EXHIBIT 4.45
THIS AGREEMENT IS MADE EFFECTIVE as at the 31st day of August, 2004
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Purchaser")
and
XX XXXXXXXXXXX LTD.
a body corporate incorporated
pursuant to the laws of the State of Virginia
(hereinafter referred to as "AVL")
and
XXXX XXXXXXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "DV")
and
XXXXX XXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "RW")
WHEREAS AVL has its principal offices in the State of Virginia and is primarily
engaged in the insurance brokerage business in Virginia under the names of "Xx
Xxxxxxx'x Insurance Agency", "Auto Insurance Experts" and "Affordable Insurance
Agency of Tidewater" (the "Business"), and wishes to sell to the Purchaser
substantially all of its Business' assets, including without limiting the
generality of the foregoing, the Client Files and Book of Business owned or
processed by AVL and the Purchaser desires to acquire such assets upon the terms
and conditions expressed in this Agreement;
AND WHEREAS DV and RW own all of the outstanding capital stock of AVL and
currently operate and manage the affairs of AVL (in their capacities as officers
and directors as the case may be) and will provide certain non-competition,
indemnification and other assurances to the Purchaser as a material inducement
for Purchaser to enter into this transaction;
NOW THEREFORE in consideration of the premises and the mutual agreements and
covenants herein contained, and for other good and valuable consideration, the
Parties covenant and agree as follows:
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1.00 - DEFINITIONS
1.01 In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following words and terms shall have
the respective meanings ascribed to them as follows:
(a) "Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due
or to become due), obligations, taxes, liens, losses, expenses, and fees,
including all reasonable attorneys' fees and court costs;
(a) "Assumed Contracts" shall mean any right, title, interest, entitlement
or benefit of AVL under or in respect of any contract, agreement,
non-competition contract, lease, engagement, commitments including unfilled
orders received by AVL in connection with the Business or license which is
applicable to the Business and specifically assumed by the Purchaser to the
extent the same may be assignable to the Purchaser, including, but not
restricted to the contracts described in Schedule "D" attached hereto;
(a) "Carrier Appointment" means that the Purchaser has received written
notification from an insurance carrier or wholesaler, as the case may be,
stating that the Purchaser is an authorized agent of the insurance carrier
or wholesaler for the sale of its insurance products;
(a) "Client Files" shall mean all business files, customer lists and other
records applicable to the Business including, without limiting the
generality of the foregoing, the Client List attached as Schedule "A"
hereto, all client files and policies owned by AVL and which reasonably
would result in Earned Commissions for AVL prior to this sale and are
expected to result in Earned Commissions for the Purchaser thereafter; all
lapsed client files which relate to former clients of the Business and all
records, documents, computer tapes and disks and related electronic data in
which or by which any such Business files, customer lists, lapsed client
files or other records applicable to the Business are stored or kept;
(a) "Closing Date" means the 31st day of August, 2004, or such other date
as shall be mutually agreed to by the parties in writing;
(a) "Closing Time" means 2:00 o'clock a.m. Eastern Standard time, on the
Closing Date or such other time on such date as the parties may agree as
the time at which the Closing shall take place;
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(a) "Commission Revenue" means all commissions and fees relating to the
sale and brokerage of insurance products and services. Commission Revenue
generated from any one account shall not be included more than once in any
twelve-month period. Direct xxxx Commission Revenue is recognized when
received from the insurance carrier and agency xxxx Commission Revenue is
recognized on the effective date of the policy installment.
(a) "Earned Commissions" shall mean the Commission Revenue attributable to
policies sold by AVL and/or payable under agreements with insurers.
Notwithstanding the foregoing, the Earned Commissions shall not include
any:
(i) Contingency Revenues;
(ii) revenues derived by the Purchaser from joint venture or revenue
processing agreements which the Purchaser or AVL may enter into after
the Closing Date, except those revenues derived by the Purchaser from
those persons or agencies set forth on Schedule "M" attached hereto
which shall be included in the definition of Earned Commissions;
(iii) life insurance revenues;
(iv) interest income; or
(v) finance charges;
(a) "Contingency Revenue" means those commissions and/or override
commissions paid to the Purchaser by insurance companies based upon the
volume, growth and or profitability of insurance business placed with such
insurance companies by the Purchaser;
(a) "Effective Date" means August 31st, 2004;
(a) "Environmental, Health, And Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local,
and foreign governments (and all agencies thereof) concerning pollution or
protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous,
or toxic materials or wastes;
(a) "Escrow Agent" means Demiantschuk Xxxxxx Xxxxx & Xxxxxxxxx, barristers
and solicitors, located at 1200, 0000 - 0xx Xxxxxx, XX, Xxxxxxx, Xxxxxxx,
X0X 0X0;
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(a) "Excluded Assets" means those assets set forth in Schedule "T"
attached hereto and forming a part hereof;
(a) "Intellectual Property" means (A) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (B) all trademarks,
service marks, trade dress, logos, together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (C) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith, (D) all mask works and all applications, registrations, and
renewals in connection therewith, (E) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing
plans and proposals), (F) all computer software (including data and related
documentation), (G) all other proprietary rights, and (H) all copies and
tangible embodiments thereof (in whatever form or medium);
(a) "Intercreditor Agreement"means that Debt Subordination and
Intercreditor Agreement dated August 31st, 2004, and made between FCC, LLC,
Oak Street Funding LLC, Xxxxxx Xxxxxxxxx, Xxxxxxx Family Trust of July
1998, Xxxxxxx Xxxxx International Insurance Brokers, the Purchaser and AVL;
(a) "Lease Agreement" means the form of lease agreement for the Premises
of the Business as attached as Schedule "C" hereto;
(a) "Non-Competition Agreement" means those agreements respecting
competition by Xx Xxxxxxxxxxx ("AV"), AVL, DV and RW substantially in the
form attached hereto as Schedule "F";
(a) "Premises" means the properties set forth in Schedule "W" attached
hereto; (a)
(a) "Purchased Assets" means, subject to paragraph 2.03 herein, all of the
assets, property and rights (other than the Excluded Assets) of any kind
and description owned and used by AVL or held by it for use in, or in
respect of the operations of, the Business wherever such assets, property
or rights are located as of the Effective Date hereof including, without
limitation, the following assets, properties and rights:
i all rights, title and interest of AVL in, to and under all Assumed
Contracts, contracts, leases, agreements, engagements, commitments
including unfilled orders received by AVL in connection with the
Business and other rights of or pertaining to the Business as are
specifically accepted by
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the Purchaser in writing, whether written or unwritten, provided that
the Purchaser shall in no event be liable or responsible for any
liabilities or obligations thereunder which shall be in existence at,
or accruing for or during the period prior to, the Closing Date except
as otherwise agreed in this Agreement;
ii all fixed assets, equipment, supplies, inventory of and pertaining to
and used in the Business, including without limiting the generality of
the foregoing, all furniture, furnishings, fixtures, leasehold
improvements (whether or not fixtures), and all other materials and
accessories, goods, chattels and effects of all kinds utilized by AVL
in connection with the operation of the Business including, without
limitation, computer hardware, credit card verification equipment,
computer software and accounting systems and all of those other assets
listed in Schedule "B" (collectively the "Fixed Assets");
iii the right of AVL to carry on the Business under the names of "Xx
Xxxxxxx'x Insurance Agency", "Auto Insurance Experts" and "Affordable
Insurance Agency of Tidewater" and the right to use any other words or
tradenames of AVL indicating that the Business is so carried on;
iv the goodwill of AVL in the Business ("Goodwill") including, without
limitation, the rights granted to the Purchaser in respect of, inter
alia, the names "Xx Xxxxxxx'x Insurance Agency", "Auto Insurance
Experts" and "Affordable Insurance Agency of Tidewater" for use in the
Business, the right of AVL to retain and use all of the Business'
present telephone numbers, listings and advertisements as listed in
the current telephone directory for all locations where the Business
is conducted and all licenses, permits and other required
authorizations issued by any governmental body, which are required in
the continued operation of the Business and which are assignable, and
the list of customers of and suppliers to the Business, and to the
extent they exist and are capable of being assigned any and all
customer profiles and customer databases and all advertising signs,
registered and unregistered trademarks, trade or brand names, service
marks, copyrights, franchises, technology or other processes
pertaining to the Business;
v all of AVL's Business records necessary to enable the Purchaser to
renew the Purchased Book of Business (as defined in section
1.00(p)(vii) below);
vi all Intellectual Property related to the Business;
vii all of the Business, including, but not limited to, the life, health,
bond, and property and casualty insurance business (both personal and
commercial lines) and renewals and expirations thereof, together with
all written or otherwise recorded documentation, data or information
relating to the Business, whether compiled by AVL or by other agents
or employees of AVL, including, but not limited to: (i) lists of
insurance companies and records pertaining thereto; (ii) customer
lists, prospect lists, policy forms, and/or rating information,
expiration dates, information on risk characteristics, information
concerning insurance markets for large or unusual risks, and all other
types of written or otherwise recorded
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information customarily used by AVL or available to AVL, including all
other records of and pertaining to the accounts and customers of AVL,
past and present, including, but not limited to, the active insurance
customers of AVL (collectively, the "Purchased Book of Business");
viii All other assets of AVL relating or pertaining to the Purchased Book
of Business, including (i) computer disks, servers, software,
databases (whether in the form of computer tapes or otherwise),
related object and source codes, and associated manuals, and any other
records or media of storage or programs for retrieval of information
pertaining to the Purchased Book of Business, (ii) all supplies and
materials, including promotional and advertising materials, brochures,
plans, supplier lists, manuals, handbooks, and related written data
and information, (iii) customer and other deposits and prepayments,
(iv) transferable approvals, permits, licenses, orders, registrations,
certificates, variances and similar rights obtained from governments
and governmental agencies to own and operate the Business and
Purchased Assets; and (v) the Client Files and book of business;
ix all rights, title and interest of AVL in, to and under all contracts,
leases, agreements, engagements, commitments and all commission
revenue derived by AVL from those persons or agencies set forth on
Schedule "M" attached hereto and forming a part hereof; and
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x All Commission Revenue on installments of agency xxxx policies billed
or effective on or after the Effective Date shall be the property of
the Purchaser, regardless of when actually received. All Commission
Revenue on direct xxxx policies actually received from insurance
carriers or intermediaries on or after the Effective Date shall be the
property of the Purchaser, regardless of when billed by the insurance
carrier or intermediary. The Purchaser shall be entitled to all
Contingency Revenues and/or override commissions received on or after
the Effective Date, regardless of when earned. All additional
commissions, return commissions or charge-backs for uncollected
premiums as a result of audits by insurance carriers or intermediaries
conducted before the Closing Date or concerning matters arising before
the Closing Date shall be the property or the responsibility of AVL,
whether credit or debit, and regardless of effective date, and all
additional commissions, return commissions or charge-backs for
uncollected premiums as a result of audits by insurance carriers or
intermediaries conducted after the Closing Date and concerning matters
arising after the Closing Date shall be the property or the
responsibility of the Purchaser, whether credit or debit, and
regardless of effective date.
(t) "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not; (t)
(t) "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes arising from the
operation of the Business or the ownership of the Purchased Assets,
including any schedule or attachment thereto, and including any amendment
thereof;
1.02 The following are the Schedules which are to be attached to and are
incorporated into this Agreement by reference and are deemed to be a part
hereof:
(d) Schedule "A": Client list including the Client Files and names of
customers (current and previous), all commission revenues, all
premiums and all policies in force for each client, also referred to
as the Accounts;
(e) Schedule "B": Fixed Assets of AVL on Closing Date;
(f) Schedule "C" Real Property Lease Agreement;
(g) Schedule "D": Assumed Contracts (including insurance company
contracts) of AVL;
(h) Schedule "E": Financial Statements of AVL;
(i) Schedule "F" Non-Competition Agreements of AV, AVL, DV and RW;
(j) Schedule "G" Non-Solicitation Agreement of Xxx Xxxxxxxxxxx ("RV");
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(k) Schedule "H" Permitted Encumbrances;
(l) Schedule "I" Tax Returns and Other Tax Matters;
(m) Schedule "J" Volume Reports - Summary Production Reports;
(n) Schedule "K" AVL's Insurance;
(o) Schedule "L" Escrow Agreement;
(p) Schedule "M" Joint Venture Agencies;
(q) Schedule "N" Schedule of AVLs Existing carrier appointments With a B+
or Higher Rating;
(r) Schedule "O" Promissory Note;
(s) Schedule "P" Agency Agreement;
(t) Schedule "Q" AVL Escrow Agreement;
(u) Schedule "R" Subordination Agreement and Power of Attorney;
(v) Schedule "S" AVL Liabilities
(w) Schedule "T" Excluded Assets;
(x) Schedule "U" Security Agreement;
(y) Schedule "V" List of Those Clients of the Business From The Client
Files Who Provide Earned Commissions to AVL in excess of $5,000.00 per
Annum;
(z) Schedule "W List of business locations and Premises;
(aa) Schedule "X" Intercreditor Agreement;
(bb) Schedule "Y" Acknowledgment of Collateral Assignment of Acquisition
Documents; and
(cc) Schedule "Z" Maximum Assumed AVL Liabilities
1.03 Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in United States funds.
1.04 Any references herein dealing with federal or state legislation, rules,
regulations or codes shall be deemed to be a reference to those federal or
state legislation, rules, regulations or codes as amended from time to
time.
2.00 - THE ACQUISITION
2.01 At the Effective Date, and upon and subject to the terms and conditions of
this Agreement, the parties mutually covenant and agree as follows:
(a) AVL shall sell, convey and assign to Purchaser all right, title and
interest of AVL in and to the Purchased Assets free and clear of all
liens, pledges, security interests, charges, restrictions or
encumbrances of any nature whatsoever, except for those described in
Schedule "H" annexed hereto; and
(b) Purchaser shall purchase and accept the Purchased Assets from AVL and
assume the Assumed Contracts in exchange for the consideration
described in Article 3.00.
2.02 On the Effective Date, Purchaser shall assume all of the obligations and
liabilities first arising or occurring under the Assumed Contracts after
the Closing Date. Except for these obligations, the Purchaser shall not
assume or be deemed to have assumed any liability or obligation of AVL
whatsoever.
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2.03 AVL does not agree to sell or assign, and Purchaser does not agree to
purchase or assume, any assets, liabilities and obligations not described
in paragraphs 2.01 or 2.02 of this Agreement. Without limiting the
foregoing and notwithstanding anything to the contrary set forth herein,
Purchaser shall not purchase or assume any of the following:
(a) AVL's cash in hand or in banks and other readily liquid working
capital as of the close of business on the Effective Date, including
AVL's accounts and other receivables, money market certificates,
stocks, bonds, and AVL's automobiles and other vehicles;
(b) AVL's claims, refunds, causes of action, choses in action, rights of
recovery, rights of set off, and rights or recoupment (including any
such right relating to the payment of Taxes) except those relating to
the Purchased Assets or the Business arising after the Effective Date;
(c) (i) any contract, lease or other obligation that relates to the
Purchased Assets or the Business and is not otherwise assigned to
Purchaser under this Agreement or (ii) any contract, lease or other
obligation whatsoever not relating to the Purchased Assets or the
Business;
(d) (i) AVL's corporate charter, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization,
maintenance, and existence of AVL as a corporation or (ii) any of the
rights of AVL under this Agreement;
(e) any duty or liability of any type whatsoever with respect to any
employee or to any pension or profit sharing plan or other employee
benefit;
(f) (i) any liability for income, transfer, sales, use, and other Taxes,
including any such Taxes arising in connection with the consummation
of the transactions contemplated hereby (including any Taxes arising
because AVL is transferring the Purchased Assets), (ii) any liability
of AVL for the unpaid Taxes of any person or entity under United
States Treasury Regulation 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise, (iii) any obligation of AVL to indemnify any
person or entity (including any shareholder) by reason of the fact
that such person or entity was a director, officer, employee, or agent
of AVL or was serving at the request of any such entity as a partner,
director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or otherwise and whether
such indemnification is pursuant to any statute, charter document,
bylaw, agreement, or otherwise), (iv) any liability of AVL for costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, or (v) any liability or obligation
of AVL under this Agreement (or under any related agreement between
AVL on the one hand and Purchaser on the other hand entered into on or
after the date of this Agreement); or
(g) those assets set forth on Schedule "T" attached hereto.
2.04 The consummation of the purchase and sale of the Purchased Assets shall
take place by way of the mutual exchange of documents under appropriate
trust conditions at the Closing Time on the Closing Date at the offices of
the Escrow Agent, unless another date
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or place is agreed to in writing by the parties hereto.
3.00 - CONSIDERATION AND METHOD OF PAYMENT
3.01 Subject to the terms and conditions of this Agreement, AVL hereby sells,
assigns and transfers to the Purchaser and the Purchaser hereby buys from
AVL the Purchased Assets for the maximum aggregate sum of $7,000,000 and
the minimum aggregate sum of $6,000,000 (the "Purchase Price").
3.02 For all purposes (including federal and state income tax purposes), the
parties agree to allocate the aggregate of the Purchase Price (as adjusted
pursuant to the "Adjustment" as defined herein) among the Purchased Assets
as follows (the "Allocation"): (i) $50,000 shall be allocated to the Fixed
Assets owned by AVL and listed on Schedule "B"; (ii) $100,000 shall be
allocated equally to the covenants of AV, AVL, DV and RW as set forth in
the Non-Competition Agreements attached as Schedule "F" hereto; (iii)
$25,000 shall be allocated to the covenant of RV as set forth in the
Non-Solicitation Agreement attached as Schedule "G" hereto; (iv) $3,412.500
shall be allocated to the Goodwill, and (v) $3,412,500 shall be allocated
to the Purchased Book of Business. Each of Purchaser and AVL shall file, in
accordance with the Internal Revenue Code of 1986, as amended (the "Code"),
an Asset Acquisition Statement on Form 8594 with its federal income tax
return for the tax year in which the Closing Date occurs, and shall
contemporaneously provide the other party with a copy of the Form 8594
being filed. The Form 8594 shall be consistent with the Allocation. Each of
Purchaser and AVL also shall file any additional Forms 8594 from time to
time as are required to reflect any Adjustment to the Purchase Price as
required hereunder or any alteration in the allocation required by the
Purchaser's auditor, and again shall contemporaneously provide the other
party with a copy of the additional Form 8594 being filed. If there is an
Adjustment in the Purchase Price resulting from the application of Article
3.00 hereof, then the amounts allocated to Goodwill and the Purchased Book
of Business shall each be reduced by an equal amount corresponding to one
half of the Adjustment. Once the amount of the Remaining Balance of the
Purchase Price has been determined then the parties hereto agree to
allocate such amount equally between Goodwill and the Purchased Book of
Business. The final version of each additional Form 8594 as agreed to by
Purchaser and AVL shall be timely filed by each of Purchaser and AVL. All
indemnification payments made pursuant to Article 6.00 hereof shall be
treated as adjustments to the Purchase Price.
3.03 The Purchase Price shall be subject to Adjustment (as more particularly set
forth in this Article 3.00) and be paid as follows:
(a) $5,500,000 on the Closing Date which shall be disbursed and
distributed as follows;
(i) $50,000 shall be disbursed to AVL or to the account of AVL in
full and final payment for the Fixed Assets;
(ii) $25,000 shall be disbursed to AVL or to the account of AVL in
full and final payment for the Non-Competition Agreement;
(iii)$25,000 shall be disbursed to DV or to the account of DV in full
and final payment for the Non-Competition Agreement;
(iv) $25,000 shall be disbursed to RW or to the account of RW in full
and final payment for the Non-Competition Agreement;
(v) $25,000 shall be disbursed to AV or to the account of AV in full
and final
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payment for the Non-Competition Agreement;
(vi) $25,000 shall be disbursed to RV or to the account of RV in full
and final payment for the Non-Solicitation Agreement;
(vii)$5,065,000 shall be disbursed to AVL (as a partial payment for
the Purchased Assets excluding the Fixed Assets); and
(viii) $260,000 shall be disbursed to Xxxxxx Xxxxxxxxx or to the
account of Xxxxxx Xxxxxxxxx in payment of commissions owed to him
by AVL;
(b) $500,000 shall be delivered to the firm of Sykes, Bourdon, Xxxxx &
Levy, PC ("AVL's Counsel") on the Closing Date to be held in escrow
and dealt with in accordance with the terms of the AVL Escrow
Agreement attached as Schedule "Q" hereto; and
(c) on the Closing Date, the Purchaser shall provide the Escrow Agent with
the Promissory Note, attached as Schedule "O" hereto, drawn in favour
of AVL in the principal amount of $1,000,000. The Promissory Note
shall be held by the Escrow Agent and dealt with in accordance with
the terms of paragraph 3.04 and the Escrow Agreement attached as
Schedule "L" hereto.
3.04 The Promissory Note shall be dealt with in accordance with the following
terms:
(a) within 5 days of the end of the 14th month after the Closing Date, the
Purchaser shall prepare a Purchase Price reconciliation to show the
actual Earned Commissions from the Business. If the actual Earned
Commission revenue from the Business for the one year period beginning
on September 1st, 2004 and ending on August 31st, 2005 (the "Period")
is greater than or equal to $4,000,000, then the Purchase Price shall
be crystalized at $7,000,000 and no further Adjustment (as defined
herein) shall be made to the Purchase Price or the Promissory Note;
(b) if the actual Earned Commission revenue from the Business for the
Period is less than $4,000,000, then within 5 days of the end of the
26th month after the Closing Date, the Purchaser shall prepare a
Purchase Price reconciliation to show the actual Earned Commissions
from the Business. If the actual Earned Commission revenue from the
Business for the one year period beginning on September 1st, 2005 and
ending on August 31st, 2006 (the "Second Period") is less than
$4,000,000, then the Purchase Price and Promissory Note will be
adjusted downward in accordance with the following formula:
(Earned Commissions from the Second Period x 1.75) - $7,000,000 =
the "Adjustment"
if after the application of the formula the Adjustment results in a
negative number, then the Purchase Price and the principal amount of
the Promissory Note shall be reduced by an amount equal to that
negative number. For greater clarification, the Adjustment cannot have
the effect of increasing the Purchase Price, the Adjustment can only
lower the Purchase Price and, in no event shall the Adjustment cause
the Purchase Price to be less than $6,000,000 ;
(c) if after the Adjustment is determined, there is no reduction in the
Purchase Price, then there shall be no changes made to the Promissory
Note by the Escrow Agent;
(d) if after the Adjustment is determined, there is a reduction in the
Purchase Price,
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then the Escrow Agent shall amend the Promissory Note by reducing the
principal amount (and, after taking into account any and all sums paid
to AVL pursuant to the Promissory Note up to and including the date of
the Adjustment, any amortization schedules related thereto) by the
amount of the Adjustment as determined in accordance with paragraph
3.04(b). If it is discovered that, after the Adjustment is determined
and after taking into account any and all sums paid to AVL pursuant to
the Promissory Note up to and including the date of the determination
of the Adjustment, AVL owes the Purchaser a refund (the "Refund
Amount") on any monies paid to AVL pursuant to the Promissory Note (as
a result of the Adjustment), then AVL shall within thirty (30) days
notice of such Refund Amount pay the Refund Amount to the Purchaser;
(e) the Adjustments to be made pursuant to this paragraph shall be made
within 27 months of the Closing Date; and
(i) the Parties agree that the Earned Commission Revenues over the Period
from the Business shall be calculated on a pre-tax basis.
3.05 In order to secure the payments to be made to AVL in accordance with the
terms of the Promissory Note, the Purchaser agrees to grant to AVL a
security interest in the Purchased Assets and to provide AVL with a
Security Agreement (attached as Schedule "U" hereto) in respect of those
Purchased Assets (the "Security").
3.06 AVL hereby covenants and agrees with the Purchaser that any and all
payments due, any and all obligations owing and any and all Security taken
or granted pursuant to the Promissory Note or Security Agreement shall be
subordinate to any and all senior debt financing (including, without
limiting the generality of the foregoing, loans or advances made by or to
be made by Oak Street Funding LLC, FCC LLC and Xxxxxx Xxxxxxxxx), whether
present or future, which has been or may be obtained by the Purchaser now
or at any time into the future, and AVL hereby agrees to: (i) execute a
Subordination Agreement and Power of Attorney (attached hereto as Schedule
"R); and (ii) execute and deliver the Intercreditor Agreement (attached
hereto as Schedule "X"); in order to give effect to this paragraph.
3.07 AVL may, from time to time and during normal business hours, employ a
professionally qualified independent third party auditor (acceptable to the
Purchaser) to audit the books and records of the Purchaser which relate to
the Business and Purchased Assets in order to verify the amounts of the
Adjustment. If the audit discloses a discrepancy unfavourable to AVL in the
Adjustment of three per cent (3%) or more, then the Purchaser shall
promptly pay for the cost of the audit and shall make or cause to be made
all of the necessary adjustments as disclosed in the audit to the
Adjustment. If the audit discloses a discrepancy in the payments (or the
timing thereof) to be made to AVL in accordance with the terms of the
Promissory Note, then the Purchaser shall promptly pay for the cost of the
audit and shall forthwith bring all of the payments due under the
Promissory Note up to date in accordance with the results of the audit and
the terms of the Promissory Note. If the audit discloses a discrepancy
unfavourable to AVL in the Adjustment of less than three per cent (3%) or
if the audit does not disclose a discrepancy in the payments (or the timing
thereof) to be made to AVL in accordance with the terms of the Promissory
Note, then AVL shall
12
be responsible for the costs of the audit.
3.08 All rights of Adjustment and set off set forth in Article 3.00 shall
survive the completion of this Agreement.
4.00 - REPRESENTATIONS, WARRANTIES AND COVENANTS
4.01 Subject to the fulfilment of the Conditions Precedent set out in paragraphs
7.01(k) and 7.02, the Purchaser represents and warrants to AVL as follows:
(a) Purchaser is a corporation organized and in good standing under the
laws of Delaware, and its status is active. Purchaser has all
requisite corporate power and authority and all necessary governmental
approvals to own, lease, and operate its properties and to carry on
its business as now being conducted and as proposed to be conducted.
Purchaser is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased, or
operated by it or the nature of the business conducted by it or as
proposed to be conducted by it makes such qualification or licensing
necessary;
(b) Purchaser has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement, and the consummation of the Agreement and the other
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement
has been duly executed and delivered by Purchaser, and, assuming this
Agreement constitutes a valid and binding obligation of AVL,
constitutes a valid and binding obligation of Purchaser, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization or similar laws from time to
time in effect which offset creditors' rights generally and general
equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or in law);
(c) Neither the execution, delivery, or performance of this Agreement by
Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby nor compliance by Purchaser with any of the
provisions hereof will (a) conflict with or result in any breach of
any provision of the Articles of Incorporation or the Bylaws of
Purchaser, (b) require any filing with, or authorization, consent, or
approval of, any Governmental Authority except for necessary reports
and other filings in accordance with the terms of paragraph 7.02, (c)
result in a violation or breach of, or constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice or
consent any of the terms, conditions, or provisions of any agreement
or other instrument or obligation to which Purchaser is a party or by
which Purchaser or its properties or assets may be bound;
(d) There is no suit, claim, action, proceeding, or investigation pending
or, to the knowledge of Purchaser, threatened against Purchaser or its
affiliates before any Governmental Authority that is reasonably likely
to have a material adverse effect on Purchaser or would prevent
Purchaser from consummating the transactions contemplated by this
Agreement. Purchaser is not subject to any outstanding order,
13
writ, injunction or decree which, insofar as can be reasonably
foreseen, individually or in the aggregate, in the future would have a
material adverse effect on Purchaser or would prevent Purchaser from
consummating the transactions contemplated hereby. No voluntary or
involuntary petition in bankruptcy, receivership, insolvency or
reorganization with respect to Purchaser, or petition to appoint a
receiver or trustee of Purchaser's property, has been filed by or
against Purchaser, nor shall Purchaser file such a petition prior to
the Closing Date or for one hundred (100) days thereafter, and if such
petition is filed by others, the same shall be promptly discharged.
Purchaser has not made any assignment for the benefit of creditors or
admitted in writing insolvency or that its property at fair valuation
shall not be sufficient to pay its debts; and
(e) None of the representations and warranties set forth in this
Agreement, notwithstanding any investigation thereof by AVL, contains
any untrue statement of a material fact, or omits the statement of any
material fact necessary to render the statements made not materially
misleading.
4.02 AVL, DV and RW, jointly and severally, hereby represent, warrant and
covenant to the Purchaser and acknowledge that the Purchaser is relying on
such representations, warranties and covenants in connection with its
purchase of the Purchased Assets, that:
(a) DV and RW own and hold all of the outstanding shares of the capital
stock of AVL and there are no outstanding warrants, options or rights
to acquire additional shares of the capital stock of AVL;
(a) Attached as Schedule "E" hereto are the following consolidated
financial statements of AVL (collectively the "Financial Statements"):
(a) unaudited consolidated balance sheet and consolidated statements
of income and changes in shareholders' equity as of and for the fiscal
years ended December 31st 2001, 2002 and 2003 (the "Most Recent Fiscal
Year End"); and (b) unaudited consolidated balance sheet and
consolidated statements of income (the "Most Recent Financial
Statements") as of and for the seven months ended July 31, 2004 (the
"Most Recent Fiscal Month End"). The Financial Statements (including
the Notes thereto) have been prepared on a compilation and consistent
basis throughout the periods covered thereby, present fairly the
financial condition of AVL, including assets and liabilities (whether
accrued, absolute, contingent or otherwise) as of such dates and the
results of operations of AVL for such periods, are materially correct
and complete, and are materially consistent with the books and records
of AVL (which books and records are correct and complete);
(a) Except as set forth on Schedule "I" annexed hereto:
i) AVL has filed all Tax Returns that it was required to file. All
such Tax Returns were correct and complete in all material
respects. All Taxes owed by AVL (whether or not shown on any Tax
Return) have been paid, or AVL has made adequate provision for
the payment
14
therefor. AVL currently is not the beneficiary of any extension
of time within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where AVL does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the
assets of AVL that arose in connection with any failure (or
alleged failure) to pay any Tax;
ii) AVL has withheld and paid all Taxes required to have been
withheld and paid, if any, in connection with amounts paid or
owing to any employee, independent contractor, creditor,
shareholder or other third party;
iii) There is no material dispute or claim concerning any Tax
liability of AVL either (i) claimed or raised by any authority in
writing or (ii) as to which AVL has knowledge based upon personal
contact with any agent of such authority. Schedule "I" annexed
hereto lists all federal, state, local, and foreign income Tax
Returns filed or to be filed with respect to AVL for taxable
periods ended on or after December 31st, 2001, 2002 and 2003,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. AVL
has delivered to Purchaser correct and complete copies of all
federal income Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by AVL since
December 31st, 2003;
iv) AVL has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax
assessment or deficiency;
v) AVL has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
Section 6662. AVL is not a party to any Tax allocation or sharing
agreement. AVL (i) has not been a member of an affiliated group
within the meaning of Code Section 1504(a) of the Code, and (ii)
has not had any liability for the Taxes of any person or entity
under United States Treasury Regulation 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise;
vi) The unpaid Taxes of AVL (i) did not, as of the Most Recent Fiscal
Month End, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of
the balance sheet (rather than in any notes thereto) included in
the Most Recent Financial Statements and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of AVL in
filing its Tax Returns; and
vii) AVL shall promptly pay the applicable state sales and use taxes
imposed with respect to the sale and transfer of the Purchased
Assets from AVL
15
to the Purchaser pursuant to this Agreement. AVL shall prepare
the sales tax return and submit it to the Purchaser at least
seven (7) business days before its due date. The Purchaser shall
have five (5) business days to approve the return, such approval
not to be unreasonably withheld. Failure to disapprove during
such five (5) business day period shall be deemed approval. AVL
shall be obligated to timely file the return and pay the tax.
Failure by AVL to timely file the return or pay the tax due shall
result in AVL bearing the penalties and interest associated with
such late payment or filing, regardless of whether assessed
against AVL ot the Purchaser by the taxing authorities.
(d) AVL is a corporation organized and in good standing under the laws of
the State of Virginia and its status is active. AVL has all requisite
corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business
as now being conducted. AVL is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the
conduct of its insurance agency business requires it to be so
qualified.
(d) AVL has the requisite corporate power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
on the part of AVL, the officers and the shareholders, including
without limitation AVL's board of directors.
(d) This Agreement has been, and the other agreements, documents and
instruments required to be delivered by AVL in accordance with the
provisions hereof (collectively, the "AVL's Documents") shall be, duly
executed and delivered by duly authorized officers of AVL on behalf of
AVL, and this Agreement constitutes, and AVL's Documents when executed
and delivered shall constitute, the legal, valid and binding
obligations of AVL, enforceable against AVL in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization or
similar law from time to time in effect which offset creditors' rights
generally and general equitable principles (regardless of whether the
issue of enforceability is considered in a proceeding in equity or in
law).
(d) no person or entity (except the Purchaser pursuant to this Agreement)
has any agreement, option, right or privilege capable of becoming of
an agreement or option for the acquisition of any of the Purchased
Assets of AVL;
(d) since the Most Recent Fiscal Month End, AVL has carried on the
Business in the usual, regular and ordinary course in substantially
the manner
16
heretofore conducted and has taken no unusual actions with respect to
the Business or the Purchased Assets in contemplation of this
transaction, except with the consent of Purchaser. All of AVL's
accounts payable, including accounts payable to insurance carriers,
are current and reflected properly on its books and records, and shall
be paid in accordance with their terms at their recorded amounts.
Without limiting the generality of the foregoing, since the Most
Recent Fiscal Month End:
i) AVL has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, used in the Business other than
for a fair consideration in the ordinary course of business;
ii) AVL has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) relating to the Business outside the ordinary course of
business;
iii) no party (including AVL) has accelerated, terminated, modified,
or canceled any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) relating
to the Business, to which AVL is a party or by which it is bound;
iv) AVL has not imposed or granted any mortgage, pledge, lien,
encumbrance, charge or other security interest upon the Purchased
Assets or any of its assets, tangible or intangible, used in the
Business;
v) AVL has not made any capital expenditure (or series of related
capital expenditures) relating to the Business outside the
ordinary course of business;
vi) AVL has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other person or
entity (or series of related capital investments, loans, and
acquisitions) in connection with the Business;
vii) AVL has not, in connection with the Business or the Purchased
Assets, issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation;
viii)AVL has not delayed or postponed the payment of accounts payable
and other liabilities relating to the Business;
ix) AVL has not canceled, compromised, waived, or released any right
or claim (or series of related rights and claims) relating to the
Business;
x) AVL has not granted any license or sublicense of any rights under
or with respect to any patent, trademark, service xxxx, logo,
corporate name or computer software;
xi) there has been no change made or authorized in the charter or
bylaws of AVL;
xii) AVL has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
xiii)AVL has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock or redeemed,
purchased, or otherwise acquired any of its capital stock;
17
xiv) AVL has not experienced any damage, destruction, or loss (whether
or not covered by insurance) to any of its property relating to
the Business or the Purchased Assets;
xv) AVL has not made any loan to, or entered into any other
transaction with, any of its directors, officers and employees
outside the ordinary course of business;
xvi) AVL has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
xvii)AVL has not granted any material increase in the base
compensation of any of its employees employed in the Business;
xviii) AVL has not adopted, amended, modified any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees employed in
the Business;
xix) AVL has not made any other change in employment terms for any of
its employees employed in the Business;
xx) AVL has not made or pledged to make any charitable or other
capital contribution; and
xxi) AVL has not entered into any agreement to purchase or acquire any
insurance agency business;
(i) AVL is not a party to or bound by any collective bargaining agreement,
nor has it experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. AVL has not
committed any unfair labor practice. To AVL's knowledge, there are no
organizational efforts presently being made or threatened by or on
behalf of any labor union with respect to employees of AVL.
(j) AVL holds all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful
conduct of the Business (collectively, the "Permits"), and AVL is in
compliance with the terms of the Permits except where failure to
comply would not have a material adverse effect on the Business,
financial condition, operations, results of operations or future
prospects of AVL. AVL is not in violation of any law, ordinance or
regulation of any Governmental Entity, including, without limitation,
any law, ordinance or regulation relating to any of AVL's employment
practices. As of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to AVL is pending or,
to the knowledge of AVL, threatened.
(j) AVL is not in default of any agreement or other instrument to which it
is a party;
(j) it is agreed that no Contingency Revenues, of any kind, shall be
claimed by AVL as receivables and any that are received are for the
benefit of the Purchaser;
18
(j) there are no unpaid salaries, bonuses or other remuneration owing to
employees, consultants, officers, or directors (except in the ordinary
course of business and at the regular rate of salary or other
remuneration);
(j) there is no suit, claim, action, proceeding or investigation
("Litigation") pending or threatened in writing against AVL, and, to
the knowledge of AVL, DV and RW, there is no basis for such a suit,
claim, action, proceeding or investigation. AVL is not subject to any
outstanding order, writ, injunction or decree which, insofar as can be
reasonably foreseen, individually or in the aggregate, in the future
would have an adverse effect on AVL, the Business or the Purchased
Assets or would prevent AVL from consummating the transactions
contemplated hereby. No voluntary or involuntary petition in
bankruptcy, receivership, insolvency or reorganization with respect to
AVL, or petition to appoint a receiver or trustee of AVL's property,
has been filed by or against AVL, nor shall AVL file such a petition
prior to the Closing Date or for one hundred (100) days thereafter,
and if such petition is filed by others, the same shall be promptly
discharged. AVL has not made any assignment for the benefit of
creditors or admitted in writing insolvency or that its property at
fair valuation shall not be sufficient to pay its debts, nor shall AVL
permit any judgment, execution, attachment or levy against it or its
properties to remain outstanding or unsatisfied for more than ten (10)
days;
(j) Except as otherwise set forth herein, neither the execution, delivery
or performance of this Agreement by AVL nor the consummation by it of
the transactions contemplated hereby nor compliance by it with any of
the provisions hereof shall (a) conflict with or result in any breach
of any provision of AVL's Certificate of Incorporation or Bylaws, (b)
require any filing with, or permit, authorization, consent or approval
of, any court, arbitral tribunal, administrative agency or commission,
or other governmental or other regulatory authority or agency (each a
"Governmental Entity"), or (c) result in a violation or breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or
require any notice or consent under any of the terms, conditions or
provisions of any agreement or other instrument or obligation to which
AVL is a party or by which AVL or any of its properties or assets may
be bound.
(j) AVL shall allow the Purchaser to maintain AVL's current telephone
number and Yellow Page listings and will take no active steps to have
such altered;
(j) AVL shall obtain before the Closing Date all consents, approvals and
authorizations from governmental and public authorities or any other
person as may be required to complete the purchase and sale herein,
19
including without limiting the generality of the foregoing all
necessary approvals from the Virginia Department of Insurance;
(j) Except for the Permitted Encumbrances, AVL owns and holds, free and
clear of any lien, charge, pledge, security interest, restriction,
encumbrance or third-party interest of any kind whatsoever, sole and
exclusive right, marketable title and interest in and to the Purchased
Assets, together with the exclusive right to use such records and all
customer accounts, Client Files, copies of insurance policies and
contracts in force and all files, invoices and records pertaining to
the customers, their contracts and insurance policies, and all other
information comprising the Purchased Book of Business. AVL has not
received notice that any program, class of business, or book of
business in place with any single insurance carrier that is included
within the Purchased Book of Business has canceled or non-renewed or
intends to cancel or non-renew.
(j) Schedule "J" annexed hereto sets forth AVL's Volume Reports describing
premiums and commissions with respect to each of AVL's appointed
carriers including the AVL's Summary Production Reports for the twelve
month period ended on June 30, 2004;
(j) The names "Xx Xxxxxxx'x Insurance Agency", "Auto Insurance Experts"
and "Affordable Insurance Agency of Tidewater" are the only trade
names used by AVL (or any subsidiary thereof) within the past three
(3) years. No party has filed a claim during the past three (3) years
against AVL or any subsidiary thereof alleging that AVL or any
subsidiary thereof has violated, infringed on or otherwise improperly
used the intellectual property rights of such party, or, if so, the
claim has been settled with no existing liability to AVL or any
subsidiary thereof and, to the knowledge of AVL, DV and RW, neither
AVL nor any subsidiary thereof has violated or infringed any
trademark, trade name, service xxxx, service name, patent, copyright
or trade secret held by others. AVL shall allow the Purchaser to
continue operating the Business under the name(s) it holds as of and
after the Closing Date;
(j) to AVL's knowledge, AVL's computer software included in the Purchased
Assets adequately performs as presently utilized by AVL in its
operation of the Business. AVL has delivered to Purchaser
substantially complete and correct copies of all user and technical
documentation issued to AVL by the software producers related to such
software;
(e) other than as set forth herein, neither AVL, AV, DV nor RW is a party
to any non-competition or other agreement that restricts AVL's, DV's
or RW's ability to compete in the insurance agency industry or solicit
specific insurance accounts; (e)
20
(w) AVL has not incurred any liability or taken or failed to take any
action that may reasonably be expected to result in a liability for
errors or omissions in the conduct of the Business, except such
liabilities as are fully covered by insurance (other than
deductibles). AVL has errors and omission (E&O) insurance coverage in
force, with minimum liability limits of $5,000,000 per occurrence and
$5,000,000 aggregate, and a deductible of $10,000 per occurrence;
(w) AVL and its predecessors and affiliates have complied with all
Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against it alleging any failure
so to comply. Without limiting the generality of the preceding
sentence, each of AVL and its predecessors and affiliates has obtained
and been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations that are required under,
and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, Schedules, and
timetables that are contained in, all Environmental, Health, and
Safety Laws;
(w) AVL has no liability (and none of AVL and its predecessors and
affiliates has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against AVL giving rise to any liability)
for damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to, any employee or
other individual, or for any reason under any Environmental, Health,
and Safety Law;
(w) There are no outstanding material powers of attorney executed on
behalf of AVL;
(aa) Employee Benefit Plans:
i) The only employee benefit plans (defined as any plan, program,
policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal
or informal, proposed or final, funded or unfunded, and whether
or not legally binding, including without limitation, any
"Employee Benefit Plan" within the meaning of Section 3(3) of
ERISA) which AVL currently maintains or to which AVL currently
contributes are the Savings Incentive Match Plan for Employees of
Small Employers, a Group Agreement dated March 8, 2004 and made
with Optimum Choice
21
Inc., and a Group Hospital and Health Insurance Policy Contract
dated March 8, 2004 and made with Mamsi Life and Health Insurance
Company (each a "AVL Plan" and collectively, the "AVL Plans").
AVL maintains no other employee benefit plans. Each of AVL Plans
(and each related trust, insurance contract, or fund) complies in
form and have been operated and administered in all material
respects in accordance with their respective terms and applicable
law, including, without limitation, ERISA and the Code;
ii) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been
paid to each AVL Plan that is an "Employee Pension Benefit Plan"
(as defined in Section 3(2) of ERISA);
iii) Each AVL Plan that is an Employee Pension Benefit Plan has
received a determination letter from the Internal Revenue Service
to the effect that it meets the requirements of Code Section
401(a);
iv) AVL does not participate currently and has never participated in,
and is not required currently and has never been required to
contribute to or otherwise participate in any plan, program, or
arrangement subject to Title IV of ERISA;
v) AVL does not maintain currently and has never maintained, and is
not required currently and has never been required to contribute
to or otherwise participate in any Multiemployer Plan (as defined
in ERISA Section 3(37));
vi) No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of
any AVL Plan (other than routine claims for benefits) is pending;
vii) No individual (i) who has experienced a "qualifying event," as
that term is defined in Code Section 4980B(f)(3), and (ii) who
either was an employee of AVL or is a dependent or spouse of a
current or former employee of AVL, is currently covered by a
health plan of AVL pursuant to Code Section 4980B or Part 6 of
Title I of ERISA;
(bb) AVL has no knowledge of any material liability relating to the
Business or the Purchased Assets (and to AVL's knowledge, there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving
rise to any liability), except for (a) liabilities set forth on the
face of the balance sheet included in the Most Recent Financial
Statements and the notes to the Financial Statements for the Most
Recent Fiscal Year End, (b) the Assumed Contracts and contracts and
agreements not assumed by Purchaser, (c) the deductibles for claims
covered by insurance, and (d) liabilities that have arisen after the
Most Recent Fiscal Month End in the ordinary course of business (none
of which results from, arises out of, relates to, is in the nature of,
or was caused by any breach of contract, breach of trust, breach of
warranty, tort, infringement, or violation of law);
22
(cc) at the Effective Date of this agreement and at the Closing Date there
has not been and shall not have been any material adverse change in
the nature, volume or profitability of the Business or the Purchased
Assets nor has there been nor will there by any development or
threatened or probable development which to the best of the knowledge
of AVL would or will have any materially adverse effect upon the
Business or the Purchased Assets. From the Effective Date hereof to
and including the Closing Date AVL shall retain, conduct and maintain
the Business and properly keep, repair, and maintain or insure the
Purchased Assets, at its own cost and expense so that upon the closing
of the transaction herein contemplated the Purchaser shall have and
enjoy the Purchased Assets and the Business as a going concern without
any material loss of Goodwill, customers, contracts, licenses or
depreciation in value of any of the physical items included in the
Purchased Assets;
(dd) AVL or its affiliates owns the premises where the Business operates
and have agreed with the Purchaser to lease the same to the Purchaser
pursuant to the terms and conditions of the lease attached as Schedule
"C" hereto. At the Effective Date the use of the Premises of the
Business for the purpose of the conduct of the Business are and will
be in conformity with all zoning and other State and municipal
statutes, bylaws, rules, regulations and orders;
(ee) Schedule "K" annexed hereto sets forth the following information with
respect to each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which AVL has been a named insured or
otherwise the beneficiary of coverage at any time within the past
fiscal year:
i) the name, address, and telephone number of the agent;
ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
iii) the policy number and the period of coverage;
iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and
operate) of coverage; and
v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
To AVL's knowledge, no cancellation, amendment or increase of premiums
with respect to such insurance is pending or threatened to occur at or
prior to the Closing Date;
(ff) prior to the Closing Date, AVL shall permit the Purchaser and its
employees, agents, counsel and accountants or other representatives,
without interference to the ordinary conduct of the Business, to have
reasonable access during normal business hours to the Business and to
all the books, accounts,
23
records, agreements, contracts, documents, instruments and other data
of AVL (including, without limitation, all corporate, business and
accounting records of AVL) with respect to AVL, the Business and the
Purchased Assets, and AVL shall furnish to the Purchaser such
financial and operating data, agreements, contracts, documents,
instruments, and other materials and information with respect to the
Business and the Purchased Assets as the Purchaser shall from time to
time reasonably request. Until the Closing Date, and in the event of
the termination of this Agreement as provided for herein without
consummation of the transaction, the Purchaser will take the same care
to protect any confidential information obtained from AVL as it takes
to guard its own confidential information of a similar nature. The
Purchaser may disclose such information as required by law but when
requested by AVL will attempt to have the information kept
confidential to the extent possible under applicable law. If this
Agreement is so terminated, promptly after such termination, all
documents, work papers and other written material (including all
copies thereof) obtained from a Party in connection with this
Agreement shall be returned to the Party who provided such material;
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(gg) AVL shall give any notices to third parties, and AVL shall use its
commercially reasonable best efforts to obtain any third party
consents, that Purchaser may request in connection with the Assumed
Contracts. AVL and Purchaser shall give any notices to, make any
filings with, and use their commercially reasonable best efforts and
cooperate with one another to obtain any authorizations, consents, and
approvals of governments and governmental agencies. Without limiting
the generality of the foregoing, each of the parties shall file any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and shall use its
commercially reasonable best efforts to obtain an early termination of
the applicable waiting period, and shall make any further filings
pursuant thereto that may be necessary, proper, or advisable in
connection therewith;
(hh) At reasonably mutually agreeable times, AVL will permit Purchaser to
meet with its employees. AVL shall be responsible for compliance with
the requirements of Code Section 4980B and Part 6 of Title I of ERISA
for all of AVL's employees. Subject to Article 6.00 hereof, AVL shall
indemnify and hold Purchaser harmless for any liability Purchaser
incurs at any time on or after the Effective Date under the provision
of Code Section 4980B and Part 6 of Title I of ERISA with respect to
any of AVL's employees;
(ii Intellectual Property
i) AVL owns or has the right to use pursuant to license, sublicense,
agreement, or permission all Intellectual Property necessary or
desirable for the operation of the Business as presently
conducted. Each item of Intellectual Property owned or used by
AVL in connection with the Business immediately prior to the
Effective Date hereunder shall be owned or available for use by
the Purchaser on identical terms and conditions immediately
subsequent to the Effective Date hereunder;
ii) AVL has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property
rights of third parties, and, to AVL's knowledge, AVL has never
received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or
violation (including any claim that AVL must license or refrain
from using any Intellectual Property rights of any third party).
To the knowledge of AVL, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of AVL; and
iii) AVL shall not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property
rights of third parties as a result of the continued operation of
the Business as presently conducted;
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(jj) Schedule "N" annexed hereto sets forth a true and complete copy of the
AVL's list of carrier appointments and brokers representing other
carriers together with the A.M. best rating guide;
(kk) AVL will use its best efforts both prior to the Effective Date and
thereafter to aid the Purchaser in its acquisition of the Carrier
Appointments;
(ll) Except as set forth on Schedule "E" attached hereto, AVL has no
liability, whether accrued, absolute or contingent, of a type required
to be reflected on a balance sheet or described in the notes thereto
in accordance with US GAAP;
(mm) Improper and Other Payments:
(a) neither AVL, nor any director, officer, employee thereof, nor, to
the knowledge of any AVL, any agent or representative of AVL nor
any person acting on behalf of any of them: (i) has made, paid or
received any illegal contribution, gift, bribe, rebate, payoff,
influence payment, kickbacks or other similar payments to or from
any authority, whether in money, property or services: (1) to
obtain favourable treatment in securing business; (2) to pay for
favourable treatment for business secured; (3) to obtain special
concessions or for special concessions already obtained or (4) in
violation of any regulation or order; or (ii) established or
maintained a fund or asset that has not been recorded on the
books and records of AVL;
(b) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made by AVL; and
(c) the internal accounting controls of AVL are believed by AVL's
management to be adequate to detect any of the foregoing under
current circumstances
(nn) Schedule "V" annexed hereto sets forth a true and complete copy of the
list of those clients of AVL who provide Earned Commissions to the
Business in excess of $5,000.00 per annum;
(oo) Schedule "S" annexed hereto sets forth a true and complete copy of the
AVL Liabilities, and there are no other liabilities of AVL not
disclosed therein; and
(pp) none of the foregoing representations and statements of fact contains
any untrue statement of a material fact or omits to state any material
fact necessary to make any such statement or representation not
misleading to a prospective purchaser of the Purchased Assets seeking
full information as to AVL, and its respective properties, businesses
and affairs;
(qq) Within 30 days of the Closing Date hereof, AVL shall purchase, at its
cost and expense, `tail' or `extended reporting coverage' for a three
year period from the
26
Effective Date hereof from an insurance carrier acceptable to AYI in
an amount equal to the level of coverage maintained in accordance with
paragraph 4.02(w); and
(rr) they will provide their full and complete cooperation in respect of
the preparation and filing of any and all audited or unaudited
financial statements of AVL, reports, instruments or other documents
which are or may be or become required by any Canadian or United
States regulatory authority or stock exchange having jurisdiction over
the capital stock or affairs of Xxxxxxx Xxxxx International Insurance
Brokers Ltd. or the Purchaser. The professional costs associated with
the preparation and filing of the aforesaid documents and financial
statements shall be borne by the Purchaser.
4.03 The representations, warranties and covenants contained in 4.02 are
provided to and for the exclusive benefit of the Purchaser and a breach of
any one or more of the representations, warranties and covenants may be
waived by the Purchaser without prejudice to his right in respect to any
other breach of the same or any other representations, warranties or
covenants; and the representations, warranties and covenants contained in
this section shall survive execution hereof and the closing of this
Agreement and same shall continue in full force and effect for a period of
five (5) years from the Closing Date.
4.04 Xxx Xxxxxxxxxxx will agree to execute and deliver to the Purchaser on or
before the Closing Date the Non-Solicitation Agreement in form and
substance set forth in Schedule "G" attached hereto.
4.05 AV, AVL, DV and RW agree to execute and deliver to the Purchaser on or
before the Closing Date the non-competition agreements in form and
substance as set forth in Schedule "F" attached hereto.
4.06 AVL shall agree to execute and deliver to the Purchaser on or before the
Closing Date the Intercreditor Agreement in the form and substance as set
forth in Schedule "X" attached hereto.
4.07 AVL, DV and RW agree to execute and deliver to the Purchaser on or before
the Closing Date the acknowledgment of the Collateral Assignment of
Acquisition Documents Agreement in form and substance as set forth in
Schedule "Y" attached hereto.
4.08 Upon being presented with arms length third party invoices therefore, the
Purchaser agrees to pay or remit on behalf of AVL those AVL liabilities set
forth on Schedule "Z" hereto.
4.09 The parties hereby acknowledge and agree that the Purchaser is not assuming
and shall not be liable or responsible for any of the liabilities, debts or
obligations (known or unknown, present or contingent) of AVL or the
Business existing at or accruing for or during the period prior to the
Effective Date, whether or not relating to the Business, except as
27
specifically provided in this Agreement.
5.00 - TO BE PERFORMED AT CLOSING
5.01 On or before the Closing Date AVL shall execute and deliver to the
Purchaser all such bills of sale, assignments, instruments of transfer,
assurances, consents and other documents as shall be necessary to
effectively transfer to the Purchaser good and marketable title to all the
Purchased Assets, and shall deliver up to the Purchaser possession of the
Purchased Assets. AVL shall cooperate with the Purchaser, at such time or
thereafter, in effecting such registrations, recordings and filings with
insurance companies and public authorities as may be required in connection
with the transfer of ownership to the Purchaser of the Purchased Assets.
Specifically, AVL shall deliver, or cause to have delivered, the following
documents to the Purchaser all in a form satisfactory to the Purchaser and
its counsel:
(a) Certified resolutions of the Directors of AVL and of all its
shareholders adopting, approving and consenting to the sale of the
Purchased Assets as contemplated herein;
(b) Certificates from a director or officer of AVL stating that all of the
Purchased Assets are owned by AVL and are free and clear of all
encumbrances save and except for the Permitted Encumbrances;
(c) An Opinion of Counsel for AVL in accordance with paragraph 7.01(i);
(d) An updated financial statement for AVL to the Closing Date or, at the
Purchaser's option, as near to the Closing Date as reasonably
possible;
(e) a xxxx of sale covering and transferring the Purchased Assets to the
Purchaser in a form satisfactory to the Purchaser and its counsel;
(f) a lease agreement relating to the Premises in the form attached as
Schedule "C" hereto executed by the landlord set forth therein;
(g) an assignment of AVL's current telephone numbers and Yellow Page
advertisements and listings related to the Business;
(h) an assignment of AVL's trade names of "Xx Xxxxxxx'x Insurance Agency",
"Auto Insurance Experts" and "Affordable Insurance Agency of
Tidewater";
(i) an executed Non-Solicitation Agreement in respect of Xxx Xxxxxxxxxxx
in the form as set forth in Schedule "G";
(j) executed non-competition agreements (in substantially the same form as
that set forth in Schedule "F" attached hereto) from AV, AVL, DV and
RW;
(k) an officer's certificate of AVL in accordance with paragraph 7.01(a)
hereof;
(l) assignments of the Assumed Contracts assumed by the Purchaser
hereunder, provided that to the extent that any such assignment
require any third party consent or approval which has not been
obtained on or prior to the Closing Date, AVL will hold the benefit of
such lease or contract in trust for the sole and exclusive use and
benefit of the Purchaser until such consent or approval is obtained or
until the termination of such lease or contract and the Purchaser will
hold AVL harmless for any failure of Purchaser to fully perform and
discharge any such accepted lease or contract from and after the
Closing Date;
(m) evidence satisfactory to the Purchaser that all Taxes have been paid
up to and including the Effective Date;
28
(n) all current and active insurance company statistics including premium
volumes and loss ratios;
(o) a certificate to the effect that AVL is not a "foreign person"
pursuant to United States Treasury Regulation 1.1445-2(b);
(p) a copy of the Escrow Agreement executed by AVL, or his agent(s) and
the Escrow Agent;
(q) an executed Agency Agreement in the same form as that set forth in
Schedule "P" attached hereto;
(r) Receipts for the Down Payment;
(s) a Subordination Agreement and Power of Attorney in accordance with
paragraph 3.07;
(t) a Certificate of Incumbency of AVL executed by an officer of AVL;
(u) the AVL Escrow Agreement executed by AVL's Counsel;
(v) a copy of the Intercreditor Agreement executed on behalf of AVL;
(w) a Direction To Pay in respect of the Purchase Price; and
(x) an executed acknowledgment of the Collateral Assignment of Acquisition
Documents.
5.02 On the Closing Date the Purchaser shall deliver the following documents or
items to the following persons:
(a) the sum of $5,500,000 by way of a certified cheque or wire transfer to
be delivered to AVL's counsel, which sum is to be disbursed by AVL's
Counsel in strict accordance with the terms of paragraph 3.03(a)
herein;
(b) the sum of $500,000 by way of a certified cheque or wire transfer to
be delivered to AVL's Counsel, which sum is to be held and disbursed
by AVL's Counsel in strict accordance with the terms of the AVL Escrow
Agreement;
(c) a Resolution of the Directors of the Purchaser adopting, approving and
consenting to the purchase of the Purchased Assets as contemplated
herein to be delivered to AVL's counsel;
(d) The Promissory Note attached as Schedule "O" hereto executed by the
Purchaser shall be delivered to the Escrow Agent;
(e) a copy of the Escrow Agreement executed by the Purchaser, or his
agent(s), to be delivered to the Escrow Agent and AVL's counsel; and
(f) The Security Agreement attached as Schedule "U" hereto executed by the
Purchaser shall be delivered to the AVL's counsel;
5.03 All books, records and documents in the possession of AVL relating to the
Business shall be delivered to the Purchaser on the Closing Date and shall
be deemed to have become the property of the Purchaser on the Effective
Date except to the extent required by law to be retained by AVL in which
case they shall be made available by AVL to the Purchaser and its
authorized representatives for inspection and copying, at the Purchaser's
sole expense, but without any charge from AVL for providing such copies.
5.04 The parties agree as follows with respect to the period following the
Closing Date:
d) AVL acknowledges and agrees that from and after the Closing Date the
Purchaser shall be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any
sort relating to the Purchased Assets and the Business.
29
e) If and for so long as any party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act, or transaction on or prior to
the Closing Date involving the Purchased Assets, the Business or the
obligations and liabilities assumed hereunder, the other party shall
cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Article
6.00 hereof).
f) AVL shall not take any action that is designed or intended to have the
effect of discouraging any lessor, licensor, customer, supplier,
insurance carrier, or other business associate of AVL from maintaining
the same business relationships with Purchaser after the Closing Date
as it maintained with AVL prior to the Closing Date. AVL shall to
refer all customer inquiries relating to the Business to Purchaser
from and after the Closing Date.
5.05 Consents To Assignment.
(a) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any contract,
lease, license or agreement of any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would
constitute a breach thereof.
(b) If any such consent is not obtained prior to the Closing Date, AVL and
Purchaser shall cooperate (each at their own expense) in any lawful
and reasonable arrangement under which Purchaser shall obtain the
economic claims, rights and benefits under the asset, claim or right
with respect to which the consent has not been obtained in accordance
with this Agreement, including subcontracting, sublicensing or
subleasing to Purchaser and enforcement of any and all rights of AVL
against the other party thereto arising out of a breach or
cancellation thereof by the other party.
5.06 From time to time after the Closing Date, at the Purchaser's request, AVL
shall execute, acknowledge and deliver to the Purchaser such other
instruments of conveyance and transfer and shall take such other actions
and execute and deliver such other documents, certifications and further
assurances as the Purchaser may reasonably request in order to vest more
effectively in the Purchaser, or to put the Purchaser more fully in
possession of, any of the Purchased Assets. Each of the parties hereto
shall cooperate with the others and execute and deliver to the other
parties such other instruments and documents and take such other actions as
may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
6.00 - INDEMNITY
30
6.01 Survival Of Representations, Warranties, Indemnities And Covenants.
(a) Subject to paragraph 6.01(b), the representations, warranties,
covenants and indemnities set forth in this Agreement shall survive
for a period of five (5) years from the Closing Date. If a party has
received notice of a potential breach of a representation, warranty or
covenant, or an otherwise indemnifiable event under this Article 6.00,
within such five year period, it may preserve its right to assert a
later claim for damages caused by such breach by delivering written
notice of the breach (which shall specify the nature of the breach
with reasonable factual detail to the extent then in the possession of
such party) to the breaching party within ninety (90) days after such
five (5) year period. All post-closing covenants shall survive the
Closing Date for the period(s) specified in this Agreement or, if not
specified, for a period of five (5) years following the Closing Date;
(b) Notwithstanding anything set forth in paragraph 6.01(a); (i) to the
extent and only to the extent that the indemnification provisions of
paragraph 6.02(a)(ii) apply to Adverse Consequences that result from,
arise out of, relate to, or are caused by errors or omissions which
(A) occurred on or prior to the Effective Date and (B) result in a
loss after renewal of a policy by Purchaser after the Effective Date,
such provisions shall survive for a period of three (3) years, rather
than five (5) years, from the Closing Date; and (ii) all
representations, warranties, covenants and indemnities in connection
with any tax liabilities of AVL, DV, or RW shall survive in perpetuity
(subject to any applicable statutes of limitation).
6.02 Indemnification Provisions For The Benefit Of The Purchaser
(a) From and after the Effective Date, AVL, DV and RW agree, jointly and
severally, to indemnify and hold Purchaser and its officers,
directors, and affiliates harmless from and against any Adverse
Consequences any of such parties may suffer or incur, to the extent
that they result from, arise out of, relate to, or are caused by (i)
the breach of any of AVL's, DV's or RW's representations, warranties,
obligations or covenants contained herein, or (ii) the operation of
the Business or the ownership of the Purchased Assets by AVL on or
prior to the Closing Date, including, without limitation, any claims
or lawsuits based on conduct of AVL, DV or RW occurring before the
Closing Date;
(b) In addition to and without limiting the foregoing, AVL, DV and RW,
jointly and severally, agree, from and after the Effective Date, to
indemnify Purchaser from and against the entirety of any Adverse
Consequences Purchaser may suffer resulting from, arising out of,
relating to, in the nature of, or caused by:
(iv) any liability or obligation of AVL that is not assumed hereunder
(including any liability of AVL that becomes a liability of Purchaser
under any bulk transfer law of any jurisdiction, under any common law
doctrine of de facto merger or successor liability, or otherwise by
operation of law); or
(v) any liability of AVL for the unpaid taxes of any person or entity
(including AVL) under United States Treasury Regulation 1.1502-6 (or
any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
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6.03 From and after the Closing Date, Purchaser agrees to indemnify and hold
AVL, DV and RW and their respective officers, directors, shareholders and
affiliates harmless from and against any Adverse Consequences any of such
parties may suffer or incur, to the extent they result from, arise out of,
relate to, or are caused by (a) the breach of any of Purchaser's
obligations or covenants contained herein, (b) the operation of the
Business or ownership of the Purchased Assets by Purchaser after the
Closing Date, including, without limitation, any claims or lawsuits based
on conduct of Purchaser occurring after the Closing Date, or (c)
liabilities and obligations of AVL assumed by Purchaser hereunder.
6.04 Matters Involving Third Parties:
(a) If any third party shall notify any party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") that may give rise
to a claim for indemnification against the other party (the
"Indemnifying Party") under this Article 6.00, then the Indemnified
Party shall promptly notify (which the Indemnified Party will endeavor
to provide, by the sooner to occur of (i) fifteen (15) business days
after receipt of notice by it or (ii) five (5) days prior to the date
a responsive pleading is due) the Indemnifying Party thereof in
writing; Provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) that the Indemnifying Party thereby is
prejudiced;
(b) The Indemnifying Party shall have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party shall indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party shall have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money
damages and does not seek by way of a motion an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently;
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with paragraph 6.04(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii)
the Indemnified Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party, and (iii)
32
the Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party;
(d) If any of the conditions in paragraph 6.04(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, the Indemnifying Party in connection
therewith), (ii) the Indemnifying Party shall reimburse the
Indemnified Party promptly and periodically (but no more frequently
that monthly) for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (iii) the
Indemnifying Party shall remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Article 6.00.
6.05 From and after the Effective Date, except for remedies that cannot be
waived as a matter of law and except for injunctive relief, the rights to
indemnification under this Article 6.00 shall be the exclusive remedy for
the parties with respect to this Agreement contemplated and consummated
hereby, and the parties shall not be entitled to pursue, and each hereby
expressly waives as of the Effective Date, any and all other rights that
may otherwise be available to either of them either at law or in equity
with respect thereto. This paragraph 6.05 does not limit the remedies
available to any party under any other agreement or instrument executed in
connection with this Agreement. Notwithstanding the foregoing, nothing
contained in this paragraph 6.05 shall prevent any party hereto from
seeking and obtaining, as and to the extent permitted by applicable law,
specific performance by the other party hereto of any of its obligations
under this Agreement or injunctive relief against the other party's
activities in breach of this Agreement.
6.06 Prior to asserting any claim pursuant to this Article 6.00, each
Indemnified Party shall file, or cause to be filed, a claim with respect to
the liabilities in question under applicable insurance policies, if any,
maintained by such Indemnified Party or any subsidiary, division or
affiliate thereof. The amount of any Adverse Consequences suffered,
sustained, incurred or required to be paid to or for the benefit of any
Indemnified Party shall be reduced by the amount of (a) any insurance
proceeds and other amounts paid to or for the benefit of the Indemnified
Party with respect to such Adverse Consequences by any person not a party
to this Agreement or (b) any income or tax benefits actually received by or
for the benefit of the Indemnified Party or any Affiliate of any
Indemnified Party.
6.07 The Indemnifying Party shall pay to the Indemnified Party in cash the
amount of any Adverse Consequence to which the Indemnified Party may become
entitled by reason of the provisions of this Article 6.00, such payment to
be made within fifteen (15) days after such Adverse Consequences are
finally determined either by mutual agreement of the parties hereto or
pursuant to the final unappealable judgment of a court of competent
jurisdiction.
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7.00 - CONDITIONS PRECEDENT
7.01 The obligations of the Purchaser to complete the purchase of the Purchased
Assets hereunder shall be subject to the satisfaction of, or compliance
with, at or before the Closing Date, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the
exclusive benefit of the Purchaser and may be waived by it in whole or in
part):
(a) all of the representations, warranties and covenants of AVL, DV and RW
herein contained shall be true and correct in all material respects at
the Closing Date and with the same effect as if made at and as of the
Closing Date and AVL shall have delivered to the Purchaser a
certificate of an officer of AVL confirming, to the best of the
knowledge of such person, the truth and correctness in all material
respects of such representations, warranties and covenants;
(b) all instruments of conveyance and other documentation relating to the
sale and purchase of the Purchased Assets, including without
limitation, assignments of contracts and agreements (and third party
consents thereto, where required), bills of sale, documentation
relating to the due authorization and completion by AVL of the sale of
the Purchased Assets and the taking of all actions and proceedings on
or prior to the Closing Date in connection with the performance by AVL
of its obligations under this Agreement, shall be satisfactory to the
Purchaser and counsel for the Purchaser and shall have been delivered
to the Purchaser and the Purchaser shall have received copies of all
such other documentation or evidence as the Purchaser may reasonably
request in order to establish the consummation of the transactions
contemplated hereby and the taking by AVL of all necessary corporate
proceedings in connection herewith in compliance with the terms and
conditions hereof, in form (as to certification and otherwise) and
substance satisfactory to the Purchaser and counsel for the Purchaser;
(c) All actions to be taken by AVL, DV and RW in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Purchaser.
(d) as at the Closing Date there shall not have been material adverse
damage or change to the Purchased Assets or the Business;
(e) AVL shall have delivered to the Purchaser physical possession to all
of the Purchased Assets, all keys, combinations to safes,
miscellaneous title documents and any and all other items or indicia
of title to enable it to assume full, complete and unencumbered
operation of the Business and possession of the Purchased Assets;
(f) AV, AVL, DV and RW shall have executed and delivered the
Non-Competition
34
Agreements attached hereto as Schedule "F" and RV shall have executed
and delivered the Non-Solicitation Agreement attached hereto as
Schedule "G";
(g) the Purchaser shall have been satisfied that the leased premises are
satisfactory for the purposes intended in carrying on the Business;
(h) AVL shall deliver to the Purchaser's counsel, on the Closing Date, a
legal opinion of the AVL's counsel in a form satisfactory to the
Purchaser's counsel, acting reasonably;
(i) Purchaser shall have completed its due diligence investigation with
respect to AVL including, but not limited to, (i) business, financial,
operational, customer, worker's compensation, and employee due
diligence, with results satisfactory to Purchaser in its sole
discretion, and (ii) its legal and regulatory due diligence, with
results satisfactory to Purchaser in its commercially reasonable
discretion;
(j) approval by the directors of the Purchaser and Xxxxxxx Xxxxx
International Insurance Brokers Ltd. (the parent company of the
Purchaser) of this Agreement and the transactions contemplated herein;
(k) the receipt of all necessary approvals in favor of the Purchaser of
all insurance approvals and insurance licence matters from the
Virginia Department of Insurance;
(l) delivery to and satisfactory review by the Purchaser of the rating of
the insurance carriers;
(m) AVL shall have executed and delivered to Purchaser a certificate to
the effect that it is not a "foreign person" pursuant to United States
Treasury Regulation 1.1445-2(b);
(n) Satisfactory review and approval by the Purchaser of all AVL Plans
currently offered to the employees of AVL and approval by the
Purchaser of the costs to continue such AVL Plans;
(o) the receipt by the Purchaser of errors and omissions insurance,
property and casualty insurance and all necessary business licences
required by the Purchaser in order to operate the Business;
(p) acquisition of satisfactory financing for completion of the purchase
by the Purchaser;
(q) AVL shall have executed and delivered the Agency Agreement attached
hereto as Schedule "P";
(r) AVL shall have executed and delivered the Lease Agreement attached
hereto as
35
Schedule "C";
(s) the Purchaser shall have received satisfactory assurances from AVL's
current insurance carriers that they will continue to process and
renew the Client Files after the Closing Date; and
(t) AVL shall have delivered to the Purchaser a sufficient number of
copies of the Intercreditor Agreement all executed on behalf of AVL
for distribution to all of the other signatories thereto.
7.02 In addition to the foregoing, the obligations of the Purchaser to complete
the purchase of the Purchased Assets hereunder shall be subject to the
acquisition by the Purchaser of any and all regulatory or stock exchange
approvals necessary for the purchase of the Purchased Assets. Should this
condition not be met by the Closing Date (if the time limitation has not
been extended by agreement in writing by both Parties hereto) then this
Agreement shall terminate and shall be considered to be null and void ab
initio; and
7.03 In case any of the foregoing conditions not being fulfilled on or before
the Closing Date or if any of the foregoing said conditions are not
satisfactory, for any reason at all, in the opinion of the Purchaser, then
in any such event, the Purchaser may rescind this Agreement upon written
notice to AVL and thereupon shall be released from all obligations
hereunder.
7.04 Risk of loss or damage to the Purchased Assets shall be that of AVL until
the Closing Date. If any loss or damage to the Purchased Assets shall occur
prior to such time and if such loss or damage is material, the Purchaser
may at its option cancel this Agreement at any time prior to completion of
the closing.
7.05 The obligations of AVL, DV and RW to effect the transactions contemplated
by this Agreement to occur on the Closing Date are subject to the
satisfaction of the following conditions on or prior to the Closing Date,
unless waived by AVL:
a) The representations and warranties of Purchaser set forth in this
Agreement shall be true and correct in all material respects as of the
Closing Date, except for such representations and inaccurate
warranties as will not, singly or in the aggregate, be reasonably
expected to have a material adverse effect on Purchaser;
b) Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date; and
c) All actions to be taken by Purchaser in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in
form and substance to AVL, acting reasonably.
8.00 - GENERAL
36
8.01 In this agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words importing persons shall include corporations,
companies, partnerships, syndicates, trusts and any number or aggregate of
persons.
8.02 This Agreement shall be governed by and construed and enforced in
accordance with internal Virginia law without regard to any applicable
conflicts of law, and the parties hereto agree to submit and attorn to the
jurisdiction of the Courts of Virginia in respect any disputes which may
arise hereunder.
8.03 Headings are not to be considered as part of this Agreement and are
included solely for convenience of reference and are not intended to be a
full or accurate description of the text thereof.
8.04 This Agreement may be executed in two or more counterparts, each of which
shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
8.05 Time shall be of the essence.
8.06 All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (if confirmed),
or mailed by registered or certified mail (return receipt requested), or
overnight courier service to the parties at the following addresses or at
such other address for a party as shall be specified by like notice:
To AVL at: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxx Xxxxxxxxxxx
To DV at: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
To RW at: 0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx, XX, 00000
To the Purchaser at: 355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other party notice in the manner herein set forth.
8.07 Each party shall, at the request of any party, from time to time and at all
times hereafter, execute and deliver all deeds, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
8.08 This Agreement shall constitute and be the entire and final agreement by
their hands or the hands of their authorized officers, between the parties
hereto with respect to all
37
matters herein.
8.09 This Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
8.10 Where a period of time is prescribed or calculated from a day of event the
time shall be calculated excluding such day or the day of such event,
unless a contrary attention appears. Where the time for doing anything
falls or expires on a Saturday, Sunday or on a public holiday then such
thing may be validly done the first date thereafter that is not a Saturday,
Sunday or holiday.
8.11 No amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by the parties hereto. AVL may consent
to any such amendment for itself at any time prior to the closing without
the prior authorization of its Board of Directors. No waiver by any party
of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
8.12 Neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by AVL, DV or RW (whether by operation of law
or otherwise) without the prior written consent of the Purchaser. This
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective successors and assigns.
8.13 If any provision or covenant, or any part thereof, of this Agreement should
be held by any court to be illegal, invalid or unenforceable, either in
whole or in part, such illegality, invalidity or unenforceability shall not
affect the legality, validity or enforceability of the remaining provisions
or covenants, or any part thereof, all of which shall remain in full force
and effect.
8.14 The prevailing party in any proceeding brought to enforce the terms of this
Agreement shall be entitled to an award of reasonable attorneys' fees and
costs incurred in investigating and pursuing such action, both at the trial
and appellate levels.
8.15 Each of the parties acknowledges and agrees that the other party would be
damaged irreparably if any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the parties agrees that the other party
shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having jurisdiction over the
parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
8.16 AVL warrants and agrees to pay and discharge when due all claims of
creditors that
38
could be asserted against Purchaser by reason of non-compliance with the
provisions of any bulk transfer laws of any jurisdiction in connection with
the transactions contemplated by this Agreement, and acknowledges that such
liabilities and obligations are not to be assumed by Purchaser hereunder.
AVL hereby indemnifies and agrees to hold Purchaser harmless from, against
and in respect of, and shall on demand reimburse Purchaser for, any loss,
liability, cost or expense suffered or incurred by Purchaser by reason of
the failure of AVL to pay or discharge any such claims.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as to be
effective as at the date first written above.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxx Xxxxxxxxxxx
----------------------------- ----------------------------
Witness XXXX XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxxx Xxxxxxx
----------------------------- ----------------------------
Witness XXXXX XXXXXXX
39
SCHEDULE "A"
CLIENT LIST
AVL represents and warrants to the Purchaser that the computer printout dated
____________, 2004, delivered to the Purchaser herewith constitutes a full and
complete record of AVL's insurance clients and their respective policies.
INITIAL /s/ [initials]
----------------------
AVL
SCHEDULE "B"
FIXED ASSETS
SCHEDULE "C"
REAL PROPERTY LEASE AGREEMENTS
SCHEDULE "D"
ASSUMED CONTRACTS
Those agreements attached hereto and those agreements identified in the
Assignment Agreement dated August 31st, 2004, and made between AVL and
Purchaser.
1. Renewal Agreement between B&B Associates and AVL dated December 20, 2001 in
respect of AVL's leased premises at Poplar Hall Shops;
2. Lease dated as of September 1, 2000, and made between Xxxxxx X.
Xxxxxxxxxxx, trading as Xx Xxxxxxx'x Insurance Agency and Xxxxxxxx X.
Xxxxxxx;
3. Lease dated as of August 1, 2001, and made between AVL and 0000 Xxxxxxxxxx
Xxxxxxxxx L.L.C.;
4. Lease dated as of April 1, 2004, and made between Xx Xxxxxxx'x Insurance
and Public Storage Inc.;
5. Vehicle lease dated June 1, 2001 and made between Parc Leasing Co. and AVL;
6. Vehicle lease dated October 28, 2001 and made between Xxxxx Imports
Chesapeake and AVL;
7. Virginia Producer Agreement dated March 9, 1992 and made between Victoria
Fire & Casualty Company and AVL, and any amendments thereto;
8. Producer Agreement dated June 3, 2003 and made between The Vision Insurance
Group LLC and AVL, and any amendments thereto;
9. Producer Agreement dated July 13, 1984 and made between the Progressive
Companies and AVL, and any amendments thereto;
10. Agency Producer Agreement made between AIG Agency and AVL, and any
amendments thereto;
11. Producer Agreement dated January 17, 2001 and made between GMAC Insurance
and AVL, and any amendments thereto;
12. Savings Incentive Match Plan for Employees of Small Employers;
13. a Group Agreement dated March 8, 2004 and made with Optimum Choice Inc.;
14. a Group Hospital and Health Insurance Policy Contract dated March 8, 2004
and made with Mamsi Life and Health Insurance Company; and
15. A Master Service Agreement and Internet Service agreement dated April 15th,
2003 and made between Cavalier Telephone and AVL.
SCHEDULE "E"
FINANCIAL STATEMENTS OF AVL
SCHEDULE "F"
FORM OF NON-COMPETITION AGREEMENTS
1. AVL
2. XX
0. RW
4. AV
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XX XXXXXXXXXXX LTD.
a body corporate duly incorporated
according to the laws of the State of Virginia
(hereinafter referred to as "AVL")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from AVL as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from AVL in accordance with the terms and
conditions of an agreement for the sale and purchase of assets dated Effective
as at August 31st, 2004 (hereinafter referred to as the "Purchase Agreement");
AND WHEREAS AVL has access to Confidential Information regarding the Purchased
Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of $25,000
now paid by the Corporation to AVL (receipt of and sufficiency of which is
hereby acknowledged) and for other good and valuable consideration the parties
hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the State of Virginia.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 Except with the prior written consent of AYI, which consent may be
arbitrarily withheld, AVL hereby covenants and agrees that for a period of
fifteen (15) years from the date this Agreement, AVL will not, directly or
indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 AVL covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, AVL shall not, directly or indirectly, use or disclose, or cause
or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, AVL hereby
covenants and agrees with the Corporation that upon demand by the
Corporation for the same, AVL shall forthwith return any and all
Confidential Information in its possession to the Corporation.
3
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between AVL and
the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then AVL shall have the burden of
proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by AVL of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, AVL agrees that in the event of any such breach, in addition
to, and not in substitution of, all other remedies available to the
Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and AVL shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with AVL failure to keep,
observe or perform, from and after the dates hereof, the covenants to be
kept, observed and performed by AVL under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by AVL.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 AVL shall not assign, or otherwise transfer, its rights or delegate its
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Virginia.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to AVL: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxx Xxxxxxxxxxx
If to the Corporation: 00000 Xxxxxxxxx Xx. XX, Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 AVL acknowledges that it has reviewed this Agreement and understands the
term and conditions hereof.
5
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
----------------------------
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XXXX XXXXXXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "DV")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from DV as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from XX XXXXXXXXXXX LTD. in accordance with the
terms and conditions of an agreement for the sale and purchase of assets dated
Effective as of August 31st, 2004 (hereinafter referred to as the "Purchase
Agreement");
AND WHEREAS DV has or has had access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of $25,000
now paid by the Corporation to DV (receipt of and sufficiency of which is hereby
acknowledged) and for other good and valuable consideration the parties hereto
and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means State of Virginia.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 DV hereby covenants and agrees that for a period of five (5) years from the
date hereof, DV will not, directly or indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 DV covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, DV shall not, directly or indirectly, use or disclose, or cause
or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, DV hereby
covenants and agrees with the Corporation that upon demand by the
Corporation for the same, DV shall forthwith return any and all
Confidential Information in her possession to the Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any
3
discussions, negotiations or contractual relations between DV and the
Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then DV shall have the burden of
proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by DV of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, DV agrees that in the event of any such breach, in addition
to, and not in substitution of, all other remedies available to the
Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and DV shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with DV failure to keep, observe
or perform, from and after the dates hereof, the covenants to be kept,
observed and performed by DV under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by DV.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 DV shall not assign, or otherwise transfer, his rights or delegate his
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Virginia.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to DV: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
If to the Corporation: 00000 Xxxxxxxxx Xx. XX, Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 DV acknowledges that he has read this Agreement and understands the term
and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
5
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxx Xxxxxxxxxxx
----------------------------- ----------------------------
Witness XXXX XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
[print name of witness]
6
AFFIDAVIT OF EXECUTION
----------------------
I, Xxxxx X. Xxxx, of the City of Virginia Beach, in the State of Virginia, MAKE
OATH AND SAY:
3. I was personally present and did see XXXX XXXXXXXXXXX named in the within
(or annexed) instrument, who is personally known to me to be the person
named therein, duly sign and execute the instrument for the purposes named
therein.
2. That the same was executed at the City of Virginia Beach, in the State of
Virginia, and that I am the subscribing witness thereto.
3. That I know XXXX XXXXXXXXXXX and he is in my belief of the full age of l8
years.
SWORN BEFORE ME at the City of )
of Virginia Beach, in the State )
of Virginia, this 7th day of )
Sept., 2004. ) /s/ Xxxxx X. Xxxxxxxx
) ------------------------------
I was Commissioned as Xxxxx X. Xxxx
a Notary Public in and for the State of Virginia
My Commission expires June 30, 2008
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XXXXX XXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "RW")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from RW as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from XX XXXXXXXXXXX LTD. in accordance with the
terms and conditions of an agreement for the sale and purchase of assets dated
Effective as of August 31st, 2004 (hereinafter referred to as the "Purchase
Agreement");
AND WHEREAS RW has or has had access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of $25,000
now paid by the Corporation to RW (receipt of and sufficiency of which is hereby
acknowledged) and for other good and valuable consideration the parties hereto
and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means State of Virginia.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 RW hereby covenants and agrees that for a period of five (5) years from the
date hereof, RW will not, directly or indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 RW covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, RW shall not, directly or indirectly, use or disclose, or cause
or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, RW hereby
covenants and agrees with the Corporation that upon demand by the
Corporation for the same, RW shall forthwith return any and all
Confidential Information in her possession to the Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any
3
discussions, negotiations or contractual relations between RW and the
Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then RW shall have the burden of
proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by RW of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, RW agrees that in the event of any such breach, in addition
to, and not in substitution of, all other remedies available to the
Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and RW shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with RW failure to keep, observe
or perform, from and after the dates hereof, the covenants to be kept,
observed and performed by RW under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by RW.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 RW shall not assign, or otherwise transfer, his rights or delegate his
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Virginia.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to RW: 0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx, XX, 00000
If to the Corporation: 00000 Xxxxxxxxx Xx. XX, Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 RW acknowledges that he has read this Agreement and understands the term
and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
5
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxxx Xxxxxxx
----------------------------- ----------------------------
Witness XXXXX XXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
[print name of witness]
6
AFFIDAVIT OF EXECUTION
-----------------------
I, Xxxxx X. Xxxx, of the City of Virginia Beach, in the State of Virginia, MAKE
OATH AND SAY:
3. I was personally present and did see XXXXX XXXXXXX named in the within (or
annexed) instrument, who is personally known to me to be the person named
therein, duly sign and execute the instrument for the purposes named
therein.
2. That the same was executed at the City of Virginia Beach, in the State of
Virginia, and that I am the subscribing witness thereto.
3. That I know XXXXX XXXXXXX and he is in my belief of the full age of l8
years.
SWORN BEFORE ME at the City of )
of Virginia Beach, in the State )
of Virginia, this 7th day of )
Sept., 2004. ) /s/ Xxxxx X. Xxxxxxxx
) ------------------------------
I was Commissioned as Xxxxx X. Xxxx
a Notary Public in and for the State of Virginia
My Commission expires June 30, 2008
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XxXXXX XXXXXXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "AV")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from AV as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from XX XXXXXXXXXXX LTD. in accordance with the
terms and conditions of an agreement for the sale and purchase of assets dated
Effective as of August 31st, 2004 (hereinafter referred to as the "Purchase
Agreement");
AND WHEREAS AV has or has had access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of $25,000
now paid by the Corporation to AV (receipt of and sufficiency of which is hereby
acknowledged) and for other good and valuable consideration the parties hereto
and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means State of Virginia.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 AV hereby covenants and agrees that for a period of five (5) years from the
date hereof, AV will not, directly or indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 AV covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, AV shall not, directly or indirectly, use or disclose, or cause
or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, AV hereby
covenants and agrees with the Corporation that upon demand by the
Corporation for the same, AV shall forthwith return any and all
Confidential Information in her possession to the Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any
3
discussions, negotiations or contractual relations between AV and the
Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then AV shall have the burden of
proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by AV of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, AV agrees that in the event of any such breach, in addition
to, and not in substitution of, all other remedies available to the
Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and AV shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with AV failure to keep, observe
or perform, from and after the dates hereof, the covenants to be kept,
observed and performed by AV under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by AV.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 AV shall not assign, or otherwise transfer, his rights or delegate his
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Virginia.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to AV: 0000 Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
If to the Corporation: 00000 Xxxxxxxxx Xx. XX, Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: President
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 AV acknowledges that he has read this Agreement and understands the term
and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
5
as of the date first above mentioned.
Per: /s/ P. Podorieszach
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxxxx Xxxxxxxxxxx
----------------------------- ----------------------------
Witness XXXXXX XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
[print name of witness]
6
AFFIDAVIT OF EXECUTION
-----------------------
I, Xxxxx X. Xxxx, of the City of Virginia Beach, in the State of Virginia, MAKE
OATH AND SAY:
3. I was personally present and did see XXXXXX XXXXXXXXXXX named in the within
(or annexed) instrument, who is personally known to me to be the person
named therein, duly sign and execute the instrument for the purposes named
therein.
2. That the same was executed at the City of Virginia Beach, in the State of
Virginia, and that I am the subscribing witness thereto.
3. That I know XXXXXX XXXXXXXXXXX and he is in my belief of the full age of l8
years.
SWORN BEFORE ME at the City of )
of Virginia Beach, in the State )
of Virginia, this 7th day of )
Sept., 2004. ) /s/ Xxxxx X. Xxxxxxxx
) ------------------------------
I was Commissioned as Xxxxx X. Xxxx
a Notary Public in and for the State of Virginia
My Commission expires June 30, 2008
SCHEDULE "G"
NON-SOLICITATION AGREEMENT OF XXX XXXXXXXXXXX
NON-SOLICITATION AGREEMENT
THIS AGREEMENT MADE effective this 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate duly incorporated under
the laws of the State of Delaware and carrying on
business in the United States of America
(hereinafter referred to as the "AYI")
- and -
XXX XXXXXXXXXXX
an individual, resident in the City of Virginia Beach
in the State of Virginia
(hereinafter called the "RV")
WHEREAS the Corporation has requested an obligation of secrecy and
non-solicitation from RV as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from XX XXXXXXXXXXX LTD. in accordance with the
terms and conditions of an agreement for the sale and purchase of assets dated
Effective as of August 31st, 2004;
AND WHEREAS RV has or has had access to Confidential Information regarding the
Purchased Assets, the Clients and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of $25,000
now paid by AYI to RV (receipt of and sufficiency of which is hereby
acknowledged) and for other good and valuable consideration the parties hereto
and hereby agree as follows:
1.00 DEFINITIONS
1.01 In this Agreement and in any amendment hereto, the following terms shall
have the following meanings:
a) "Clients" mean any and all past, present or prospective customers of
AYI; and
b) "Xxxxxxxxxxx Division" means that business and those assets purchased
by AYI pursuant to an Asset Purchase Agreement dated as of August
31st, 2004 and made between the AYI, Xx Xxxxxxxxxxx Ltd., Xxxxx
Xxxxxxx and Xxxx Xxxxxxxxxxx.
1.02 Unless otherwise indicated, all dollar amounts referred to in this
Agreement or in the Schedules are in United States funds.
1
2.00 RV NON-SOLICITATION AND CONFIDENTIALITY OBLIGATIONS
2.01 The RV hereby covenants and agrees that, for a period of five (5) years
from the date hereof, RV will not, directly or indirectly:
(a) solicit for employment or employ any employees of AYI or its
Xxxxxxxxxxx Division; or
(b) solicit, process, transact or in any other way deal with
insurance-related business from any of AYI's Clients or from the
Clients dealing with the Xxxxxxxxxxx Division;
2.02 The Parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
2.03 The RV covenants and agrees with AYI that:
(a) the business connections, Clients, marketing, sales techniques,
financial statements, employee lists or names, procedures and
operations, and other intangible assets and aspects of the Business
have been established and maintained by AYI at great expense and are
protected as confidential information and trade secrets, and are of
great value to AYI (the "Confidential Information"); and
(b) AYI would suffer great loss and injury if the Confidential Information
were disclosed or used in any way to the detriment of AYI.
Therefore, the RV shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to AYI's detriment, any
Confidential Information, secret, or proprietary information of AYI. The
foregoing limitation shall not apply to any Confidential Information or
proprietary information which has been voluntarily disclosed to the public
by AYI, independently developed and disclosed by others, or otherwise
enters the public domain through lawful means, not in violation of the
provisions of this subsection.
2.04 The obligations contained in paragraph 2.03 shall survive the termination
of any contractual relations between the RV and AYI.
2.05 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then the RV shall have the burden
of proving that such information is not Confidential Information.
2.06 The Parties to this Agreement agree that a breach by the RV of any of the
covenants contained in this Article 2.00 would result in damages to AYI for
which AYI could not
2
adequately compensated by a monetary award. Accordingly, the RV agrees that
in the event of any such breach, in addition to, and not in substitution
of, all other remedies available to AYI at law or in equity, AYI shall be
entitled as a matter of right to apply to a Court of competent jurisdiction
for such relief by way of restraining order, injunction, decree or
otherwise, as may be appropriate to ensure compliance with the provisions
of this Agreement and the RV shall be liable to AYI for all losses, costs,
legal fees, damages and expenses whatsoever which AYI may sustain, pay or
incur as result of or in connection with the RV's failure to keep, observe
or perform, from and after the dates hereof, the covenants to be kept,
observed and performed by the RV under this Article 2.00.
2.07 The Parties agree that all restrictions in this Article 2.00 are necessary
and are fundamental to the protection of the Business of AYI and are
reasonable and valid and all defences to the strict enforcement thereof by
AYI are hereby waived by the RV.
3.00 MISCELLANEOUS
3.01 This Agreement contains the entire agreement of the parties and there are
no other promises or conditions in any other agreement whether oral or
written. This Agreement supersedes any prior written or oral agreements
between the parties. This Agreement may be modified or amended, only if the
amendment is made in writing and is signed by both parties. This agreement
cannot be altered in any way by any oral statement(s) made to RV.
3.02 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Virginia.
3.03 No provision of this agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the parties
hereto in the observance or performance of any part of this agreement shall
not extend to or be taken in any manner to effect any other default.
3.04 The parties hereto, and each of them, covenant and agree that each of them
shall and will, upon reasonable request of the other party, make, do,
execute or cause to be made, done or executed, all such further and other
lawful acts, deeds, things, devices and assurances whatsoever for the
better or more perfect and absolute performance of the terms and conditions
of this agreement.
3.05 In this agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words importing persons shall include corporations,
companies, partnerships, syndicates, trusts and any number or aggregate of
persons.
3.06 The headings of the clauses contained in this agreement have been inserted
for convenience of reference only and shall not affect the interpretation
of this agreement.
3
3.07 If any provision(s) of this Agreement shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision(s) of this
Agreement is invalid or unenforceable, but that by limiting such provision
it would become valid or enforceable, then such provision shall be deemed
to be written, construed, and enforced as so limited.
3.08 This agreement and its terms shall not be assigned by RV to any other
person, firm, corporation, or entity.
3.09 All notices, requests, demands, elections and other communications
hereunder shall be in writing and shall be deemed to have been duly given
only if delivered:
TO: AYI
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
TO: RV
0000 Xxxxx Xxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Either party may change its address for the notice by a notice given as
herein provided. A notice which is mailed will be considered as having been
given at such time as it would in the ordinary course of mail be received
by the party to which it is directed.
3.10 This agreement may be executed in any number of counterparts by any one or
more of the parties. Each executed counterpart shall be deemed to be an
original and such counterpart shall together constitute one and the same
agreement.
IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective
signatures and this agreement is delivered all as of the date first above
written.
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ P. Podorieszach
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxx Xxxxxxxxxxx
----------------------------- ----------------------------
Witness XXX XXXXXXXXXXX
4
SCHEDULE "H"
PERMITTED ENCUMBRANCES
Those UCC filings as listed below:
None
SCHEDULE "I"
TAX RETURNS AND OTHER TAX MATTERS OF AVL
SCHEDULE "J"
VOLUME REPORTS AND SUMMARY PRODUCTION REPORTS
SCHEDULE "K"
AVL'S INSURANCE
1. Business Package including auto, fire and liability;
2. Professional Liability at $5,000,000 in coverage supplied by Westport
Insurance Corporation; and
3. Such other insurance binders as are enclosed herein.
SCHEDULE "L"
ESCROW AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made as of the 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Addison")
and
XX XXXXXXXXXXX LTD.
a body corporate incorporated
pursuant to the laws of the State of Virginia
(hereinafter referred to as "AVL")
and
XXXX XXXXXXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "DV")
- and -
XXXXX XXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "RW")
and
DEMIANTSCHUK XXXXXX XXXXX & XXXXXXXXX
a partnership formed pursuant to the
Laws of the Province of Alberta
(the "Escrow Agent")
WHEREAS Addison, AVL, DV and RW (DV and RW are together referred to herein as
the "Shareholders") have made, executed and delivered an Asset Purchase
Agreement dated effective August 31st, 2004 (the "APA"), a copy of which has
been delivered to the Escrow Agent for reference purposes.
AND WHEREAS the terms of the APA provide that on the Closing Date, among other
things,
Addison shall deliver to the Escrow Agent a Promissory Note in accordance with
Schedule "O" of the APA.
AND WHEREAS Addison, AVL and the Shareholders have made, executed and delivered
an Agency Agreement dated effective as at August 31st, 2004 (the "Agency
Agreement"), a copy of which has been delivered to the Escrow Agent for
reference purposes.
AND WHEREAS the terms of the Agency Agreement provide that on the Closing Date,
among other things, the Shareholders shall deliver to the Escrow Agent a fully
completed and executed Securities Pledge Agreement along with share certificates
fully endorsed for transfer all in accordance with Schedule "D" of the Agency
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and in the Asset Purchase Agreement, the parties
hereto agree as follows:
1.00 Interpretation
-------------------
1.01 Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
2.00 Appointment of the Escrow Agent.
-------------------------------------
2.01 Addison, AVL and the Shareholders hereby constitute and appoint the Escrow
Agent as, and the Escrow Agent hereby agrees to assume and perform the
duties of, the Escrow Agent under and pursuant to this Agreement. The
Escrow Agent also acknowledges receipt of an executed copy of the APA, the
Agency Agreement and the Securities Pledge Agreement.
3.00 Delivery of Documents to the Escrow Agent
----------------------------------------------
3.01 The Escrow Agent acknowledges that Addison has delivered to the Escrow
Agent a properly completed and duly executed Promissory Note in accordance
with the terms of the APA and in the same form as is set forth in Schedule
"O" of the APA
3.02 The Escrow Agent acknowledges that the Shareholders have delivered the
following items to the Escrow Agent:
a) a duly executed Securities Pledge Agreement in accordance with the
terms of the Agency Agreement and in the same form as is set forth in
Schedule "D" of the Agency Agreement; and
b) those share certificates fully endorsed for transfer as more
particularly described in Schedule "A" of the Securities Pledge
Agreement.
3.03 The Escrow Agent acknowledges that AVL has delivered to it a duly executed
Directors Resolution in the same form as is set forth in Schedule "C" of
the Agency Agreement.
4.00 Escrow Agent's Obligations In Respect of the Promissory Note
and the Final Note
-----------------------------------------------------------------
4.01 The Escrow Agent shall hold and deal with the Promissory Note in accordance
with the following terms:
(a) within 5 days after the amount of the Adjustment has been determined
(in accordance with the terms of paragraphs 3.04(a) or (b) of the APA)
and communicated to the Escrow Agent the Escrow Agent shall proceed as
follows:
(i) if after the Adjustment is determined, there is no reduction in
the Purchase Price, then there shall be no changes made to the
Promissory Note by the Escrow Agent; and
(ii) if after the Adjustment is determined, there is a reduction in
the Purchase Price, then the Escrow Agent shall amend the
Promissory Note by reducing the Principal Amount (and, after
taking into account any and all sums paid to the Shareholders
pursuant to the Promissory Note up to and including the date of
the Adjustment, any amortization schedules related thereto) by
the amount of the Adjustment; and
once done shall deliver the amended Promissory Note to AVL; or
(a) if there has been a default in the payment or performance of the
Promissory Note (the "Default") prior to the date of delivery thereof
to AVL (in accordance with the terms of paragraph 4.01(a) hereof) and
AVL has delivered a written notice of the Default to the Escrow Agent,
then the Escrow Agent shall, subject to the terms of paragraph 4.03
hereof, deliver the Promissory Note to AVL.
4.02 The Escrow Agent shall make the Adjustment to the Promissory Note pursuant
to or in accordance with: (i) a written authorization signed by Addison and
AVL delivered to the Escrow Agent, which authorization shall set forth the
amount of the Adjustment; or (ii) if no written authorization is received,
a certified copy of a final judgment of a court of competent jurisdiction,
provided, however, that a certified copy of a final judgment shall serve as
a valid determination only if the time for appeal has expired and no appeal
has been perfected or all appeals have been exhausted or no further right
of appeal exists.
4.03 If there has been a Default of the Promissory Note, then the Escrow Agent
shall deliver the Promissory Note to AVL in accordance with: (i) a written
authorization signed by AVL delivered to the Escrow Agent, which
authorization shall set forth that there has been a Default in the
Promissory Note and the nature or amount of the Default; or (ii) if Addison
is disputing the Default and has notified the Escrow Agent in writing that
it has or intends to submit the dispute to a court of competent
jurisdiction, a certified copy of a final judgment of a court of competent
jurisdiction, provided, however, that a certified copy of a final judgment
shall serve as a valid determination only if the time for appeal has
expired and no appeal has been perfected or all appeals have been exhausted
or no further right of appeal exists.
5.00 Escrow Agent's Obligations In Respect of the Securities Pledge Agreement
and the Directors Resolution
-----------------------------------------------------------------------------
5.01 The Escrow Agent shall hold and deal with the Securities Pledge Agreement
(along with any share certificates delivered therewith) and the Directors
Resolution in accordance with the following terms:
(a) if Addison notifies the Escrow Agent that AVL is in default of the
performance of its obligations as set forth in the Agency Agreement
(the "Default") and demands in writing that the Securities Pledge
Agreement and Directors Resolution be released to it, then, subject to
the terms of paragraph 5.02 hereof, the Escrow Agent shall forthwith
deliver the Securities Pledge Agreement and the Directors Resolution
to Addison, and once delivered, the Escrow Agent shall be released
from any and all obligations concerning the Securities Pledge
Agreement and the Directors Resolution; or
(b) upon the termination of the Agency Agreement (in accordance with the
terms thereof) and if no notice of default has been received by the
Escrow Agent from Addison in accordance with the terms of paragraph
5.01(a), then the Escrow Agent shall deliver the Securities Pledge
Agreement and the Directors Resolution to the Shareholders and AVL (as
the case may be) and once delivered, the Escrow Agent shall be
released from any and all obligations concerning the Securities Pledge
Agreement and the Directors Resolution.
5.02 If there has been a Default of the Agency Agreement, then the Escrow Agent
shall deliver the Securities Pledge Agreement and the Directors Resolution
to Addison in accordance with: (i) a written authorization signed by the
Addison delivered to the Escrow Agent, which authorization shall set forth
that there has been a Default in the Agency Agreement and the nature or
amount of the Default; or (ii) if AVL is disputing the Default and has
notified the Escrow Agent in writing that it has or intends to submit the
dispute to a court of competent jurisdiction, a certified copy of a final
judgment of a court of competent jurisdiction, provided, however, that a
certified copy of a final judgment shall serve as a valid determination
only if the time for appeal has expired and no appeal has been perfected or
all appeals have been exhausted or no further right of appeal exists.
6.00 Fees and Expenses.
-----------------------
6.01 The Escrow Agent shall be entitled to fees for its services under this
Escrow Agreement and to reimbursement for all reasonable costs, charges and
expenses (including reasonable attorney fees) incurred by it in connection
therewith. Addison shall be responsible for the payment of such fees,
costs, charges and expenses as and when incurred.
7.00 Limitations on Duties and Liabilities of the Escrow Agent.
---------------------------------------------------------------
7.01 Unless otherwise expressly provided in this Agreement, the Escrow Agent
shall:
a) not be held liable for any action taken or omitted under this
Agreement so long as it shall have acted in good faith and without
negligence;
b) have no responsibility to inquire into or determine the genuineness,
authenticity, or sufficiency of any securities, checks, or other
documents or
instruments submitted to it in connection with its duties under and
pursuant to this Agreement; and
c) be entitled to deem (unless it has actual knowledge to the contrary)
the signatories of any documents or instruments submitted to it
pursuant to this Agreement as being those purported to be authorized
to sign such documents or instruments on behalf of the parties to this
Agreement and shall be entitled to rely (unless it has actual
knowledge to the contrary) upon the genuineness of the signatures of
such signatories without inquiry and without requiring substantiating
evidence of any kind.
8.00 Resignation and Removal of the Escrow Agent.
-------------------------------------------------
8.01 The Escrow Agent may resign as such thirty (30) days following the giving
of prior written notice thereof to Addison, AVL and the Shareholders.
Similarly, the Escrow Agent may be removed and replaced following the
giving of thirty (30) days' prior written notice to the Escrow Agent by
Addison, AVL and the Shareholders. Notwithstanding the foregoing, no such
resignation or removal shall be effective until a successor Escrow Agent
has acknowledged its appointment as such as provided in paragraph 8.03
below. In either event, upon the effective date of such resignation or
removal, the Escrow Agent shall deliver the items delivered to the Escrow
Agent in accordance with the terms of Article 3.00 hereof (the "Property")
to a successor Escrow Agent appointed by Addison, AVL and the Shareholders
as evidenced by a written notice executed by Addison, AVL and the
Shareholders and filed with the Escrow Agent.
8.02 If Addison, AVL and the Shareholders are unable to agree upon a successor
Escrow Agent, or shall have failed to appoint a successor Escrow Agent
prior to the expiration of thirty (30) days following the date of the
notice of such resignation or removal, the then acting Escrow Agent may
petition any court of competent jurisdiction for the appointment of a
successor Escrow Agent, or other appropriate relief, and any such resulting
appointment shall be binding upon all of the parties to this Agreement.
8.03 Upon acknowledgment by any successor Escrow Agent appointed in accordance
with the foregoing provisions of this Section 8.00 of the receipt of the
Property, the then acting Escrow Agent shall be fully released and relieved
of all duties, responsibilities, and obligations under this Agreement.
9.00 Indemnification of the Escrow Agent.
-----------------------------------------
9.01 Addison, AVL and the Shareholders, or their respective successors and
assigns, jointly and severally agree to indemnify and save and hold
harmless the Escrow Agent and its successors and assigns of, from and
against all losses, costs and expenses that the Escrow Agent shall sustain
or incur as a result of the Escrow Agent's involvement as a party hereto in
any litigation commenced prior to or after the termination of this
Agreement, arising from the performance by the Escrow Agent of its duties
and responsibilities under and pursuant to this Agreement that is not
attributable in any manner, or to any extent, to
any action taken, or omitted, by the Escrow Agent in connection with this
Agreement in respect of which the Escrow Agent shall have been adjudged to
have been negligent.
10.00 Termination of Escrow Fund.
---------------------------------
10.01 This Agreement (other than Sections 6.00 and 9.00) shall automatically
terminate when all of the Property held by the Escrow Agent shall have been
distributed, or otherwise disposed of, at any time while this Agreement
remains in effect by the Escrow Agent in accordance with the terms of this
Agreement.
11.00 Notices.
--------------
11.01 Any notice or other communication required or permitted hereunder shall be
in writing and shall be considered delivered in all respects when it has
been delivered by hand or overnight courier, by acknowledged facsimile
transmission followed by the original mailed by certified mail, return
receipt requested, or three (3) days after it is mailed by certified mail,
return receipt requested, first class postage prepaid, addressed as
follows:
TO ADDISON: Attn: Primo Podorieszach
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Fax: (000) 000-0000
TO AVL 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxx Xxxxxxxxxxx
TO DV 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
TO RW 0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx, XX, 00000
TO THE ESCROW AGENT: Demiantschuk Xxxxxx Xxxxx & Xxxxxxxxx
1200, 0000 - 0xx Xxxxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Xxxxxx Xxxxxx
Fax: (000) 000-0000
or such other addresses as shall be similarly furnished in writing by such
party.
12.00 Continuance of Agreement.
-------------------------------
12.01 This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
13.00 Applicable Law.
---------------------
13.01 This Agreement shall be governed by and construed under and in accordance
with the laws of the Province of Alberta and the parties hereto agree to
attorn and submit all disputes arising hereunder to the jurisdiction of the
Court of Queen's Bench of Alberta. .
14.00 Counterparts.
-------------------
14.01 This Agreement may be exercised in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the
same agreement. Each of the parties to this Agreement agrees that a
signature affixed to a counterpart of this Agreement and delivered by
facsimile by any person is intended to be its, his or her signature and
shall be valid, binding and enforceable against such person.
IN WITNESS WHEREOF, the parties hereto has executed this Agreement as of the
date and year first above written.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxx Xxxxxxxxxxx
----------------------------- ----------------------------
Witness XXXX XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxxx Xxxxxxx
----------------------------- ----------------------------
Witness XXXXX XXXXXXX
DEMIANTSCHUK XXXXXX XXXXX & XXXXXXXXX
Per: /s/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx
SCHEDULE "M"
JOINT VENTURE AGENCIES
NONE
SCHEDULE "N"
AVL'S EXISTING CARRIER APPOINTMENTS WITH A B+ OR HIGHER RATING
SCHEDULE "O"
PROMISSORY NOTE
The indebtedness evidenced by this Promissory Note and any lien or security
interest in connection therewith are subordinate to certain other indebtedness
and security interests in accordance with a Debt Subordination and Intercreditor
Agreement dated as of August 31st, 2004, and made between Addison York Insurance
Brokers Ltd., Xxxxxxx Xxxxx International Insurance Brokers Ltd., the Xxxxxxx
Family Trust of July 1998, Xx Xxxxxxxxxxx Ltd., Xxxxxx Xxxxxxxxx, FCC, LLC and
Oak Street Funding LLC, as amended from time to time (the (Intercreditor
Agreement"). If there is a conflict between the terms of this Agreement and the
Intercreditor Agreement, then the terms of the Intercreditor Agreement shall
prevail.
PROMISSORY NOTE
FOR VALUE RECEIVED the undersigned Promissor, ADDISON YORK INSURANCE BROKERS,
LTD., a Delaware corporation, promises to pay to the XX XXXXXXXXXXX LTD.
("AVL"), the sum of ONE MILLION ($1,000,000) US DOLLARS (hereinafter called the
"Principal Amount") together with interest thereon at the rate of SEVEN (7%)
PERCENT interest per annum, calculated and compounded annually, not in advance,
both before and after maturity. Subject to the terms hereof, the Principal
Amount along with the accrued interest thereon as aforesaid shall be repaid in
monthly installments (the "Installments") in accordance with the amortization
schedule attached as Schedule "A" hereto and forming a part hereof (the
"Amortization Schedule") beginning on the 1st day of October, 2004, to and until
the 31st day of September, 2009 (the "Maturity Date") when all amounts
outstanding shall become due and payable.
AVL acknowledges and agrees that, the Principal Amount is subject to Adjustment
as is more particularly set forth in Article 3.00 of the Asset Purchase
Agreement dated effective the 31st day of August, 2004, and made between the
Promissor, AVL, Xxxx Xxxxxxxxxxx and Xxxxx Xxxxxxx.
AVL acknowledges and agrees that any charge against the assets of the Promissor
which may be created by this instrument is subject to the terms of a
Subordination Agreement dated the 31st day of August, 2004 and made between the
Promissor and AVL and is, inter alia, subordinate to all present and future
Senior Debt (as defined in the Subordination Agreement) of the Promissor.
AVL acknowledges and agrees that, at the option of the Promissor, the Principal
Amount (or any part thereof) along with all accrued interest thereon are
repayable without notice or bonus at any time prior to the Maturity Date.
If any deficiency in any payment due under this note is not made good within
thirty (30) days of the due date of such payment, the entire principal sum and
accrued interest shall at once become due and payable without notice at the
option of the holder of this note. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent default.
The Promissor agrees to pay all costs of collection, including a reasonable
fattorney's fee, in the event of default in payment of principal or interest
when due, or the event of the bankruptcy or receivership of the Promissor.
The Promissor waives presentment for payment, notice of protest, demand for
payment and notice of non-payment. This Note shall be construed according to and
governed by the laws of the State of Virginia.
DATED at the City of Kamloops, in the Province of British Columbia this 31st day
of August, 2004.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
SCHEDULE "P"
AGENCY AGREEMENT
THIS AGENCY AGREEMENT IS MADE EFFECTIVE THE 31st DAY OF August, 2004
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the
laws of the State of Delaware
(hereinafter referred to as "AYI")
- and -
XX XXXXXXXXXXX LTD.
a body corporate incorporated
pursuant to the laws of the State of Virginia
(hereinafter referred to as "AVL")
- and -
XXXX XXXXXXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "DV")
- and -
XXXXX XXXXXXX
a resident of the City of Virginia Beach
in the State of Virginia
(hereinafter referred to as "RW")
WHEREAS AYI, AVL, DV and RW (DV and RW are together referred to herein as the
"Shareholders") have made, executed and delivered a certain Asset Purchase
Agreement dated as of August 31st, 2004 (the "APA").
AND WHEREAS as at the date of the APA, AYI may not have obtained all of the
necessary regulatory approvals to operate as an insurance broker or agent in the
State of Virginia and AYI has not obtained all of the Carrier Appointments from
those carriers listed in Schedule "N" of the APA.
AND WHEREAS pursuant to the terms of the APA, AVL has agreed to enter into this
Agency Agreement in order to allow AYI to process its clients insurance policies
through AVL, whereby AYI shall receive all revenues therefrom and shall pay all
of AVL's reasonable out of pocket expenses and costs associated therewith in
accordance with the terms hereof.
AND WHEREAS the Shareholders have agreed to enter into this Agency Agreement and
the Securities Pledge Agreement (attached as Schedule "D" hereto) as additional
security for the performance of AVL's obligations to AYI under the Agency
Agreement.
2
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and in the APA, the parties hereto agree as follows:
1.00 DEFINITIONS
1.01 Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
1.02 The following are the Schedules which are to be attached to and are
incorporated into this Agreement by reference and are deemed to be a part
hereof:
a) Schedule "A" Budget;
b) Schedule "B" Bank Accounts;
c) Schedule "C" Director's Resolution;
d) Schedule "D" Securities Pledge Agreement; and
e) Schedule "E" Employees;
2.00 WARRANTIES AS TO LICENCE
2.01 AVL for the benefit of AYI represents, warrants and covenants that:
a) AVL holds all the licenses and permits required for an agent and an
agency in the State of Virginia;
b) the employees of AVL hold all applicable licenses and permits required
for the performance of their duties as insurance brokers or otherwise;
c) AVL and its employees will maintain in good standing throughout the
Term of this Agreement, all the licenses and permits referred to in
paragraphs 2.01(a) and (b);
d) AVL will not knowingly or negligently do, or omit to do, anything that
results in, or is likely to result in, the suspension or revocation of
such licenses or permits, during the Term of this Agreement;
e) AVL shall maintain the appropriate trust accounts and account balances
all in accordance with the laws, rules and regulations governing the
operation of an insurance agency and brokerage in the State of
Virginia; and
f) AVL shall maintain in good standing its Carrier Appointment Contracts
with those insurance carriers or wholesalers set forth on Schedule "N"
of the APA and any other carrier or wholesaler appointments acquired
during the Term hereof.
3.00 WORKING RELATIONSHIP OF AVL AND AYI
3.01 Except as otherwise specifically authorized by AYI in writing, AVL shall,
for the sole and exclusive benefit of AYI and for the benefit of no other
person(s) whatsoever, market, sell, distribute, place and write general
insurance products to those persons set forth in the Client Files and to
any and all other potential customers who may wish to purchase general
insurance products.
3
3.02 AYI shall, during the Term of this Agreement, and to the extent required to
enable AVL to function as an agent or broker, provide without charge to
AVL, the basic office space and equipment, required for the administration
of functioning of AVL as an agent or broker. AYI shall not be required to
furnish the same for the conduct of any other business of AVL than the
business of an insurance agent or broker.
3.03 AYI shall, during the Term of this Agreement, and to the extent required to
enable AVL to function as an agent or broker, provide without charge to
AVL, the office equipment, required for the administration of functioning
of AVL as an agent or broker. AYI shall not be required to furnish the same
for the conduct of any other business of AVL than the business of an
insurance agent or broker pursuant to the terms of this agreement.
3.04 Subject to the terms and conditions set forth herein and to AYI's prior
approval of all staffing levels, salaries and benefits, AVL shall, during
the Term of this Agreement, provide all necessary insurance sales and
brokerage, clerical and stenographic services, required for the
administration and functioning of AVL as an agent or broker.
3.05 AVL shall assure that all files, computer records, and accounting records
kept by AVL and all other internal operating systems of AVL are marked or
designated to indicate which documents, matters and entries pertain to
Client Files. AVL shall maintain a software system that is capable of
generating reports listing all of the Client Files and basic related
information.
3.06 Upon the request of AYI, AVL shall, in a timely fashion, provide to AYI any
and all reports, financial statements, bank reconciliations, contracts,
agreements, memorandums or other documents of any nature or kind whatsoever
concerning the Business or Purchased Assets, including the monthly
financial statements of the Business which shall be delivered to AYI within
15 days of the end of the month. In addition, AVL shall permit AYI and its
employees, agents, professional advisors, counsel and accountants or other
representatives to have access to all of the books, accounts, records,
agreements, contracts, documents, instruments and other data of AVL
(including, without limitation, all corporate, business and accounting
records of AVL) and AVL shall furnish to AYI such financial and operating
data, agreements, contracts, documents, instruments, and other materials
and information with respect to AVL or the Business and the Purchased
Assets as AYI shall from time to time request.
3.07 AYI shall be responsible for the following reasonable and provable expenses
of AVL:
a) all out of pocket expenses with respect to the operation of the
Business;
4
b) all of the costs and expenses incurred by AVL in respect of those
matters set forth in paragraph 3.04;
c) all required license fees and other required regulatory fees necessary
to maintain AVL's status as an insurance agency or brokerage under the
laws of the State of Virginia or under the rules of any professional
or regulatory or licensing body having jurisdiction over the affairs
of AVL or an insurance agency or brokerage in general; and
d) other reasonable and necessary operational expenses incurred in the
normal day to day operation of the Business.
All as set forth in the budget (the "Budget") attached as Schedule "A"
hereto and forming a part hereof. AVL warrants and agrees that it must
obtain the written consent of AYI prior to making any capital expenditures
or other expenditures in excess of the amounts set forth in the Budget in
respect of the better operation of the Business or the servicing of the
Client Files for which it intends to hold AYI responsible for the payment
thereof.
3.08 AVL represents and warrants to AYI that it will conduct its operations as
an insurance agency or broker in accordance with the established norms and
customs of the insurance industry and will operate the Business and service
the Client Files as would a prudent operator handling such matters.
3.09 AVL represents and warrants to AYI that it shall, process the revenues
received by it and pay the expenses incurred from the Business and Client
Files through its general and trust bank accounts as more fully described
in Schedule "B" attached hereto and forming a part hereof (the "Accounts").
Subject to the normal and reasonable controls placed on such Accounts by
the relevant banking institution, AVL agrees that AYI shall have the right
to impose its own controls over the Accounts, to designate the signing
officers on the Accounts and to change the signing officers on the Account
from time to time as AYI deems prudent and necessary. In order to give
effect to the foregoing, AVL further agrees to execute the directors
resolution (the "Directors Resolution") attached as Schedule "C" hereto and
forming a part hereof and deliver the same to the Escrow Agent.
3.10 The Shareholders hereby agree to execute the Securities Pledge Agreement
attached as Schedule "D" hereto and deliver the same to the Escrow Agent to
be held by the Escrow Agent and dealt with by the Escrow Agent in
accordance with the following terms:
(a) if AVL is in default of the performance of its obligations as set
forth in this Agreement and AYI notifies the Escrow Agent of that
default and demands in writing that the Securities Pledge Agreement
and Directors Resolution be released to them, then the Escrow Agent
shall, in accordance with the terms of the Escrow Agreement, deliver
the Securities Pledge Agreement and the Directors Resolution to AYI,
and once delivered, the Escrow Agent shall be released from any and
all obligations concerning the Securities Pledge Agreement and the
Directors Resolution; or
5
(b) upon the termination of this Agreement and if no notice of default has
been received by the Escrow Agent from AYI in accordance with the
terms of sub-paragraph (a), then the Escrow Agent shall deliver the
Securities Pledge Agreement and the Directors Resolution to the
Shareholders and once delivered, the Escrow Agent shall be released
from any and all obligations concerning the Securities Pledge
Agreement and the Directors Resolution. (a)
4.00 OWNERSHIP OF CLIENT FILES AND REVENUES THEREFROM
4.01 AVL acknowledges and agrees that the Client Files and all associated
tangible and intangible property, rights and choses in action associated
therewith are and shall remain the sole and exclusive domain and personal
property of AYI whether such files or documents therein or associated
rights bear or include the name of AVL or any other trade name or style of
or associated with AVL.
4.02 Subject to the interests of any joint venture agencies set forth in
Schedule "M" of the APA and any new joint venture interests which may be
agreed to by AYI after the date hereof, AVL further acknowledges that any
new client files or insurance business originated by AVL or AYI or their
personnel from and after the date hereof and all associated tangible and
intangible property rights and choses in action shall be and will remain
the sole and exclusive domain and personal property of AYI, whether such
files or documents therein or associated rights bear or include the name of
AVL or any other trade name or style of or associated with AVL and shall
form part of the Client Files.
4.03 Any and all commissions, fees, interest income earned on the Accounts or
otherwise, contingency fees or other revenues of any kind nature or
description whatsoever received by AVL in connection with any Client File
or the Business shall be the sole and exclusive property of AYI (such
commissions, fees, interest income, contingency fees or revenues of any
kind nature or description whatsoever being referred to hereafter as the
"Revenues".
4.05 AVL shall, immediately upon the demand of AYI, pay to AYI any and all sums
due and owing to AYI pursuant to the terms of this Agreement.
5.00 TERM OF AGREEMENT
5.01 This Agreement shall be terminated upon the occurrence of the earliest of
the following events:
a) the date upon which AYI obtains:
i) all of the necessary regulatory approvals to operate as an
insurance broker or agent in the State of Virginia;
ii) all of the necessary regulatory approvals in respect of the
Assignment of employees to AYI; and
iii) all of the Carrier Appointments from those carriers listed in
Schedule "N" of the APA (or such lesser number of Carrier
Appointments which may be satisfactory to AYI in its sole and
unfettered discretion); or
6
b) the 31st day of December, 2024; or
c) the date that AYI delivers written notice to AVL that it is
terminating this Agreement; (the "Term").
5.02 Immediately upon the termination of this Agreement AVL hereby agrees to:
a) assign all of its right title and interest in and to any and all
employment agreements, non-competition agreements and confidentiality
agreements which it may have with those employees set forth on
Schedule "E" attached hereto and forming a part hereof and with any
other employee not listed on Schedule "E" but who may be employed by
AVL at the time of termination of this Agreement. Notwithstanding the
foregoing, AYI, in its sole and unfettered discretion, retains the
right not to accept the assignment of any particular employee's
agreement; and
b) pay over to AYI any and all monies remaining in the Accounts which are
or will become due and owing to AYI pursuant to the terms of this
Agreement
5.03 It is further agreed by AYI and AVL that after termination of this
contract:
a) AYI agrees to allow AVL to retain copies from such files of those
documents which by operation of law or in accordance with the
regulatory requirements either of the insurance licensing agencies or
of licensing or agency agreements with insurers, AVL may be
specifically obliged to retain; and
b) AVL further warrants that he will keep the files available and intact
and in order for the Government and insurance industries prescribed
time limits and that he will produce and make available all files,
papers and information that he possesses, in order to assist AYI in
any future query or disputes regarding the Client Files.
6.00 ERRORS AND OMISSIONS AND OTHER INSURANCE
6.01 During the Term hereof, AVL represents and warrants that it shall place and
will keep in effect and in good standing the following insurance coverages
for the benefit of AYI:
a) an Errors & Omission policy covering AVL with such coverage and limits
as shall be approved by AYI in its sole discretion;
b) proper and adequate coverage with respect to the Client Files and
Fixed Assets of AYI with such coverage and limits as shall be approved
by AYI in its sole discretion;
c) proper and adequate coverage with respect to the Business, the
Premises and the operations of an insurance agency thereon with such
coverage and limits as shall be approved by AYI in its sole
discretion; and
d) any other forms of insurance which AYI may require from time to time
in its sole discretion with such coverage and limits as shall be
approved by AYI.
6.02 AYI shall be responsible for the payment of all costs and expenses related
to the placement of the insurance matters set forth in paragraph 6.01
7
6.03 If after the date hereof and until the termination hereof, there is an
errors or omissions ("E&O") claim made against AVL in respect of the Client
Files, then AYI shall pay all costs up to the deductible portion on AVL's
E&O policy, including any reasonable legal expenses incurred thereon.
6.04 AVL shall notify AYI immediately of any possible claim or occurrence that
could cause an E&O claim against AVL, and AVL agrees that AYI, at its sole
and unfettered discretion shall have conduct of the action in respect of
the claim or occurrence and AVL shall provide its full cooperation to AYI
in respect of the claim or occurrence.
7.00 GENERAL
7.01 Notices to be given under this Agreement shall be given in writing to the
Parties at the following respective addresses, namely:
TO AYI: 355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
TO AVL: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxx Xxxxxxxxxxx
TO DV: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
TO RW: 0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx, XX, 00000
or to such address as any Party may for itself stipulate by written notice
in accordance with this paragraph 7.01, and any notice so sent by single,
or double registered mail shall be deemed received on the seventh (7) day
following such posting unless the contrary be proved, the burden of such
proof being that of the person whose receipt of such notice in question.
7.02 This agreement shall be governed by, and be construed in accordance with,
the laws of the State of Virginia. In addition, the parties hereto waive
trail by jury and agree to submit to the personal jurisdiction and venue of
a court of subject matter jurisdiction located in the State of Virginia.
7.03 The Recitals herein form part of this Agreement in as full and effective a
manner as if incorporated herein as numbered clauses.
7.04 Should any clause or other portion of this Agreement be declared illegal,
void, invalid, or inoperative by any competent Court, then this Agreement
shall be read as if such impugned clause or portion had never been included
in the Agreement, and so as to give the Agreement as full and forceful a
reading as possible consistent with the deletion of such impugned clause or
portion.
7.05 In this Agreement, the masculine shall include the feminine and vice versa,
the personal the impersonal and vice versa, the individual the corporate
and vice versa, and the
8
singular the plural and vice versa, all as the context may require.
7.06 No purported amendment to, variation of, or departure from or indulgence of
any term of, this Agreement shall be of any force or effect whatever unless
and until evidence in writing and that writing executed by all the Parties
hereto in the same fashion as the execution hereof.
7.07 This Agreement may not be assigned by AVL or the Shareholders without the
prior written consent of AYI, which consent may be unreasonably withheld.
7.08 Each Party agrees for the benefit of the other to do all things and to
execute all documents which may reasonably be required in order to give
effect to this Agreement.
IN WITNESS WHEREOF the Parties hereto have hereunder caused to be set hands and
seals as at the date first above written.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxx Xxxxxxxxxxx
----------------------------- ----------------------------
Witness XXXX XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxxx Xxxxxxx
----------------------------- ----------------------------
Witness XXXXX XXXXXXX
9
SCHEDULE "A"
BUDGET
10
SCHEDULE "B"
BANK ACCOUNTS
11
SCHEDULE "C"
DIRECTORS RESOLUTION
12
SCHEDULE "D"
SECURITIES PLEDGE AGREEMENT
13
SCHEDULE "E"
EMPLOYEES OF AVL
SCHEDULE "Q
AVL ESCROW AGREEMENT
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT ("Agreement") is made as of the 31st day of August, 2004.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Addison")
and
XX XXXXXXXXXXX LTD.
a body corporate incorporated
pursuant to the laws of the State of Virginia
(hereinafter referred to as "AVL")
and
SYKES, BOURDON, XXXXX & XXXX, PC
(the "Escrow Agent")
WHEREAS Addison, AVL, Xxxx Xxxxxxxxxxx and Xxxxx Xxxxxxx have made, executed and
delivered an Asset Purchase Agreement dated effective August 31st, 2004 (the
"APA"), a copy of which has been delivered to the Escrow Agent for reference
purposes.
AND WHEREAS the terms of the APA provide that on the Closing Date Addison shall
deliver to the Escrow Agent a the sum of $500,000.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and in the Asset Purchase Agreement, the parties
hereto agree as follows:
1.00 Interpretation
-------------------
1.01 "Adverse Event"means all charges, complaints, actions, suits, proceedings,
hearings, investigations, claims, demands, judgments, orders, decrees,
stipulations, injunctions, damages, dues, penalties, fines, costs, amounts
paid in settlement, liabilities (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to
become due), obligations, taxes, liens, losses, expenses, and fees,
including all reasonable attorneys' fees and court costs or any other
circumstances which would provide Addison with a right of indemnity
pursuant to Article 6.00 of the APA.
1.02 "Notice of Adverse Event"means the notice set forth in Article 4.00 which
may be sent by Addison to the Escrow Agent, which notice shall be in
writing and shall set forth the nature of the Adverse Event, the
approximate date of occurrence of the Adverse Event and the approximate or
actual costs of the Adverse Event if known to Addison.
1.02 Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
2.00 Appointment of the Escrow Agent.
-------------------------------------
2.01 Addison and AVL hereby constitute and appoint the Escrow Agent as, and the
Escrow Agent hereby agrees to assume and perform the duties of, the Escrow
Agent under and pursuant to this Agreement. The Escrow Agent also
acknowledges receipt of an executed copy of the APA.
3.00 Delivery of Funds to the Escrow Agent
------------------------------------------
3.01 The Escrow Agent acknowledges that Addison has delivered to the Escrow
Agent the sum of $500,000 (the "Funds").
4.00 Escrow Agent's Obligations In Respect of the Funds
-------------------------------------------------------
4.01 The Escrow Agent shall hold and deal with the Funds in accordance with the
following terms:
(a) If the Escrow Agent has not received a Notice of Adverse Event from
Addison on or before the 5th day of October, 2004, then the Escrow
Agent shall release the sum of $100,000 to AVL;
(a) If the Escrow Agent has not received a Notice of Adverse Event from
Addison on or before the 5th day of November, 2004, then the Escrow
Agent shall release the sum of $100,000 to AVL;
(a) If the Escrow Agent has not received a Notice of Adverse Event from
Addison on or before the 5th day of December, 2004, then the Escrow
Agent shall release the sum of $100,000 to AVL;
(a) If the Escrow Agent has not received a Notice of Adverse Event from
Addison on or before the 5th day of January, 2005, then the Escrow
Agent shall release the sum of $100,000 to AVL;
(a) If the Escrow Agent has not received a Notice of Adverse Event from
Addison on or before the 5th day of February, 2005, then the Escrow
Agent shall release the sum of $100,000 to AVL;
(a) if, at any time prior to the full payout of the Funds as set forth in
sub-paragraphs 4.01(a) to (e), the Escrow Agent receives a Notice of
Adverse Event, then it shall: (i) immediately notify AVL in respect of
the same; and (ii) hold back from release to AVL the amount of the
approximate or actual costs of the Adverse Event as specified in the
Notice of Adverse Event and shall, in 10 days after the receipt of the
Notice of Adverse Event, pay such sum to Addison, or if the
approximate or actual costs of the Adverse Event are not known to
Addison then it shall hold back any further releases from the Funds
until such costs can be determined and, it shall, in 10 days after
such determination is made, remit such sum to Addison; and
(a) if, after the Escrow Agent notifies AVL of its receipt of a Notice of
Adverse Event from Addison and prior to the release of monies to
Addison as set forth in sub-paragraph 4.01(f), AVL notifies the Escrow
Agent in writing that it is disputing the Notice of Adverse Event and
that it has or intends to submit the dispute to a court of competent
jurisdiction, then the Escrow Agent shall not release any further
monies or make any further disbursements from the Funds to Addison or
AVL until it has received a certified copy of a final judgment of a
court of competent jurisdiction settling the dispute, provided,
however, that a certified copy of a final judgment shall serve as a
valid determination only if the time for appeal has expired and no
appeal has been perfected or all appeals have been exhausted or no
further right of appeal exists.
5.00 Fees and Expenses.
-----------------------
5.01 The Escrow Agent shall be entitled to fees for its services under this
Escrow Agreement and to reimbursement for all reasonable costs, charges and
expenses (including reasonable attorney fees) incurred by it in connection
therewith. AVL shall be responsible for the payment of such fees, costs,
charges and expenses as and when incurred.
6.00 Limitations on Duties and Liabilities of the Escrow Agent.
---------------------------------------------------------------
6.01 Unless otherwise expressly provided in this Agreement, the Escrow Agent
shall:
a) not be held liable for any action taken or omitted under this
Agreement so long as it shall have acted in good faith and without
negligence;
b) have no responsibility to inquire into or determine the genuineness,
authenticity, or sufficiency of any securities, checks, or other
documents or instruments submitted to it in connection with its duties
under and pursuant to this Agreement; and
c) be entitled to deem (unless it has actual knowledge to the contrary)
the signatories of any documents or instruments submitted to it
pursuant to this Agreement as being those purported to be authorized
to sign such documents or instruments on behalf of the parties to this
Agreement and shall be entitled to rely
(unless it has actual knowledge to the contrary) upon the genuineness
of the signatures of such signatories without inquiry and without
requiring substantiating evidence of any kind.
7.00 Resignation and Removal of the Escrow Agent.
-------------------------------------------------
7.01 The Escrow Agent may resign as such thirty (30) days following the giving
of prior written notice thereof to Addison and AVL. Similarly, the Escrow
Agent may be removed and replaced following the giving of thirty (30) days'
prior written notice to the Escrow Agent by Addison and AVL.
Notwithstanding the foregoing, no such resignation or removal shall be
effective until a successor Escrow Agent has acknowledged its appointment
as such as provided in paragraph 7.03 below. In either event, upon the
effective date of such resignation or removal, the Escrow Agent shall
deliver the Funds (or such amount as may be remaining) delivered to the
Escrow Agent in accordance with the terms of Article 3.00 hereof to a
successor Escrow Agent appointed by Addison and AVL as evidenced by a
written notice executed by Addison and AVL and filed with the Escrow Agent.
7.02 If Addison and AVL are unable to agree upon a successor Escrow Agent, or
shall have failed to appoint a successor Escrow Agent prior to the
expiration of thirty (30) days following the date of the notice of such
resignation or removal, the then acting Escrow Agent may petition any court
of competent jurisdiction for the appointment of a successor Escrow Agent,
or other appropriate relief, and any such resulting appointment shall be
binding upon all of the parties to this Agreement.
7.03 Upon acknowledgment by any successor Escrow Agent appointed in accordance
with the foregoing provisions of this Section 7.00 of the receipt of the
Funds (or such amount as may be remaining), the then acting Escrow Agent
shall be fully released and relieved of all duties, responsibilities, and
obligations under this Agreement.
8.00 Indemnification of the Escrow Agent.
-----------------------------------------
8.01 Addison and AVL, or their respective successors and assigns, jointly and
severally agree to indemnify and save and hold harmless the Escrow Agent
and its successors and assigns of, from and against all losses, costs and
expenses that the Escrow Agent shall sustain or incur as a result of the
Escrow Agent's involvement as a party hereto in any litigation commenced
prior to or after the termination of this Agreement, arising from the
performance by the Escrow Agent of its duties and responsibilities under
and pursuant to this Agreement that is not attributable in any manner, or
to any extent, to any action taken, or omitted, by the Escrow Agent in
connection with this Agreement in respect of which the Escrow Agent shall
have been adjudged to have been negligent.
9.00 Termination of Escrow Fund.
--------------------------------
9.01 This Agreement (other than Sections 5.00 and 8.00) shall automatically
terminate when all of the Funds held by the Escrow Agent shall have been
distributed, or otherwise disposed of, at any time while this Agreement
remains in effect by the Escrow Agent in accordance with the terms of this
Agreement.
10.00 Notices.
--------------
10.01 Any notice or other communication required or permitted hereunder shall be
in writing and shall be considered delivered in all respects when it has
been delivered by hand or overnight courier, by acknowledged facsimile
transmission followed by the original mailed by certified mail, return
receipt requested, or three (3) days after it is mailed by certified mail,
return receipt requested, first class postage prepaid, addressed as
follows:
TO ADDISON: Attn: Primo Podorieszach
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Fax: (000) 000-0000
TO AVL 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxx Xxxxxxxxxxx
TO THE ESCROW AGENT: Sykes, Bourdon, Xxxxx & Levy, PC
Pembroke One Building
5th Floor, 000 Xxxxxxxxxxxx Xxxx.
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxxxx Xxxxx
Fax: (000) 000-0000
or such other addresses as shall be similarly furnished in writing by such
party.
11.00 Continuance of Agreement.
-------------------------------
11.01 This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
12.00 Applicable Law.
---------------------
12.01 This Agreement shall be governed by and construed under and in accordance
with the laws of the State of Virginia and the parties hereto agree to
attorn and submit all disputes arising hereunder to the jurisdiction of the
Courts of the State of Virginia.
13.00 Counterparts.
-------------------
13.01 This Agreement may be exercised in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the
same agreement. Each of the parties to this Agreement agrees that a
signature affixed to a counterpart of this Agreement and delivered by
facsimile by any person is intended to be its, his or her signature and
shall be valid, binding and enforceable against such person.
IN WITNESS WHEREOF, the parties hereto has executed this Agreement as of the
date and year first above written.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
SYKES, BOURDON, XXXXX & XXXX, PC
Per: /s/ Xxxxxx Xxxxx
----------------------------
Xxxxxx Xxxxx
SCHEDULE "R"
SUBORDINATION AGREEMENT AND POWER OF ATTORNEY
THIS SUBORDINATION AGREEMENT IS MADE EFFECTIVE THE 31st DAY OF AUGUST, 2004
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the
laws of the State of Delaware
(hereinafter referred to as "AYI")
- and -
XX XXXXXXXXXXX LTD.
a body corporate incorporated
pursuant to the laws of the State of Virginia
(hereinafter referred to as "AVL")
WHEREAS AYI, AVL, Xxxx Xxxxxxxxxxx and Xxxxx Xxxxxxx have made, executed and
delivered a certain Asset Purchase Agreement dated Effective as of August 31st,
2004 (the "APA").
AND WHEREAS pursuant to the APA, AVL is to receive a promissory note (the
"Note") from AYI and AYI has agreed to provide a security interest to AVL as
security for the performance of AYI's obligations under the Note;
AND WHEREAS AYI has agreed to execute and provide to AVL a Security Agreement
(in the same form as Schedule "U" to the APA;
AND WHEREAS pursuant to the terms of the APA, AVL has agreed to subordinate the
Note and Security Agreement (collectively referred to herein as the "Security
Documents") to any and all senior indebtedness, whether present or future, which
has been or may be obtained by AYI now or at any time into the future
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by AYI to AVL (receipt of and sufficiency of which is
hereby acknowledged) and for other good and valuable consideration the parties
hereto and hereby agree as follows:
1. Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
2. "Senior Indebtedness" means, without limiting the generality of the
foregoing, the principal of and interest on any and all:
(c) operating lines of credit for AYI;
(d) financing for the purpose of growing and expanding AYI and to provide
additional capital for brokerage acquisitions or other insurance
related assets; or
(e) any and all sums, debts or obligations owing now or at any time
hereafter and from time to time to FCC LLC, Oak Street Funding LLC or
Xxxxxx Xxxxxxxxx.
which are, may be or may become required by AYI, at present or at any time
into the future.
3. AVL covenants and agrees that the Security Documents are secured
obligations of AYI ranking subordinate to any and all Senior Indebtedness
of AYI, present or future, whether secured or unsecured, and without
limiting the generality of the foregoing, the Security Documents shall be
subordinate to any and all Senior Indebtedness which may be or become
required by AYI at present or at any time into the future. So long as no
default shall have occurred in the Security Documents and be continuing,
AVL does hereby covenant and agree with AYI, that Primo Podorieszach (or
the then Chief Executive Officer of AYI), acting reasonably and in good
faith, is unconditionally and irrevocably authorized and empowered, without
further authorization or direction from AVL, to postpone and subordinate
the Security Documents, to and in favour of AYI's principal lender
providing Senior Indebtedness to AYI, from time to time, and AVL hereby
irrevocably nominates and appoints Primo Podorieszach as its agent and
lawful Power of Attorney with respect to the execution, delivery and
registration of any and all documents which may be or become required
pursuant to the terms of this Agreement.
3. AVL agrees to execute and deliver to AYI the Limited Irrevocable Power of
Attorney (attached as Schedule "A" hereto and forming a part hereof)
appointing Primo Podorieszach (or the then Chief Executive Office of AYI)
as its agent and lawful attorney to act in accordance with the terms hereof
and thereof. In addition, AVL does hereby covenant and agree to execute and
deliver such other agreements and instruments of postponement from time to
time as may be requested by AYI and required to better carry out the true
intent and meaning of this Agreement.
3. AVL covenants and agrees that the performance of the obligations and the
payment of the principal and interest on the Security Documents are hereby
expressly subordinated and subrogated in right of payment to the prior
payment in full of all Senior Indebtedness of AYI.
3. Notices to be given under this Agreement shall be given in writing to the
Parties at the following respective addresses, namely:
TO AYI: Addison York Insurance Brokers, Ltd.
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
TO AVL: 0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX, 00000
Attn: Xxxx Xxxxxxxxxxx
or to such address as any Party may for itself stipulate by written notice
in accordance with this paragraph 6, and any notice so sent by single, or
double registered mail shall be
2
deemed received on the seventh (7) day following such posting unless the
contrary be proved, the burden of such proof being that of the person whose
receipt of such notice in question.
7. This agreement shall be governed by, and be construed in accordance with,
the laws of the State of Virginia. In addition, the parties hereto waive
trail by jury and agree to submit to the personal jurisdiction and venue of
a court of subject matter jurisdiction located in the State of Virginia.
8. The Recitals herein form part of this Agreement in as full and effective a
manner as if incorporated herein as numbered clauses.
9. Should any clause or other portion of this Agreement be declared illegal,
void, invalid, or inoperative by any competent Court, then this Agreement
shall be read as if such impugned clause or portion had never been included
in the Agreement, and so as to give the Agreement as full and forceful a
reading as possible consistent with the deletion of such impugned clause or
portion.
10. In this Agreement, the masculine shall include the feminine and vice versa,
the personal the impersonal and vice versa, the individual the corporate
and vice versa, and the singular the plural and vice versa, all as the
context may require.
11. No purported amendment to, variation of, or departure from or indulgence of
any term of, this Agreement shall be of any force or effect whatever unless
and until evidence in writing and that writing executed by all the Parties
hereto in the same fashion as the execution hereof.
12. Each party shall, at the request of any party, from time to time and at all
times hereafter, execute and deliver all deeds, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
IN WITNESS WHEREOF the Parties hereto have hereunder caused to be set hands and
seals as at the date first above written.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
3
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT THE UNDERSIGNED
XX XXXXXXXXXXX LTD. DOES HEREBY make, nominate, constitute and appoint Primo
Podorieszach (or the current Chief Executive Office of Addison York Insurance
Brokers Ltd. if the same is not Primo Podorieszach) as the undersigned's True
and Lawful Attorney for the undersigned and in the name, place and stead and for
the sole use and benefit to act as agent for the undersigned as described and
set out in the Subordination Agreement between it and Addison York Insurance
Brokers, Ltd. dated August 31st, 2004 and to take all steps as agent as required
by the Subordination Agreement, including but not limited to, any postponements
that need to be executed pursuant to Senior Indebtedness as set out in the
Subordination Agreement.
And for all and every of the purposes aforesaid DO HEREBY GIVE AND GRANT unto
Primo Podorieszach (or the current Chief Executive Office of Addison York
Insurance Brokers Ltd. if the same is not Primo Podorieszach), the said
Attorney, full and absolute power and authority to do and execute all acts,
deeds, matters and things necessary to be done in and about the premises.
IN WITNESS WHEREOF the proper signing officer of the undersigned has hereunto
set its hand and seal this ____ day of August, 2004.
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
4
SCHEDULE "S"
AVL'S LIABILITIES
NONE EXCEPT AS DISCLOSED ON ITS MOST RECENT FISCAL MONTH END BALANCE SHEET DATED
JUNE 30, 2004
SCHEDULE "T"
EXCLUDED ASSETS
NONE
SCHEDULE "U"
SECURITY AGREEMENT
The indebtedness evidenced by this Security Agreement and any lien or security
interest in connection therewith are subordinate to certain other indebtedness
and security interests in accordance with that certain Debt Subordination and
Intercreditor Agreement dated as of August 31st, 2004 among Addison York
Insurance Brokers Ltd., Xxxxxxx Xxxxx International Insurance Brokers Ltd.,
Xxxxxx Xxxxxxxxx, Xx Xxxxxxxxxxx Ltd., the Xxxxxxx Family Trust of July 1998,
FCC, LLC, and Oak Street Funding LLC, as amended from time to time (the
"Intercreditor Agreement"), in the event that there is a conflict between the
terms of this Security Agreement and the Intercreditor Agreement, then the terms
of the Intercreditor Agreement shall prevail.
SECURITY AGREEMENT
------------------
This Security Agreement (the "Agreement") is entered into as of August 31st,
2004 by and between Addison York Insurance Brokers, Ltd. A Delaware corporation
(the "Company"), and Xx Xxxxxxxxxxx Ltd. (the "Creditor").
WHEREAS, the Company, Xxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx and the Creditor have
executed an Asset Purchase Agreement (the "APA") dated August 31st, 2004;
AND WHEREAS pursuant to the APA the Company has executed and delivered a
promissory note (the Note") drawn in favor of the Creditor in the principal
amount of $1,000,000 and dated August 31st, 2004;
AND WHEREAS, the Company has agreed to execute and deliver to Creditor a
security agreement in substantially the form hereof, in order to secure the
obligations of the Company represented by the Note (the "Obligations"); and
AND WHEREAS, the Company wishes to grant a security interest in favor of
Creditor as herein provided,
NOW, THEREFOR, in consideration of the promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. The term "State", as used herein, means the State of Virginia.
All terms defined in the Uniform Commercial Code of the State and used herein
shall have the same definitions herein as specified therein. However, if a term
is defined in Article 9 of the Uniform Commercial Code of the State differently
than in another Article of the Uniform Commercial Code of the State, the term
has the meaning specified in Article 9. The term "Obligations' as used herein,
means all of the indebtedness, obligations and liabilities of the Company to
Creditor, individually or collectively, whether direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising under or in respect of the Loan or the Note, or any other instruments
executed in connection with this Agreement.
1
2. Grant of Security Interest. The Company hereby grants to Creditor, to secure
the payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Creditor a security interest in
and to the Purchased Assets as defined in the APA and all proceeds and products
thereof (all of the same being hereinafter called the "Collateral").
3. Authorization to File Financing Statements. The Company hereby irrevocably
authorizes Creditor at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any initial financing statements and amendments
thereto (the "Financing Statements") that (a) identify the Collateral, and (b)
contain any other information required by part 5 of Article 9 of the Uniform
Commercial Code of the State for the sufficiency or filing office acceptance of
any financing statement or amendment.
4. Other Actions. The Company further agrees to take any and all action
reasonably requested by Creditor to insure the attachment and perfection of, and
the ability of Creditor to enforce, Creditor's security interest in the
Collateral including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the Uniform Commercial Code, to the extent, if any, that the Company's signature
thereon is required therefor, (b) causing the Creditor's name to be noted as a
secured party on any certificate of title if such notation is a condition to
attachment, perfection or priority of, or ability of Creditor to enforce,
Creditor's security interest in the Collateral, (c) complying with any provision
of any statute, regulation or treaty of the United States as to the Collateral
if compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Creditor to enforce, the Creditor's security interest
in the Collateral, (d) obtaining governmental and other third party consents and
approvals, (e) taking all actions required by any earlier versions of the
Uniform Commercial Code or by other law, as applicable in any relevant Uniform
Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction.
5. Representations and Warranties Concerning Legal Status. The Company
represents and warrants to Creditor that:
(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do business
as a foreign corporation in all jurisdictions where the nature of its business
and/or ownership of its assets makes such qualification necessary.
(b) The Company has the requisite power and authority to own its properties and
assets. All of the Company's properties and assets are located its offices set
forth on Exhibit "A"hereto.
(c) The Company has the power to execute deliver and perform this Agreement and
the other agreements and documents referred to herein to which it is a party and
to grant the security interests granted under or pursuant to the terms of this
Agreement, all of which actions have been duly authorized by all necessary
corporate action.
2
(d) The Company's execution of and performance of all transactions contemplated
by this Agreement do not and will not in any way materially and adversely affect
the rights of the Company, violate or constitute a breach of any provision of
law, any court or agency decree or judgment, rule or regulation applicable to
the Company or the Company's certificate of incorporation or bylaws or be in
conflict with or constitute a breach of any other agreement, contract or
instrument or other binding commitment to which the Company is a party or by
which it is bound.
(e) This Agreement and each of the other documents executed by the Company and
delivered to Creditor hereunder, when executed and delivered will constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
(f) The Company is not in default in the performance of any material obligation,
undertaking or covenant contained in any contract or agreement to which it is a
party or by which it, or any portion of the Collateral, is bound.
(g) There is currently no material action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other agency or any
investigation into the affairs of the Company or any of its properties or
rights.
6. Covenants Concerning Company's Legal Status. The Company covenants with
Creditor that without providing at least 30 days prior written notice to
Creditor, the Company will not change its name, its place of business or, if
more than one, chief executive office, or its mailing address or organizational
identification number, and the Company will not change its type of organization,
jurisdiction of organization or other legal structure.
7. Representations and Warranties Concerning Collateral. The Company further
represents and warrants to Creditor as follows:
(a) The Company is the owner of or has other rights in or power to transfer the
Collateral, free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and the permitted
encumbrances set forth on Exhibit "B" hereto (the "Permitted Encumbrances");
(b) None of the account debtors or other persons obligated on any of the
Collateral is a governmental authority subject to the Federal Assignment of
Claims Act or like federal, state or local statute or rule in respect of such
Collateral;
(c) The Company holds no commercial tort claim; and,
(d) The Company has at all times operated its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control,
3
shipment, storage or disposal of hazardous materials or substances.
8. Covenants Concerning Collateral. Etc. The Company further covenants with
Creditor as follows:
(a) The Collateral will be kept at the locations set forth in Exhibit "A" and
the Company will not remove the Collateral from such location, without providing
at least 30 days prior written notice to Creditor;
(b) Except for the security interest herein granted and the Permitted
Encumbrances, the Company shall be the owner of the Collateral free from any
lien, security interest or other encumbrance, and the Company shall defend the
same against all claims and demands of all persons at any time claiming the same
or any interests therein adverse to Creditor;
(c) The Company will keep the Collateral in good order and repair and will not
use the same in violation of law or any policy of insurance thereon;
(d) The Company will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement.
9. Default. Each of the following constitutes an "Event of Default":
(a) Company fails to pay all or any part of the accrued interest or unpaid
principal on the Note when and as the same becomes due and payable at maturity,
upon prepayment, by acceleration or otherwise;
(b) The Company fails to observe or perform in all material respects any
covenant or agreement on its part contained in this Agreement, the Loan or the
Note if such failure is not remedied within 10 days after written notice is
given to Company by any of Creditor specifying such default, requiring that such
default be remedied and stating that such notice is a "Notice of Default."
(c) Any representation or warranty made in this Agreement, the Loan or the Note
proves to have been false or misleading in any material respect;
(d) Any action is taken establishing or seeking to establish a lien, charge or
other right to any of the assets comprising the Collateral, or seeking to
execute upon, seize or foreclose upon any such assets, and such action is not
fully released, abandoned or dismissed within ten days after such action is
first initiated.
(e) The Company pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case;
4
(iii) consents to the appointment of a Custodian of it for all or
substantially all of the its property; or
(iv) makes a general assignment for the benefit of its creditors; or
(f) A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against Company in an involuntary case;
(ii) appoints a Custodian for Company or for all or substantially all of
its property; or
(iii) orders the liquidation of Company;
and the order or decree remains unstayed and in effect for 60 consecutive days.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
10. Acceleration. If any Event of Default occurs and is continuing, Creditor, by
written notice to Company may declare the principal of and accrued interest on
the Notes to be immediately due and payable; provided that in the case of an
Event of Default described in Section 4.1 (e) or (f), the Note shall become due
and payable without further action or notice.
11. No Duty on Creditor. The powers conferred on Creditor hereunder are solely
to protect its interests in the Collateral and shall not impose any duty upon
Creditor to exercise any such powers. Creditor shall be accountable only for the
amounts that it actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents shall be
responsible to the Company for any act or failure to act, except for Creditor's
own gross negligence or willful misconduct.
12. No Waiver by Creditors. Creditor shall not be deemed to have waived any of
its rights upon or under the Obligations or the Collateral unless such waiver
shall be in writing and signed by Creditor. No delay or omission on the part of
Creditor in exercising any right shall operate as a waiver of such right or any
other right. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right on any future occasion. All rights and remedies of Creditor
with respect to the Obligations or the Collateral, whether evidenced hereby or
by any other instrument or papers, shall be cumulative and may be exercised
singularly, alternatively, successively or concurrently at such time or at such
times as Creditor deems expedient.
13. Governing Law: Consent to Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the laws of the state of Virginia. The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the State or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in any such
suit being made upon the Company by mail at its registered address.
5
14. Intercreditor Agreement. The Creditor acknowledges and agrees that the
indebtedness evidenced by this Security Agreement and any lien or security
interest in connection herewith are subordinate to certain other indebtedness
and security interests in accordance with the Intercreditor Agreement dated as
of August 31st, 2004 and made among Addison York Insurance Brokers Ltd., Xxxxxxx
Xxxxx International Insurance Brokers Ltd., Xxxxxx Xxxxxxxxx, Xx Xxxxxxxxxxx
Ltd., the Xxxxxxx Family Trust of July 1998, FCC, LLC, and Oak Street Funding
LLC, as amended from time to time, in the event that there is a conflict between
the terms of this Security Agreement and the Intercreditor Agreement, then the
terms of the Intercreditor Agreement shall prevail.
15. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of Creditor and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein.
IN WITNESS WHEREOF, the Company and Creditor have duly executed this Security
Agreement as of the 31st day of August, 2004.
XX XXXXXXXXXXX LTD.
Per: /s/ Xxxx Xxxxxxxxxxx
----------------------------
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ P. Podorieszach
----------------------------
6
EXHIBIT "A"
LOCATIONS OF COLLATERAL
1. 000 Xxxxxx Xxxx, Xxxxxxxx Xxxxx, XX, 00000;
2. 0000 Xxxxxxxx Xxxxx, Xxxxxxx, XX, 00000;
3. 0000 Xxxxxxxxxx Xxxx., Xxxxxxxxxx, XX, 00000;
4. 000 X. Xxxxxxxxx Xx., Xxxxxxxx Xxxxx, XX, 00000;
5. 000 Xxxxxxxx Xxxxxx, Xxxxxxx, XX, 00000;
6. 0000-X Xxxxxx Xxxx Xxxxx, Xxxxxxx, XX, 00000;
7. 0000 Xxxxxxx Xxx., Xxxxxxx, XX, 00000;
8. 0000 X. Xxxxxxxxxxx Xxxx., Xxxxxxxxxx, XX, 00000;
9. 000-X Xxxxxxx Xxxx, Xxxxxxx, XX, 00000;
10. Suite 3, 0000 X. Xxxxxxxxxxxx Xxxx., Xxxxxxxx Xxxxx, XX, 00000; and
11. 0000 X. Xxxxxxx Xxxx., Xxxxxxx, XX, 00000.
7
EXHIBIT "B"
PERMITTED ENCUMBRANCES
8
SCHEDULE "V"
LIST OF CLIENTS OF AVL WHO PROVIDE COMMISSION REVENUES TO AVL
IN EXCESS OF $5,000.00 PER ANNUM
NONE
SCHEDULE "W
LIST OF PREMISES
1. 000 Xxxxxx Xxxx, Xxxxxxxx Xxxxx, XX, 00000;
2. 0000 Xxxxxxxx Xxxxx, Xxxxxxx, XX, 00000;
3. 0000 Xxxxxxxxxx Xxxx., Xxxxxxxxxx, XX, 00000;
4. 000 X. Xxxxxxxxx Xx., Xxxxxxxx Xxxxx, XX, 00000;
5. 000 Xxxxxxxx Xxxxxx, Xxxxxxx, XX, 00000;
6. 0000-X Xxxxxx Xxxx Xxxxx, Xxxxxxx, XX, 00000;
7. 0000 Xxxxxxx Xxx., Xxxxxxx, XX, 00000;
8. 0000 X. Xxxxxxxxxxx Xxxx., Xxxxxxxxxx, XX, 00000;
9. 000-X Xxxxxxx Xxxx, Xxxxxxx, XX, 00000;
10. Suite 3, 0000 X. Xxxxxxxxxxxx Xxxx., Xxxxxxxx Xxxxx, XX, 00000; and
11. 0000 X. Xxxxxxx Xxxx., Xxxxxxx, XX, 00000.
SCHEDULE "X
DEBT SUBORDINATION AND INTERCREDITOR AGREEMENT
DEBT SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS DEBT SUBORDINATION AND INTERCREDITOR AGREEMENT, dated as of August
___, 2004 (as amended, supplemented or otherwise modified from time to time,
this "Agreement"), is by and among ADDISON YORK INSURANCE BROKERS LTD., a
Delaware corporation ("Borrower"), XXXXXXX XXXXX INTERNATIONAL INSURANCE BROKERS
LTD., a corporation organized under the laws of the Province of Alberta
("Parent"), XXXXXX XXXXXXXXX, an individual resident of the State of New Jersey
("Lescroart"), XX XXXXXXXXXXX LTD., a Virginia limited liability company
("Seller"; Lescroart and Seller are sometimes referred to herein individually as
a "Junior Creditor" and collectively as the "Junior Creditors"), XXXXXXX FAMILY
TRUST OF JULY 1998 ("Xxxxxxx"), FCC, LLC, d/b/a First Capital, a Florida limited
liability company ("FCC"), and OAK STREET FUNDING LLC, an Indiana limited
liability company ("Oak Street"; FCC and Oak Street are sometimes referred to
herein individually as a "Senior Creditor" and collectively as the "Senior
Creditors").
W I T N E S S E T H:
WHEREAS, Borrower and FCC have entered into that certain Loan and Security
Agreement dated as of June 3, 2004 (as amended, supplemented, modified or
restated from time to time, the "FCC Loan Agreement"), pursuant to which, among
other things, FCC agreed, subject to the terms and conditions set forth in such
agreement, to make certain loans and financial accommodations to Borrower; and
WHEREAS, Borrower and Oak Street have entered into that certain Credit
Agreement dated as of March 19, 2004 (as amended, supplemented, modified or
restated from time to time, the "Oak Street Loan Agreement"), pursuant to which,
among other things, Oak Street agreed, subject to the terms and conditions set
forth in such agreement, to make certain loans and financial accommodations to
Borrower; and
WHEREAS, all of the obligations of Borrower under the FCC Loan Agreement
and the Oak Street Loan Agreement are secured by Liens on all of the Collateral
(as such terms are defined below); and
WHEREAS, FCC and Oak Street have agreed upon their relative rights with
respect to the Collateral pursuant to that certain Intercreditor Agreement dated
as of June 3, 2004 among FCC, Oak Street, Borrower and Parent (the "Senior
Creditor Intercreditor Agreement"); and
WHEREAS, Borrower has executed that certain Promissory Note payable to
Xxxxxxx dated October 1, 2003 in the original principal amount of $3,515,000
(the "Xxxxxxx Note"), which note is secured by a Lien on the Xxxxxxx Collateral
(as defined below); and
WHEREAS, Xxxxxxx subordinated the Xxxxxxx Indebtedness (as defined below)
and Xxxxxxx'x Xxxx on the Xxxxxxx Collateral in favor of Oak Street pursuant to
that certain Subordination Agreement dated March 15, 2004 (the "Oak
Street/Xxxxxxx Agreement"); and
WHEREAS, Xxxxxxx subordinated the Xxxxxxx Indebtedness and its Lien on the
Xxxxxxx Collateral in favor of FCC pursuant to that certain Subordination
Agreement dated as of June 3, 2004 (the "FCC/Xxxxxxx Agreement"); and
WHEREAS, Borrower, Seller, Xxxx Xxxxxxxxxxx and Xxxxx Xxxxxxx have entered
into that certain Agreement dated as of August ___, 2004 (the "Asset Purchase
Agreement"), pursuant to which Borrower will purchase certain assets of Seller;
and
WHEREAS, FCC is providing a portion of the financing for Borrower's
purchase of such assets pursuant to the FCC Loan Agreement; and
WHEREAS, Lescroart and Borrower are parties to that certain Loan and
Security Agreement dated as of August ___, 2004 (the "Lescroart Loan
Agreement"), pursuant to which Lescroart will lend $3,250,000 to Borrower as
additional financing for the Borrower's purchase under the Asset Purchase
Agreement, and such loan will be secured by the Collateral; and
WHEREAS, pursuant to the Asset Purchase Agreement, Seller agreed to defer a
portion of the purchase price due to Seller, and such deferred portion of the
Purchase Price is evidenced by that certain Promissory Note dated as of August
___, 2004 by Borrower in favor of Seller in the principal amount of $1,000,000
(the "Seller Note"), which Seller Note is secured by the Seller Collateral; and
WHEREAS, Parent has guaranteed the repayment of the obligations evidenced
by the FCC Loan Agreement, the Oak Street Loan Agreement and the Lescroart Loan
Agreement; and
WHEREAS, the indebtedness evidenced by the Lescroart Loan Agreement and the
Seller Note is prohibited by the terms and conditions of the FCC Loan Agreement
and the Oak Street Loan Agreement; and
WHEREAS, in order to induce FCC and Oak Street to consent to such
indebtedness and to the transactions contemplated by the Asset Purchase
Agreement, and to induce FCC to finance a portion of the purchase price
thereunder, the Junior Creditors have agreed to subordinate the indebtedness
evidenced by the Lescroart Loan Agreement and the Seller Note to the
indebtedness of Borrower owing to the Senior Creditors and to subordinate the
Liens of the Junior Creditors in the Collateral to the Liens of the Senior
Creditors therein, all as more fully described below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
2
ARTICLE 1
DEFINITIONS
-----------
Section 1.1 For purposes of this Agreement, the following terms shall have
the following meanings:
"Agreement" means this Debt Subordination and Intercreditor Agreement, as
amended, supplemented or otherwise modified from time to time.
"Asset Purchase Agreement" has the meaning provided in the Recitals of this
Agreement.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. ss.
101 et seq.).
"Bankruptcy Event" means, with respect to Borrower and/or Parent, any
voluntary or involuntary dissolution, winding-up, total or partial liquidation
or reorganization, or bankruptcy, insolvency, receivership or other statutory or
common law proceedings or arrangements involving Borrower and/or Parent or the
readjustment of its liabilities or any assignment for the benefit of creditors
or any marshalling of its assets or liabilities.
"Borrower" shall have the meaning ascribed to such term in the introductory
paragraph to this Agreement, and includes all successors in interest of
Borrower, including a trustee or debtor in possession in connection with a
Bankruptcy Event.
"Collateral" means any and all of the assets now owned or hereafter
acquired by Borrower (including the Xxxxxxx Collateral and the Seller
Collateral) or Parent, together with all proceeds, products, accessions and
additions thereto from time to time, including without limitation any insurance
proceeds.
"FCC" has the meaning provided in the introductory paragraph of this
Agreement.
"FCC Indebtedness" means (a) the collective reference to the principal of
and interest on (including, without limitation, interest accruing at the then
applicable rate provided in the FCC Loan Agreement after the maturity of the
loans thereunder and interest accruing at the then applicable rate provided in
the FCC Loan Agreement after the commencement of any Bankruptcy Event, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) the loans and all other obligations and liabilities of Borrower and
Parent to FCC under the FCC Loan Agreement or under any other FCC Loan Document
entered into by Borrower or Parent, whether on account of principal, interest,
guaranty obligations, reimbursement obligations, fees, indemnities (whether
contingent or actual), costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to FCC that are required to be
paid by Borrower or Parent pursuant to the terms of the FCC Loan Agreement, this
Agreement or any other FCC Loan Document), and (b) all renewals, refundings,
restructurings and other refinancings thereof.
"FCC/Xxxxxxx Agreement" has the meaning provided in the Recitals of this
Agreement.
3
"FCC Loan Agreement" has the meaning provided in the Recitals of this
Agreement.
"FCC Loan Document" means the FCC Loan Agreement and any other document,
instrument or other agreement executed and/or delivered in connection therewith.
"Junior Creditor Indebtedness" means, collectively, the Lescroart
Indebtedness and the Seller Indebtedness.
"Junior Creditor Loan Documents" means, collectively, the Lescroart Loan
Documents and the Seller Loan Documents.
"Junior Creditors" has the meaning provided in the introductory paragraph
of this Agreement.
"Xxxxxxx" has the meaning provided in the introductory paragraph of this
Agreement.
"Xxxxxxx Collateral" means all assets of Borrower acquired pursuant to that
certain Agreement dated October 1, 2003 among Borrower, Xxxxxxx, DKWS
Enterprises, Inc., Xxxx X. Xxxxxxx and Xxxxxxx Xxxxxxx, including any insurance
policies, and all renewals and "expirations" with respect to such insurance
policies, and all commissions paid or payable thereunder, and all products and
proceeds thereof.
"Xxxxxxx Indebtedness" means all amounts owing by Borrower and Parent to
Xxxxxxx at any time, whether principal, interest, fees, costs, expenses,
guaranty obligations, indemnity obligations or otherwise, and whether pursuant
to the Xxxxxxx Loan Documents or otherwise, the aggregate outstanding principal
amount of which is $3,321,292.00 as of the date hereof.
"Xxxxxxx Loan Document" means the Xxxxxxx Note and any other document,
instrument or other agreement executed and/or delivered in connection therewith.
"Xxxxxxx Note" has the meaning provided in the Recitals of this Agreement.
"Lescroart" has the meaning provided in the introductory paragraph of this
Agreement.
"Lescroart Indebtedness" means all amounts owing by Borrower and Parent to
Lescroart at any time, whether principal, interest, fees, costs, expenses,
guaranty obligations, indemnity obligations or otherwise, and whether pursuant
to the Lescroart Loan Documents or otherwise, the aggregate outstanding
principal amount of which is $3,250,000 as of the date hereof.
"Lescroart Loan Agreement" has the meaning provided in the Recitals of this
Agreement.
"Lescroart Loan Document" means the Lescroart Loan Agreement and any other
document, instrument or other agreement executed and/or delivered in connection
therewith.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, a person or entity other than the owner of such property, whether such
interest is based on the
4
common law, statute or contract, and including a security interest, charge,
claim or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes.
"Oak Street" has the meaning provided in the introductory paragraph of this
Agreement.
"Oak Street Indebtedness" means (a) the collective reference to the
principal of and interest on (including, without limitation, interest accruing
at the then applicable rate provided in the Oak Street Loan Agreement after the
maturity of the loans thereunder and interest accruing at the then applicable
rate provided in the Oak Street Loan Agreement after the commencement of any
Bankruptcy Event, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the loans and all other obligations and
liabilities of Borrower and Parent to Oak Street under the Oak Street Loan
Agreement or under any other Oak Street Loan Document entered into by Borrower
or Parent, whether on account of principal, interest, reimbursement obligations,
guaranty obligations, fees, indemnities (whether contingent or actual), costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to Oak Street that are required to be paid by Borrower or Parent
pursuant to the terms of the Oak Street Loan Agreement, this Agreement or any
other Oak Street Loan Document), and (b) all renewals, refundings,
restructurings and other refinancings thereof.
"Oak Street/Xxxxxxx Agreement" has the meaning provided in the Recitals of
this Agreement.
"Oak Street Loan Agreement" has the meaning provided in the Recitals of
this Agreement.
"Oak Street Loan Document" means the Oak Street Loan Agreement and any
other document, instrument or other agreement executed and/or delivered in
connection therewith.
"Parent" shall have the meaning ascribed to such term in the introductory
paragraph to this Agreement, and includes all successors in interest of Parent,
including a trustee or debtor in possession in connection with a Bankruptcy
Event.
"Permitted Payment" has the meaning forth in Section 2.1(c) below.
"Remaining Collateral" means all Collateral other than the Seller
Collateral and the Xxxxxxx Collateral.
"Seller" has the meaning provided in the introductory paragraph of this
Agreement.
"Seller Collateral" means all assets of Borrower acquired pursuant to the
Asset Purchase Agreement, including any insurance policies, and all renewals and
"expirations" with respect to such insurance policies, and all commissions paid
or payable thereunder, and all products and proceeds thereof.
5
"Seller Indebtedness" means all amounts owing by Borrower or Parent to
Seller at any time, whether principal, interest, fees, costs, expenses, guaranty
obligations, indemnity obligations or otherwise, and whether pursuant to the
Seller Loan Documents or otherwise, the aggregate outstanding principal amount
of which is $1,000,000 as of the date hereof.
"Seller Loan Document" means the Seller Note and any other document,
instrument or other agreement executed and/or delivered in connection therewith.
"Seller Note" has the meaning provided in the Recitals of this Agreement.
"Senior Creditor Indebtedness" means, collectively, the FCC Indebtedness
and the Oak Street Indebtedness.
"Senior Creditor Loan Documents" means, collectively, the FCC Loan
Documents and the Oak Street Loan Documents.
"Senior Creditor Repayment" means the circumstance in which (a) subject to
Section 2.7(e), all of the Senior Creditor Indebtedness has been indefeasibly
paid in full in cash, and (b) the commitment of FCC to make loans under the FCC
Loan Agreement has been terminated, and (c) the commitment of Oak Street to make
loans under the Oak Street Loan Agreement has been terminated.
"Senior Creditors" has the meaning provided in the introductory paragraph
of this Agreement.
ARTICLE 2
GENERAL INTERCREDITOR AND LIEN SUBORDINATION PROVISIONS
-------------------------------------------------------
Section 2.1 Agreement to Subordinate Debt.
(a) Borrower and Parent may pay, and Junior Creditors may retain,
Permitted Payments (as defined below) with respect to the Junior Creditor
Indebtedness. Neither Junior Creditor will ask for, demand, xxx for, take or
receive from Borrower or Parent, by setoff or in any other manner, and neither
Borrower nor Parent will pay, the whole or any part of any Junior Creditor
Indebtedness which does not constitute a Permitted Payment, unless and until the
Senior Creditor Repayment shall have occurred.
(b) In the event that any Junior Creditor shall receive any payment or
distribution with respect to any Junior Creditor Indebtedness which does not
constitute a Permitted Payment, then in such event, such payment or distribution
shall be deemed to have been paid to such Junior Creditor in trust for the
benefit of the Senior Creditors, shall not be commingled with any assets of such
Junior Creditor and shall be immediately paid over to FCC in the form received
by such Junior Creditor (with proper endorsements or assignments, if necessary)
to the extent necessary to pay the Senior Creditor Indebtedness in full after
giving effect to any concurrent payment to Senior Creditors from other sources.
FCC shall promptly
6
remit a pro rata portion of any such payment received by FCC to Oak Street,
based on the outstanding principal amount of FCC Indebtedness and Oak Street
Indebtedness at the time of FCC's receipt of any such payment. To the extent
that there are any amounts paid over to FCC in excess of the Senior Creditor
Indebtedness then outstanding, such excess amounts shall be remitted to
Lescroart to the extent necessary to pay in full the Lescroart Indebtedness then
outstanding, and any excess shall be remitted to Seller; provided, that, to the
extent of the amount of such remittance received by it, each Junior Creditor
shall indemnify and hold harmless each Senior Creditor from any and all claims,
liabilities, damages, and expenses suffered by such Senor Creditor in connection
with the making of any such remittance to any Junior Creditor.
(c) As used herein, the term "Permitted Payment" shall mean a
regularly scheduled payment of principal and/or interest with respect to the
applicable Junior Creditor Indebtedness on the dates and at the interest rate
set forth in the applicable Junior Creditor Loan Documents as in effect on the
date hereof (including the contingent payments of $250,000 and $1,000,000
contemplated by Section 2(e) of the Lescroart Loan Agreement) to the extent that
(i) after giving effect to such payment, no Default under and as defined in the
FCC Loan Agreement exists, (ii) after giving effect to such payment, no Default
under and as defined in the Oak Street Loan Agreement exists, (iii) at least
five business days prior to the date of such proposed payment, Borrower shall
have provided to FCC a Borrowing Base Certificate (as defined in the FCC Loan
Agreement) and a compliance certificate setting forth calculations demonstrating
Borrower's pro forma compliance with the financial covenants under the FCC Loan
Agreement after giving effect to such payment and assuming that such payment was
made on the last day of the calendar month most recently ended, in each case
together with such supporting documentation as FCC may reasonably request, and
(iv) at least five business days prior to the date of such proposed payment,
Borrower shall have provided to Oak Street a Borrowing Base Certificate (as
defined in the Oak Street Loan Agreement) and a compliance certificate setting
forth calculations demonstrating Borrower's pro forma compliance with the
financial covenants under the Oak Street Loan Agreement after giving effect to
such payment and assuming that such payment was made on the last day of the
calendar month most recently ended, in each case together with such supporting
documentation as Oak Street may reasonably request. In addition to the foregoing
requirements, any proposed payment with respect to the Seller Indebtedness shall
not constitute a Permitted Payment unless (y) after giving effect to such
payment, no Event of Default under and as defined in the Lescroart Loan
Agreement exists, and (z) at least five business days prior to the date of such
proposed payment, Borrower shall have provided to Lescroart a compliance
certificate certifying that no Event of Default exists under the Lescroart Loan
Documents, together with such supporting documentation as Lescroart may
reasonably request.
Section 2.2 Agreement to Subordinate Liens. Borrower, Parent, each Junior
Creditor, Xxxxxxx and each Senior Creditor, in each case for itself and its
successors and assigns, acknowledges, covenants and agrees that, to the extent
and in the manner set forth in this Section 2.2:
7
(a) With respect to the Seller Collateral, (i) all Liens now or
hereafter acquired by FCC in any or all of the Seller Collateral shall at all
times be prior and superior to any Lien now held or hereafter acquired by Oak
Street or any Junior Creditor in the Seller Collateral, (ii) all Liens now or
hereafter acquired by Oak Street in any or all of the Seller Collateral shall at
all times be prior and superior to any Lien now held or hereafter acquired by
any Junior Creditor in the Seller Collateral, (iii) all Liens now or hereafter
acquired by Lescroart in any or all of the Seller Collateral shall at all times
be prior and superior to any Lien now held or hereafter acquired by Seller in
the Seller Collateral, and (iv) Xxxxxxx does not have any Lien on any of the
Seller Collateral. Said priority shall be applicable irrespective of the time or
order of attachment or perfection of any Lien or the time or order of filing of
any financing statements or other documents, or any statutes, rules or law, or
court decisions to the contrary. The foregoing Lien subordination provisions are
for the benefit of, and shall be enforceable directly by (w) FCC against Oak
Street, Xxxxxxx and each Junior Creditor, (x) Oak Street against Xxxxxxx and
each Junior Creditor, (y) Lescroart against Seller and Xxxxxxx, and (z) Seller
against Xxxxxxx. Senior Creditors, Lescroart and Seller shall be deemed to have
acquired the FCC Indebtedness, the Oak Street Indebtedness, the Lescroart
Indebtedness and the Seller Indedebtedness, as applicable, in reliance upon this
paragraph.
(b) With respect to the Xxxxxxx Collateral, (i) all Liens now or
hereafter acquired by Oak Street in any or all of the Xxxxxxx Collateral shall
at all times be prior and superior to any Lien now held or hereafter acquired by
FCC, Xxxxxxx or Xxxxxxxxx in the Xxxxxxx Collateral, (ii) all Liens now or
hereafter acquired by FCC in any or all of the Xxxxxxx Collateral shall at all
times be prior and superior to any Lien now held or hereafter acquired by
Xxxxxxx or Lescroart in the Xxxxxxx Collateral, (iii) all Liens now or hereafter
acquired by Xxxxxxx in any or all of the Xxxxxxx Collateral shall at all times
be prior and superior to any Lien now held or hereafter acquired by Lescroart in
the Xxxxxxx Collateral, and (iv) Seller does not have any Lien on any of the
Xxxxxxx Collateral. Said priority shall be applicable irrespective of the time
or order of attachment or perfection of any Lien or the time or order of filing
of any financing statements or other documents, or any statutes, rules or law,
or court decisions to the contrary. The foregoing Lien subordination provisions
are for the benefit of, and shall be enforceable directly by (w) Oak Street
against FCC, Xxxxxxx and each Junior Creditor, (x) FCC against Xxxxxxx and each
Junior Creditor, (y) Xxxxxxx against each Junior Creditor, and (z) Lescroart
against Seller. Senior Creditors, Lescroart and Xxxxxxx shall be deemed to have
acquired the FCC Indebtedness, the Oak Street Indebtedness, the Lescroart
Indebtedness and the Xxxxxxx Indedebtedness, as applicable, in reliance upon
this paragraph.
(c) With respect to the Remaining Collateral, (i) the relative
priority of all Liens now or hereafter acquired by Oak Street or FCC in any or
all of the Remaining Collateral shall be determined in accordance with the terms
and conditions of the Senior Creditor Intercreditor Agreement, (ii) all Liens
now or hereafter acquired by FCC or Oak Street in any or all of the Remaining
Collateral shall at all times be prior and superior to any Lien now held or
hereafter acquired by Lescroart in the Remaining Collateral, and (iii) neither
Seller nor Xxxxxxx has any Lien on any of the Remaining Collateral. Said
priority shall be applicable irrespective of the time or order of attachment or
perfection of any Lien or the time or order of filing of any financing
statements or other documents, or any statutes, rules or law, or court decisions
to the
8
contrary. The foregoing Lien subordination provisions are for the benefit of,
and shall be enforceable directly by (y) Oak Street and FCC against Lescroart,
Xxxxxxx and Seller, and (z) Lescroart against Xxxxxxx and Seller. Senior
Creditors and Lescroart shall be deemed to have acquired the FCC Indebtedness,
the Oak Street Indebtedness and the Lescroart Indebtedness, as applicable, in
reliance upon this paragraph.
Section 2.3 Other Intercreditor Agreements. FCC and Oak Street hereby
acknowledge and agree that the Senior Creditor Intercreditor Agreement remains
in full force and effect, both before and after giving effect to the
transactions contemplated hereby. Oak Street acknowledges and agrees that the
Seller Collateral constitutes "FCC Priority Collateral" under and as defined in
the Senior Creditor Intercreditor Agreement. Xxxxxxx hereby acknowledges and
agrees that the FCC/Xxxxxxx Agreement and the Oak Street/Xxxxxxx Agreement
remain in full force and effect, both before and after giving effect to the
transactions contemplated hereby.
Section 2.4 Limitation on Liens.
(a) Seller acknowledges and agrees that (i) Seller's Liens apply only
to the Seller Collateral, (ii) any Lien in favor of Seller in any Collateral
other than the Seller Collateral is hereby released, and (iii) each Senior
Creditor and Lescroart are authorized by Seller to file and record such UCC
financing statements and similar documents as may be necessary or appropriate in
order to evidence the termination of any such Liens. Neither Borrower nor Parent
shall grant to Seller, and Seller shall not take or receive, any Lien in any
Collateral other than the Seller Collateral.
(b) Xxxxxxx acknowledges and agrees that (i) Xxxxxxx'x Liens apply
only to the Xxxxxxx Collateral, (ii) any Lien in favor of Xxxxxxx in any
Collateral other than the Xxxxxxx Collateral is hereby released, and (iii) each
Senior Creditor and Lescroart is authorized by Xxxxxxx to file and record such
UCC financing statements and similar documents as may be necessary or
appropriate in order to evidence the termination of any such Liens. Neither
Borrower nor Parent shall grant to Xxxxxxx, and Xxxxxxx shall not take or
receive, any Lien in any Collateral other than the Xxxxxxx Collateral.
Section 2.5 Disposition of Collateral. Xxxxxxx, Lescroart and Seller each
hereby agree that, until the Senior Creditor Repayment, any Senior Creditor may
dispose of, and exercise any other rights with respect to, any or all of the
Collateral, free of the Liens of Xxxxxxx, Xxxxxxxxx and Seller, provided that
each of Xxxxxxx, Lescroart and Seller shall retain any rights it may have as a
junior secured creditor with respect to the Xxxxxxx Indebtedness, the Lescroart
Indebtedness and the Seller Indebtedness, as applicable, with respect to the
surplus, if any, arising from any such disposition or enforcement. Upon any
disposition of any of the Collateral by any Senior Creditor, each of Xxxxxxx,
Xxxxxxxxx and Seller each (a) agrees, if requested, to execute and immediately
deliver any and all releases or other documents or agreements which such Senior
Creditor deems necessary to accomplish a disposition thereof free of the Liens
of Xxxxxxx, Lescroart and Seller, and (b) authorizes such Senior Creditor to
record, or cause to have recorded, any UCC financing statements and similar
documents which such Senior Creditor deems necessary to accomplish a disposition
thereof free of the Liens of
9
Xxxxxxx, Xxxxxxxxx and Seller. Xxxxxxx, Lescroart and Seller each agree that any
funds of Borrower or Parent which it obtains through the exercise of any right
of setoff or other similar right constitute Collateral, and Xxxxxxx, Xxxxxxxxx
and Seller shall each immediately pay such funds to FCC, and such funds shall be
pro-rated between FCC and Oak Street in the manner set forth in Section 2.1(b).
Section 2.6 Limitations on Rights and Remedies.
(a) Until the Senior Creditor Repayment, neither Xxxxxxx nor Seller
shall be entitled to exercise any rights or remedies with respect to any of the
Collateral, including without limitation the right to (i) enforce any Liens or
sell or otherwise foreclose on any portion of the Collateral, or (ii) request
any action, institute proceedings, give any instructions, make any election,
notice account debtors or make collections with respect to any portion of the
Collateral, or (iii) amend or modify (or permit the amendment or modification
of) the terms of any Xxxxxxx Loan Document or any Seller Loan Document in any
manner adverse to the interests of any Senior Creditor (including, without
limitation, any amendment which has the effect of shortening the maturity of the
Xxxxxxx Indebtedness or the Seller Indebtedness or increasing the interest rate
with respect thereto).
(b) Until the Senior Creditor Repayment, Lescroart shall not be
entitled to exercise any rights or remedies with respect to any of the
Collateral, including without limitation the right to (i) enforce any Liens or
sell or otherwise foreclose on any portion of the Collateral, or (ii) request
any action, institute proceedings against Borrower, Parent or any other person
or entity, give any instructions, make any election, notice account debtors or
make collections with respect to any portion of the Collateral, or (iii) amend
or modify (or permit the amendment or modification of) the terms of any
Lescroart Loan Document or any Seller Loan Document in any manner adverse to the
interests of any Senior Creditor (including, without limitation, any amendment
which has the effect of shortening the maturity of the Xxxxxxx Indebtedness or
the Seller Indebtedness or increasing the interest rate with respect thereto);
provided, however, that Lescroart shall be entitled to take one or more of the
actions described in clauses (i) and/or (ii) above from or after the date that
is one year following the date on which Lescroart notifies each Senior Creditor
and Xxxxxxx in writing that an event of default exists under the Lescroart Loan
Documents and that Lescroart intents to exercise its rights and remedies with
respect to Borrower, Parent and/or the Collateral.
(c) Until the Lescroart Indebtedness has been paid in full, Seller
shall not be entitled to exercise any rights or remedies with respect to any of
the Collateral, including without limitation the right to (i) enforce any Liens
or sell or otherwise foreclose on any portion of the Collateral, or (ii) request
any action, institute proceedings, give any instructions, make any election,
notice account debtors or make collections with respect to any portion of the
Collateral, or (iii) amend or modify (or permit the amendment or modification
of) the terms of the Seller Loan Documents in any manner adverse to the
interests of Lescroart (including, without limitation, any amendment which has
the effect of shortening the maturity of the Seller Indebtedness or increasing
the interest rate with respect thereto).
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(d) Until the date 91 days after the Senior Creditor Repayment,
neither Xxxxxxx nor any Junior Creditor shall take any action, directly or
indirectly, to initiate an involuntary bankruptcy or receivership proceeding or
receivership in respect of Borrower or Parent.
(e) Until the date 91 days after the date on which the Lescroart
Indebtedness is repaid in full, Seller shall not take any action, directly or
indirectly, to initiate an involuntary bankruptcy or receivership proceeding or
receivership in respect of Borrower or Parent.
Section 2.7 Intercreditor Arrangements in Bankruptcy.
(a) This Agreement shall remain in full force and effect and
enforceable pursuant to its terms in accordance with Section 510(a) of the
Bankruptcy Code, and all references herein to Borrower or Parent shall be deemed
to apply to such entity as debtor in possession and to any trustee in bankruptcy
for the estate of such entity.
(b) Except as otherwise specifically permitted in this Section 2.7,
until the Senior Creditor Repayment, neither Xxxxxxx nor any Junior Creditor
shall assert without the written consent of each Senior Creditor any claim,
motion, objection, or argument in respect of any Collateral in connection with
any Bankruptcy Event which could otherwise be asserted or raised in connection
with such Bankruptcy Event by Xxxxxxx or such Junior Creditor as a secured
creditor of Borrower or Parent, including without limitation any claim, motion,
objection or argument seeking adequate protection or relief from the automatic
stay in respect of any Collateral.
(c) Without limiting the generality of the foregoing, Xxxxxxx and each
Junior Creditor agree that if a Bankruptcy Event occurs, (i) any Senior Creditor
may consent to the use of cash collateral on such terms and conditions and in
such amounts as such Senior Creditor, in its sole discretion, may decide without
seeking or obtaining the consent of Xxxxxxx or any Junior Creditor as a holder
of an interest in the Collateral; (ii) any Senior Creditor may (A) provide
financing to Borrower and/or Parent or (B) consent to the granting of a priming
Lien to secure postpetition financing, in each case pursuant to Section 364 of
the Bankruptcy Code or other applicable law and on such terms and conditions and
in such amounts as such Senior Creditor, in its sole discretion, may decide
without seeking or obtaining the consent of Xxxxxxx or any Junior Creditor as
holder of an interest in the Collateral; (iii) neither Xxxxxxx nor any Junior
Creditor shall oppose Borrower's or Parent's use of cash collateral on the basis
that Xxxxxxx'x or any Junior Creditor's interest in the Collateral is impaired
by such use or inadequately protected by such use to the extent such use has
been approved by any Senior Creditor; and (iv) neither Xxxxxxx nor any Junior
Creditor shall oppose any sale or other disposition of any assets comprising
part of the Collateral free and clear of Liens or other claims of any party,
including Xxxxxxx and each Junior Creditor, under Section 363 of the Bankruptcy
Code on the basis that Xxxxxxx'x or any Junior Creditor's interest in such
Collateral is impaired by such sale or inadequately protected as a result of
such sale if any Senior Creditor has consented to such sale or disposition of
such assets.
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(d) Xxxxxxx and each Junior Creditor agree that neither Xxxxxxx nor
any Junior Creditor will initiate, prosecute, encourage, or assist with any
other person to initiate or prosecute any claim, action or other proceeding (i)
challenging the validity or enforceability of this Agreement, (ii) challenging
the validity or enforceability of any Senior Creditor's claim, (iii) challenging
the perfection or enforceability of any of either Senior Creditor's Liens, or
(iv) asserting any claims which Borrower or Parent may hold with respect to any
Senior Creditor or any Senior Creditor Indebtedness, if any.
(e) To the extent that any Senior Creditor receives payments or
transfers on the Senior Creditor Indebtedness or proceeds of the Collateral
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then, to the extent of such payment or proceeds received, the Senior Creditor
Indebtedness, or part thereof, intended to be satisfied shall be revived and
continue in full force and effect as if such payments or proceeds had not been
received by such Senior Creditor.
(f) Notwithstanding any other provision of this Section 2.7, (i)
Xxxxxxx and each Junior Creditor shall be entitled to file their initial claims
as secured claims and file any necessary responsive or defensive pleadings in
opposition to any motion, claim, adversary proceeding or other pleading made by
any person objecting to or otherwise seeking the disallowance of the claims of
Xxxxxxx or such Junior Creditor, including without limitation any claims secured
by any Collateral, and (ii) Xxxxxxx and each Junior Creditor shall be entitled
to file any pleadings, objections, motions or agreements which assert rights or
interests available to unsecured creditors of Borrower or Parent arising under
either the Bankruptcy Code or applicable non-bankruptcy law.
Section 2.8 Relative Rights.
(a) Nothing contained in this Agreement is intended to or shall affect
the relative rights of any Senior Creditor, Xxxxxxx or any Junior Creditor, on
the one hand, and other creditors of Borrower or Parent not party to this
Agreement, on the other hand. This Agreement and the subordination provisions
contained herein are intended only for the benefit of Senior Creditors, Xxxxxxx
and Lescroart, but no other creditor of Borrower or Parent.
(b) All rights and interests of Senior Creditors, Xxxxxxx and
Xxxxxxxxx hereunder, and all agreements and obligations of Borrower, Parent,
Senior Creditors, Xxxxxxx and Junior Creditors hereunder, shall remain in full
force and effect irrespective of:
(i) any lack of validity or enforceability of any Senior Creditor
Loan Document, any Junior Creditor Loan Document, any Xxxxxxx Loan Document or
any other agreement or instrument relating to any of the foregoing;
(ii) any change in the time, manner or place of, or in any other
term of, all or any of the Senior Creditor Indebtedness, the Junior Creditor
Indebtedness or the Xxxxxxx Indebtedness, or any amendment or waiver of or any
consent to departure from any provision of
12
any of the Senior Creditor Loan Documents, any of the Junior Creditor Loan
Documents or any of the Xxxxxxx Loan Documents;
(iii) any exchange, release, nonperfection, or unenforceability
of any Lien on any Collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the Senior Creditor
Indebtedness, the Junior Creditor Indebtedness or the Xxxxxxx Indebtedness; or
(iv) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Borrower or Parent in respect of any
Senior Creditor Indebtedness, any Xxxxxxx Indebtedness or any Junior Creditor
Indebtedness, in respect of this Agreement.
Section 2.9 Waivers.
(a) Other than the rights and duties of the Senior Creditors under the
Senior Creditor Intercreditor Agreement, the FCC/Xxxxxxx Agreement and the Oak
Street/Xxxxxxx Agreement, and except as set forth in this Agreement, neither any
Senior Creditor, Xxxxxxx nor any Junior Creditor shall have any liability or
duty of any kind, nature or origin to any other Senior Creditor, Xxxxxxx or any
Junior Creditor, express or implied.
(b) Each Junior Creditor and Xxxxxxx hereby waive and release any
claim which such Junior Creditor or Xxxxxxx may now or hereafter have against
any Senior Creditor arising out of any and all actions which any Senior
Creditor, in good faith, takes or omits to take with respect to Borrower,
Parent, any Collateral or any Senior Creditor Loan Document, including without
limitation, (i) actions with respect to the creation, perfection or continuation
of Liens on the Collateral and other security for any Senior Creditor
Indebtedness, (ii) actions with respect to the occurrence of any event of
default by Borrower or Parent under this Agreement or any Senior Creditor Loan
Document, (iii) action with respect to the foreclosure upon, sale, release, or
depreciation of, or failure to realize upon, any of the Collateral, (iv) actions
with respect to the collection of any claim for all or any part of any Senior
Creditor Indebtedness from any account debtor, guarantor or any other party, (v)
any other action with respect to the enforcement of any Senior Creditor Loan
Document or the valuation, use, protection or disposition of the Collateral or
any other security for any Senior Creditor Indebtedness and (vi) the election of
any Senior Creditor, in any proceeding instituted under Chapter 11 of the
Bankruptcy Code, for application of Section 1111(b) of the Bankruptcy Code.
(c) Seller hereby waives and releases any claim which Seller may now
or hereafter have against Lescroart arising out of any and all actions which
Lescroart, in good faith, takes or omits to take with respect to Borrower,
Parent, any Collateral or any Lescroart Loan Document, including without
limitation, (i) actions with respect to the creation, perfection or continuation
of Liens on the Collateral, (ii) actions with respect to the occurrence of any
event of default by Borrower or Parent under this Agreement or the Lescroart
Loan Documents, (iii) action with respect to the foreclosure upon, sale,
release, or depreciation of, or failure to realize upon, any of the Collateral,
(iv) actions with respect to the collection of any claim for all or any
13
part of the Lescroart Indebtedness from any account debtor, guarantor or any
other party, (v) any other action with respect to the enforcement of the
Lescroart Loan Documents or the valuation, use, protection or disposition of the
Collateral and (vi) the election of Lescroart, in any proceeding instituted
under Chapter 11 of the Bankruptcy Code, for application of Section 1111(b) of
the Bankruptcy Code.
(d) Lescroart hereby waives and releases any claim which Lescroart may
now or hereafter have against Xxxxxxx arising out of any and all actions which
Xxxxxxx, in good faith, takes or omits to take with respect to Borrower, Parent,
any Collateral or any Xxxxxxx Loan Document, including without limitation, (i)
actions with respect to the creation, perfection or continuation of Liens on the
Collateral, (ii) actions with respect to the occurrence of any event of default
by Borrower or Parent under this Agreement or the Xxxxxxx Loan Documents, (iii)
action with respect to the foreclosure upon, sale, release, or depreciation of,
or failure to realize upon, any of the Collateral, (iv) actions with respect to
the collection of any claim for all or any part of the Xxxxxxx Indebtedness from
any account debtor, guarantor or any other party, (v) any other action with
respect to the enforcement of the Xxxxxxx Loan Documents or the valuation, use,
protection or disposition of the Collateral and (vi) the election of Xxxxxxx, in
any proceeding instituted under Chapter 11 of the Bankruptcy Code, for
application of Section 1111(b) of the Bankruptcy Code.
Section 2.10 Remedies.
(a) Rights Cumulative. The rights and remedies of each Senior
Creditor, Xxxxxxx and Lescroart under this Agreement and the Senior Creditor
Loan Documents, the Xxxxxxx Loan Documents or the Lescroart Loan Documents, as
applicable, shall be cumulative and not exclusive of any rights or remedies
which such Senior Creditor, Xxxxxxx or Xxxxxxxxx would otherwise have. In
exercising such rights and remedies, each Senior Creditor, Xxxxxxx and Lescroart
may be selective, and no failure or delay by any Senior Creditor, Xxxxxxx or
Xxxxxxxxx in exercising any right shall operate as a waiver of such right, nor
shall any partial or single exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right.
(b) Waiver of Marshalling. Borrower, Parent, Xxxxxxx and each Junior
Creditor hereby waive any right to require marshalling of assets by any Senior
Creditor or Lescroart and any similar rights.
Section 2.11 Lescroart to Subordinate.
(a) Lescroart acknowledges and agrees that Borrower is engaged in
negotiations to purchase certain assets of Xxxxxxx-Xxxxxxxxx Insurance Services,
Inc. ("Xxxxxxx"). Borrower intends to issue a note in favor of Xxxxxxx as part
of the consideration for such assets, and such note will be secured by the
assets purchased from Xxxxxxx and the proceeds thereof. Lescroart hereby agrees
that Lescroart shall subordinate his Liens in such assets to the Lien of Xxxxxxx
therein on such terms and conditions as Xxxxxxx, Borrower or any Senior Creditor
may reasonably request.
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(b) To the extent that Lescroart's consent is required in connection
with any future indebtedness to be incurred by Borrower for any other
acquisition, Lescroart acknowledges and agrees that such consent will not be
unreasonably withheld or delayed. Additionally, Lescroart agrees that he will
not unreasonably refuse or delay any request by Borrower or any Senior Creditor
that Lescroart subordinate his Lien in any assets to be acquired in any future
acquisition and the proceeds thereof to the Lien of the seller of such assets.
Lescroart acknowledges that, pursuant to this Agreement, the Lien of the Senior
Creditors in any assets acquired in a future acquisition and any proceeds
thereof shall be senior to the Lien of Lescroart.
ARTICLE 3
MISCELLANEOUS
-------------
Section 3.1 Successors; Continuing Effect. This Agreement is being entered
into for the benefit of, and shall be binding upon, (a) each Senior Creditor and
its respective successors and assigns, including subsequent holders of any
Senior Creditor Indebtedness, and the term "Senior Creditor" shall include any
such subsequent or additional holder of any Senior Creditor Indebtedness,
wherever the context permits, (b) each Junior Creditor and its respective
successors and assigns, including subsequent holders of any Junior Creditor
Indebtedness, and the term "Junior Creditor" shall include any such subsequent
or additional holder of any Junior Creditor Indebtedness, and (c) Xxxxxxx and
its successors and assigns, including subsequent holders of any Xxxxxxx
Indebtedness, and the term "Xxxxxxx" shall include any such subsequent or
additional holder of any Xxxxxxx Indebtedness.
Section 3.2 Further Assurances. Each party hereto will, at the expense of
Borrower, and at any time and from time to time, promptly execute and/or
authorize and deliver all further instruments and documents, and take all
further action, that any other party hereto may reasonably request in order to
perfect or otherwise protect any right or interest granted or purported to be
granted hereby or to enable any Senior Creditor, Xxxxxxx or any Junior Creditor
to exercise and enforce its rights and remedies hereunder, including, without
limitation, appropriate amendments to financing statements and similar public
filings authorized by Borrower or Parent in favor of any Junior Creditor or
Xxxxxxx in order to refer to this Agreement (but this Agreement shall remain
fully effective notwithstanding any failure to execute any additional documents
or instruments). Without limiting the generality of the foregoing, in connection
with any refinancing or replacement of all or any portion of the any Senior
Creditor Indebtedness, each party hereto agrees, if requested by any Senior
Creditor, to execute an intercreditor and lien subordination agreement
substantively similar to this Agreement in favor of any replacement lender.
Section 3.3 Expenses. Borrower shall pay to each Senior Creditor, Xxxxxxx
and Xxxxxxxxx, upon demand, the amount of any and all reasonable expenses,
including, without limitation, the reasonable fees and expenses of counsel for
each Senior Creditor, Xxxxxxx and Lescroart, which such Senior Creditor, Xxxxxxx
or Xxxxxxxxx may incur in connection with the exercise or enforcement of any of
its rights or interests with respect to Borrower, Parent or any
15
other party hereto, and all such amounts shall constitute part of the FCC
Indebtedness, the Oak Street Indebtedness, the Xxxxxxx Indebtedness or the
Lescroart Indebtedness, as applicable.
Section 3.4 Notices; Amendments, Etc.
(a) All notices, requests and demands to or upon the parties to this
Agreement to be effective shall be in writing (including by facsimile or
telecopy transmission) and shall be deemed to have been duly given or made (i)
when delivered by hand or (ii) three business days after being deposited in the
mail, postage prepaid or (iii) one business day after being sent by priority
overnight delivery with an internationally recognized overnight delivery carrier
or (iv) if by telecopy or facsimile, when confirmed in writing by the sender's
telecopy or facsimile device, at the addresses or transmission numbers for
notices set forth under the signatures below. The parties to this Agreement may
change their addresses and transmission numbers for notices by providing written
notice of such new address to the other parties hereto.
(b) This Agreement may be amended and the terms hereof may be waived
only with the written consent of each of the parties hereto, or their authorized
successors and assigns.
Section 3.5 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 3.6 GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT HAS BEEN
DELIVERED AND ACCEPTED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN INDIANAPOLIS,
INDIANA AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF
INDIANA WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES. IN ORDER TO INDUCE SENIOR
CREDITORS TO CONSENT TO THE JUNIOR CREDITOR INDEBTEDNESS AND THE XXXXXXX
INDEBTEDNESS, EACH JUNIOR CREDITOR AND XXXXXXX CONSENTS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF INDIANA AND WAIVES
TRIAL BY JURY AND WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED HEREUNDER, AND FURTHER AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK
OF JURISDICTION OR VENUE.
Section 3.7 Entire Agreement. Except as expressly set forth in the Senior
Creditor Intercreditor Agreement, the FCC/Xxxxxxx Agreement and the Oak
Street/Xxxxxxx Agreement, this Agreement embodies the entire agreement and
understanding of the parties hereto regarding the subject matter hereof.
16
Section 3.8 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
[Signatures appear on following pages]
17
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers on the date
and year first above written.
BORROWER:
ADDISON YORK INSURANCE BROKERS LTD.
By: /s/ P. Podorieszach
--------------------------------------
Name: P. Podorieszach
------------------------------------
Title: CEO
-----------------------------------
Address for notices to Borrower:
Addison York Insurance Brokers Ltd.
0000 Xxxxxxxxx Xxxx X.X., Xxxxx 000
Xxxxxxx, Xxxxxxx, X0X 0X0
Attention: Primo Podorieszach
Facsimile No.: 000-000-0000
PARENT:
XXXXXXX XXXXX INTERNATIONAL INSURANCE
BROKERS LTD.
By: /s/ P. Podorieszach
--------------------------------------
Name: above
------------------------------------
Title: CEO
-----------------------------------
Address for notices to Guarantor:
Xxxxxxx Xxxxx International Insurance
Brokers Ltd.
0000 Xxxxxxxxx Xxxx X.X., Xxxxx 000
Xxxxxxx, Xxxxxxx, X0X 0X0
Attention: Primo Podorieszach
Facsimile No.: 000-000-0000
18
SELLER:
XX XXXXXXXXXXX LTD.
By: /s/ Xxxx Xxxxxxxxxxx
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address for notices to Seller:
Attention:
-------------------------
Facsimile No.:
---------------------
LESCROART:
/s/ Xxxxxx Xxxxxxxxx L.S.
-----------------------------------------
XXXXXX XXXXXXXXX
Address for notices to Lescroart:
Xxxxxx Xxxxxxxxx
c/x Xxxxxxx
Associates 000
Xxxx Xxxxxx
Xxxxxxxxx, Xxx
Xxxxxx 00000
Facsimile No.:
FCC:
FCC, LLC, d/b/a First Capital
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------------
Title: Vice President
-----------------------------------
Address for notices to FCC:
FCC, LLC
000 XxxxXxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
00
XXX XXXXXX:
OAK STREET FUNDING LLC
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------------------
Title: President
-----------------------------------
Address for notices to Oak Street:
Oak Street Funding LLC
00000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
XXXXXXX:
XXXXXXX FAMILY TRUST OF JULY 1998
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx, as Trustee
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx, as Trustee
Address for notices to Xxxxxxx:
Xxxxxxx Family Trust of July 1998
00 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: 000-000-0000
20
SCHEDULE "Y"
ACKNOWLEDGMENT OF COLLATERAL ASSIGNMENT OF ACQUISITION DOCUMENTS
SCHEDULE "Z"
MAXIMUM ASSUMED AVL LIABILITIES
