EXHIBIT 10q

 

AMENDED AND RESTATED

ASSET PURCHASE AGREEMENT

 

            This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this
"Agreement"),dated as of November 12, 2002 (the "Agreement Date"), is made and
entered into by and amongBROWN & BROWN, INC., a Florida corporation ("Buyer");
CAL-SURANCE ASSOCIATES, INC., a California corporation (“Cal-Surance”), UNITED
NETWORK OF INSURANCE SERVICES, INC., aCaliforniacorporation (“UNIS”), STERLING
REINSURANCE INTERMEDIARIES, INC., a California corporation (“SRII”), LANCER
CLAIMS SERVICES, INC., a California corporation (“Lancer”), and CHARTERED
FINANCIAL SERVICES CORPORATION, a California corporation (“Chartered” and
together with Cal-Surance, UNIS, SRII, and Lancer, each a "Seller" and
collectively, "Sellers"); and DONALD E. MARTIN AND RENEE MARTIN, AS TRUSTEES OF
THE MARTIN LIVING TRUST U/D/T DATED AUGUST 14, 1984, AS AMENDED OCTOBER 22,
1986, a trust organized under the laws of the State of California (“Martin
Trust” or “Shareholder”), and DONALD E. MARTIN, a resident of the State of
California ("Martin").

 

Background

 

            Buyer, Sellers, Martin Trust and Martin are each parties to an Asset
Purchase Agreement dated as of October 23, 2002 (the "Original Agreement").  The
parties wish to amend and restate the Original Agreement in its entirety.

 

            THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein, the sufficiency of which
is hereby acknowledged, the parties, intending to be legally bound, each agree
as follows:

 

Article 1

The Acquisition

 

            Section 1.1       Covenants of Sale and Purchase of Acquired
Assets.  Subject to the terms and conditions set forth in this Agreement, at the
Closing (as defined in Section 2.1), but effective as of the Effective Date (as
defined in Section 2.7 hereof), Sellers shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Sellers in exchange
for the consideration described in Section 1.4, free and clear of any
Encumbrance (as defined below), all of Sellers' respective right, title and
interest in and to all of Sellers’ property and assets, real, personal or mixed,
tangible and intangible, of every kind and description, wherever located, as of
the Closing Date, including the following (but excluding the Excluded Assets)
(collectively, the "Acquired Assets"):

 

                        (a)        Purchased Book of Business; Records.  All of
Sellers’ insurance program and managing general agency business throughout the
United States (collectively, the “Program Business”) and Sellers’ retail
insurance agency business in the State of California (collectively, the
“Commercial Business” and, together with the Program Business, the “Business”),
including but not limited to the 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 Sellers' Business, whether compiled by Sellers or by other agents or
employees of Sellers, including but not limited to: (i) lists of insurance
companies and records pertaining thereto; and (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 information
customarily used by Sellers and in the possession or control of Sellers,
including all other records of and pertaining to the accounts and customers of
Sellers, past and present (collectively, the "Purchased Book of Business"),
including, but not limited to, the active insurance customers of Sellers with
respect to the Commercial Business listed on Schedule 1.1(a).

 

                        (b)        Tangible Property.  All equipment, furniture,
office equipment, computer hardware, supplies, materials and other items of
tangible personal property of every kind owned or leased by Sellers (wherever
located), together with any express or implied warranty by the manufacturers or
sellers or lessors of any item or component part thereof and all maintenance
records and other documents relating thereto (collectively, "Tangible
Property"), including those items described in Schedule 1.1(b) hereto;

 

                        (c)        Seller Contracts.  All agreements, contracts,
leases, licenses, consensual obligations, promises or undertakings of Sellers
that relate to the Business (whether written or oral and whether express or
implied), whether or not legally binding (a "Contract") including, without
limitation, (i) Sellers' lease for an aggregate of 41,480 square feet of office
space located at 333 City Boulevard, Orange, California ("Sellers' Premises"),
(ii) all leases for the Tangible Property, including, but not limited to,
furniture, computer or other equipment used in the Business, (iii) all
agreements with insurance companies and clients, claims service agreements and
insurance program agreements including, but not limited to, those described in
Schedule 1.1(c), and (iv) all non-competition, non-solicitation, and
non-disclosure covenants of third parties made in favor of any Seller (all such
Contracts, including those described in clauses (i) through (iv), are
collectively referred to as the "Seller Contracts");

 

                        (d)        Governmental Authorizations.  All
Governmental Authorizations required to run the Business and all pending
applications therefor or renewals thereof, in each case to the extent
transferable to Buyer; provided, however, that the Sellers, Shareholder and
Martin shall not be required to assign or transfer any Governmental
Authorization necessary to wind down the business of Sellers following the
Closing.  For purposes of this Agreement, the term "Governmental Authorization"
means any approval, consent, ratification, waiver or other authorization
("Consent"), license, registration or permit issued, granted, given or otherwise
made available by or under the authority of any Governmental Entity (as defined
in Section 3.4(b)) or pursuant to any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty ("Legal Requirements");

 

                        (e)        Records.  Subject to Section 6.15, all data
and Records (as defined herein) related to the Business not otherwise described
in Section 1.1(a), including production reports and Records, service and
warranty Records, equipment logs, operating guides and manuals, financial and
accounting Records, creative materials, advertising materials, promotional
materials, studies, reports, correspondence and other similar documents and
Records and, subject to compliance with any Legal Requirements, copies of all
personnel Records and other Records described in Section 1.2(f).  For purposes
of this Agreement, the term "Record" means any information that is inscribed on
a tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form;

 

                        (f)         Intangible Property.  All of the intangible
rights and intangible property of Sellers primarily used in the Business,
including (i) Intellectual Property Assets (as defined in Section 3.16 hereof)
of Sellers primarily used in the Business, going concern value, goodwill,
telephone, telecopy and e-mail addresses and listings and those items listed in
Schedules 3.16(c), and (ii) any Seller's interest in any risk purchasing group
related to the Business and set forth in Schedule 1.1(f). 

 

                        (g)        Insurance Benefits. All insurance benefits
under the policies listed on Schedule 1.1(g), but only to the extent that such
benefits arise from or relate to the Acquired Assets or the Assumed Liabilities
(as defined in Section 1.3) prior to the Effective Date; and

 

                        (h)        Claims Against Third Parties.  All claims of
Sellers against third parties relating to the Acquired Assets and arising prior
to the Closing Date, whether choate or inchoate, known or unknown, contingent or
noncontingent.

Notwithstanding the foregoing, the transfer of the Acquired Assets pursuant to
this Agreement shall not include the assumption of any Liability (as defined in
Section 1.3(a)(i)) unless Buyer expressly assumes that Liability pursuant to
Section 1.3(a).

For purposes of this Agreement, the term "Encumbrance" means any charge, claim,
community or other marital property interest, condition, equitable interest,
lien (excluding liens for current Taxes not yet due and payable), option,
pledge, security interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, right of first refusal or similar restriction,
including any restriction on use, voting (in the case of any security or equity
interest), transfer, receipt of income or exercise of any other attribute of
ownership, except minor restrictions or liens which in the aggregate are not
substantial in amount, do not materially detract from the value or
transferability of the property or assets subject thereto or interfere in any
material respect with the present use.

 

            Section 1.2       Excluded Assets.  Notwithstanding anything to the
contrary contained in Section 1.1 or elsewhere in this Agreement, all assets and
property of Sellers that are not Acquired Assets (collectively, the "Excluded
Assets") are not part of the sale and purchase contemplated hereunder, shall
remain the property of Sellers after the Effective Date, including, but not
limited to, the following:

 

                        (a)        All cash, cash equivalents, accounts and
notes receivable, money market certificates, stocks, bonds, real property and
vehicles;

 

                        (b)        All minute books, stock Records and corporate
seals;

 

                        (c)        The shares of capital stock of Sellers held
in treasury;

 

                        (d)        Those rights relating to deposits and prepaid
assets and expenses and claims for refunds and rights to offset in respect
thereof;

 

                        (e)        All insurance policies and rights thereunder,
except to the extent specified on Schedule 1.1(g);

 

                        (f)         All personnel Records and other Records that
Sellers are required by law to retain in their possession;

 

                        (g)        All claims for refund of Taxes (as defined
herein) and other governmental charges of whatever nature.  For purposes of this
Agreement, the term "Tax" means any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, environmental,
windfall profit, customs, vehicle, airplane, boat, vessel or other title or
registration, capital stock, franchise, employees' income withholding, foreign
or domestic withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, value added, alternative,
add-on minimum and other tax of any kind whatsoever and any interest, penalty,
addition or additional amount thereon imposed, assessed or collected by or under
the authority of any Governmental Entity responsible for the imposition of such
Tax;

 

                        (h)        All rights in connection with and assets of
the Employee Benefit Plans (as defined in Section 3.15 hereof);

 

                        (i)         All rights in connection with any Value
Increase Shareholder Agreement (“VISA”) between any Seller and those employees
of Sellers participating in VISA whose names are set forth in Schedule 1.2(i)
(collectively, the "VISA Participants"); and

 

                        (j)         All assets listed on Schedule 1.2(j) (the
"Personal Effects").

 

            Section 1.3       Liabilities.

 

                        (a)        Assumed Liabilities.  At the Closing (as
defined in Section 2.1),  but effective as of the Effective Date, Buyer shall
assume and agree to discharge only (i) all obligations related to the Purchased
Book of Business (as defined in Section 1.4(a) hereof) arising after the
Effective Date; (ii)  those duties and obligations arising after the Effective
Date under the Seller Contracts, regardless of whether or not a consent was
required or obtained for any such Seller Contract; (iii) subject to Section 6.17
hereof, Sellers' purchase price payment obligations remaining after the
Effective Date pursuant to the Pizza Program Acquisition (as defined in Section
6.17); (iv) Sellers' obligation to pay the Seller employee bonuses listed on
Schedule 1.3(a)(iv)and(v) the PTO Liability (as defined in Section 6.18)
(individually, an “Assumed Liability” and, collectively, the "Assumed
Liabilities").  For purposes of this Agreement, the term:

 

                        (x)        "Liability" means, with respect to any
individual, corporation, association, partnership, limited liability company, or
other organization or entity (a "Person"), any liability or obligation of such
Person of any kind, character or description, whether known or unknown, absolute
or contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person; and

 

                        (y)        "Breach" means any breach of, or any
inaccuracy in, any representation or warranty or any breach of, or failure to
perform or comply with, any covenant or obligation, in or of this Agreement or
any other Contract, or any event which with the passing of time or the giving of
notice, or both, would constitute such a breach, inaccuracy or failure.

 

                        (b)        Retained Liabilities.  Without limiting
anything set forth in Section 1.2(a), the Retained Liabilities shall remain the
sole responsibility of and shall be retained, paid, performed and discharged
solely by Sellers or Shareholder. "Retained Liabilities" shall mean every
Liability of Sellers other than the Assumed Liabilities, including, without
limitation:

 

                                    (i)         Any account or note payable
incurred by any Seller or Shareholder prior to the Effective Date;

 

                                    (ii)        Any Liability for any (A) Taxes
whenever due arising as a result of Sellers' operation of their respective
businesses or ownership of the Acquired Assets prior to the Effective Date, and
(B) Taxes that shall arise as a result of the sale of the Acquired Assets
pursuant to this Agreement and which are payable by Seller as provided in
Section 6.12(a);

 

                                    (iii)       Any Liability under any Contract
not assumed by Buyer under Section 1.1(c), including any Liability arising out
of or relating to (A) VISA, or (B) any credit facilities of any Seller or any
security interest related thereto;

 

                                    (iv)       Any Liability incurred by any
Seller prior to the Effective Date under any Environmental Laws(as defined
below)arising out of or relating to the operation by such Seller of the Business
prior to the Effective Date or any Seller's leasing, ownership or operation of
real property prior to the Effective Date, including those consisting of or
relating to: (A) any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand arising under any
Environmental Law or (B) any financial responsibility under any Environmental
Law for cleanup costs or corrective action, including any inspection, cleanup,
removal, containment or other remediation or response actions and for any
natural resource damages.  The terms "removal," "remedial" and "response action"
include the types of activities covered by the United States Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA);

 

As used in this Agreement, the term "Environmental 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.

 

                                    (v)        Other than any PTO Liability, any
Liability under the Employee Benefit Plans or relating to payroll, sick leave,
workers' compensation, unemployment benefits, pension benefits, employee stock
option or profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for Sellers' employees or former
employees or both (provided that Buyer give length-of-service credit to those
Seller employees who become employed by Buyer for purposes of Buyer's Employee
Benefit Plans);

 

                                    (vi)       Except for the PTO Liability and
as set forth in Schedule 1.3(a)(iv), any Liability under any employment,
incentive, bonus, severance, retention or termination agreement with any
employee of any Seller;

 

                                    (vii)      Any Liability arising out of or
relating to any employee or independent contractor grievance arising with
respect to any Seller or Shareholder prior to the Effective Date, whether or not
the affected employees or independent contractors are hired or engaged by Buyer;

 

                                    (viii)      Any Liability of any Seller to
Shareholder or Martin;

 

                                    (ix)       Any Liability of any Seller to
indemnify, reimburse or advance amounts to any officer, director, employee or
agent of any Seller;

 

                                    (x)        Any Liability to distribute to
Shareholder or otherwise apply all or any part of the consideration received
hereunder;

 

                                    (xi)       Any Liability of any Seller
arising out of any Proceeding (as defined herein) related to the Business and
pending as of the Effective Date.  For purposes of this Agreement, the term
"Proceeding" means any action, arbitration, audit, complaint, charge, demand,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether
public or private) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Entity or arbitrator; and

 

                                    (xii)      Any Liability arising out of or
resulting from Sellers’ compliance or noncompliance prior to the Effective Date
with any Legal Requirement or any order, injunction, judgment, decree, ruling,
assessment or arbitration award ("Order") of any Governmental Entity.

 

            Section 1.4       Purchase Price. 

 

                        (a)        The consideration for the Acquired Assets
shall be the assumption by Buyer of the Assumed Liabilities, plus payment by
Buyer of an amount equal to Sixty-Four Million Fifty-One Thousand Six Hundred
Fifteen and 32/100 Dollars ($64,051,615.32) (the "Purchase Price").

 

                        (b)        The Purchase Price shall be paid to Sellers
as follows: 

 

                                    (i)         An aggregate down payment (the
"Down Payment Amount") equal to (A) $57,652,134.32 minus (B) the aggregate
amount of consideration, as described in Schedule 1.4(b) hereto, for Martin's
restrictive covenants under Section 6.5 hereof (the "Non-Compete Amount"), minus
(C) the aggregate amount of liabilities of Sellers outstanding under that
certain Loan and Security Agreement dated January 30, 2001 by and between Lake
Forest Bank & Trust Company and Chartered (f/k/a Cal-Surance Companies, Inc.)
(the "Secured Indebtedness Amount") shall be paid to Sellers at the Closing; 

 

                                    (ii)        Buyer shall pay the Non-Compete
Amount to Shareholder at the Closing;

 

                                    (iii)       Buyer, on behalf of Sellers,
shall pay the Secured Indebtedness Amount in appropriate amounts to Sellers'
secured creditors on the Closing Date; and

 

                                    (iv)       Subject to Section 8.4(h) hereof,
Buyer shall pay $6,399,481.00 to Sellers on or before December 1, 2003 (the
"Final Purchase Price Payment Amount").

 

                        (c)        The Purchase Price (plus Assumed Liabilities
to the extent properly taken into account under the Internal Revenue Code of
1986, as amended (the “Code”)), and the Treasury regulations promulgated
thereunder), shall be allocated among the Acquired Assets in accordance with
Schedule 1.4(c), as attached hereto (the “Allocation”).  Unless otherwise
required pursuant to a “determination” within the meaning of Section 1313(a) of
the Code.  After the Closing, the parties shall (i) be bound by and shall make
consistent use of the Allocation, and (ii) act in accordance with the Allocation
in the preparation of all financial statements, for all Tax purposes and in all
filings, declarations and reports with the Internal Revenue Service (IRS) in
respect thereof, including the reports required to be filed under Section 1060
of the Code, and in the course of any Tax audit, Tax review or Tax litigation
relating thereto.  Buyer shall prepare and deliver to Sellers a copy of Buyer’s
IRS Form 8594 relating to this transaction no later than ninety (90) days after
the Closing Date.  Unless otherwise required pursuant to a “determination”
within the meaning of Section 1313(a) of the Code, neither Buyer nor Sellers or
Shareholder shall take any position or cause any affiliate to take any position
inconsistent with the Allocation for Tax purposes, and neither Buyer nor Sellers
or Shareholder shall contend or represent that such Allocation is not correct.

 

            Section 1.5       Commissions Collected. 

 

                        (a)        All commissions on installments of agency
bill policies with an effective date prior to the Effective Date and actually
billed prior to the Effective Date shall be the property of Sellers, and those
agency bill policies with an effective date on or after the Effective Date or
actually billed on or after the Effective Date shall be the property of Buyer,
regardless of when actually received.  Subject to subsection (b) of this Section
1.5, all commissions on direct bill policies actually received by Sellers from
insurance carriers before the Effective Date shall be the property of Sellers
and those actually received from insurance carriers on or after the Effective
Date shall be the property of Buyer, regardless of when billed by the insurance
carrier.  Subject to subsection (b) of this Section 1.5, Buyer shall be entitled
to all contingent commissions, override commissions or payments, and commissions
for additional endorsements received on or after the Effective Date, regardless
of when earned.  All additional or return commissions as a result of audits
actually received before the Effective Date shall be the property or the
responsibility of Sellers, whether credit or debit, and regardless of policy
effective date, and those actually received after the Effective Date shall be
the property or responsibility of Buyer, whether credit or debit, and regardless
of policy effective date.  If Buyer or Sellers shall receive commissions that
appropriately are the property of the other party, Buyer or Sellers, as the case
may be, shall pay such commissions to the other party no later than fifteen (15)
days after Buyer or Sellers, as the case may be, receives such commissions.

 

                        (b)        Notwithstanding anything set forth in this
Agreement to the contrary:

 

                                    (i)         with respect to any production
override payments with Fireman’s Fund Insurance Company in connection with
professional liability insurance business (the “FFIC Override”) attributable to
calendar year 2002 (regardless of when paid), Buyer shall pay to Sellers, no
later than fifteen (15) days after Buyer receives such production override
payments, an amount equal to the total FFIC Override;

 

                                    (ii)        with respect to any production
override payments resulting from production with Fireman’s Fund Insurance
Company regarding Seller’s account with Farmer’s Insurance Group (the “Farmer’s
Override”) attributable to calendar year 2002 (regardless of when paid), Buyer
shall pay to Sellers, no later than fifteen (15) days after Buyer receives such
production override payments, an amount equal to the total Farmer’s Override;
and

 

                                    (iii)       Buyer shall pay to the Pizza
Program Sellers (as defined in Section 6.17 hereof) the full amount of any
profit-sharing commissions with respect to the Pizza Program (as defined in
Section 6.17 hereof) received by Buyer from Traveler’s Insurance Company, no
later no later than fifteen (15) days after Buyer receives such profit-sharing
commissions.

 

            SECTION 1.6       PRORATIONS AND ADJUSTMENTS AS OF THE EFFECTIVE
DATE.

 

                        (a)        Buyer and Sellers agree that, to effect a
transfer of good and marketable title to the Acquired Assets, Buyer shall pay to
Sellers on the Closing Date an amount equivalent to the sum of all rights
relating to deposits and prepaid assets and expenses and claims for refunds and
rights to offset in respect thereof, including but not limited to prepaid
amounts under all lease agreements of Sellers, and such items with respect to
the Acquired Assets shall be adjusted and allowed as of the Effective Date, with
Sellers to be responsible for and to receive the benefit of the same through the
period before the Effective Date and Buyer to be responsible for and to receive
the benefit of the same from and after the Effective Date.

 

                        (b)        Any of the items described in Section 1.6(a)
which shall be required to be adjusted as of the Effective Date shall be paid by
certified bank or cashier’s check (or, upon the receiving party's written
request no more than two (2) business days prior to the Closing Date, the paying
party shall initiate a wire transfer of immediately available funds to one or
more accounts designated by the receiving party) on the Closing Date.

 

            SECTION 1.7       POST-CLOSING REIMBURSEMENT OF EXPENSES BY BUYER. 

 

                        (a)        On or before December 6, 2002, Sellers shall
deliver to Buyer a written certificate (the "Certificate") setting forth the
amount of all expenses accrued and paid by Sellers for the period beginning on
November 1, 2002 and ending on November 12, 2002, inclusive (the "Period") in
connection with the operation of the Sellers business during the Period (the
“Reimbursable Expense Amount”).  Subject to Sections 1.7(b) and 1.7(c), Buyer
shall pay to Sellers the Reimbursable Expense Amount no later than three (3)
business days after receipt of the Certificate.

 

                        (b)        If Buyer in good faith disputes the amount
set forth in the Certificate, Buyer shall deliver written notice to Sellers of
such objection no later than two (2) business days after receipt of the
Certificate.  Upon receipt of such notice, Buyer and Sellers shall attempt to
resolve and finally determine the Reimbursable Expense Amount.

 

                        (c)        If Buyer and Sellers shall be unable to agree
upon the Reimbursable Expense Amount within 15 days following Sellers’ delivery
of the Certificate, an independent auditor (the “Auditor”) shall review the
disputed items and make a final determination of the Reimbursable Expense Amount
(the “Final Reimbursable Expense Amount”).  The Auditor shall be of national
recognition and mutually agreed to by Buyer and Sellers within 30 days following
Sellers’ delivery of the Certificate.  The Auditor shall have 30 days after its
engagement to determine the Final Reimbursable Expense Amount and such
determination shall be binding upon, and may not be appealed by, the parties. 
Buyer shall pay to Sellers the Final Reimbursable Expense Amount no later than
two (2) business days after the receipt of such amount from the Auditor.  Buyer
and Sellers shall each pay one-half of the fees, costs and expenses of the
Auditor in connection with the determination under this Section 1.7.

 

Article 2

Closing, Closing Date, Items to Be Delivered,

Further Assurances, and Effective Date

 

            Section 2.1       Closing.  The consummation (the "Closing") of the
sale of the Acquired Assets and the assumption of the Assumed Liabilities upon
the terms and conditions set forth in this Agreement (the “Acquisition”) shall
take place at 9 a.m., local time, on November 12, 2002, provided that those
conditions to the Closing set forth in Article 7 that are not waived by the
appropriate party have been satisfied by such date (the "Closing Date"), at
Buyer's office located at 401 E. Jackson Street, Suite 1700, Tampa, Florida
33602, unless another date or place is agreed to in writing by the parties
hereto.

 

            Section 2.2       Conveyance and Delivery by Sellers.  On the
Closing Date, Sellers shall surrender and deliver possession of the Acquired
Assets to Buyer and take such steps as may be required to put Buyer in actual
possession and operating control of the Acquired Assets, and in addition shall
deliver to Buyer such bills of sale and assignments and other good and
sufficient instruments and documents of conveyance, in the form attached to this
Agreement, as shall be necessary and effective to transfer and assign to, and
vest in, Buyer all of Sellers' respective right, title and interest in and to
the Acquired Assets free and clear of any Encumbrance, subject to the terms and
conditions hereof.  Without limiting the generality of the foregoing, at the
Closing, Sellers shall deliver to Buyer:

 

                        (a)        A Bill of Sale and Assignment, substantially
in the form of Exhibit A, executed by Sellers (the "Bill of Sale");

 

                        (b)        An Assignment and Assumption Agreement,
substantially in the form of Exhibit B, executed by Sellers (the "Assignment and
Assumption Agreement");

 

                        (c)        An Employment Agreement, substantially in the
form of Exhibit C, executed by Martin (the "Martin Employment Agreement"); and

 

                        (d)        An Employment Agreement, substantially in the
form of Exhibit D, executed by Masters (the "Masters Employment Agreement").

 

            Section 2.3       Delivery by Buyer.  On the Closing Date, Buyer
shall deliver to Chartered:

 

                        (a)        A certified bank or cashier’s check (or, upon
Sellers' written request no more than two (2) business days prior to the Closing
Date, Buyer shall initiate a wire transfer of immediately available funds to one
or more accounts designated by Sellers) for the Down Payment Amount to be
delivered at Closing pursuant to Section 1.4(b)(i) hereof;

 

                        (b)        The Assignment and Assumption Agreement,
executed by Buyer;

 

                        (c)        The Martin Employment Agreement, executed by
Buyer; and

 

                        (d)        The Masters Employment Agreement, executed by
Buyer.

 

            Section 2.4       Mutual Performance.  At the Closing, the parties
shall also deliver to each other the agreements and other documents referred to
in Article 6 hereof.

 

            Section 2.5       Third Party Consents. To the extent that the
Acquired Assets may not be transferred to Buyer hereunder without the consent of
another person (including, without limitation, those persons described in
Schedule 6.16 hereof) which consent has not been obtained, this Agreement shall
not constitute an agreement to transfer the same if an attempted transfer would
constitute a breach thereof or be unlawful, and the Sellers, at their expense,
shall use their commercially reasonable efforts to obtain any such required
consent(s) as promptly as possible. If any such consent shall not be obtained or
if any attempted transfer would be ineffective or would impair Buyer's rights so
that Buyer would not in effect acquire the benefit of all such rights, Sellers,
to the maximum extent permitted by law, shall cooperate after the Closing with
Buyer in efforts to obtain for it the benefits thereunder and shall cooperate,
to the maximum extent permitted by law, with Buyer in any other reasonable
arrangement designed to provide such benefits to Buyer.

 

            Section 2.6       Further Assurances.  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.

 

            Section 2.7       Effective Date.  The effective date of this
Agreement and all related instruments executed at the Closing shall be November
1, 2002 (the "Effective Date") unless otherwise specified. 

 

Article 3

Representations and Warranties of Sellers, Shareholder and Martin

 

            Except as set forth in the disclosure schedules prepared by Sellers
and delivered to Buyer simultaneously with the execution hereof (the “Disclosure
Schedules”), Sellers, Shareholder and Martin, jointly and severally, represent
and warrant to Buyer that all of the statements contained in this Article 3 are
true as of the Effective Date (or, if made as of a specified date, as of such
date).  Disclosure in any section of the Disclosure Schedules shall be deemed to
be adequate response and disclosure of such facts or circumstances with respect
to all representations and warranties by Sellers to the extent the relation of
such disclosure to such other representations and warranties is reasonably
apparent.

 

            Section 3.1       Organization.  Each Seller is a corporation
organized and in good standing under the laws of the State of California.  Each
Seller has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.  Each Seller is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction set forth in Schedule 3.1.

 

            Section 3.2       Capitalization.  Chartered owns and holds all of
the outstanding shares of capital stock of Cal-Surance, UNIS, and SRII, and
there are no outstanding options or rights to acquire additional shares of
capital stock of Cal-Surance, UNIS, and SRII.  Cal-Surance owns and holds all of
the outstanding shares of capital stock of Lancer, and there are no outstanding
options or rights to acquire additional shares of capital stock of Lancer. 
Martin Trust owns and holds all of the outstanding shares of capital stock of
Chartered.

 

            Section 3.3       Authority.  Each Seller has the requisite power
and authority to 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 action on the part of
each Seller.  This Agreement has been, and the other agreements, documents and
instruments required to be delivered by each Seller in accordance with the
provisions hereof (collectively, the "Sellers' Documents") shall be, duly
executed and delivered by duly authorized officers of each Seller on behalf of
such Seller, and this Agreement constitutes, and the Sellers' Documents when
executed and delivered shall constitute, the legal, valid and binding
obligations of Sellers, Shareholder and Martin, as applicable, enforceable
against Sellers, Shareholder and Martin, as applicable, in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization or similar
laws from time to time in effect relating to or affecting the enforcement of
creditors' rights generally and general equitable principles.

 

            Section 3.4       Consents and Approvals; No Violations. 

 

                        (a)        Except for applicable requirements, if any,
of the Hart-Scott-Rodino Act (as defined below), neither the execution, delivery
or performance of this Agreement by Sellers nor the consummation by Sellers of
the transactions contemplated hereby nor compliance by Sellers with any of the
provisions hereof shall (i) conflict with or result in any breach of any
provision of their respective Governing Documents (as defined below), or
(ii) 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"), except in the case where such conflict or breach does not and could
not reasonably be expected to have a material adverse effect on the ability of
the parties hereto to consummate the transaction contemplated by this Agreement
or have a material adverse effect on the Acquired Assets (including the
Purchased Book of Business) (“Material Adverse Effect”).

 

As used in this Agreement, the term “Hart-Scott-Rodino Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any and
all rules and regulations promulgated thereunder.

 

                        (b)        As used herein, the term "Governing
Documents" means, with respect to any particular entity: (i) if a corporation,
the articles or certificate of incorporation and the bylaws; (ii) if a general
partnership, the partnership agreement and any statement of partnership;
(iii) if a limited partnership, the limited partnership agreement and the
certificate of limited partnership; (iv) if a limited liability company, the
articles of organization and operating agreement; (v) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; and (vi) any amendment or
supplement to any of the foregoing.

 

            Section 3.5       No Third Party Options.  Except as set forth in
Schedule 3.5, there are no existing agreements, options, commitments, or rights
with, of or to any Person to acquire any of any of the Acquired Assets or any
interest therein.

 

            Section 3.6       Financial Statements; No Material Adverse Change;
No Undisclosed Liabilities. 

 

                        (a)        Schedule 3.6(a) sets forth true and complete
copies of (i)  Sellers' consolidated balance sheet at December 31, 2001 (the
"Year-End Balance Sheet") and the related consolidated statement of income for
the fiscal year then ended (the "Year-End Income Statement") and (ii)  Sellers'
consolidatedbalance sheet (the "Interim Balance Sheet") at September 30, 2002
(the "Balance Sheet Date") and the related consolidatedstatement of income for
the nine (9) months then ended (the “Interim Income Statement”) (collectively,
the "Financial Statements").  All of such Financial Statements were prepared in
accordance with generally accepted accounting principles, consistently applied
throughout the periods involved (subject, in the case of interim period
statements, to normal recurring audit adjustments and absence of footnotes). 
The Year-End Balance Sheet and Interim Balance Sheet (collectively, the “Balance
Sheets”) fairly present in all material respects the consolidated financial
position, assets, and liabilities (whether accrued, absolute, contingent or
otherwise) of each Seller at the dates indicated and such statements of income
fairly present in all material respects the results of operations for the
respective periods then ended. Each Seller's financial books and records are
accurate and complete in all material respects.  No Seller has guaranteed any
premium financing on behalf of its customers.

 

                        (b)        Since the Balance Sheet Date, there has not
been any change in the business, operations, assets, liabilities, results of
operations or condition (financial or other) of any Seller or any Seller's
business other than changes that would not have a Material Adverse Effect, and
no event has occurred or circumstance exists that would result in such a
Material Adverse Effect.

 

                        (c)        Except as set forth in Schedule 3.6(c), no
Seller has any Liabilities except for Liabilities (i) reflected or reserved
against in the Financial Statements, (ii) current liabilities incurred in the
Ordinary Course of Business of such Seller (as defined in Section 3.7 hereof)
since the Balance Sheet Date, (iii) arising under the Seller Contracts, and (iv)
permitted to be incurred pursuant to this Agreement.

 

            Section 3.7       Absence of Certain Changes and Events. Except as
set forth in Schedule 3.7 or except as would not have a Material Adverse Effect,
since the Balance Sheet Date, each Seller has conducted its business only in the
Ordinary Course of Business (as defined below) and there has not been any:

 

                        (a)        change in any Seller's authorized or issued
capital stock, grant of any stock option or right to purchase shares of capital
stock of any Seller or issuance of any security convertible into such capital
stock;

 

                        (b)        amendment to the Governing Documents of any
Seller;

 

                        (c)        payment (except in the Ordinary Course of
Business) or increase by any Seller of any bonuses, salaries or other
compensation to any shareholder, director, officer or employee or entry into any
employment, severance or similar Contract with any director, officer or
employee, except for amendments to VISA;

 

                        (d)        adoption of, amendment to or increase in the
payments to or benefits under, any Employee Benefit Plan (as defined in
Section 3.15 hereof), except for amendments to VISA;

 

                        (e)        material damage to or destruction or loss of
any Acquired Asset;

 

                        (f)         entry into, termination of or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit or similar Contract to which any Seller is
a party, or (ii) any Contract or transaction involving a total remaining
commitment  by any Seller of at least $25,000.00;

 

                        (g)        sale, lease or other disposition of any
Acquired Asset (including the Intellectual Property Assets) or the creation of
any Encumbrance on any Acquired Asset;

 

                        (h)        cancellation or waiver of any claims or
rights with a value to any Seller in excess of $25,000.00;

 

                        (i)         written notice from any customer or supplier
of an intention to discontinue or change in any material respect the terms of
its relationship with any Seller including, without limitation, any major change
in a Program Business account or Commercial Business account; or

 

                        (j)         material change in the accounting methods
used by any Seller.

 

            As used herein, the term "Ordinary Course of Business" means any
action taken by any Seller which is consistent in nature, scope and magnitude
with the past practices of such Seller and is taken in the ordinary course of
the normal, day-to-day operations of such Seller.

 

            Section 3.8       Assets. 

 

                        (a)        Except as set forth on Schedule 3.8(a),
Sellers own and hold, free and clear of any Encumbrance, all right, title and
interest in and to the Acquired Assets, including but not limited to the
customer expiration Records for those accounts comprising the Purchased Book of
Business, together with the right to use such Records and all customer accounts,
copies of insurance policies and contracts in force and all files, invoices and
Records pertaining to the customers, and all other information comprising the
Purchased Book of Business.  Schedule 1.1(a) sets forth a complete and accurate
list of all active insurance accounts with respect to the Commercial Business. 
Except as set forth in Schedule 3.8(a), no Seller has received written notice
that any of the accounts comprising the Purchased Book of Business has canceled
or non-renewed or intends to cancel or non-renew. 

 

                        (b)        Schedule 3.8(b) shows the revenue received by
Sellers from each of their appointed carriers for the twelve-month period ended
September 30, 2002.  Except as set forth in Schedule 3.8(b), none of the
accounts shown in Schedule 1.1(a) represents revenue that has been brokered by
any Seller on behalf of a third party.

 

                        (c)        Sellers' consolidated Core Revenue (as
defined herein) for the twelve (12)-month period ended September 30, 2002 was at
least $27,400,000.00.  As used herein, the term "Core Revenue" means commission
revenue and fees, including contingent commissions and override commissions or
payments, net of any commissions paid to any third party producing agent or
agency, or to any third party broker, but shall not include late fees charged to
clients or interest income.

 

                        (d)        Except as set forth in Schedule 3.8(d), no
Seller holds any interest in any insurance captive entity.

 

            Section 3.9       Litigation and Claims.  Except as disclosed in
Schedule 3.9, there is no Proceeding pending by or against any Seller or, to the
Knowledge (as defined in Section 10.2) of any Seller, Shareholder or Martin,
threatened against any Seller, that would reasonably be expected to have a
Material Adverse Effect, and no circumstances exist that could reasonably form a
basis for such a Proceeding to be initiated or threatened.  No Seller is 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
reasonably be expected to have a Material Adverse Effect or would prevent such
Seller from consummating the transactions contemplated hereby.  No voluntary or
involuntary petition in bankruptcy, receivership, insolvency or reorganization
with respect to any Seller, or petition to appoint a receiver or trustee of any
Seller's property, has been filed by or against any Seller.  No Seller has 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. 
No Seller shall become "insolvent", as defined in the Uniform Fraudulent
Transfer Act ("UFTA") as a result of consummating the Contemplated Transactions,
nor shall any of the Contemplated Transactions constitute a transfer fraudulent
as to any Seller's, Shareholder's or Martin's present or future creditors under
the UFTA.

 

            Section 3.10     Compliance with Applicable Law. 

 

                        (a)        The Sellers collectively hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful operation of the Business (collectively, the
"Permits"), and each Seller is in material compliance with the terms of the
Permits, except where failure to so comply would not reasonably be expected to
have a Material Adverse Effect.

 

                        (b)        Except as set forth in Schedule 3.10(b), the
Business is not being conducted in violation of any Legal Requirement,
including, without limitation, (i) the Gramm-Leach-Bliley Financial Services
Modernization Act of 1999 and any applicable federal or state regulations
promulgated pursuant thereto, (ii) any Legal Requirement prohibiting the making
or offering of any improper gifts, "kickbacks", contributions or other illegal
or improper payments), or (iii) any Environmental Laws, except for possible
violations that individually or in the aggregate do not, and, insofar as
reasonably can be foreseen, would not, have a Material Adverse Effect. 

 

                        (c)        Without limiting the foregoing, each Seller's
revenues as set forth in the Financial Statements do not include any fees
received in addition to, or in lieu of, commissions from any account, except as
permitted by applicable Legal Requirements, and each Seller is otherwise in
material compliance with applicable Legal Requirements regarding rebating,
excess fees and charges, and other unfair insurance trade practices. 

 

            Section 3.11     Tax Returns and Audits.  Each Seller has (i) timely
filed all material federal, state, local and foreign Tax returns, including all
material amended returns, in each jurisdiction where such Seller is required to
do so through the Effective Date or has paid or made provision for the payment
of any penalty or interests arising from the late filing of any such return,
(ii) has, in all material respects, correctly reflected all material Taxes
required to be shown thereon, and (iii) has fully paid or made adequate
provision for the payment of all Taxes shown on such returns.  No Seller is
currently subject to any audits with respect to any federal, state, local or
foreign Tax returns required to be filed and there are no unresolved audit
issues with respect to prior years' Tax returns that, if such audits or audit
issues were adversely determined, could result in a Tax liability that would
have a Material Adverse Effect on the Acquired Assets after the Effective Date. 
No Seller has executed an extension or waiver of any statute of limitations on
the assessment or collection of any Tax due relating to the Acquired Assets that
is currently in effect.

 

            Section 3.12     Non-Solicitation Covenants.  Except as set forth in
Schedule 3.12, none of the Sellers or Martin is a party to any agreement that
restricts any Seller's or Martin's ability to compete in the insurance agency
industry or to solicit specific insurance accounts.

 

            Section 3.13     Insurance Policies; Errors and Omissions,
Employment Practices Liability and Employee Dishonesty Coverage.

 

                        (a)        Schedule 1.1(g) sets forth a complete and
correct list of all insurance policies held by Sellers with respect to their
businesses (including, without limitation, errors and omissions (E&O),
employment practices liability (EPL), and employee dishonesty coverage), and
true and complete copies of such policies have been delivered to Buyer.  Each
Seller has complied in all material respects with the provisions of such
policies and the policies are in full force and effect.

 

                        (b)        No Seller has incurred any material liability
or taken or failed to take any action that may reasonably be expected to result
in a material liability for errors or omissions in the conduct of its insurance
business or employment practices liability (EPL), except such liabilities as are
fully covered by insurance.  All errors and omissions (E&O) and EPL lawsuits and
claims currently pending or threatened against each Seller are set forth in
Schedule 3.9.  Each Seller has E&O insurance coverage in force, with minimum
liability limits of $20 million per claim and $20 million aggregate, with a
deductible of $100,000.00 per claim and $300,000.00 aggregate, and Sellers shall
provide to Buyer a certificate of insurance evidencing such coverage prior to or
on the Closing Date.  Each Seller has EPL insurance coverage in force, with
minimum liability limits of $5 million per claim and $5 million aggregate, with
a deductible of $50,000.00 per claim, and Sellers shall provide to Buyer a
certificate of insurance evidencing such coverage prior to or on the Closing
Date.  Each Seller has had the same or higher levels of E&O and EPL coverage
continuously in effect for at least the past five (5) years.  Schedule 3.13(b)
lists the E&O and EPL coverage Sellers have had in effect for the past five (5)
years.

 

                        (c)        Each Seller has employee dishonesty insurance
coverage in force, with minimum limits of $1 million per claim and $1 million
aggregate, with a deductible of $5,000.00 per claim.  Each Seller has complied
in all material respects with the provisions of its employee dishonesty bonds or
policies.

 

            Section 3.14     Employees.  Except as disclosed in Schedule 3.14,
all employees of Sellers are employees at will, and no Seller is a party to any
written contract of employment or any written engagement of any independent
contractor.

 

            Section 3.15     Employee Benefit Plans.  Schedule 3.15 lists each
Employee Benefit Plan (as defined below) that each Seller or any trade or
business, whether or not incorporated, that together with such Seller would be
deemed a "single employer" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (a "Seller ERISA
Affiliate") maintains or to which Seller or any Seller ERISA Affiliate
contributes.

 

                        (a)        Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form and in operation in
all respects with the applicable requirements of ERISA, the Code and other
applicable Legal Requirements, except to the extent any failure to comply could
not reasonably be expected to have a Material Adverse Effect. 

 

                        (b)        No Seller or Seller ERISA Affiliate
participates currently, has ever participated in, and is not required currently
and has never been required to contribute to or otherwise participate in any
"Multiemployer Plan" (as such term is defined in ERISA Section 3(37)) (a
"Multiemployer Plan").

 

                        (c)        No Seller or Seller ERISA Affiliate maintains
currently and has never maintained, 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.

 

                        (d)        Each Seller has delivered or made available
to Buyer correct and complete copies of the plan documents and summary plan
descriptions, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements that implement
each such Employee Benefit Plan.

 

As used in this Agreement, the term "Employee Benefit Plan" means any (a)
nonqualified deferred compensation or retirement plan or arrangement that is an
Employee Pension Benefit Plan as such term is defined in ERISA Section 3(2), (b)
qualified defined contribution retirement plan or arrangement that is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement that is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d)  Employee Welfare Benefit Plan as such term is
defined in ERISA Section 3(1) or material fringe benefit plan or program.

 

            Section 3.16     Intellectual Property.

 

                        (a)        To the Knowledge of any Seller, Shareholder
or Martin, each of the Sellers owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property Assets (as
defined below) necessary for the operation of the businesses of such Seller as
presently conducted and as currently proposed to be conducted.

 

                        (b)        To the Knowledge of any Seller, Shareholder
or Martin, no Seller has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and neither Martin nor any Seller has received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation with respect to such Intellectual Property rights
(including any claim that any Seller must license or refrain from using any
Intellectual Property rights of any third party).  To the Knowledge of any
Seller, Shareholder or Martin, no third party has interfered with, infringed
upon, or misappropriated any of Sellers’ Intellectual Property rights used
primarily in the operation of the Business.

 

                        (c)        No Seller has any patents issued in its name,
or patent applications filed or pending.  Seller has not granted any license,
agreement, or other permission to any third party with respect to any of its
Intellectual Property Assets.  Schedule 3.16(c) identifies each trade name,
fictitious business name, registered or unregistered trademark or service mark,
and proprietary software principally used by Sellers in the operation of the
Business in the past three (3) years.  With respect to each item of Intellectual
Property owned or used by Sellers primarily in the operation of the Business and
identified in Schedule 3.16(c):

 

                                    (i)         the item is not subject to any
outstanding Order;

 

                                    (ii)        no Proceeding is pending or, to
the Knowledge of any Seller, Shareholder or Martin, threatened that challenges
the legality, validity, enforceability, use, or ownership of the item; and

 

                                    (iii)       no Seller has ever agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.         

 

                        (d)        As used in this Agreement the term:

 

                                    (i)         "Intellectual Property"and
"Intellectual Property Assets" mean (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 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 registered domain names,
website content, website related software, and all other Internet related tools
and applications, (H) all other proprietary rights, and (I) all copies and
tangible embodiments thereof (in whatever form or medium). 

 

                        (e)        Sellers have provided Buyer access to all
existing documentation and source code for all software included in the
Intellectual Property owned or licensed by Sellers and primarily used in the
operation of the Business.

 

            Section 3.17     Disclosure.  None of the representations and
warranties of Sellers, Shareholder or Martin set forth in this Agreement or in
the attached Disclosure Schedules, notwithstanding any investigation thereof by
Buyer, contains any untrue statement of a material fact, or omits the statement
of any material fact necessary to render the statements made not misleading.

 

            Section 3.18     No Brokers.  Neither the Sellers, Shareholder nor
Martin has any Liability to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
Buyer could become liable or obligated.

 

Article 4

Representations and Warranties of Buyer

 

            As of the Effective Date, Buyer represents and warrants to Sellers,
Shareholder and Martin as follows:

 

            Section 4.1       Organization.  Buyer is a corporation organized
and in good standingunder the laws of the State of Florida.  Buyer has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.

 

            Section 4.2       Authority.  Buyer has the requisite power and
authority to 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 action on the part of
Buyer.  This Agreement has been, and the other agreements, documents and
instruments required to be delivered by Buyer in accordance with the provisions
hereof (collectively, the "Buyer's Documents") shall be, duly executed and
delivered, respectively, by the duly authorized representative of Buyer, on
behalf of Buyer.  This Agreement constitutes, and the Buyer's Documents when
executed and delivered shall constitute, the legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization or similar laws
from time to time in effect relating to or affecting the enforcement of
creditors' rights generally and general equitable principles.

 

            Section 4.3       Consents and Approvals; No Violations.  Neither
the execution, delivery or performance of this Agreement by Buyer 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 its Governing Documents, (b) require any filing with,
or permit, authorization, consent or approval of, any Governmental Entity
(except for necessary reports and other filings in connection with the
Hart-Scott-Rodino Act and with the Securities and Exchange Commission (the
“SEC”) and the New York Stock Exchange), or (c) result in a violation or breach
of, or constitute a default  under, any of the terms, conditions or provisions
of any agreement or other instrument or obligation to which Buyer is a party or
by which Buyer or any of its properties or assets may be bound.

 

            Section 4.4       Disclosure.  None of the representations and
warranties of Buyer set forth in this Agreement, notwithstanding any
investigation thereof by Sellers, Shareholder or Martin, contains any untrue
statement of a material fact, or omits the statement of any material fact
necessary to render the statements made not misleading.

 

            Section 4.5       No Litigation.  There are no Proceedings pending,
or the Knowledge of Buyer, threatened against Buyer, which would affect the
consummation of the transactions contemplated herein.

 

            Section 4.6       No Brokers.  Buyer has no Liability to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which any Seller, Shareholder or
Martin could become liable or obligated.

 

Article 5

Covenants

 

Intentionally Omitted.

 

Article 6

Additional Agreements

 

            Section 6.1       Intentionally Omitted. 

 

            Section 6.2       Expenses.  Whether or not the Acquisition is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses.

 

            Section 6.3       Brokers or Finders.  Each of the parties agrees to
indemnify and hold the others harmless from and against any and all claims,
liabilities, or obligations with respect to any fees, commissions, or expenses
asserted by any person on the basis of any act or statement alleged to have been
made by such party or its affiliate.

 

            Section 6.4       Additional Agreements; Best Efforts.  Subject to
the terms and conditions of this Agreement, each of the parties agrees to use
its commercially reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Legal Requirements to consummate and make effective
the Acquisition and the other transactions contemplated hereby, including
cooperating fully with the other parties.

 

            Section 6.5       Restrictive Covenants.

 

                        (a)        Non-Compete Covenant.  Each of the Sellers
and Martin agrees that it or he, as the case may be, shall not, for a period of
five (5) years beginning on the Closing Date (the "Restricted Period"), engage
in, or be or become the owner of an equity interest in, or otherwise directly
consult with or be employed by, or serve as a member of the board of directors
of, any entity (other than Buyer) engaged in (i) the Program Business within the
United States of America, or (ii) the Commercial Business within the following
California counties: Imperial, Kern, Los Angeles, Orange, Riverside, San
Bernardino, San Diego, or Ventura (as applicable under clause (i) or(ii) hereof,
the "Restricted Area"); provided however, that (i) either Martin or Shareholder,
or both, together may own not more than five percent (5%) of the outstanding
stock of any publicly traded corporation; (ii) Martin may serve as a member of
the board of directors of any company that is not abusiness enterprise that is
primarily engaged in the insurance program, retail insurance agency, or managing
general agency business in the United States(“Competitive Enterprise”); (iii)
none of Martin’s activities involving ePolicy, Inc. or any of its subsidiaries
or affiliatesshall constitute a Breach of this Section 6.5(a); and (iv) Martin
may continue as an officer, director or shareholder of any Seller after the
Closing Date as necessary to wind down the business of Sellers following the
Closing(this covenant is referred to herein as the "Non-Compete Covenant").

 

                        (b)        Non-Solicitation Covenant.  Without limiting
the foregoing, Sellers and Martin shall not, (i) solicit, divert, accept
business from, nor service, directly or indirectly, as insurance solicitor,
insurance agent, insurance broker or otherwise, for his account or the account
of any other agent, broker, or insurer, either as owner, shareholder, promoter,
employee, consultant, manager or otherwise, (A) during the Restricted Period,
any account that is part of the Purchased Book of Business as of the Effective
Date or any insurance account serviced by Buyer as of the Effective Date or (B)
for a period of three (3) years following the Effective Date, any account that
is acquired or produced by Buyer during such three (3)-year period, or (ii)
during the Restricted Period, hire or directly or indirectly solicit any
employees of Buyer or its affiliates to work for any Seller, Martin or any of
their respective affiliates, or for any Competitive Enterprise;provided,
however, that none of Martin’s activities involving ePolicy, Inc. or any of its
subsidiaries or affiliatesshall constitute a Breach of clause (i) of this
Section 6.5(b)  (this covenant is referred to herein as the "Non-Solicitation
Covenant").  Martin acknowledges that the non-solicitation covenants contained
in the Martin Employment Agreement shall be in addition to, and shall not
supersede or be subordinate to, the Non-Compete Covenant and Non-Solicitation
Covenant contained in this Section 6.5. 

 

                        (c)        Non-Disparagement Covenant. After the Closing
Date, neither Sellers nor Martin shall disparage Buyer or any of Buyer's
shareholders, directors or officers.

 

                        (d)        Reasonableness.  Sellers and Martin each
acknowledge and agree that the Non-Compete Covenant and Non-Solicitation
Covenant are being entered into voluntarily and for consideration and that,
given the nature and respective geographic scope of the Program Business, the
Restricted Period and the Restricted Area are reasonable in time and space. 
Notwithstanding anything in this Agreement to the contrary, the covenants set
forth in this Section 6.5 shall not be held invalid or unenforceable because of
the scope of the territory or actions subject hereto or restricted hereby, or
the period of time within which such covenants are imperative; but the maximum
territory, the actions subject to such covenants, and the period of time in
which such covenants are enforceable, respectively, are subject to determination
by a final judgment of any court which had jurisdiction over the parties and
subject matter.

 

            Section 6.6       Remedy for Breach of Covenants.  In the event of a
breach of the provisions of Section 6.5, Buyer shall be entitled to injunctive
relief as well as any other applicable remedies at law or in equity.  Should a
court of competent jurisdiction declare any of the covenants set forth in
Section 6.5 unenforceable due to a unreasonable restriction, duration,
geographical area or otherwise, the parties agree that such court shall be
empowered to grant Buyer or its affiliates injunctive relief to the extent
reasonably necessary to protect their respective interests.  Sellers and Martin
each acknowledge that the covenants set forth in Section 6.5 represent an
important element of the value of the Acquired Assets and were a material
inducement for Buyer to enter into this Agreement.

 

            Section 6.7       Successor Rights.  The covenants contained in
Section 6.5 shall inure to the benefit of any successor in interest of Buyer by
way of merger, consolidation, sale of a controlling interest, or other
succession.

 

            Section 6.8       Errors and Omissions and Employment Practices
Liability Extending Reporting ("Tail") Coverage.  On or prior to the Closing
Date, Sellers shall purchase, at Sellers' expense, a tail coverage extension on
an errors and omissions (E&O) and employment practices liability (EPL) insurance
policy covering all Sellers with respect to acts or omissions occurring prior to
the Effective Date.  Such coverage shall extend for a period of at least
eighteen (18) months from the Effective Date, in an amount equal to the lesser
of (i) the existing amount of coverage of the existing E&O and EPL policies
maintained by the Sellers as of the date of this Agreement (the “Existing
Policies”) and (ii) the amount of coverage purchased by 150% of the amount of
the last annual premiums paid by Sellers prior to the date of this Agreement for
the Existing Policies; provided, however, that Seller may substitute for the
Existing Policies other policies of comparable coverage.  A certificate of
insurance evidencing each such coverage shall be delivered to Buyer at or prior
to Closing.

 

            Section 6.9       Confidentiality; Publicity.  So long as the terms
hereof have not been publicly disclosed, each of the parties agrees to maintain
the terms of this Agreement, including the consideration payable by Buyer, in
strict confidence and shall not disclose such terms to any third party without
the prior written consent of all parties to this Agreement, unless required to
do so by applicable Legal Requirements.  The provisions of this Section 6.9
shall not be deemed to prevent any party from disclosing the terms of this
Agreement to their board of directors, advisory board, accountants, counsel,
other professionals engaged by such party, VISA Participants, the VISA trustee,
or any employee of any Seller who participated in due diligence. 
Notwithstanding any provision in this Section 6.9, each of the parties
acknowledges and agrees that Buyer, Sellers and Shareholder shall, promptly
after the Closing, issue a jointly prepared press release containing certain
details with respect to the transactions contemplated hereby.  Buyer and Sellers
shall consult with each other prior to issuing any press releases or otherwise
making public announcements with respect to the transactions contemplated hereby
and prior to making any filings with any third party or Governmental Entity with
respect thereto, except as may be required by applicable Legal Requirements.

 

            Section 6.10     Intentionally Omitted. 

 

            Section 6.11     Corporate Name.  Promptly after the Closing,
Sellers agree to cease all operational use of the names "Cal-Surance
Associates," “United Network of Insurance Services,” “Sterling Reinsurance
Intermediaries” and “Lancer Claims Services” or any derivatives thereof (though
Sellers shall be entitled to the use of such names in connection with the
winding-down of their respective affairs or liquidations for a period not longer
than eighteen (18) months following the Closing) and shall, no later than five
(5) business days after the Closing Date, file an amendment to their respective
Articles of Incorporation, changing their respective corporate names to new
names that bear no resemblance to their respective current names.

 

            Section 6.12     Post-Closing Payment of Liabilities. 

 

                        (a)        Taxes Resulting from Sale of Assets by
Seller. Sellers shall pay in a timely manner all Taxes imposed on Sellers under
the applicable Legal Requirements resulting from or payable in connection with
the sale of the Acquired Assets pursuant to this Agreement.  If required by
applicable Legal Requirements, Buyer shall, and shall cause its affiliates to,
join in the execution of any Tax return or other documentation prepared in
connection with the payment of such Taxes.

 

                        (b)        Payment of Other Retained Liabilities. 
Sellers shall pay, or make adequate provision for the payment, in full, of all
Retained Liabilities of Sellers under this Agreement.  If any such Retained
Liabilities are not so paid or provided for and Buyer reasonably determines that
failure to make any payments shall materially impair Buyer's use or enjoyment of
the Acquired Assets or conduct of the Business in a manner consistent with the
manner conducted by Sellers prior to the Effective Date, Buyer may, at any time
after the Closing Date, elect to make such payments directly (but shall have no
obligation to do so) upon reasonable prior notice to Sellers.

 

            Section 6.13     Reports and Returns. Each Seller shall promptly
after the Closing prepare and file all reports and returns required by Legal
Requirements relating to the business of such Seller as conducted using the
Acquired Assets, to and including the Effective Date.

 

            Section 6.14     Client and other Business Relationships. After the
Closing, Sellers and Martin shall cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business relationships of
Sellers existing prior to the Closing and relating to the Business, including
relationships with lessors, employees, regulatory authorities, licensors,
clients, suppliers and others, and Sellers shall take commercially reasonable
steps to satisfy the Retained Liabilities in a manner that is not specifically
intended to be detrimental to any such relationships.  For a period of nine (9)
months following the Effective Date (or, with respect to Martin, during Martin's
employment with Buyer but in any event not less than nine (9) months following
the Effective Date), Sellers and Martin shall refer to Buyer all inquiries
related to the Business from existing clients, insurance program insurance
agents, or insurance carriers that reasonably may be expected to represent
material new business or new program distribution opportunities for Buyer.

 

            Section 6.15     Retention of and Access to Records; Post-Closing
Assistance.

 

                        (a)        After the Closing Date, Buyer shall retain
for a period consistent with Buyer's record-retention policies and practices
those Records of Sellers delivered to Buyer; provided, however, that in no event
shall the period be shorter than eighteen (18) months following the Closing
Date; and provided, further, that (i) Buyer shall retain all such Records with
respect to Tax matters (including any Records that Sellers may reasonably
designate as being with respect to Tax matters) pertinent to any of Sellers,
Shareholder or Martin for at least seven (7) years following the Closing Date,
and (ii) after such eighteen month period (or seven year period in the case of
Records relating to Tax maters), Buyer shall provide Sellers, Shareholder and
Martin with at least ten (10) days prior written notice before transferring,
destroying or discarding any such Records, during which period any Seller,
Shareholder or Martin can elect to take possession, at its own expense, of such
Records. Buyer also shall provide Sellers, Shareholder, Martin and their
representatives access to Records, information and assistance, during normal
business hours and on at least three (3) business days' prior notice, which are
reasonably necessary for Sellers’ winding-down and liquidation following the
Closing, preparation of financial statements, preparation and filing of Tax
returns, preparation for any audit by any Taxing authority, and prosecution or
defense of any other Proceeding relating to Tax.  For a period of eighteen (18)
months following the Closing Date, Sellers shall provide Buyer and its
representatives reasonable access to Records that are Excluded Assets, during
normal business hours and on at least three (3) business days' prior written
notice, for any reasonable business purpose specified by Buyer in such notice. 
Sellers, Shareholder, Martin and Buyer shall cooperate fully, as and to the
extent reasonably requested by the other party, with each other in the conduct
of any audit or other Proceeding relating to Taxes involving the Acquired
Assets.  Upon Sellers’ request, Buyer shall cooperate with Sellers, Shareholder
and Martin and use its commercially reasonable best efforts to obtain any
certificate or other document from any Government Entity as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby). 

 

                        (b)        Buyer covenants and agrees that subsequent to
the Closing Date (i) it will, at the request and under the direction of Sellers,
Shareholder or Martin, prepare such reports and data and provide such other
information and administrative support as shall be reasonably requested by
Sellers, Shareholder or Martin to enable Sellers, Shareholder or Martin to
comply with their respective obligations with respect to the issuance of
Forms W-2, 1099 and other tax reports, reports and notices relating to pension,
profit sharing, health and other plans, income tax returns, preparation of
financial statements and completion of the Sellers’ audit for 2001 and 2002, and
other similar matters, and to wind down the business of Sellers following the
Closing Date, except, that, to the extent Buyer is required to seek outside
assistance in complying with this Section 6.15(b), such assistance shall be for
the account of Sellers, Shareholder and Martin and (ii) Buyer shall make its
employees (including any of its employees who were formerly employees of any
Seller, Shareholder or Martin) reasonably available from time to time subsequent
to the Closing Date to assist Sellers, at Sellers’ cost and expense, in
connection with the defense, prosecution or investigation of Sellers’ continuing
obligations, rights and liabilities relating to the Business and the Acquired
Assets.

 

            Section 6.16     Notices and Consents.  Each Seller shall give any
required notices to third parties, and each Sellers shall use their commercially
reasonable efforts to obtain those third party consents set forth in
Schedule 6.16.  Sellers and Buyer shall give any notices to, make any filings
with, and use their commercially reasonable efforts and cooperate with one
another to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section 3.4
above.

 

            Section 6.17     Pizza Program Payout.  In connection with the
acquisition by Cal-Surance of a business providing insurance to pizza parlors
(the “Pizza Program”) pursuant to that certain Asset Purchase Agreement dated
November 7, 2001 (the "Pizza Agreement"), with Gail H. Murrell and Virginia
Murrell d/b/a Gail H. Murrell Insurance Agency (the "Pizza Program Sellers"),
each of the parties hereto acknowledges that after the Closing, Buyer shall be
responsible for any payments due from Sellers after the Effective Date under the
Pizza Agreement to the Pizza Program Sellers, to the extent aggregate payments
under the Pizza Agreement are required under the terms thereof to be made in
excess of $832,104.00 (the "Excess Pizza Program Amount").  Buyer shall make
payment of the Excess Pizza Program Amount, if any, to the Pizza Program Sellers
as specified in the Pizza Agreement.

 

            Section 6.18     Employee Matters.

 

                        (a)        Attached hereto as Schedule 6.18 is a list of
those employees of Seller to whom Buyer intends to make offers of employment on
or after the Closing, effective as of the Effective Date.  Buyer shall assume
all Liability for accrued but unpaid vacation liabilities of Seller as of the
Effective Date (such assumed Liability, the “PTO Liability”) that are
attributable to each such Seller employee who accepts an offer of employment
with Buyer (each a “Transferred Employee”).  On and after the Effective Date,
each Transferred Employee shall accrue paid time off benefits in accordance with
the Buyer’s policies, as may be amended from time to time after the Effective
Date. 

 

                        (b)        Buyer shall provide each Transferred Employee
credit for years of service with the Sellers prior to the Effective Date for
purposes of eligibility and vesting under the Buyer’s Employee Benefit Plans and
for purposes of any pre-existing condition limitations and eligibility waiting
periods under group health plans of the Buyer.

 

                        (c)        Buyer shall be responsible for providing
continuation coverage as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), under a group health plan
maintained by Buyer, to those employees of Company and any other qualified
beneficiaries under COBRA with respect to such employees, who have a COBRA
qualifying event (due to termination of employment with Company or otherwise)
prior to or in connection with the transactions contemplated by this Agreement,
including any employees of Sellers who remain employed following the Closing and
who lose coverage upon termination of Sellers’ group health plan.  Buyer shall
indemnify and hold Sellers harmless from any and all damages, liabilities,
claims or expenses incurred by Sellers as a result of the failure of Buyer to
comply with any of the requirements of COBRA, including applicable notice
requirements.

 

            Section 6.19     Secured Indebtedness Amount.  Not later than two
(2) business days before the Closing, Sellers shall provide to Buyer an updated
Secured Indebtedness Amount, estimated as of the expected Closing Date, together
with (a) wire transfer instructions for those secured creditors whose
outstanding balances comprise the Secured Indebtedness Amount, and (b) an
aggregate per diem amount in the event the Secured Indebtedness Amount is paid
by Buyer on other than the Closing Date.

 

            Section 6.20     Office Space at Buyer's Location; Reimbursement for
Staff Assistance. 

 

                        (a)        For a period of up to one (1) year following
the Closing Date, Buyer shall make a reasonable amount of office space at
Buyer's Orange County, California profit center (or successor location)
available for use by Martin, at no additional cost or expense to Martin.

 

                        (b)        During Martin's employment with Buyer and for
a period of up to one (1) year following the Closing Date, Buyer shall pay
Martin an amount equal to $15,000.00 for administrative support during such
period. 

 

                        (c)        Buyer and Martin acknowledge that the
foregoing use of the office space and the provision of administrative support
are for the purpose of winding down the businesses of Sellers following the
Closing and other matters not involving Buyer.  After the expiration of such one
(1)-year period, the availability of office space and administrative support
shall be as mutually agreed upon between Buyer and Martin.

 

            Section 6.21     Employee Purchase Options.  The parties each
acknowledge and agree that pursuant to the terms of Sellers' existing employment
agreements with those Seller employees listed in Schedule 3.5 hereto, such
Seller employees have the option, at any time within two (2) years after
termination of their employment with Sellers, to purchase from Sellers the
client accounts that such employees personally worked on or were responsible for
(collectively, the "Option Employees").  In the event that any of the Option
Employees exercises such purchase option during such two (2)-year period and
Buyer must deliver ownership of any client accounts to such Option Employees,
Buyer agrees to cooperate, to the extent commercially reasonable, with Sellers
to deliver such accounts to such Option Employees, and Sellers agree to pay over
any purchase proceeds from such Option Employees to Buyer within fifteen (15)
days after Sellers' receipt of such proceeds.

 

Article 7

Conditions

 

            Section 7.1       Conditions to Each Party's Obligation.  The
respective obligations of each party to effect the transactions contemplated by
this Agreement to take place at the Closing shall be subject to the satisfaction
prior to or on the Closing Date of the following conditions, any of which may be
waived by a party with respect to its own obligation to close:

 

                        (a)        Approvals.  All authorizations, consents,
orders, or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by any Governmental Entity, the failure to obtain which
would have a Material Adverse Effect, shall have been filed, occurred, or been
obtained. 

 

                        (b)        No Injunctions or Restraints.  No temporary
restraining order, preliminary or permanent injunction, or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
shall be in effect (i) preventing the consummation of the transactions
contemplated hereunder, or (ii) that would cause any of the transactions
contemplated by this Agreement to be rescinded following consummation.

 

            Section 7.2       Conditions to Obligations of Buyer.  The
obligation of Buyer to effect the transactions contemplated hereby is subject to
the satisfaction of the following conditions, unless waived by Buyer:

 

                        (a)        Representations and Warranties.  The
representations and warranties of Sellers, the Shareholder and Martin set forth
in this Agreement shall be true and correct in all material respects as of the
Effective Date, other than those made as of another specific date, which shall
be true and correct in all material respects as of such other date;

 

                        (b)        Performance of Obligations by Sellers, the
Shareholder and Martin.  Sellers, the Shareholder and Martin shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date;

 

                        (c)        Bill of Sale. Sellers shall have executed and
delivered the Bill of Sale to Buyer;

 

                        (d)        Assignment and Assumption Agreement.  Sellers
shall have executed and delivered the Assignment and Assumption Agreement to
Buyer;

 

                        (e)        Martin Employment Agreement.  Sellers shall
have delivered the Martin Employment Agreement to Buyer, executed by Donald E.
Martin;

 

                        (f)         Masters Employment Agreement.  Sellers shall
have delivered the Masters Employment Agreement to Buyer, executed by Masters;

 

                        (g)        Required Consents.  Sellers shall have
delivered evidence that all third party consents and approvals identified in
Schedule 6.16 were obtained;

 

                        (h)        Sellers' Board Resolutions. Sellers shall
have delivered to Buyer duly adopted resolutions of the Board of Directors of
each Seller, approving this Agreement and the transactions contemplated hereby,
in accordance with applicable provisions of the California Corporations Code
regarding the sale of assets other than in the ordinary course of business;

 

                        (i)         Disclosure Schedules.  Sellers shall have
delivered to Buyer the Disclosure Schedules;

 

                        (j)         Intentionally Omitted.

 

                        (k)        Intentionally Omitted.

 

                        (l)         E&O and EPL Tail Coverages.  Sellers shall
have delivered evidence to Buyer, commercially reasonably satisfactory to Buyer,
of a Certificate of Insurance regarding the tail coverages required under
Section 6.8 hereof;

 

                        (m)       No Secured Indebtedness Amount Encumbrances. 
Upon Buyer's discharge of the Secured Indebtedness Amount (as defined in Section
1.4(b)(i)(C) hereof) at or prior to the Closing, all Encumbrances on the
Acquired Assets securing the Secured Indebtedness Amount shall have been
satisfied and released, and Sellers shall have delivered UCC termination
statements evidencing the release of all such Encumbrances; and

 

                        (n)        Material Adverse Changes.  There shall have
been no Material Adverse Effect since the Balance Sheet Date.

 

            Section 7.3       Conditions to Obligation of Sellers and
Shareholder.  The obligation of Sellers and Shareholder to effect the
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Sellers and Shareholder:

 

                        (a)        Representations and Warranties.  The
representations and warranties of Buyer set forth in this Agreement shall be
true and correct in all material respects as of the Effective Date, other than
those made as of another specific date, which shall be true and correct in all
material respects as of such other date;

 

                        (b)        Performance of Obligations by Buyer.  Buyer
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;

 

                        (c)        Assignment and Assumption Agreement.  Buyer
shall have executed and delivered the Assignment and Assumption Agreement to
Sellers;

           

                        (d)        Martin Employment Agreement.  Buyer shall
have executed and delivered the Martin Employment Agreement to Martin;

 

                        (e)        Masters Employment Agreement.  Buyer shall
have executed and delivered the Masters Employment Agreement to Masters; and

 

                        (f)         Intentionally Omitted.

 

                        (g)        Secured Indebtedness Amount.  Buyer shall
have delivered to Sellers evidence of Buyer's discharge of the Secured
Indebtedness Amount.

 

Article 8

Indemnification

 

            SECTION 8.1       SURVIVAL OF REPRESENTATIONS, WARRANTIES,
INDEMNITIES AND COVENANTS.

 

            (a)        The representations, warranties and indemnities set forth
in this Agreement shall survive the Closing and continue in full force and
effect for a period ending on April 30, 2004, solely for purposes of this
Article 8 (the "Survival Period").  All post-closing covenants shall survive the
Closing for the period(s) specified in this Agreement or, if not specified, for
the Survival Period, solely for purposes of this Article 8.  If a party has
received notice of a potential breach of a representation, covenant or warranty,
or the occurrence of an otherwise potentially-indemnifiable event under this
Agreement within such period, such party may preserve its right to assert a
later claim for damages arising from such breach or event by delivering notice
of same to the other party within the period. The right to indemnification,
reimbursement or other remedy based upon such representations, warranties,
covenants and obligations shall not be affected by any investigation conducted
at any time, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with any such representation, warranty, covenant or obligation.

 

                        (b)        Notwithstanding anything set forth in Section
8.1(a), all representations, warranties, covenants and indemnities in connection
with any Tax Liabilities of any Seller, Shareholder or Martin, shall survive
until the expiration of the applicable statutes of limitation.

 

            Section 8.2       Indemnification Provisions for the Benefit of
Buyer.  Subject to Section 8.4 hereof:

 

                        (a)        To the extent that any Seller employee listed
in Schedule 6.18 diverts any accounts which are part of the Purchased Book of
Business, Buyer shall be indemnified by Sellers and the Shareholders (which
obligation shall be joint and several) as follows:

 

                                    (i)         If such Seller employee refuses
to sign Buyer's standard employment agreement and Buyer refuses to employ such
Seller employee, Buyer shall be indemnified for an amount equal to 2.0 times the
aggregate, annualized Core Revenue on such diverted accounts, provided that such
diversion occurred on or before the one (1) year anniversary of the Effective
Date;

 

                                    (ii)        If such Seller employee signs
Buyer's standard employment agreement but leaves Buyer's employment for any
reason during the fifty-nine (59) day-period following the Effective Date, Buyer
shall be indemnified for an amount equal to 1.0 times the aggregate, annualized
Core Revenue on such accounts, provided that such diversion occurred on or
before the one (1) year anniversary of the Effective Date; or

 

                                    (iii)       If such Seller employee signs
Buyer's standard employment agreement but leaves Buyer's employment for any
reason on or after the sixtieth (60th) day following the Effective Date, Buyer
shall not be entitled to any indemnification for any such diverted accounts,
regardless of when such diversion occurred;

 

provided, however, that in the case of clauses (i)   or (ii), prior to asserting
an indemnification claim, Buyer shall provide Sellers, Shareholder and Martin
with written notice of any such diversion of business (or anticipated diversion
of business), setting forth the name of the former Seller employee, the accounts
diverted (or anticipated to be diverted), the approximate dollar amount of
annual Core Revenue represented by the diverted business (or anticipated
diversion of business), and reasonable supporting documentation.  Sellers,
Shareholder and Martin shall have right, for thirty (30) days after Buyer's
delivery of such written notice, to request additional supporting documentation
and reasonable access during normal business hours to Buyer's Records with
respect to the purportedly diverted business, and to attempt to mitigate Buyer's
losses (or anticipated losses) as a result of such diversion (or anticipated
diversion) including, but not limited to, by directly contacting the former
Seller employee for the purpose of restoring (or preventing) such diverted
business (and corresponding Core Revenue lost from the date of such diversion). 
Buyer shall be entitled to indemnification from Sellers (but only to the extent
Sellers, Shareholder or Martin is unable to prevent the diversion described
above) under this Section 8.2(a) for the applicable multiple times the
difference between the aggregate amount of diverted business and the amount of
Core Revenue that Sellers, Shareholder and Martin were successful in restoring
to Buyer as a result of such diversion.

 

                        (b)        Sellers, Shareholder and Martin each agree,
jointly and severally, to indemnify and hold Buyer and its officers, directors,
and affiliates (collectively, the "Buyer Indemnified Parties") harmless from and
against any Adverse Consequences (as defined below) that any of such parties may
suffer or incur resulting from, arising out of, relating to, or caused by
(i) any Breach of any Seller's, Shareholder’s or Martin's representations,
warranties, obligations or covenants contained herein, or (ii) the operation of
the Business or ownership of the Acquired Assets by any Seller prior to the
Effective Date, including, without limitation, (A) any Proceedings based on
conduct of any Seller, Shareholder or Martin occurring before the Effective Date
or (B) any Liability of any Seller that is not an Assumed Liability.  For
purposes of this Article 8, the term "Adverse Consequences" means all
out-of-pocket payments, expenses or losses resulting from any charges,
complaints, actions, suits, proceedings, hearings, investigations, claims,
demands, judgments, orders, decrees, stipulations, injunctions, damages, dues,
penalties, fines, costs, amounts paid in settlement, Liabilities, obligations,
taxes, liens, and fees, including all reasonable attorneys' fees and court
costs.

 

            Section 8.3       Indemnification Provisions for the Benefit of
Sellers, Shareholder and Martin.  Subject to Section 8.4 hereof, Buyer agrees to
indemnify and hold Sellers, Shareholder, Martin and their respective officers,
directors, shareholders and affiliates harmless from and against any Adverse
Consequences that any of such parties may suffer or incur resulting from,
arising out of, relating to, or caused by (a) any Breach of any of Buyer's
representations, warranties, obligations or covenants contained herein, or (b)
the operation of the Business or ownership of the Acquired Assets by Buyer after
the Effective Date (other than the Retained Liabilities), including, without
limitation, (i) any Proceedings based on conduct of Buyer occurring on or after
the Effective Date, (ii) any Assumed Liability, or (iii) the continued
processing by Sellers from the Effective Date through December 31, 2002 of
payroll and related deductions and reporting for those employees of Seller who
become employed with Buyer at the Closing but effective as of the Effective
Date, provided that, with respect to clause (iii) of this subsection (b), such
indemnification by Buyer shall not be subject to the limitations set forth in
Section 8.4 hereof.

 

            Section 8.4       Indemnification Limitations.   Except (x) with
respect to any Tax Liabilities of any Seller, Shareholder or Martin, (y) with
respect to any Breach by Martin of his covenants under Section 6.5 hereof, or
(z)in the event of fraud:

 

                        (a)        No party (the "Indemnified Party") shall be
entitled to indemnification pursuant this Article 8 until the aggregate amount
otherwise payable under such section exceeds $175,000.00, in which event the
Indemnified Party shall be entitled to indemnification from the other party (the
"Indemnifying Party"), but only for the amount by which such claim exceeds
$175,000.00;

 

                        (b)        In no event shall the Liability for any party
(the Sellers, the Shareholder and Martin collectively being considered one party
for purposes of this Section 8.4(b)) in the aggregate exceed $7,500,000.00.

 

                        (c)        Each party hereto shall take all commercially
reasonable steps to mitigate all Adverse Consequences upon and after becoming
aware of any event which could reasonably be expected to give rise to Adverse
Consequences that are indemnifiable hereunder.

 

                        (d)        Any indemnification payment required to be
paid by a party (the “Indemnifying Party”) pursuant to this Article 8 shall be
reduced by (i) the amount of any insurance proceeds actually paid or payable to
the party seeking indemnification hereunder (the “Indemnified Party”) with
respect to its loss, and (ii) any indemnity, contribution or other similar
payment actually paid to the Indemnified Party by any third party with respect
to its loss.

 

                        (e)        Except as set forth in Section 6.6 of this
Agreement, each party’s rights to indemnification as provided for in this
Article 8 for breach of the other’s representations, warranties, obligations or
covenants contained in this Agreement shall constitute the Indemnified Party’s
sole remedy for such a Breach, and the Indemnifying Party shall have no other
liability to the Indemnified Party resulting from the Breach.

 

                        (f)         Any liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state of
facts giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.

 

                        (g)        All indemnification payments made under this
Article 8 shall be deemed adjustments to the Purchase Price, except as otherwise
required by applicable Legal Requirements.

 

                        (h)        Upon the final settlement or final,
non-appealing determination of any indemnification claims made by Buyer in favor
of Buyer pursuant to the indemnification procedures set forth in this Article 8
(collectively, "Final Indemnification Amounts"),Buyer shall be entitled to
offset such Final Indemnification Amounts against the Final Purchase Price
Amount otherwise due to Sellers under Section 1.4(b)(iv)hereof; provided,
however, that in the event the Final Indemnification Amounts exceed the Final
Purchase Price Amount, such offset shall not operate to waive the obligations of
Sellers, Shareholders and Martin to pay Buyer the unsatisfied portion of such
Final Indemnification Amounts. 

 

            SECTION 8.5       MATTERS INVOLVING THIRD PARTIES.

 

                        (a)        If any third party shall notify any
Indemnified Party with respect to any matter (a “Third Party Claim”) that may
give rise to a claim for indemnification against the Indemnifying Party under
this Article 8, 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
such claim is within the scope of and subject to the indemnification provisions
of this Article 8 (subject to the limitations of Section 8.4), (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, in which case it shall not be liable to the Indemnified Party under
this Article 8 for any fees or related expenses of other counsel subsequently
incurred by the Indemnified Party in connection with the defense of such
Proceeding.

 

                        (c)        So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with
Section 8.4(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) 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 the Indemnifying Party does not elect to
assume the defense of the Third Party Claim in accordance with the provisions of
Section 8.4(b), (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), and (ii) 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 8.

 

                        (e)        If an Indemnifying Party elects to defend or
prosecute a Third Party Claim, the Indemnified Party shall reasonably cooperate
in the defense or prosecution thereof, which cooperation shall include, to the
extent reasonably requested by the Indemnifying Party, the retention, and the
provision to Indemnifying Party, of Records and information reasonably relevant
to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
materials provided thereunder.

 

            Section 8.6       Tax Benefit.  To the extent that the Indemnified
Party recognizes "Tax Benefits" (as defined below) as a result of any Adverse
Consequences, the Indemnified Party shall pay the amount of such Tax Benefits
(but not in excess of the indemnification payment or payments actually received
from the Indemnifying Party with respect to such Adverse Consequences) to the
Indemnifying Party as such Tax Benefits are actually recognized by the
Indemnified Party.  For this purpose, the Indemnified Party shall be deemed to
recognize a tax benefit (the "Tax Benefit") with respect to a taxable year if,
and to the extent that, the Indemnified Party's cumulative liability for Taxes
through the end of such taxable year, calculated by excluding any Tax items
attributable to the Adverse Consequences and the receipt of indemnification
payments under this Article 8 from all taxable years exceeds the Indemnified
Party's actual cumulative liability for Taxes through the end of such taxable
year, calculated by taking into account any Tax items attributable to the
Adverse Consequences and the receipt of indemnification payment under this
Article 8 for all taxable years (to the extent permitted by relevant Tax law and
treating such Tax items as the last items taken into account for any taxable
year).

 

Article 9

Termination and Amendment

 

Intentionally Omitted. 

 

Article 10

Miscellaneous

 

            Section 10.1     Notices.  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) to the parties at the following addresses or at such other
address for a party as shall be specified by like notice:

 

 

 

 

 

 

(a) 

If to Buyer, to

 

 

 

 

 

 

 

 

Brown & Brown, Inc.

 

 

 

220 S. Ridgewood Avenue

 

 

 

Daytona Beach, Florida  32114

 

 

 

Telecopy No.: (386) 239-5729

 

 

 

Attn:  Jim W. Henderson

 

 

 

          Regional Executive Vice President

 

 

 

 

 

 

 With a copy to

 

 

 

 

 

 

Brown & Brown, Inc.

 

 

401 E. Jackson Street, Suite 1700

 

 

Tampa, Florida  33602

 

 

Telecopy No.: (813) 222-4464

 

 

Attn:  Laurel L. Grammig, Esq.

 

 

          General Counsel

 

 

 

 

(b) 

If to Sellers, the Shareholder or Martin, to

 

 

 

 

 

 

19191 South Vermont Avenue

 

 

Suite 770

 

 

Torrance, CA 90502

 

 

Fax (310) 819-3311

 

 

Attention: Donald E. Martin

 

 

 

 

With a copy to

 

 

 

 

 

 

Latham & Watkins

 

 

135 Commonwealth Drive

 

 

Menlo Park, CA  94025

 

 

Telecopy No.: (650) 463-2600

 

 

Attn:  Patrick Pohlen, Esq.

 

 

            Section 10.2     Use of Term "Knowledge".  With respect to the term
"Knowledge" as used herein, (a) Martin shall be deemed to have "Knowledge" of a
particular fact or other matter if he is actually aware of such fact or other
matter, or reasonably should be aware of such fact or other matter; (b) a Seller
or Shareholder shall be deemed to have "Knowledge" of a particular fact or other
matter if Martin, Masters or James Adams is actually aware of such fact or other
matter, or reasonably should be aware of such fact or other matter; and (b)
Buyer shall be deemed to have "Knowledge" of a particular fact or other matter
if J. Hyatt Brown, Jim W. Henderson, Cory Walker or Rich Freebourn is actually
aware of such fact or other matter, or reasonably should be aware of such fact
or other matter.

 

            Section 10.3     Counterparts.  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.

 

            Section 10.4     Entire Agreement.  This Agreement (including the
Schedules, Exhibits, and other documents and instruments delivered pursuant to
this Agreement) constitutes the entire agreement and supersedes all prior
agreements (including, without limitation, the Original Agreement) and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.

 

            Section 10.5     Assignment; No Third Party Rights.  Subject to
Section 6.7 hereof, neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties.  This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective successors and permitted
assigns.  Each of the provisions of this Agreement is for the sole and exclusive
benefit of the parties hereto.  Nothing in this Agreement is to be construed to
give any Person other than the parties to this Agreement any legal or equitable
right under or with respect to this Agreement or any provision of this
Agreement.

 

            Section 10.6     Joint Efforts.  This Agreement is the result of the
joint efforts and negotiations of the parties hereto, with each party being
represented, or having the opportunity to be represented, by legal counsel of
its own choice, and no singular party is the author or drafter of the provisions
hereof.  Each of the parties assumes joint responsibility for the form and
composition of this Agreement and each party agrees that this Agreement shall be
interpreted as though each of the parties participated equally in the
composition of this Agreement and each and every provision and part hereof.  The
parties agree that the rule of judicial interpretation to the effect that any
ambiguity or uncertainty contained in an agreement is to be construed against
the party that drafted the agreement shall not be applied in the event of any
disagreement or dispute arising out of this Agreement.

 

            Section 10.7     Headings.  All paragraph headings herein are
inserted for convenience of reference only and shall not modify or affect the
construction or interpretation of any provision of this Agreement.

 

            Section 10.8     Severability. In the event that any provision,
covenant, section, subsection, paragraph, or any portion thereof, of this
Agreement is held by any court of competent jurisdiction to be illegal, invalid
or unenforceable, either in whole or in part, the legality, validity or
enforceability of the remaining provisions, covenants, sections, subsections,
paragraphs, or portions thereof shall not be affected thereby, and each such
provision, covenant, section, subsection, paragraph, or any portion thereof
shall remain valid and enforceable to the fullest extent permitted by law.

 

            Section 10.9     Attorneys' Fees and Costs.  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.

 

            Section 10.10   Governing Law.  This Agreement shall be governed by
and construed and enforced in accordance with internal Florida law without
regard to conflicts-of-laws principles that would require the application of any
other law.

 

            Section 10.11   Amendment; Waiver.  This Agreement may not be
amended, or any provision waived, except by an instrument in writing signed on
behalf of each of the parties.

 

            Section 10.11   Bulk Sales Law.  The parties hereto agree to waive
any rights they may have against each other as a result of the failure of any
party to comply with the provisions of any applicable laws of any state relating
to the bulk sale of assets which may be applicable to the transactions
contemplated hereby.

 

 

* * * * * * * * * *

 

[Remainder of Page Intentionally Left Blank – Signature Pages Follow]

           

 

            IN WITNESS WHEREOF, the parties have signed or caused this Amended
and Restated Asset Purchase Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.

 

 

BUYER:

 

 

 

 

BROWN & BROWN, INC.

 

 

By:

/S/ THOMAS M. DONEGAN, JR.

Name:

Thomas M. Donegan, Jr.

Title:

Vice President

 

 

SELLERS:

 

 

CAL-SURANCE ASSOCIATES, INC.

 

 

 

 

By:

/S/ DONALD E. MARTIN

Name:

Donald E. Martin

Title:

Chairman

 

 

UNITED NETWORK OF INSURANCE

  SERVICES, INC.

 

 

 

 

By:

/S/ DONALD E. MARTIN

Name:

Donald E. Martin

Title:

Chairman

 

 

STERLING REINSURANCE

  INTERMEDIARIES, INC.

 

 

 

 

By:

/S/  DONALD E. MARTIN

Name:

Donald E. Martin

Title:

Chairman

 

 

LANCER CLAIMS SERVICES, INC.

 

 

 

 

By:

/S/ DONALD E. MARTIN

Name:

Donald E. Martin

Title:

Chairman

 

 

 

 

CHARTERED FINANCIAL SERVICES

  CORPORATION

 

 

 

 

By:

/S/ DONALD E. MARTIN

Name:  

Donald E. Martin

Title:  

Chairman, President & Chief Executive

 

              Officer

 

 

SHAREHOLDER:

 

 

MARTIN LIVING TRUST U/D/T DATED

AUGUST 14, 1984, AS AMENDED

OCTOBER 22, 1986

SHAREHOLDER:

 

 

By:

/S/ DONALD E. MARTIN

Name:

Donald E. Martin

Title:

Trustee

 

 

 

 

 

 

By:

/S/ RENEE MARTIN

Name:

Renee Martin

Title:

Trustee

 

 

MARTIN:

 

 

 

 

 

    /S/ DONALD E. MARTIN

 

Donald E. Martin, individually

 

 

 

 

SCHEDULES AND EXHIBITS

 

 

Schedule 1.1(a):

 

Commercial Book of Business

 

Schedule 1.1(b):

 

Tangible Property

 

Schedule 1.1(c):

 

Seller Contracts

 

Schedule 1.1(f):

 

Risk Purchasing Groups

 

Schedule 1.1(g):

 

Insurance Policies

 

Schedule 1.2(i):

 

VISA Participants

 

Schedule 1.2(j):

 

Personal Effects

 

Schedule 1.3(a)(iv)

 

Employee Bonuses

 

Schedule 1.4(c):

 

Allocation Schedule

 

Schedule 3.1:

 

Good Standing Jurisdictions

 

Schedule 3.6(a):

 

Financial Statements

 

Schedule 3.6(c):

 

Undisclosed Liabilities

 

Schedule 3.7:

 

Certain Changes and Events

 

Schedule 3.8(a):

 

Encumbrances

 

Schedule 3.8(b):

 

Revenues by Carrier for Twelve Months Ended September 30, 2002

 

Schedule 3.8(d):

 

Insurance Captive Entities

 

Schedule 3.9:

 

List of Claims and Litigation

 

Schedule 3.14:

 

Employment Agreements and Independent Contractor Agreements

 

Schedule 3.15:

 

Employee Benefit Plans

 

Schedule 3.16(c):

 

Owned Intellectual Property Assets

 

Schedule 6.16:

 

Third-Party Consents

 

Schedule 6.18:

 

Employees to be Offered Employment

 

 

 

 

 

Exhibit A:

 

Bill of Sale

 

Exhibit B:

 

Assignment and Assumption Agreement

 

Exhibit C:

 

Martin Employment Agreement

 

Exhibit D:

 

Masters Employment Agreement