Exhibit 10.1
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement
(“Agreement”) is made and entered on August 31,
2009, between and among Cadence Bank, N. A., a national
banking association (“Cadence”),
Galloway-Chandler-McKinney Insurance Agency, Inc. , a
Mississippi corporation (“GCM”) (collectively the
“Sellers”) and GCM Insurance Agency, LLC , a
Mississippi limited liability company (“Agency”),
Galloway-Chandler-McKinney Insurance Agency of Columbus, LLC
, a Mississippi limited liability company,
(“Columbus”), Galloway-Chandler-McKinney Insurance
Agency of Starkville, LLC , a Mississippi limited liability
company (“Starkville”), Galloway-Chandler-McKinney
Insurance Agency of West Point, LLC , a Mississippi limited
liability company (“West Point”) and
Galloway-Chandler-McKinney Insurance Agency of Monroe County,
LLC , a Mississippi limited liability company
(“Monroe”) (collectively
“Buyers”).
The parties hereto agree as
follows:
DEFINITIONS
Certain Definitions.
As used in this Agreement, the
following terms have the following meanings unless the context
otherwise require:
(a) “ Affiliate”
means any Person, directly or indirectly, controlling, controlled
by, or under common control with Sellers or Buyers. Without
limiting the generality of the foregoing, a Person is considered to
be in control of or to be controlled by another Person if such
Person holds 50% or more of the outstanding voting equity interest
in such other Person or such other Person holds 50% or more of its
outstanding voting equity interest.
(b) “Acquired
Assets” means all of the assets of Sellers of every kind,
character and description, tangible or intangible, real or
personal, used in and constituting GCM’s insurance operation
(other than the Excluded Assets), including but not limited to,
Customer Lists, Property Rights, receivables, contract rights, work
in process, as well as the personal property described in the list
attached as Exhibit 1(b) , including GCM’s furniture,
equipment and business assets and its leasehold rights (as
specified in paragraph 8.3 below, at GCM’s facilities in
Columbus, Starkville, West Point, Aberdeen and Amory, Mississippi
(the “Business Locations”) including, without
limitation, those assets identified on Exhibit 1(a) of this
Agreement.
(c) “Assumed
Liabilities” means those obligations of Sellers being
assumed by one or more of the Buyers pursuant to this Agreement,
including, without limitation, those liabilities identified on
Exhibit 1(c) of this Agreement.
(d) “Books and
Records” means all books and records and operating data
in the possession of GCM and relating solely to the GCM Business,
including, but not limited to, all lists of customers, lists of
suppliers, all sales and credit information, advertising and
purchasing materials and correspondence, quotation records,
personnel records, resume files, payroll master files and all
collection and credit records.
(e) “Customer
Lists” means all lists of customers who, at present are,
in the past have been, or in the future may be, purchasers of the
goods and services related to the GCM Business.
(f) “Encumbrance”
means any mortgage, deed of trust, covenant, condition,
restriction, easement, right of way, option, lien, pledge, lease,
charge, equity, claim, conditional sales contract, or security
interest.
(g) “Excluded
Assets” means those assets of GCM that Cadence will
retain, which assets are identified on Exhibit 1(g) to this
Agreement.
(h) “Knowledge”
means, with respect to any party hereto, the actual knowledge,
after Due Inquiry (as defined herein), of the individuals listed
below. For Sellers, such individuals are: Lewis F. Mallory, Richard
T. Haston and Aubrey Adair. For Buyers, such individuals are: James
C. Galloway, Jr. and Kyle Chandler, III. For purposes of the
foregoing, “Due Inquiry” by a party means a process
reasonably calculated to elicit such material information relating
to that inquiry as the applicable party is expressly requested
hereunder to disclose (to the extent of their respective
Knowledge).
(i) “Person”
means a natural person, a corporation, a partnership or any other
entity.
(j) “Property
Rights” means all trademarks, trade names, service marks,
copyrights, patents and all documents related thereto, and other
similar intellectual property rights used or held by GCM and used
in the GCM Business.
(k) “GCM
Business” means the business and related or supporting
activities regarding the sale or service of insurance products of
GCM as conducted at GCM’s Business Locations
(l) “Return” or
“Returns” means all returns, declarations, reports,
statements, and other documents required to be filed in respect of
Taxes.
(m) “Tax” or
“Taxes” means any federal, state, local, foreign or
other taxes (including, without limitation, income (net or gross),
gross receipts, profits, alternative or add-on minimum, franchise,
license, capital, capital stock, intangible, services, premium,
mining, transfer, sales, use, ad valorem, payroll, wage, severance,
employment, occupation, property (real or personal), windfall
profits, import, excise, custom, stamp, withholding or governmental
charges of any kind whatsoever, including interest, penalties,
additions to tax or additional amounts with respect to such
items).
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ARTICLE 1
SALE AND TRANSFER OF
ASSETS
1.1 Sale and Transfer of Business
and Assets.
(a) Subject to and upon the terms
and conditions set forth in this Agreement, GCM will sell,
transfer, convey, assign and deliver to Buyers, and Buyers will
purchase, at the Closing hereunder, the GCM Business, including all
of the business, assets, properties, goodwill and rights of GCM as
a going concern, of every nature, kind and description, tangible
and intangible, wheresoever located and whether or not carried or
reflected on the Books and Records of GCM (hereinafter
“Acquired Assets”), including, without limitation,
(i) the assets identified in Exhibit 1(a) and
(b) the assets reflected on the Balance Sheet referred
to in Section 2.2 hereof, with only such dispositions of such
assets reflected on the Balance Sheet as shall have occurred in the
ordinary course of GCM’s business between the date thereof
and the Closing and which are permitted by the terms hereof, but
not including the Excluded Assets described on Exhibit 1( g
).
(b) The Acquired Assets shall be
conveyed to the respective Buyers as shown on Exhibit 1(e)
free and clear of all liabilities, obligations, and Encumbrances
excepting only those liabilities and obligations which are
expressly to be assumed by Buyers hereunder and those Encumbrances
securing the same which are specifically disclosed herein or
expressly permitted by the terms hereof.
1.2 Assumption of
Liabilities. Buyers agree
to assume, pay, perform and discharge the Assumed Liabilities
, which shall be assumed by the respective Buyers as shown
on Exhibit 1(c) .
It is expressly acknowledged and
agreed that Buyers will not assume and shall not be liable, either
expressly or impliedly, for any of the obligations or liabilities
of GCM of any kind and nature other than those specifically assumed
herein. Buyers shall not assume or become liable (expressly or
impliedly) with respect to any of the following:
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(a)
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except as set
forth herein, any liability of GCM, either directly or indirectly,
for either principal or interest, with respect to advances or loans
made by Cadence to GCM or made by GCM to Cadence;
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(b)
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except as set
forth herein, any liability arising out of any employee benefit
plans maintained by Cadence for the benefit of any employees of GCM
or any other liability of GCM with respect to any employees
including but not limited to incentive compensation plans,
severance pay, retention pay, accrued salaries, wages, bonuses,
payroll taxes, hospitalization and medical insurance, deferred
compensation and vacation and sick pay; and
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(c)
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except as set
forth herein, any liability attributable to Tax assessed against
any of the assets to be conveyed or leased hereunder relating to
the period on or before the Closing Date, such taxes to remain the
responsibility of GCM.
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1.3 Purchase
Price.
In consideration of the sale,
transfer, conveyance, assignment and delivery of the Acquired
Assets by GCM to Buyers, and in reliance upon the representations
and warranties made herein by Sellers, Buyers will, in full payment
thereof, pay to GCM at the Closing a total purchase price equal to
the sum of $5,204,000 allocated as of July 31, 2009 on the
attached Exhibit 1.3, with (i) the total price to be
adjusted to reflect any change in working capital for the period
from December 31, 2008 and ending on August 31, 2009,
such adjustment to be made in accordance with generally accepted
accounting principles when the Books and Records of GCM as of
August 31, 2009 have been closed out by GCM and Buyers in
accordance with the normal accounting practices of GCM and approved
by Sellers (the “Post Closing Adjustment”) and
(ii) a further adjustment (the “Final Post Closing
Adjustment”) to be performed as set forth in Section 8.6
herein. Buyers and Sellers agree to pay to the appropriate party
such additional amounts established to accomplish the Post Closing
Adjustment and the Final Post Closing Adjustment. The purchase
price shall be payable in cash at Closing.
1.4 Closing.
The “Closing” shall take
place on the 31 st day of August , 2009 (the “Closing
Date”) at the office of Cadence in Starkville, Mississippi,
or such other time and place as the parties may agree upon. In the
event either of the parties is entitled not to close on the
scheduled date because a condition to the Closing set forth in
Articles 6 or 7 hereof has not been met (or waived by the party or
parties entitled to waive it), such party may postpone the Closing
from time to time, by giving at least five days prior written
notice to the other party, until the condition has been met (which
all parties will use their best efforts to cause to happen), but in
no event to a date later than September 30, 2009.
1.5 Obligations at Closing;
Further Acts and Assurances.
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(a)
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At the Closing,
Sellers will deliver to Buyers:
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(i)
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a bill of sale
duly executed by GCM for all of the Acquired Assets that are
tangible personal property in the form of Exhibit 1.5(a)(i)
(the “Bill of Sale”) executed by GCM;
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(ii)
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an assignment
of all of the Assets that are intangible personal property in the
form of Exhibit 1.5(a)(ii) , which assignment shall also
contain Buyer’s undertaking and assumption of the Assumed
Liabilities (the “Assignment and Assumption Agreement”)
executed by GCM;
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(iii)
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such other good
and sufficient instruments of conveyance, assignment and transfer,
in form and substance satisfactory to Buyers’ counsel, as
shall be effective to vest in Buyers good and marketable title to
the Acquired Assets;
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(iv)
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all contracts,
files and other data and documents pertaining to the Acquired
Assets, and
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(v)
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all documents
required to be delivered to Buyers under the provisions of this
Agreement.
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(vi)
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a certificate
executed on behalf of Sellers as to the accuracy of their
representations and warranties as of the date of this Agreement and
as of the Closing and as to their compliance with and performance
of their covenants and obligations to be performed or complied with
at or before the Closing; and
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(vii)
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assignment of
lease agreements in the form attached as Exhibit 1.5(a)(vii)
, which will be sufficient to transfer GCM’s leasehold rights
as detailed in paragraph 8.3 to Starkville and West
Point.
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(viii)
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a special
warranty deed executed by GCM conveying its owned property in
Amory, Mississippi to Campbell Properties, LLC, the assignee of
Monroe, free and clear of any and all Encumbrances and right of
tenants in possession except the permitted exceptions in the form
set forth on Exhibit 1.5(a)(viii).
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(ix)
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Other customary
deliverables related to conveyance of owned property.
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(b)
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At the Closing,
Buyers will deliver to Sellers:
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(i)
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Five Million
Two Hundred and Four Thousand Dollars ($5,204,000) by check or wire
transfer, allocated in accordance with Exhibit 1.3 , to an
account or accounts specified by GCM in a writing delivered to
Buyers at least three (3) business days prior to the Closing
Date;
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(ii)
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a document
detailing the assumption of the Assumed Liabilities (the
“Assignment and Assumption Agreement”) executed by
Buyers;
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(iii)
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a certificate
executed on behalf of Buyers as to the accuracy of their
representations and warranties as of the date of this Agreement and
as of the Closing and as to their compliance with and performance
of their covenants and obligations to be performed or complied with
at or before the Closing; and
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(iv)
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assumption of
lease agreements, in the form attached as Exhibit
1.5(a)(vii) , which will be sufficient to assume GCM’s
leasehold rights as detailed in Section 8.3 at Starkville and
West Point.
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(v)
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lease
agreements with Cadence covering the space currently occupied in
the Cadence branch office in Aberdeen, Mississippi and the building
owned by Cadence in Columbus, Mississippi currently occupied by
GCM.
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(c)
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At any time and from time to time
after the Closing, at Buyers’ request and without further
consideration, Sellers will execute and deliver such other
instruments of sale, transfer, conveyance, assignment and
confirmation and take such action as Buyers may reasonably deem
necessary or desirable in order to more effectively
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transfer, convey and assign to
Buyers, and to confirm Buyers’ title to, all of the Acquired
Assets, to put Buyers in actual possession and operating control
thereof and to assist Buyers in exercising all rights with respect
thereto. After the Closing, at reasonable times and on reasonable
written notice of not less than ten (10) days, Buyers shall
have access to the minute books and stock ledger records of GCM,
which relate to the Acquired Assets, and Sellers shall retain such
minute books and stock ledger records, for a period of three years
after the Closing.
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(d)
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At any time and
from time to time after the Closing, at Sellers’ request and
without further consideration, Buyers will execute and deliver such
other instruments of assumption, transfer, assignment and
confirmation and take such action as Sellers may reasonably deem
necessary or desirable in order to more effectively transfer,
convey and assign to Buyers, and to confirm Buyers’ title to,
all of the Acquired Assets and Buyers’ assumption of all of
the Assumed Liabilities.
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(e)
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GCM agrees that
Buyers shall have the right and authority to collect for its own
account all receivables which are included in the Acquired Assets
as shown on Exhibit 1(b) and other items which shall be transferred
to Buyers as provided herein and to endorse with the name of GCM
any checks received on account of any such receivables or other
items. GCM agrees that it will promptly transfer and deliver to
Buyers any cash or other property which GCM may receive in respect
of such receivables or other items.
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(f)
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Buyers agree to
retain all Books and Records related to the GCM Business for seven
(7) years following the Closing.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES BY
SELLERS
Sellers represent and warrant to
Buyers as follows:
2.1 Organization, Corporate Power
and Qualification. GCM is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Mississippi and has full corporate
power and authority and all authorizations, licenses and permits
necessary to own, lease and operate its properties and assets and
to carry on the GCM Business as and where it is now being
conducted, to enter into this Agreement, and to consummate the
transactions contemplated hereby. GCM is not in default under or in
violation of any provision of its Articles of Incorporation or
by-laws.
2.2 Financial
Statements. Exhibit
2.2 consists of the following financial statements of GCM: the
unaudited balance sheet of GCM as of December 31,
2008, March 31, 2009, June 30, 2009 and
July 31, 2009 (“Balance Sheet”) and unaudited
statement of operations of GCM for such periods (the “Balance
Sheet Date”) (the unaudited financial statements and the
related statements of operation being herein called “GCM
Financial Statements”).
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2.3 Absence of Certain Recent
Changes. Except as
expressly provided in this Agreement or as set forth on Exhibit
2.3 in alphabetical order corresponding to the following
subsections since the Balance Sheet Date, and through the Closing
Date, with regard to the GCM Business, GCM has not been and will
not have:
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(a)
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suffered any
change in financial condition, assets, liabilities, operations,
prospects or business or suffered any other event or condition of
any character which individually or in the aggregate has or might
reasonably have a material adverse effect on GCM;
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(b)
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canceled any
debts or waived any claims or rights whether or not in the usual
and ordinary course of business;
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(c)
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paid, lent or
advanced any amount to, or sold, transferred or leased any
properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with,
any of the officers or directors of GCM or of any
“affiliate” or “associate” of any of their
officers or directors (as such terms are defined in the rules and
regulations of the Securities and Exchange Commission under the
Securities Act of 1933, as amended), except for reimbursement of
ordinary and reasonable business expenses related to the GCM
Business and compensation to officers at rates not exceeding the
rates of compensation at the Balance Sheet Date;
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(d)
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amended,
terminated or otherwise altered (whether by action or inaction) any
contract, agreement or license to which GCM is a party, or received
any notice of termination or violation of the same;
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(e)
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entered into a
material transaction other than in the ordinary course of business
or made any change in any method of accounting or accounting
practice;
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(f)
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canceled, or
failed to continue, insurance coverages; or
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2.4 Title to
Properties.
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(a)
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GCM has good,
marketable and insurable title to all the properties and assets it
owns or uses in the GCM Business . To the knowledge of
Sellers, except as specifically provided in this Agreement, none of
the Acquired Assets are subject to any Encumbrance, restriction,
lease, license, easement, liability or adverse claim of any nature
whatsoever, direct or indirect, whether accrued, absolute,
contingent or otherwise, except (i) as expressly set forth in
the Balance Sheet as securing specific liabilities or as otherwise
expressly permitted by the terms hereof; (ii) those
imperfections of title and Encumbrances, if any, which (A) are
not substantial in character, amount or extent and do not
materially detract from the value of the properties subject
thereto, (B) do not interfere with either the present or the
continued use of such property or the conduct of GCM’s normal
operations, and (C) have arisen only in the ordinary course of
business. All of the properties and assets owned, leased or used by
GCM are in good operating condition and repair, are suitable for
the purposes used, are adequate and sufficient for all current
operations of GCM and are directly related to the business of
GCM.
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(b)
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Attached hereto
as Exhibit 2.4(b) is a separate schedule containing an
accurate and complete list and description of the following items
which are related to the GCM Business:
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(i)
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All real
property in which GCM has a leasehold or other interest or which is
used by GCM in connection with the operation of the GCM Business,
together with a description of each lease, sublease, license, or
any other instrument under which GCM claims or holds such leasehold
or other interest or right to the use thereof or pursuant to which
GCM has assigned, sublet or granted any rights therein, identifying
the parties thereto, the rental or other payment terms, expiration
date and cancellation and renewal terms thereof.
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(ii)
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All leases
related to machinery, tools, equipment, motor vehicles, rolling
stock and other tangible personal property (other than inventory
and supplies), owned, leased or used by GCM except for items having
a value of less than $500 which do not, in the aggregate, have a
total value of more than $5,000, setting forth with respect to all
such listed property a summary description of all leases,
Encumbrances, charges, restrictions, covenants and conditions
relating thereto, identifying the parties thereto, the rental or
other payment terms, expiration date and cancellation and renewal
terms thereof.
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(iii)
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All Property
Rights, including but not limited to patents, patent applications,
patent license, trademarks, trademark registrations, and
applications therefor, service marks, service names, trade names,
copyrights and copyright registrations, and applications therefor,
wholly or partially owned or held by GCM or used in the operation
of GCM’s business.
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(iv)
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All contracts
(including service contracts), agreements, commitments or other
understandings or arrangements to which GCM is a party or by which
it or any of its property is bound or affected but excluding
(A) purchase and sale orders and commitments made in the
ordinary course of business involving payments or receipts by GCM
of less than $500 in any single case but not more than $5,000 in
the aggregate, (B) contracts entered into the ordinary course
of business and involving payments or receipts by GCM of less than
$500 in the case of any single contract but not more than $5,000 in
the aggregate, and (C) contracts entered into in the ordinary
course of business which are terminable by GCM on less than 30
days’ notice without any penalty or consideration and
involving payments or receipts by GCM of less than $500 in the case
of any single contract but not more than $5,000 in the
aggregate.
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To Sellers’ Knowledge, all of
the contracts, agreements, leases, licenses and commitments
required to be listed on Exhibit 2.4(b) (other than those
which have been fully performed) are valid and binding and
enforceable in accordance with their respective terms (subject to
bankruptcy, reorganization, insolvency and other similar laws
affecting creditors’ rights), in full force and effect and,
except as otherwise specified in Exhibit 2.4(b) , validly
assignable to Buyers without the consent of any other party so
that, after the assignment thereof to Buyers pursuant hereto,
Buyers will be entitled to the full benefits thereof. Except as
provided herein, none of the payments required to be made under any
such contract, agreement, lease, license or commitment has been
prepaid more than 30 days prior to the due date of such payment
thereunder, and there is not thereunder any existing default, or
event which, after notice or lapse of time, or both, would
constitute a default or result in a right to accelerate or loss of
rights, and none of such contracts, agreements, leases, licenses or
commitments is, either when considered singly or in the aggregate
with others, unduly burdensome, onerous or materially adverse to
GCM’s business, properties, assets, earnings or prospects or
likely, either before or after the Closing, to result in any
material loss or liability. None of GCM’s existing or
completed contracts is subject to renegotiation with any
governmental body. True and complete copies of all such contracts,
agreements, leases, licenses and other documents listed on
Exhibit 2.4(b) (together with any and all amendments
thereto) have been delivered to Buyers.
2.5 Execution, Delivery and
Performance of Agreement; Authority. To the Knowledge of Sellers , neither the
execution, delivery nor performance of this Agreement by Sellers
will, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or
loss of rights under, or result in the creation of any Encumbrance
pursuant to, any provision of GCM’s certificate of
incorporation or bylaws or any franchise, mortgage, deed of trust,
lease, license, agreement, understanding, law, rule or regulation
or to the Knowledge of Sellers, any order, judgment or decree to
which GCM is a party or by which any of them may be bound or
affected. Sellers have the full power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby, all proceedings required to be taken by each of them to
authorize the execution, delivery and performance of this Agreement
and the agreements relating hereto have been properly taken and
this Agreement and each document to be executed in connection
herewith constitutes a valid and binding obligation enforceable in
accordance with its terms against Sellers, subject to bankruptcy,
reorganization, insolvency and other similar laws affecting
creditors’ rights.
2.6 Permits and
Licenses. Included as
Exhibit 2.6 is a schedule of permits and licenses, listing
and briefly describing each permit, license or similar
authorization from each governmental authority issued with respect
to the operation or ownership of the GCM Business by Sellers
together with the designation of the respective expiration dates of
each. To the Knowledge of Sellers, GCM is not required to obtain
any additional permits, licenses or similar authorizations from any
governmental authority for the property or the operation of the GCM
Business other than those listed on Exhibit 2.6.
2.7 Assets Necessary to
Business. GCM presently
has and at Closing will have and transfer to Buyers title to all
property and assets, real, personal and mixed, tangible and
intangible, and all leases, licenses and other agreements,
necessary to permit Buyers to carry on the GCM Business as
presently conducted.
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2.8 Compliance With Laws and
Other Instruments. Except
as set forth in Exhibit 2.8 , to the Sellers’
Knowledge, GCM has complied with all existing laws, rules,
regulations, ordinances, orders, judgments and decrees now or
hereafter applicable to the GCM Business, as presently conducted.
To the Sellers’ Knowledge, neither the ownership nor use of
GCM’s properties nor the conduct of the GCM Business
conflicts with the rights of any other person, firm or corporation
or violates, or with or without the giving of notice or the passage
of time, or both, will violate, conflict with or result in a
default, right to accelerate or loss of rights under, any terms or
provisions of its certificate of incorporation or bylaws as
presently in effect, or any Encumbrance, lease, license, agreement,
understanding, law ordinance, rule or regulation or any other,
judgment or decree to which Sellers are a party or by which it may
be bound or affected. To the Sellers’ Knowledge, no proposed
laws, rules, regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other proceedings which
would be applicable to the GCM Business, and its operations or
properties and which might adversely affect the Acquired Assets in
the GCM Business, its, operations or prospects, either before or
after Closing exist.
2.9 Tax Matters.
Sellers have filed, or will prepare
and timely file, all Returns that are required to be filed by it
for all periods prior to or including the Closing Date related to
the GCM Business, and such Returns are (or to the extent filed
between the date hereof and the Closing Date will be) correct and
complete. All Taxes (whether or not requiring the filing of
Returns) of Sellers related to the GCM Business for the
aforementioned periods have been timely and fully paid or
adequately reserved.
2.10 Books of Account;
Reports. The books of
account of GCM related to the GCM Business are accurate and
complete and fairly reflect the transactions and the disposition of
its assets, and GCM has filed all reports and returns required by
any law or regulation to be filed by it.
2.11 Brokers and
Finders. Sellers have not
incurred any obligation or liability, contingent or otherwise, for
brokerage
