On November 30, 2023, the Company completed the sale of significantly all of the assets of TEA to Arthur J. Gallagher & Co. and Arthur J. Gallagher Risk Management Services, LLC and ceased insurance related activities for the Company. Pursuant to the terms and conditions of the purchase agreement, as amended, at the closing of the transaction, Gallagher distributed $37.6 million in cash to TEA, of which $2.0 million was placed in a third party escrow account as security for the indemnification obligations of the Company and TEA relating to the representations and warranties included in the purchase agreement, and retained an additional $2.4 million to be payable to TEA at the end of a two year period based on the performance of certain customer accounts.

The purchase agreement contains customary representations and warranties regarding the parties. The purchase agreement provides that, for a period of five years following the closing of the transaction, the Company and its subsidiaries will not, subject to certain limited exceptions, engage in a business that is competitive with Gallagher’s business.

TEA recorded insurance revenue of $9.7 million in 2023, $9.8 million in 2022, and $9.9 million in 2021. Total net income for 2023, 2022, and 2021 was $15.7 million, $1.5 million, and $1.3 million, respectively. TEA’s 2023 net income included a pretax gain of $20.2 million and income tax expense of $6.6 million related to the sale. Details of the pretax gain on the sale is summarized below:


		(in thousands)
Gross purchase price pursuant to Asset Purchase Agreement	$	40,000
Transaction costs		(3,775)
Working capital adjustment settled at closing		(60)
Contingent Consideration		(2,377)
Contractual adjustment of other assets & liabilities		(1,929)
Write-off of goodwill & intangibles		(11,699)
Gain on sale of insurance agency	$	20,160

Prior to the sale of TEA, management evaluated the accounting treatment of the potential sale as it relates to held-for-sale and any succeeding discontinued operations financial impact. Based on management’s review of ASC 205-20-45-1E it was determined not to have met all necessary criteria to be considered discontinued operations.