholders under the Internal Revenue
Code of 1986, as amended and the Cash Consideration (as defined in the
Agreement) shall be treated as capital gain; and; (xiii) the UNB Shares shall be
fully tradeable by the Shareholders following one year after the Closing Date.
9.5 EMPLOYMENT AGREEMENT. United Insurance shall have executed and
delivered the employment agreements to Xxxx and Xxx.
9.6 RESOLUTIONS. Certified copies of resolutions duly adopted by the
Board of Directors of United Insurance and UNB Corp. approving the execution and
delivery of this
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Agreement and the Certificate of Merger and the consummation of the transactions
contemplated hereby shall have been delivered to the Company.
ARTICLE 10.
DEFINITIONS.
------------
10.01 REVENUE. For purposes of this Agreement and the Employment
Agreements to be entered into by United Insurance and Xxx and Xxxx, revenue
shall include the following sources of income payable to United Insurance or any
successor entity:
(a) All fees generated by services rendered by United
Insurance and its employees.
(b) Commissions earned for the sale of products by United
Insurance and its employees.
(c) Expense allowance received by United Insurance for
insurance products sold.
(d) Renewal commissions received by United Insurance for
insurance products sold.
(e) Broker/Dealer commissions for the sale of financial
products by United Insurance and its employees.
10.02. NET INCOME. For purposes of this Agreement and the Employment
Agreements to be entered into by United Insurance and Xxx and Xxxx, the term
"net income" shall mean the difference between all revenue received by United
Insurance as defined above, and all direct expenses incurred by United Insurance
in the operation of its business including expenses associated with the
automobile, country club and fringe benefits provided for in the Employment
Agreements. The parties further agree that in the determination of net income,
any commission paid pursuant to the terms of the employment agreements shall be
treated as a direct expense and
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deducted from revenues. For purposes of determining net income, the parties
agree that a 35% tax rate shall be applied as an expense following deductions
for commission payments and other direct expenses. For purposes of this Section,
direct expenses shall not include any amortization of expenses associated with
the Merger or costs associated with assigning personnel not employed by the
Surviving Corporation to the office facility being used by United Insurance.
10.3 "TO THE KNOWLEDGE OF THE COMPANY" or any derivative thereof shall
mean the actual knowledge of Xxx or Xxxx.
10.4 CLOSING. The closing of the Merger (the "Closing") shall take
place (a) at the offices of Buckingham, Xxxxxxxxx & Xxxxxxxxx, LLP, 0000 Xxxxxx
Xxxxx, X.X., Xxxxxx, Xxxx at 10:00 a.m. on the first business day on which the
last to be fulfilled or waived of the conditions set forth in Articles 8 and 9
hereof shall be fulfilled or waived in accordance with this Agreement or (b) at
such other place and time and/or on such other date as the parties may agree,
subject to Article 12.12(d) (the "Closing Date").
ARTICLE 11.
SURVIVAL; INDEMNIFICATION
-------------------------
11.1 SURVIVAL. The representations, warranties and agreements made by
the Company United Insurance and UNB Corp. herein, except as they may be fully
performed prior to or at the Closing, shall survive the Closing and shall be
fully enforceable to the extent provided for in this Article for a period of
sixty (60) months from the Closing, at which time they shall terminate except
for any representations and warranties related to the corporate status of the
Company or its ownership of assets prior to Closing.
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11.2 GENERAL INDEMNIFICATION. UNB Corp. and United Insurance, jointly
and severally, shall defend, indemnify and hold each of the Shareholders
harmless from any loss, liability, damage or expense (including without
limitation, interest, penalties and attorneys' fees) incurred by any of the
Shareholders as a result of any material breach of any representation, warranty
or agreement made by UNB Corp. or United Insurance set forth in this Agreement
or any claim or action initiated against the Shareholders by stockholders of UNB
Corp. or any other third party objecting to the terms of the Merger. The
Shareholders, jointly and severally, shall indemnify and hold harmless UNB Corp.
and United Insurance and their successors and assigns, to the extent provided
for in this Article, against all loss, liability, damage or expense (including,
without limitation, interest, penalties and reasonable attorneys' fees) incurred
by UNB Corp. or United Insurance arising from or in connection with any material
breach of any representation, warranty or agreement made by the Company set
forth in this Agreement.
ARTICLE 12.
GENERAL PROVISIONS
------------------
12.1 ARBITRATION. Any and all disputes arising out of or in connection
with the negotiation, execution, interpretation, performance or non-performance
of this Agreement, shall be submitted to binding arbitration by either party no
sooner than thirty (30) days after such dispute arose, during which time the
parties shall attempt to resolve such dispute in good faith. Any such
arbitration shall be held in Canton, Ohio, and be conducted pursuant to the
commercial arbitration rules of the American Arbitration Association, then in
effect. This decision of the arbitrator shall be final and binding and may be
entered in any court having jurisdiction over the
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parties. The arbitrator shall render his final decision in writing to the
parties, which decision shall explain the reasons therefor. Each party shall pay
their own fees and expenses incurred in connection with such arbitration.
12.2 EXPENSES. Subject to the provisions of hereof, UNB Corp. shall pay
its own expenses, and the Company shall pay its own expenses incurred in
connection with the authorization, preparation, negotiation and execution of
this Agreement, including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants retained by each of them.
12.3 AMENDMENT. This Agreement shall not be amended or modified except
by means of a written instrument executed by the Company, UNB Corp., United
Insurance and the Shareholders.
12.4 NOTICES. All notices, claims, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly delivered if delivered by telephone facsimile transmission or by a
recognized express courier service as follows:
(a) If to the Company:
Xxxx X. Xxxxx
0000 Xxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxx 00000-0000
With copies to:
Xxxxxxx X. Xxxx, Esq.
Xxxxxxxxxx Xxxxxxxxx & Xxxxxxxxx
0000 Xxxxxx Xxxxx, XX
XX Xxx 00000
Xxxxxx XX 00000-0000
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(b) If to UNB Corp. or
United Insurance:
United Insurance Agency, Inc.
000 Xxxxxx Xxxxxx Xxxxx
XX Xxx 00000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Secretary / Treasurer
With copies to:
Xxxx X. Xxxxx, Esq.
Black, McCuskey, Xxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
or to such other person or address as any party may subsequently designate in
writing and deliver as provided in this Section.
12.5 ENTIRE AGREEMENT. This Agreement, the Employment Agreements, and
the Confidentiality Agreement entered into between the parties on February 15,
2001, set forth the entire understanding of the parties hereto and supersede any
and all prior agreements, arrangements and understandings relating to the
subject matter hereof.
12.6 COUNTERPARTS. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12.7 PUBLICITY. UNB Corp. and the Company agree that they will advise
and confer with one another prior to the issuance of any press releases or other
public statements with respect to the transactions contemplated by this
Agreement, or the implementation thereof. No press releases or public statements
shall be made prior to the Closing without the consent of both UNB Corp. and the
Company hereto, except as otherwise required by law.
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12.8 CONSTRUCTION. This Agreement has been executed and delivered in
Ohio and accordingly, this Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Ohio applicable to the
agreements made and wholly performed in such state and any applicable federal
laws.
12.9 ASSIGNMENT. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof may be assigned by
any party without the consent of the other parties hereto. Nothing contained
herein, express or implied, is intended to confer upon any person or entity
other than the parties hereto, and their heirs, personal representatives,
successors in interest and permitted assignees any rights or remedies under or
by reason of this Agreement unless so stated herein to the contrary.
12.10 CAPTIONS AND PARAGRAPH HEADINGS. Captions used herein are for
convenience only, are not a part hereof and shall not be used in construing this
Agreement.
12.11 REMEDIES. No remedy conferred by any of the specific provisions
of this Agreement is intended to be exclusive of any other remedy, each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder, now or hereafter existing at law or in equity or by statute or
otherwise, and the election by a party of one or more remedies shall not
constitute a waiver of the party's right to pursue any other available remedies.
12.12 TERMINATION. This Agreement shall terminate at any time prior to
the Closing upon the occurrence of the earlier of:
(a) the mutual agreement of UNB Corp., United Insurance, and the
Company;
(b) ten (10) business days after written notice by UNB Corp. or United
Insurance of a material breach of any of the representations, warranties or
agreements of the Company or the
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Shareholders contained in this Agreement, which is not cured within such ten
(10) business day period;
(c) ten (10) business days after written notice by the Company of a
material breach of any of the representations, warranties or agreements of UNB
Corp. or United Insurance contained in this Agreement, which is not cured within
such ten (10) business day period; or
(d) the failure of the Closing to occur prior to July 31, 2001.
12.13 TAX STATUS. The parties agree that the Merger is intended to
qualify as a reorganization under Section 368(a)(1)(A) and Section 368(a)(2)(D)
of the Internal Revenue Code of 1986, as amended, and shall report the Merger
consistent with such status.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and the year first set forth above.
UNB CORP.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: EVP & CFO
--------------------------------
UNITED INSURANCE AGENCY INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: Secretary - Treasurer
--------------------------------
XXXXX FINANCIAL ADVISORS CORP.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Its: President
--------------------------------
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/s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx
47.