STOCK PURCHASE AGREEMENT
by and between
FIDELITY LEASING, INC.
and
JAPAN LEASING (U.S.A.), INC.
dated as of
December 15, 1998
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions 2
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Sale and Transfer of Shares 12
Section 2.2 Purchase Price 13
Section 2.3 Purchase Price Adjustment 13
ARTICLE III
THE CLOSING
Section 3.1 Closing 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Organization 16
Section 4.2 Capitalization 17
Section 4.3 Authorization; Validity of Agreement 18
Section 4.4 No Violations; Consents and Approvals 19
Section 4.5 Financial Statements 20
Section 4.6 Absence of Certain Changes 21
Section 4.7 No Undisclosed Liabilities 21
Section 4.8 Litigation; Compliance with Law 22
Section 4.9 Employee Benefit Plans; ERISA 22
Section 4.10 Real Property 26
Section 4.11 Intellectual Property 28
Section 4.12 Computer Software 29
Section 4.13 Material Contracts 29
Section 4.14 Taxes 31
Section 4.15 Affiliated Party Transactions; Sensitive Payments 32
Section 4.16 Environmental Matters 33
Section 4.17 No Brokers 33
Section 4.18 Receivables, Inventory and Payables 34
Section 4.19 Disclosure 34
Section 4.20 Tangible Personal Property 34
Section 4.21 Permits 35
Section 4.22 Insurance; No Casualty Events 35
Section 4.23 Employees; Labor Relations 36
Section 4.24 Registration Rights 38
Section 4.25 Exemption from Registration; Restrictions on Offer and
Sale of Same or Similar Securities 38
Section 4.26 Financing Contracts 38
Section 4.27 Accurate and Complete Disclosure 40
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1 Organization 40
Section 5.2 Authorization: Validity of Agreement 41
Section 5.3 No Violations; Consents and Approvals 41
Section 5.4 Litigation; Compliance with Law 42
Section 5.5 No Brokers 43
Section 5.6 Investigation by Purchaser 43
Section 5.7 Investment Intent 44
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business by the Company Pending the Closing 44
Section 6.2 Access to Information 47
Section 6.3 Best Efforts 48
Section 6.4 Consents 49
Section 6.5 HSR Filings 49
Section 6.6 Public Announcements 50
Section 6.7 Employee Receivables and Payables 50
Section 6.8 Employee Benefits 51
Section 6.9 Notification of Certain Matters 51
Section 6.10 Tax Matters 52
Section 6.11 Seller Non-Competition and Non-Solicitation Covenants 58
Section 6.12 Payment of Company Debt; Release of Guaranties 59
Section 6.13 Powers of Attorney; Accounts 61
Section 6.14 Inquiries and Negotiations 62
Section 6.15 Delivery of November Financial Statements and December
Financial Statements 65
Section 6.16 Employee Bonuses 65
Section 6.17 Collection of Certain Receivables and Partial Remittance 66
Section 6.18 Assignment 67
Section 6.19 Commitment Letter; Certain Termination Rights 67
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Seller's Obligations 68
Section 7.2 Conditionsto Purchaser's Obligations 70
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
Section 8.1 Documents to Be Delivered by Seller 72
Section 8.2 Documents to Be Delivered by Purchaser 72
ARTICLE IX
TERMINATION
Section 9.1 Termination 73
Section 9.2 Effect of Termination 74
ARTICLE X
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION; REMEDIES
Section 10.1 Indemnification by Seller 75
Section 10.2 Indemnification by Parent and Purchaser 76
Section 10.3 Certain Other Indemnity Matters 76
Section 10.4 Time Limitations 77
Section 10.5 Limitations on Amount 78
Section 10.6 Procedure for Indemnification; Third Party Claims 78
Section 10.7 Security for Indemnification 81
ARTICLE XI
MISCELLANEOUS
Section 11.1 Fees and Expenses 81
Section 11.2 Amendments 82
Section 11.3 Notices 82
Section 11.4 Interpretation 83
Section 11.5 Headings 84
Section 11.6 Counterparts 84
Section 11.7 Entire Agreement 84
Section 11.8 Severability 84
Section 11.9 Governing Law 84
Section 11.10 Assignment 84
Section 11.11 Specific Performance; Submission to Jurisdiction 85
Section 11.12 Waiver 86
Section 11.13 Time of Essence 86
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
December 15, 1998, by and between, Fidelity Leasing, Inc., a Pennsylvania
corporation ("Purchaser"), and Japan Leasing (U.S.A.), Inc., a Delaware
corporation ("Seller"),
W-I-T-N-E-S-S-E-T-H:
WHEREAS, Resource America, Inc., a Delaware corporation ("Parent"),
owns all of the issued and outstanding capital stock of Resource Leasing, Inc.,
a Delaware corporation, which in turn owns all of the issued and outstanding
capital stock of Purchaser; and
WHEREAS, Seller owns all of the issued and outstanding capital stock of
JLA Credit Corporation, a Delaware corporation (the "Company"); and
WHEREAS, the Company is a specialty commercial finance company engaged
in the business of originating, acquiring, securitizing and servicing
non-cancellable, full-payout equipment leases in the United States (the
"Business"); and
WHEREAS, Purchaser desires to purchase from Seller all of the issued
and outstanding capital stock of the Company (the "Shares") upon and subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions . As used in this Agreement, each of the
following terms shall have the respective meaning set forth below:
Term Defined in Section
---- ------------------
Accounting Dispute Notice 2.3(b)
Agreement Preamble
Approvals 4.10(d)
Acquisition Transaction 6.14(a)
Audited Financial Statements 4.5
Barclays 10.1(b)
Benefit Arrangement 4.9(a)
Business Recitals
Change-in-Control Amounts 6.16(a)
Closing 3.1
Closing Date 3.1
Commitment Letter 6.19
Commitment Letter Due Date 6.19
Company Recitals
Company Employee 4.13(a)
Company Insurance Policies 4.22
Company Lenders 6.12(a)
Confidentiality Agreement 6.2(b)
Consents 6.4
Contract 4.13(a)
DAF Report 2.3(b)
Damages 10.1(a)
Date of Notice of Claim 10.6(d)
Election 6.10(a)
Employment Agreements 6.16(a)
Environmental Laws 4.16
Existing Employee 6.8
Financial Statements 4.5
Governmental Entity 4.4(b)
Information 6.2(b)
Intellectual Property 4.11
Leases 4.10(b)
Material Contracts 4.13(a)
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Material Lease 4.10(b)
Material Leased Real Property 4.10(b)
Modified ADSP 6.10(b)
Net Asset Value Report 2.3(a)
Notice of Claim 10.6(a)
Owned Real Property 4.10(a)
Parent Recitals
PBGC 4.9(a)
Plans 4.9(a)
Promissory Note 6.12(b)
Purchase Price 2.2
Purchaser Preamble
Purchaser Indemnified Persons 10.1(a)
Purchaser's Closing Documents 8.2
Section 6.19(b) Last Termination Date 6.19(b)
Seller Preamble
Seller Disclosure Letter Article IV
Seller Indemnified Persons 10.2
Seller's Closing Documents 8.1
Seller Tax Returns 6.10(d)(ii)
Shares Recitals
Special Contingent Liability 10.1(b)
Tax Audit 6.10(f)(i)
Unaudited Financial Statements 4.5
"Affiliate," with respect to any Person, shall include (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person and (ii) in the case of Seller, the
Company, each Company Subsidiary, and its respective directors and officers. For
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings that
correspond to the foregoing.
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"Antitrust Law" means the Xxxxxxx Act, each the Xxxxxxx Act, the HSR
Act, the Federal Trade Commission Act, each as amended, and all other federal,
state and foreign statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines, and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
"Assignment" means the Assignment and Assumption of Interests in
Receivables, to be executed and delivered at the Closing by the Company, on the
one hand, and Seller, on the other hand, in substantially the form of Exhibit
7.1(j).
"Bankruptcy Exception" means, in respect of any agreement, contract,
commitment or obligation, any limitation thereon imposed by any bankruptcy,
insolvency, fraudulent conveyance, reorganization, receivership, moratorium or
similar law affecting creditors' rights and remedies generally and, with respect
to the enforceability of any agreement, contract, commitment or obligation, by
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing, regardless of whether enforcement is sought in a
proceeding at law or in equity.
"Business Day" means each day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"Change in Control" has the meaning set forth in Section 6 of each of
the Employment Agreements.
"Closing Date Balance Sheet" means the consolidated balance sheet for
the Company and the Company Subsidiaries prepared as of the close of business on
the Closing Date before giving effect to the Closing or any of the other
transactions contemplated hereby to occur on the Closing Date and in accordance
with GAAP applied on a basis consistent with the preparation of the Audited
Financial Statements.
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"Closing Date Net Asset Value" means the amount by which the total
assets of the Company and the Company Subsidiaries on a consolidated basis
exceeds the total liabilities of the Company and the Company Subsidiaries on a
consolidated basis, in each case as derived from the Closing Date Balance Sheet.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Material Adverse Effect" means any event, condition or
circumstance that would be reasonably likely to have a material adverse effect
on (A) the business, results of operations or financial condition of the Company
and the Company Subsidiaries, taken as a whole, but excluding any such effect
resulting from any bankruptcy or similar filings made, as of the date hereof, by
Seller or any of its Affiliates (other than the Company or any of the Company
Subsidiaries), including any defaults or cross-defaults caused by such filings
under any agreements to which the Company or any of its Affiliates is a party
and the defaults disclosed in the Seller Disclosure Letter or (B) the ability of
Seller to perform any of its obligations under this Agreement or consummate the
transactions contemplated hereby.
"Company Subsidiary" means any of JLA Funding Corporation, JLA Funding
Corporation II or JLA Funding Corporation III.
"Corporate Affiliate" means an Affiliate that is not a natural person.
"Credit Enhancement" means any (i) security deposit, unapplied advance
rental payment or dealer investment, (ii) investment certificate, certificate of
deposit, authorization to hold funds, hypothecation of account or like
instrument, (iii) letter of credit, repurchase agreement, agreement of
indemnity, guarantee, lease guarantee bond or postponement agreement, (iv)
recourse agreement, (v) security agreement, (vi) property, (vii) certificate
representing shares or the right to purchase shares in the capital of any
corporation, (viii) Financing Contract or (ix) bond or debenture, in each case
pledged, assigned, mortgaged,
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made, delivered or transferred as security for the performance of any obligation
under or with respect to a Financing Contract or Non-Recourse Note.
"December Financial Statements" means the unaudited consolidated
balance sheet and the related unaudited consolidated income statement of the
Company and the Company Subsidiaries for the twelve months ending December 31,
1998, to be delivered by Seller to Purchaser following the date hereof pursuant
to Section 6.15.
"Designated Accounting Firm" means PriceWaterhouseCoopers LLP, or if
PriceWaterhouseCoopers LLP shall decline or otherwise be unable to perform the
engagement in question, another firm of independent certified public accountants
of nationally recognized standing (other than the Purchaser Accountants and the
Seller Accountants) mutually acceptable to the parties hereto.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"Employee Escrow Agreements" means two agreements, each in
substantially the form of Exhibit 6.16, to be executed and delivered by the
Company and the relevant Company Employee at the Closing.
"Employment Agreements" means the Employment Agreements, effective as
of the first day of January, 1998 and existing as of the date hereof, between
the Company, on the one hand, and each of Xxxxx Xxxxxxxx and Xxxxxx X. Xxxxxxx,
on the other hand.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agreement" means an agreement in substantially the form of
Exhibit 7.1(h), to be executed and delivered by Purchaser and Seller at the
Closing.
"Financing Contract" means any contract (including any schedule or
amendment thereto or assignment, assumption, renewal or novation thereof) in
existence on or prior to the Closing Date and any ancillary agreements relating
thereto which is in the form of a lease
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or rental agreement with respect to property, or any sale contract (including an
installment sale contract or conditional sale agreement) arising out of the sale
of property or any secured or unsecured financing of property, or any secured or
unsecured loan with respect to which the Company and/or a Company Subsidiary is
either (i) the lessor, seller, lender, secured party or obligee (whether
initially or as an assignee) or (ii) the holder of a Non-Recourse Note secured
thereby.
"Financing Records" means all material records in the possession or
control of the Company or any Company Subsidiary relating to the Financing
Contracts and any Credit Enhancement with respect thereto, including
applications, agreements, promissory notes, security agreements, insurance
policies and any other collateral security of any nature whatsoever held by the
Company or any Company Subsidiary, including any relevant documents or
instruments held by the Company or any Company Subsidiary as collateral
security, credit files, computer records, correspondence, collection histories,
underwriting criteria and policy and procedure manuals.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in effect in the
United States of America at the time of any determination, and which are applied
on a consistent basis during the periods involved, as adjusted in the case of
the Closing Date Balance Sheet by the accounting policies set forth in Exhibit
1. Any accounting term or other term used in this Agreement with respect to an
accounting matter shall have the meaning given to that term by GAAP, unless
otherwise defined herein or the context of this Agreement otherwise requires.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
7
"Income Tax" means any federal, state, local or foreign Tax (a) based
upon, measured by or calculated with respect to net income, profits or receipts
(including capital gains Taxes and minimum Taxes) or (b) based upon, measured by
or calculated with respect to multiple bases (including corporate franchise
taxes) if one or more of the bases on which such Tax may be based, measured by
or calculated with respect to, is described in clause (a), in each case together
with any interest, penalties or additions to such Tax.
"JLC" means Japan Leasing Corporation, a Japanese corporation.
"Knowledge" of Seller, the Company or any Company Subsidiary, "known"
to Seller, the Company or any Company Subsidiary, matters of which Seller, the
Company or any Company Subsidiary is "aware" and language of similar import
shall mean all matters actually known by any of Mitsumasa Sakka, Xxxxx Xxxxxxxx,
Xxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxx, Jun Ogihara or Xxxxxx Xxxxxx.
"Liens" means all mortgages, claims, charges, liens, security
interests, pledges, options, easements, rights of way, or other encumbrances of
any nature whatsoever.
"Net Asset Value" means the amount by which (i) the total assets of the
Company and the Company Subsidiaries on a consolidated basis exceeds (ii) the
total liabilities of the Company and the Company Subsidiaries on a consolidated
basis, in each case as derived in reliance on the accounting principles and the
methods of applying such principles used in preparing the Financial Statements.
"Non-Recourse Note" means (i) a promissory note or assignment of
chattel paper issued by (and the obligor on which is) an owner of a Financing
Contract, which note or assignment is secured by a security interest in (and
collateral assignment of) such Financing Contract and all proceeds thereof or
(ii) an assignment of a stream of current and/or future
8
payments due under a Financing Contract, which assignment is secured by a
security interest in (and collateral assignment of) such Financing Contract and
all proceeds thereof.
"November Financial Statements" means the unaudited consolidated
balance sheet and the related unaudited consolidated income statement of the
Company and the Company Subsidiaries for the eleven months ending November 30,
1998, to be delivered by Seller to Purchaser following the date hereof pursuant
to Section 6.15.
"October Financial Statements" means the unaudited consolidated balance
sheet and the related unaudited consolidated income statement of the Company and
the Company Subsidiaries for the ten months ending October 31, 1998 delivered by
Seller to Purchaser prior to the date hereof.
"Permits" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental Entity.
"Permitted Liens" means (i) those liens set forth in Section 4.10 of
the Seller Disclosure Letter, (ii) (A) any state of facts that would be set
forth in the public records of a Governmental Entity, (B) Liens for current
water and sewage charges and current Taxes not yet due and payable or being
contested in good faith, and (C) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens arising or incurred in the
ordinary course of business, in each case that do not materially interfere with
the operation of the Company and the Company Subsidiaries, taken as whole, or
(iii) Liens arising or resulting from any action taken by Purchaser or any of
its Affiliates.
"Person" means a natural person, partnership, joint venture, trust,
corporation, limited liability company or other entity (including any government
or political subdivision or any agency, department or instrumentality thereof).
9
"Pre-Closing Period" means any taxable period ending on or prior to the
Closing Date.
"Purchaser Accountants" means Xxxxx Xxxxxxx LLP.
"Purchaser Material Adverse Effect" means any event, condition or
circumstance that would be reasonably likely to have a material adverse effect
on the ability of Purchaser to perform any of its obligations under this
Agreement or consummate the transactions contemplated hereby.
"Purchaser Plans" means employee benefit plans, as defined in Section
3(3) of ERISA, or such nonqualified employee benefit or deferred compensation
plans, stock option, bonus or incentive plans or other employee benefit or
fringe benefit programs that may be in effect generally for employees of
Purchaser or its Subsidiaries from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitized 90+ Contracts" means Financing Contracts of any of the
Company Subsidiaries with payments more than 90 days past due as of the date
that is two Business Days prior to the Closing Date.
"Security Agreement" means an agreement in substantially the form of
Exhibit 7.1(i), to be executed and delivered by Purchaser and Seller at the
Closing for the purpose of securing the Promissory Note.
"Seller Accountants" means Xxxxxx Xxxxxxxx LLP.
"Straddle Period" means any taxable period that begins before and ends
after the Closing Date.
"Subsidiary" of a Person means any entity of which the securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person or such Person otherwise has
the right to vote or to direct the vote of such securities or other ownership
interests.
10
"Target Net Asset Value" means $38,000,000.
"Tax Affiliate" means any entity that is a member of an affiliated
group of corporations (within the meaning of Section 1504(a) of the Code) filing
a consolidated U.S. federal Income Tax Return, and a group of corporations
filing a consolidated or combined Tax Return for state, local or foreign Tax
purposes (each, a "Consolidated Group"), if the Company could be held liable for
the Taxes of such entity or of such Consolidated Group.
"Taxes" means any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, net worth, payroll, franchise, license, gains,
customs, transfer and recording taxes, imposed by any taxing authority, and
shall include any interest, penalties or additions to tax.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority with
respect to Taxes.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Sale and Transfer of Shares. Subject to the terms and
conditions set forth in this Agreement, at the Closing, Seller shall sell,
convey, assign, transfer and deliver the Shares to Purchaser, free and clear of
all Liens (other than restrictions arising under the Securities Act or any other
applicable state securities laws), and Purchaser shall purchase, acquire and
accept the Shares from Seller.
Section 2.2 Purchase Price. Subject to the terms and conditions of
this Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery of the
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Shares, Purchaser agrees to pay to Seller at the Closing the sum of $38,000,000
(the "Purchase Price"), which sum shall be payable in immediately available
funds by (a) a wire transfer in the amount of $5,000,000 to such bank account as
may be specified in writing by the Escrow Agent (as defined in the Escrow
Agreement) to Purchaser prior to the Closing for deposit in accordance with the
terms of the Escrow Agreement and (b) a wire transfer in the amount of
$33,000,000 to such bank account as may be specified in writing by Seller to
Purchaser prior to the Closing.
Section 2.3 Purchase Price Adjustment.
(a) As promptly as practicable, but not later than 60 days
after the Closing Date, Purchaser shall cause to be prepared and delivered to
Seller (i) the Closing Date Balance Sheet audited by the Purchaser Accountants
and (ii) a report (the "Net Asset Value Report") setting forth a calculation of
the Closing Date Net Asset Value. Purchaser shall, and shall cause the Purchaser
Accountants to, make available to Seller and the Seller Accountants all books
and records of the Company and each Company Subsidiary and all work papers used
in connection with the preparation and audit of the Closing Date Balance Sheet
or the preparation of the Net Asset Value Report. The Closing Date Balance Sheet
and the Net Asset Value Report delivered pursuant to this Section 2.3 shall not
be binding on Seller if Seller timely exercises its right to dispute the same
pursuant to the procedures set forth in this Section 2.3. If Seller does not
exercise such right with respect to the Closing Date Balance Sheet or the Net
Asset Value Report on a timely basis under this Section 2.3, then Seller shall
be deemed to have accepted the same as delivered pursuant to this Section 2.3.
(b) If Seller disputes any item in the Net Asset Value Report,
then Seller shall, within 30 days after the delivery of the Closing Date Balance
Sheet and Net Asset Value Report, give Purchaser written notice of such dispute
(an "Accounting Dispute Notice")
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setting forth in reasonable detail each of the items in dispute. If no
Accounting Dispute Notice is given to Purchaser within such 30-day period, the
Closing Date Net Asset Value as set forth in the Net Asset Value Report shall be
deemed to be final and binding upon all the parties hereto. In the event that an
Accounting Dispute Notice is given to Purchaser within such 30-day period,
Seller and Purchaser shall attempt to resolve in good faith and by mutual
agreement the items in dispute within 15 days after the delivery of such
Accounting Dispute Notice to Purchaser. Failing agreement on all items in
dispute within such 15-day resolution period, Purchaser and Seller shall submit
such items in dispute for resolution to the Designated Accounting Firm. The
Designated Accounting Firm shall be instructed to resolve such disputed items,
based solely on written presentations by Purchaser and Seller and not by
independent review, and to deliver a written report to the parties hereto upon
such disputed items (the "DAF Report") in accordance with Section 11.3, all
within 15 days after the submission of such disputed items to it. The DAF Report
shall be (i) within the range of proposals established for such dispute by
Purchaser and Seller and (ii) deemed to be an agreement between Seller and
purchaser with respect to the issues in dispute, and upon the delivery of the
DAF Report to Purchaser and Seller, the Closing Date Net Asset Value as set
forth in the DAF Report shall be deemed to be final, conclusive and binding upon
all the parties hereto.
(c) The fees and expenses of the Designated Accounting Firm
incurred in connection with the resolution of a dispute pursuant to Section
2.3(b) shall be borne equally by Purchaser and Seller.
(d) If the Closing Date Net Asset Value (as deemed to be final
and binding pursuant to Section 2.3(b)) is less than the Target Net Asset Value,
then the principal amount payable under the Promissory Note shall be reduced by
the amount by which the
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Target Net Asset Value exceeds the Closing Date Net Asset Value; provided,
however, that in the event that the amount by which the Target Net Asset Value
exceeds the Closing Date Net Asset Value is less than $250,000, no adjustment
shall be made to the principal amount payable under the Promissory Note.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The sale and transfer of the Shares by Seller to
Purchaser (the "Closing") shall take place at the offices of Ledgewood Law Firm,
Philadelphia, Pennsylvania at 10:00 a.m., local time, on January 19, 1999 or, if
the conditions to close set forth in Article VII have not been satisfied or
waived by such date, two Business Days following the satisfaction or waiver of
all conditions to close set forth in Article VII (the "Closing Date"), unless
another date or place is agreed to in writing by the parties hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise disclosed to Purchaser in those sections of a
letter delivered to Purchaser by Seller prior to the execution hereof relating
to the following representations and warranties (the "Seller Disclosure
Letter"), Seller represents and warrants to Purchaser as follows:
Section 4.1 Organization.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. The Company is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
the
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business conducted by it makes such qualification or licensing necessary. Seller
has heretofore delivered to Purchaser a complete and correct copy of each of the
Company's Certificate of Incorporation and Bylaws, as currently in effect.
(b) Section 4.1(b) of the Seller Disclosure Letter lists (i)
the name of each Company Subsidiary and the jurisdiction of its incorporation,
(ii) the amount of its authorized, and its issued and outstanding, capital stock
or other equity interests and (iii) the principal lines of business in which
each Company Subsidiary is participating or engaged. Each Company Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. Each Company Subsidiary is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each jurisdiction in which the nature of the business conducted by it makes such
qualification or licensing necessary. Seller has heretofore delivered to
Purchaser a complete and correct copy of each of the Company Subsidiary's
Certificate of Incorporation and Bylaws, as currently in effect. All of the
outstanding shares of capital stock of or other equity interests in each Company
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned, beneficially and of record, by the Company free
and clear of all Liens. Neither the Company nor any of the Company Subsidiaries
owns, directly or indirectly, of record or beneficially, any equity,
partnership, limited liability company, joint venture or other interest in any
Person or has any obligation, direct or indirect, present or contingent, (i) to
purchase or subscribe for any interest in, advance or loan money to, or in any
way make investments in, any Person or (ii) to share any profits or capital
investments or both.
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(c) The stock and minute books of the Company and each Company
Subsidiary contain accurate and complete records of all requisite meetings and
consents in lieu of meetings of the respective board of directors (and any
committee thereof) and of stockholders since the time of each of their
incorporation and accurately reflect all transactions referred to therein.
Section 4.2 Capitalization.
(a) The authorized capital stock of the Company consists of
64,000 shares of Common Stock, par value $500 per share. Sixty thousand shares
of Common Stock are issued and outstanding (and such shares of Common Stock
constitute the "Shares"), all of which are owned of record and beneficially by
Seller, free and clear of all Liens, and no shares of Common Stock are issued
and held in the treasury of the Company. All of the Shares are duly authorized,
validly issued, fully paid and nonassessable. There are no existing (i) options,
warrants, calls, preemptive rights, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the Company or
any Company Subsidiary to issue, transfer, sell or otherwise dispose of any
shares of capital stock of, or other equity interest in, the Company or any
Company Subsidiary, or which restrict the transfer of such shares, (ii)
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any capital stock of the Company or any Company
Subsidiary, or (iii) voting trusts or similar agreements to which the Company,
any Company Subsidiary or Seller is a party with respect to the voting of the
capital stock of the Company or any Company Subsidiary.
Section 4.3 Authorization; Validity of Agreement. Seller has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Seller of this
16
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Seller, and no other
corporate proceedings on the part of Seller are necessary to authorize the
execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and, assuming due authorization, execution
and delivery of this Agreement by Purchaser, is a valid and binding obligation
of Seller enforceable against Seller in accordance with its terms, except as may
be limited by the Bankruptcy Exception.
Section 4.4 No Violations; Consents and Approvals.
(a) The execution, delivery or performance of this Agreement by
Seller does not, and the consummation by Seller of the transactions contemplated
hereby will not, (i) violate any provision of the Certificate of Incorporation
or Bylaws of Seller, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any material note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, license, contract,
agreement or other instrument to which Seller, the Company or any Company
Subsidiary is a party or by which any of them or any of their properties or
assets may be bound or otherwise subject or (iii) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to the
Seller, the Company or any Company Subsidiary or any of their respective
properties or assets, except in the case of clauses (ii) or (iii) for such
violations, breaches or defaults that become applicable as a result of the
business or activities in which Purchaser or its Affiliates is or proposes to be
engaged or as a result of any acts or omissions by, or the status of any facts
pertaining to, Purchaser or its Affiliates.
17
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any court, legislative, executive or
regulatory authority or agency (each a "Governmental Entity") is required in
connection with the execution, delivery and performance of this Agreement by
Seller or the consummation by Seller of the transactions contemplated hereby,
except for filings with the FTC and with the DOJ pursuant to the HSR Act.
Section 4.5 Financial Statements. Seller has furnished the Purchaser
with (i) true and complete copies of the audited consolidated financial
statements of the Company and the Company Subsidiaries (including the related
notes) for the fiscal years ending December 31, 1996 and 1997 (the "Audited
Financial Statements"), and (ii) the unaudited consolidated balance sheet and
the related unaudited consolidated income statement of the Company and the
Company Subsidiaries for the nine months ended September 30, 1998 (the
"Unaudited Financial Statements" and, together with the Audited Financial
Statements, the "Financial Statements"). The Audited Financial Statements fairly
present in all material respects the financial position, results of operations
and cash flows of the Company and the Company Subsidiaries as of the dates and
for the periods specified therein, all in conformity with GAAP. The Unaudited
Financial Statements and the October Financial Statements fairly present, and
the November Financial Statements and the December Financial Statements shall
fairly present, in all material respects the consolidated combined results of
operations and cash flows of the Company and the Company Subsidiaries for the
periods specified therein, all in conformity with GAAP (subject to normal
year-end audit adjustments that will not have or reflect a Company Material
Adverse Effect) and except as otherwise noted therein. The books and records of
the Company and each Company Subsidiary are complete and correct in all material
respects, have been maintained in accordance with good business practices and
GAAP, and accurately reflect the basis for the financial condition and results
of
18
operations as set forth in the Financial Statements. Throughout the periods
covered by the Financial Statements, there has been no change in the accounting
principles followed by the Company or any of the Company Subsidiaries or the
methods of applying such principles. Except as expressly provided in this
Section 4.5, no representation is made by Seller as to any financial information
of the Company or the Company Subsidiaries provided to Purchaser, including any
financial information set forth in the Confidential Memorandum dated July 1998
regarding the Company and the Company Subsidiaries provided to Purchaser by
Xxxxx Xxxxxxx, Inc. Without limiting the generality of the foregoing, no
representation is made as to the accuracy, fairness or reasonableness of any
projections regarding the Company or any Company Subsidiary provided to
Purchaser or the assumptions used in preparing the same or as to the likelihood
that such projections will be achieved.
Section 4.6 Absence of Certain Changes. Except as (a) disclosed in the
Financial Statements or (b) expressly required by this Agreement, between
September 30, 1998 and the date hereof, (i) no event that would result in a
Company Material Adverse Effect has occurred and (ii) the Company has not taken
action that, if taken after the date hereof, would constitute a violation of
Section 6.1.
Section 4.7 No Undisclosed Liabilities. Except for liabilities and
obligations incurred in the ordinary course of business, between September 30,
1998 and the date hereof, neither the Company nor any Company Subsidiary has
incurred any liabilities or obligations that would be required to be disclosed,
reflected or reserved against in a consolidated balance sheet of the Company
(including the related notes thereto, where appropriate) prepared in accordance
with GAAP.
Section 4.8 Litigation; Compliance with Law. As of the date hereof,
there is no action, suit or proceeding pending or,
19
to the Knowledge of Seller, any investigation pending or, to the Knowledge of
Seller, any action, suit or proceeding threatened, involving the Company or any
Company Subsidiary, by or before any court, Governmental Entity or arbitration
panel or any other Person. The business and the operations of the Company and
the Company Subsidiaries are not being conducted in violation of any applicable
law, ordinance, rule, regulation, decree or order of any court or Governmental
Entity or other regulatory authority, or arbitration panel. Neither the Company
nor any Company Subsidiary has been the subject of any investigation or
proceeding by any Governmental Entity within the past three years.
Section 4.9 Employee Benefit Plans; ERISA.
(a) Section 4.9(a) of the Seller Disclosure Letter lists any
"employee pension benefit plan" or "employee welfare benefit plan" within the
meaning of Sections 3(1) and 3(2) of ERISA established or maintained or
contributed to by the Company or any Company Subsidiary, or in respect of which
the Company or any Company Subsidiary is considered an "employer" under Section
414 of the Code, in each case which provides benefits for an employee of the
Company or any Company Subsidiary (collectively, "Plans"). None of the Company
or any Company Subsidiary is required, or was required within the immediately
preceding five years, to make any contribution to any "multiemployer plan"
within the meaning of Section 3(37) of ERISA. None of the Company or any Company
Subsidiary has any unpaid liability to the Pension Benefit Guaranty Corporation
("PBGC") in respect of any Plans established or maintained and to which
contributions are or were made by it.
Section 4.9(a) of the Seller Disclosure Letter also lists each
deferred compensation plan, bonus plan, stock option plan, employee stock
purchase plan and any other employee benefit plan, agreement, arrangement or
commitment not required under the preceding paragraph to be listed on Section
4.9(a) of the Seller Disclosure Letter (other than normal policies concerning
holidays, vacations and salary continuation during short absences for illness
20
or other reasons) maintained by the Company or any of the Company Subsidiaries
(together with the Plans, collectively, "Benefit Arrangements").
(b) No Plan (i) has incurred any "accumulated funding
deficiency," as defined in Section 412 of the Code (whether or not waived), or
(ii) has incurred any liability to the PBGC. None of the Company or any Company
Subsidiary has breached any of the responsibilities, obligations or duties
imposed on it by ERISA or the Code with respect to any Plan maintained by it,
which breach has given rise to, or would reasonably be expected in the future to
give rise to, an obligation of the Company or such Company Subsidiary to pay a
sum of money, including the obligation to make contributions to any Plan that
has become due prior to the date hereof for any Plan year ending prior to the
Closing Date. There is no contribution due for any Plan for the year in which
the Closing occurs. None of the Company or any Company Subsidiary or, to the
Knowledge of the Seller or the Company, any "party in interest," as defined in
Section 3(14) of ERISA, in respect of any such Plan has engaged in any
non-exempt prohibited transaction described in Sections 406 and 408 of ERISA or
Section 4975 of the Code which would reasonably be expected to have a
significant adverse effect on the Company or any Company Subsidiary. No
reportable event, as defined in Section 4043 of ERISA (other than any reportable
event as to which the 30-day notice period has been waived by statute or
regulation), has occurred with respect to any Plan; and no Plan subject to Title
IV of ERISA has been terminated by the plan administrator thereof or by the
PBGC. None of the Company or any Company Subsidiary has incurred any unpaid
liability with respect to any Plan under Title IV of ERISA.
(c) No action, suit, grievance, arbitration or other manner of
litigation, or claim with respect to the assets of any Plan (other than the
routine claims for benefits made in the ordinary course of Plan administration
for which plan administrative review procedures
21
have not been exhausted) is pending or has been threatened against such Plan,
the Company or any Company Subsidiary, or, to the Knowledge of the Seller, any
fiduciary (as defined in ERISA ss.3(21)) of the Plan (including any action,
suit, grievance, arbitration or other manner of litigation, or claim regarding
conduct which allegedly interferes with the attainment of rights under the
plan), and to the Seller's knowledge, no facts exist which would reasonably be
expected to give rise to any such action, suit, grievance, arbitration or other
manner of litigation, or claim.
(d) None of the Company or any Company Subsidiary has
communicated to any employee any intention or commitment to modify any Benefit
Arrangement (except as required by law or by contract in effect as of the date
hereof and described on Section 4.9(d) of the Seller Disclosure Letter) or to
establish or implement any other employee or retiree benefit or compensation
arrangement not listed in Section 4.9(a) of the Seller Disclosure Letter.
(e) None of the Company or any Company Subsidiary (i) maintains
or contributes to any Plan which provides, or has any liability to provide, life
insurance, medical, severance or other employee welfare benefits to any employee
upon such employee's retirement or termination of employment, except as may be
required by Section 4980B of the Code; or (ii) has ever represented, promised,
or contracted (whether in oral or written form) to any employee (either
individually or to employees as a group) that such employee(s) would be provided
with life insurance, medical, severance or other employee welfare benefits upon
their retirement or termination of employment, except to the extent required by
Section 4980B of the Code.
(f) The consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) (i)
22
constitute an event under any Benefit Arrangement as in effect as of the date
hereof that will result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee, or (ii)
result in the triggering or imposition of any restrictions or limitations on the
right of the Company or any Company Subsidiary to amend or terminate any Benefit
Arrangement and, as applicable with respect to any employee pension benefit
plan, receive the full amount of any excess assets remaining or resulting from
such amendment or termination, subject to applicable taxes. No payment or
benefit which will be made by the Company or any Company Subsidiary with respect
to an employee pursuant to any Benefit Arrangement as in effect as of the date
hereof will be characterized as an "excess parachute payment," within the
meaning of Section 280G(b)(1) of the Code.
(g) No Benefit Arrangement is funded by a trust described in
Section 501(c)(9) of the Code.
(h) With respect to each Plan that is an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA, all claims incurred
(including claims incurred but not reported) by employees thereunder prior to
the Closing for which the Company or any Company Subsidiary is, or will become,
liable are (i) insured pursuant to a contract of insurance whereby the insurance
company bears any risk of loss with respect to such claims; (ii) covered under a
contract with an insurer pursuant to which the insurer bears the liability for
such claims; or (iii) will be reflected as a liability or accrued for on the
Financial Statements.
(i) None of the Company or any Company Subsidiary has any
liability, contingent or otherwise, to, or with respect to any benefit plan
(other than the Benefit Arrangements),
23
which is now or previously has been sponsored, maintained, contributed to, or
required to be contributed to, by the Company or any Company Subsidiary.
(j) Each of the Company and the Company Subsidiaries have
provided, or will have provided prior to the Closing, to individuals entitled
thereto, all required notices and coverage pursuant to Sections 601 through 609
of ERISA or Section 4980B of the Code with respect to any "qualifying event" (as
defined in Section 4980B(f)(3) of the Code) occurring prior to the Closing Date,
and no tax payable on account of Section 4980B of the Code has been incurred
with respect to any current or former employees (or their beneficiaries).
Section 4.10 Real Property.
(a) Section 4.10(a) of the Seller Disclosure Letter is a list
of all real property owned by the Company or any Company Subsidiary (the "Owned
Real Property"). Either the Company or a Company Subsidiary has good and
marketable title to the Owned Real Property in fee subject to no Liens, except
for Permitted Liens.
(b) Section 4.10(b) of the Seller Disclosure Letter is a list
(including all amendments) of all leases and subleases of real property under
which the Company or any Company Subsidiary is tenant or subtenant (the
"Leases") that in any 12-month period of lease term requires total lease or rent
payments by the Company or any Company Subsidiary of more than $10,000 (each
such Lease, a "Material Lease"), including the date of the Material Lease, the
premises demised thereunder, the name of the lessee and lessor, the commencement
date and expiration date of such Material Lease and the annual rent payable by
the lessee under such Material Lease. As used herein, the term "Material Leased
Real Property" shall mean the real property demised by Material Leases.
(c) Copies of the Material Leases have been made available to
Purchaser by Seller. The Material Leases are in full force and effect and are
enforceable in all material
24
respects in accordance with their respective terms, except as such
enforceability may be subject to or limited by the Bankruptcy Exception. None of
the Material Leases has been amended since August 1998. Neither the Company nor
any Company Subsidiary has assigned, pledged or otherwise transferred, or has
sublet the premises demised by, any Material Lease. Either the Company or a
Company Subsidiary is in possession of the premises demised by the Material
Leases. No event has occurred or failed to occur that, with the giving of notice
or the passage of time, or both, would constitute a default by the lessee under
any Material Lease. No security deposit in excess of $5,000 is being held under
any Material Lease. As of the date of this Agreement, no lessor or lessee under
any Material Lease has exercised any option or right to (i) cancel or terminate
such Material Lease or shorten the term thereof, (ii) lease additional premises,
(iii) reduce or relocate the premises demised by such Material Lease or (iv)
purchase any property.
(d) All licenses, Permits and permanent certificates of
occupancy (the "Approvals"), if any, needed in connection with the construction,
use, occupancy and maintenance of any Owned Real Property or any Material Leased
Real Property are in full force and effect in accordance with the respective
terms thereof.
(e) The Owned Real Property and the Material Leased Real
Property, including all building systems, structural components, and building
equipment, are in good condition and repair, normal wear and tear excepted.
Section 4.11 Intellectual Property . Section 4.11 of the Seller
Disclosure Letter lists all material trademarks, trade names, service marks,
service names, xxxx registrations, logos, assumed names and copyright
registrations, patents and all applications therefor owned by the Company or any
Company Subsidiary and used in the business and operations of the Company or any
Company Subsidiary, as currently conducted (collectively, the "Intellectual
25
Property"). As of the date hereof, there are no pending or threatened claims, of
which Seller has been given written notice, by any Person relating to the
Company's use, or any Company Subsidiary's use, of any Intellectual Property.
The Company or a Company Subsidiary has such ownership and use (free and clear
of all Liens) of, or rights by license, lease or other agreement to use (free
and clear of all Liens), the Intellectual Property as are necessary to permit
the Company and the Company Subsidiaries to conduct the business and the
operations of the Company and the Company Subsidiaries, as currently conducted,
and neither the Company nor any Company Subsidiary is obligated to pay any
royalty or similar fee to any Person in connection with the Company's use, or
any Company Subsidiary's use, or license of any of the Intellectual Property.
Section 4.12 Computer Software. The Company and the Company
Subsidiaries have such title or such rights by license, lease or other agreement
to the computer software programs, including application software, used by the
Company and the Company Subsidiaries and material to the conduct of the business
and operations of the Company and the Company Subsidiaries, as currently
conducted, as are necessary to permit the conduct of such business and
operations.
Section 4.13 Material Contracts.
(a) Except for Financing Contracts, Non-Recourse Notes and
Credit Enhancements, Section 4.13 of the Seller Disclosure Letter sets forth, as
of the date hereof, a true, complete and correct list of every contract,
agreement, loan, lease, license, guarantee, understanding or commitment (each
such item, a "Contract") to which the Company or any Company Subsidiary is a
party or by which it is bound that (i) provides for aggregate future payments by
the Company or any Company Subsidiary, or to the Company or any Company
Subsidiary, of more than $50,000 and has an unexpired term exceeding one year
and may not
26
be canceled upon 60 days' notice without any liability, penalty or premium
(excluding purchase orders and invoices entered into or incurred in the ordinary
course of business); (ii) was entered into by the Company or a Company
Subsidiary with a stockholder, officer, director or significant employee of the
Company, a Company Subsidiary or Seller (other than contracts identified in
Section 4.9 of the Seller Disclosure Letter); (iii) is a collective bargaining
or similar agreement; (iv) guarantees or indemnifies or otherwise causes the
Company or any Company Subsidiary to be liable or otherwise responsible for the
obligations or liabilities of any other Person or provides for a charitable
contribution by the Company or any Company Subsidiary; (v) involves an agreement
with any bank, finance company or similar organization for borrowed money or
indebtedness of the Company or any Company Subsidiary; (vi) materially restricts
the Company or any Company Subsidiary from engaging in any business or activity
anywhere in the world; (vii) is an employment agreement, consulting agreement or
similar arrangement with any Person who is an employee or former employee of the
Company or any Company Subsidiary (each, a "Company Employee"), or any other
Person (other than Contracts identified in Section 4.9 of the Seller Disclosure
Letter); (viii) is an agreement for the purchase or sale of a portfolio of
Financing Contracts or Non-Recourse Notes with an aggregate value in excess of
$500,000; (ix) is an agreement pursuant to which any Person is entitled or
obligated to (A) manage, service, administer, enforce or make collections on any
Financing Contract or Non-Recourse Note or (B) repossess or otherwise convert
the ownership of any Portfolio Property or to sell or otherwise dispose of
Portfolio Property; (x) is an agreement with a collection agency for the
collection of past-due payments under Financing Contracts or Non-Recourse Notes;
or (xi) is an agreement or commitment by investors to purchase any Non-Recourse
Notes or Financing Contracts, or interests on participations therein, or an
agreement or commitment to sell any Non-Recourse
27
Notes or Financing Contracts, or interests or participations therein (the
foregoing, collectively, "Material Contracts"). For purposes hereof, Material
Contracts shall not include Material Leases. True, complete and correct copies
of all Material Contracts have been made available to Purchaser.
(b) As of the date hereof, (i) there is not and, to Seller's
Knowledge, there has not been claimed or alleged by any Person, with respect to
any Material Contract, any existing default or event that, with notice or lapse
of time or both, would constitute a default or event of default on the part of
the Company or any Company Subsidiary or, to Seller's Knowledge, on the part of
any other party thereto, and (ii) no consent, approval, authorization or waiver
from, or notice to, any Governmental Entity or other Person is required in order
to maintain in full force and effect any of the Material Contracts, other than
such consents and waivers that have been obtained and are unconditional and in
full force and effect and such notices that have been duly given.
Section 4.14 Taxes.
(a) The Company and each Company Subsidiary has (A) duly and
timely filed with the appropriate governmental authorities all Tax Returns
required to be filed by it, and such Tax Returns are true, correct and complete
in all material respects, and (B) duly and timely paid in full or made provision
for such payment in accordance with GAAP for the payment of all Taxes shown to
be due on such Tax Returns.
(b) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending or
proposed (in each case, in writing) with regard to any Taxes or Tax Returns of
the Company or any Company Subsidiary.
(c) There are no Liens for Taxes upon any property or assets of
the Company or any Company Subsidiary, except for Permitted Liens.
28
(d) The federal income Tax Returns of or including the Company
or any Company Subsidiary have been examined by the Internal Revenue Service (or
the applicable statutes of limitation for the assessment of federal income Taxes
for such periods have expired) for all periods through the taxable year ended
1995 but excluding the taxable year 1994.
(e) There are no agreements in effect to extend (A) the time to
file any Tax Return of the Company or any Company Subsidiary, (B) the period of
limitations for the assessment or collection of any Taxes for which the Company
or any Company Subsidiary would be liable or (C) the time for the assessment of
any deficiency or adjustment for any year for the Company or any Company
Subsidiary.
(f) All deficiencies of Taxes asserted or proposed (in each
case, in writing) have been paid, adequate provision therefore has been made on
the Financial Statements or are being contested in good faith.
(g) The Company and each Company Subsidiary is a member of a
U.S. consolidated return filing group of which Seller is the common parent.
Section 4.15 Affiliated Party Transactions; Sensitive Payments. No
contracts or agreements in which the amount involved, either alone or together
with all similar items, exceeds $100,000 are in effect as of the date hereof
between the Company or any Company Subsidiary, on the one hand, and Seller or
its Affiliates, on the other hand. To the Knowledge of the Seller, none of the
Company, any Company Subsidiary, or any director, officer, employee or agent of
the Company or any Company Subsidiary has made, on behalf of the Company or any
Company Subsidiary, directly or indirectly, since January 1, 1993 any illegal
contribution, gift, bribe, rebate, payoff, kickback or other payment to any
Person, whether in money, property or services.
Section 4.16 Environmental Matters. (a) The Company and each Company
Subsidiary is in material compliance with all applicable federal, state and
local laws governing pollution or the protection of human health or the
environment ("Environmental Laws"), (b) neither the Company nor any Company
Subsidiary has received any written notice with respect to the business or
operations of the Company or any Company Subsidiary or to any property owned or
leased by the Company or any Company Subsidiary from any Governmental Entity or
third party alleging that the Company or any Company Subsidiary is not in
material compliance with any Environmental Law, and (c) no Hazardous Substance,
as that term is defined in the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. 9601 et seq., has been stored or
disposed of on any real property owned, leased or occupied by the Company or any
Company Subsidiary that is used in the business and operations of the Company
and the Company Subsidiaries, as currently conducted, except as permitted by or
in accordance with applicable law.
Section 4.17 No Brokers. Except for Xxxxx Xxxxxxx, Inc., whose fees
shall be borne solely by Seller, Seller has not employed any broker, finder or
similar agent or incurred any liability for any brokerage or investment banking
fees, commissions, finders' fees or other similar fees in connection with the
transactions contemplated by this Agreement.
Section 4.18 Receivables, Inventory and Payables. All accounts
receivable (including lease receivables), inventory and accounts payable of the
Company or any Company Subsidiary have arisen, and as of the Closing Date will
have arisen, from bona fide transactions in the ordinary course of business
consistent with past practice.
Section 4.19 Disclosure. For purposes of the representations and
warranties of Seller contained herein, disclosure in any Section of the Seller
Disclosure Letter or other document delivered pursuant to this Agreement of any
facts or circumstances shall be
30
deemed to be adequate response and disclosure of such facts or circumstances
with respect to all representations or warranties by Seller calling for
disclosure of such information, whether or not such disclosure is specifically
associated with or purports to respond to one or more or all of such
representations or warranties. The inclusion of any information in any Section
of the Seller Disclosure Letter or other document delivered by Seller pursuant
to this Agreement shall not be deemed to be an admission or evidence of the
materiality of such item, nor shall it establish a standard of materiality for
any purpose whatsoever.
Section 4.20 Tangible Personal Property. Either the Company or a
Company Subsidiary is in possession of and has good and marketable title to, or
has valid leasehold interests in or valid rights under contract to use, all
tangible personal property used in the conduct of the Business as currently
conducted, including (a) all equipment reflected on the balance sheet included
in the Unaudited Financial Statements and (b) all equipment acquired by the
Company or such Company Subsidiary since September 30, 1998 (in each case other
than equipment disposed of since such date in the ordinary course of business
consistent with past practice or the terms of this Agreement). All such tangible
personal property is free and clear of all Liens, other than Permitted Liens,
and is adequate and suitable for the conduct by the Company and the Company
Subsidiaries of the Business presently conducted by them, and is in good working
order and condition, ordinary wear and tear excepted.
Section 4.21 Permits. Section 4.21 of the Seller Disclosure Letter
contains a true and complete list of all Permits used in and material to the
conduct of the Business, setting forth the issuing jurisdiction, the function
and (where applicable) the expiration date of each. Either the Company or a
Company Subsidiary owns or validly holds all Permits that are material to the
conduct of the Business. Each Permit listed in Section 4.21 of the Seller
Disclosure Letter is valid, binding and in full force and effect, and neither
the Company nor any Company Subsidiary is, or has received any notice that it
is, in default (or with the giving of notice or lapse of time or both, would be
in default) under any such Permit.
31
Section 4.22 Insurance; No Casualty Events. Section 4.22 of the Seller
Disclosure Letter contains a true and complete list (including policy numbers)
of all liability, property, workers' compensation, directors' and officers'
liability and other insurance policies (including self-insurance programs, if
any) (the "Company Insurance Policies") currently in effect that insure the
business, operations, employees, officers or directors of the Company or any
Company Subsidiary or affect or relate to the ownership, use or operation of any
of the assets and properties of the Company or any Company Subsidiary. Each of
the Company Insurance Policies has been issued to the Company or a Subsidiary
thereof and the insurance coverage provided by the Company Insurance Policies
will not terminate or lapse by reason of the transactions contemplated by this
Agreement. Each of the Company Insurance Policies is valid and binding and in
full force and effect in all material respects, all premiums due thereunder have
been paid when due, and none of the Seller, the Company or any Company
Subsidiary has received any notice of cancellation or termination in respect of
any such policy.
Section 4.23 Employees; Labor Relations.
(a) (i) Neither the Company nor any Company Subsidiary is
engaged in any unfair labor practice, (ii) no unfair labor practice complaint is
pending or, to the Knowledge of the Seller, threatened against either the
Company or a Company Subsidiary before the National Labor Relations Board, (iii)
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is pending or, to the Knowledge of the Seller, threatened
against the Company or any Company Subsidiary, (iv) no strike, labor dispute,
slowdown or stoppage is pending or, to the Knowledge of the Seller, threatened
against the Company or any Company Subsidiary, (v) no union representation
question exists with respect to employees of the Company or any Company
Subsidiary and, to the Knowledge of the Seller, no union organizing activities
are taking place with respect to any such employees or have taken place within
the last three years, and (vi) neither the Company nor any Company Subsidiary is
a party to, or has any obligation under, any collective bargaining agreement or
other labor union contract, white paper or side agreement with any labor union
or organization, or has any obligation to recognize or deal with any labor union
or organization.
32
(b) The Company and each Company Subsidiary has at all times
since January 1, 1995 been in material compliance with all applicable laws
relating to employment, wages, hours, compensation, benefits, occupational
health and safety, and payment and withholding of taxes in connection with
employment. Each of the Company and the Company Subsidiaries has withheld all
amounts required by law or agreement to be withheld by it from wages, salaries
and commissions, and neither the Company nor any Company Subsidiary is liable
for any arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing. As of the date hereof, there are no actions or proceedings
pending or, to the Knowledge of the Seller, threatened against the Company or
any Company Subsidiary before any Governmental Entity involving or relating to
any past or present employee or applicant for employment of the Company or any
Company Subsidiary, or relating to any acts, omissions or practices of the
Company or any Company Subsidiary relating to employment, wages, hours,
compensation or benefits. Neither the Company nor any Company Subsidiary is
party to or bound by any order of any kind respecting the employment, wages,
hours, compensation or benefits of any employees or prospective employees of the
Company or any Company Subsidiary.
33
(c) Section 4.23 of the Seller Disclosure Letter sets forth
the name and current annual rate of compensation (including bonuses) paid by the
Company and each Company Subsidiary to each officer or employee of the Company
and each director, officer and employee of any Company Subsidiary.
Section 4.24 Registration Rights. None of the Seller, the Company or
any Company Subsidiary has granted registration rights to any holder of any of
the securities of the Company or any Company Subsidiary.
Section 4.25 Exemption from Registration; Restrictions on Offer and
Sale of Same or Similar Securities. Assuming the representations and warranties
of the Purchaser set forth in Section 5.7 hereof are true and correct in all
material respects, the offer and sale of the Shares made pursuant to this
Agreement is exempt from the registration requirements of the Securities Act.
None of the Seller, the Company, the Company Subsidiaries or any Person
authorized to act on behalf of any of them has, in connection with the offering
of the Shares, engaged in (a) any form of general solicitation or general
advertising (as those terms are used in Rule 502(c) under the Securities Act),
(b) any action involving a "public offering" within the meaning of Section 4(2)
of the Securities Act, or (c) any action that would require the registration
under the Securities Act of the offering and sale of the Shares pursuant to this
Agreement or that would violate applicable state securities or "blue sky" laws.
None of the Seller, the Company, the Company Subsidiaries or any Person
authorized to act on behalf of any of them has made, directly or indirectly, any
offer or sale of any of the Shares or of securities of the same or a similar
class as the Shares that could cause the offer and sale of the Shares
contemplated hereby to fail to be entitled to exemption from the registration
requirements of the Securities Act. As used herein, the terms "offer" and "sale"
have the meanings specified in Section 2(3) of the Securities Act.
34
Section 4.26 Financing Contracts.
(a) Section 4.26 of the Seller Disclosure Letter includes a
list of each Financing Contract as of the date hereof. All Financing Records
relating to the Financing Contracts, including any Credit Enhancements with
respect thereto, have been furnished or made available for inspection by
Purchaser. The Company or a Company Subsidiary has in its possession (i) an
executed original or a true, correct and complete copy of any lease, note or
chattel paper relating to each Financing Contract, (ii) an executed original or
a true, correct and complete copy of all other documents relating to each such
Financing Contract and each Credit Enhancement relating thereto and (iii) all
other documents reasonably necessary to enforce such Financing Contracts and
Credit Enhancements or perfect the security interest thereunder.
(b) Each Financing Contract, and each Credit Enhancement
relating thereto, is valid, binding and enforceable by the Company or the
appropriate Company Subsidiary against the lessee, obligor or borrower
thereunder in accordance with its written terms, except as may be limited by the
Bankruptcy Exception, and (ii) arose out of a bona fide business transaction
entered into in the ordinary course of business; provided, however, that Seller
makes no representation or warranty with respect to the ability of the obligor
under any Financing Contract or Credit Enhancement to discharge its payment
obligations thereunder.
(c) (i) There are no payments under any Financing Contract
that are more than 90 days past due as of December 1, 1998, (ii) the Company or
the appropriate Company Subsidiary is not in breach or default of any of its
material obligations under any Financing Contract or Credit Enhancement related
thereto and (iii) neither the Company nor any Company Subsidiary has received
any notice of (A) any event other than a payment default which is, or with
notice and/or lapse of time would constitute, a material default under any
Financing Contract or Credit Enhancement related thereto by any other party
thereto or (B) any claim that any obligation to the Company or the appropriate
Company Subsidiary under any Financing Contract or Credit Enhancement related
thereto is subject to any defense, offset, claim, right of rescission or
counterclaim of any party.
35
Section 4.27 Accurate and Complete Disclosure. The written information
furnished to Purchaser by employees of the Company in connection with its
investigation of the Company and the Company Subsidiaries, whether before or
after the date of this Agreement, is true and correct in all material respects,
and no representation or warranty of Seller contained herein contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 5.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so existing and in good standing or to
have such power and authority would not in the aggregate have a Purchaser
Material Adverse Effect. Purchaser is qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified, licensed and in
good standing, to have such power and authority or to be so qualified or
licensed would not have a Purchaser Material Adverse Effect. Purchaser has
heretofore delivered to Seller complete and correct copies of its Certificate of
Incorporation and Bylaws, in each case, as currently in effect.
Section 5.2 Authorization: Validity of Agreement. Purchaser has the
requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Purchaser of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Purchaser, and no other corporate proceedings on the
part of Purchaser are necessary to authorize the execution, delivery and
performance of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and, assuming due authorization, execution and delivery
of this Agreement by Seller, is a valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be subject to or limited by the Bankruptcy Exception.
37
Section 5.3 No Violations; Consents and Approvals.
(a) The execution, delivery or performance of this Agreement
by Purchaser does not, and the consummation by Purchaser of the transactions
contemplated hereby will not, (i) violate any provision of the Certificate of
Incorporation or Bylaws of Purchaser, (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, guarantee, other evidence of indebtedness, license, contract,
agreement or other instrument to which Purchaser is a party or by which
Purchaser or any of its properties or assets may be bound or otherwise subject
or (iii) violate any order, writ, judgment, injunction, decree, law, statute,
rule or regulation applicable to Purchaser, or any of its properties or assets,
except in the case of clauses (ii) and (iii) for violations, breaches or
defaults that would not have a Purchaser Material Adverse Effect.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution, delivery and performance of this Agreement by
Purchaser or the consummation by Purchaser of the transactions contemplated
hereby, except for (i) filings with the FTC and with the DOJ pursuant to the HSR
Act and (ii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings the failure of which to
be obtained or made would not have a Purchaser Material Adverse Effect.
38
Section 5.4 Litigation; Compliance with Law. There is no action, suit
or proceeding pending or, to the Knowledge of Purchaser, any investigation
pending or, to the Knowledge of Purchaser, any action, suit or proceeding
threatened, that in any way involves or affects Purchaser, by or before any
court, Governmental Entity or arbitration panel or any other Person that would
have a Purchaser Material Adverse Effect. The business and operations of
Purchaser are not being conducted in violation of any applicable law, ordinance,
rule, regulation, decree or order of any court or Governmental Entity except for
violations that, individually or in the aggregate, would not have a Purchaser
Material Adverse Effect.
Section 5.5 No Brokers. Purchaser has not employed any broker, finder
or similar agent or incurred any liability for any brokerage or investment
banking fees, commissions, finders' fees or other similar fees in connection
with any of the transactions contemplated by this Agreement.
Section 5.6 Investigation by Purchaser. Purchaser has conducted its
own independent review and analysis of the businesses, assets, condition,
operations and prospects of the Company and the Company Subsidiaries and
acknowledges that Purchaser has been provided access to the properties, premises
and records of the Company and each Company Subsidiary for this purpose. In
entering into this Agreement, Purchaser has relied upon its own investigation
and analysis, and Purchaser agrees, to the fullest extent permitted by law, that
none of Seller or its Subsidiaries, or any of their respective directors,
officers, employees, affiliates, controlling persons, agents or representatives,
will have any liability or responsibility whatsoever to Purchaser, its
directors, officers, employees, affiliates, controlling persons, agents or
representatives on any basis (including in contract or tort, under federal or
state securities laws or otherwise) based upon any information provided or made
available, or statements made, to Purchaser or its directors, officers,
employees, affiliates, controlling persons, agents or representatives (or any
omissions therefrom) except as and only to the extent expressly set forth in the
representations, warranties, covenants and agreements of Seller contained herein
and pursuant to the rights to indemnification by Seller provided for herein,
subject in each case to the limitations and restrictions contained herein and in
the Seller Disclosure Letter.
39
Section 5.7 Investment Intent. Following the Closing, the Shares shall
not be transferred by Purchaser except in a transaction registered or exempt
from registration under the Securities Act.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business by the Company Pending the Closing.
During the period from the date hereof to the Closing, unless Purchaser will
otherwise agree in writing, except as required by applicable law or as otherwise
contemplated by this Agreement, Seller shall cause the Company and each Company
Subsidiary to conduct its respective business in the ordinary course and
consistent with past practice. Without limiting the generality of and in
addition to the foregoing, and except as set forth in the Seller Disclosure
Letter or as otherwise provided in this Agreement, prior to the Closing, Seller
shall cause the Company and each Company Subsidiary not to, without the prior
written consent of Purchaser (which consent shall not be unreasonably withheld
or delayed): (a) amend its Certificate of Incorporation or Bylaws;
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock or redeem or otherwise acquire any of its securities;
40
(d) (i) incur or assume any material long-term debt or, except
in the ordinary course of business under existing lines of credit, incur or
assume any material short-term debt; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other Person; or (iii) make any
material loans, advances or capital contributions to, or investments in, any
other Person (other than customary loans or advances to employees in accordance
with past practices);
(e) enter into, adopt or (except as otherwise required by law
or existing contract disclosed in the Seller Disclosure Letter) materially amend
or terminate any Benefit Arrangement or (except for normal increases in the
ordinary course of business that are consistent with past practice) increase in
any manner the compensation or fringe benefits of any Company Employee or pay
any benefit not required by any existing Benefit Arrangement;
(f) acquire, sell, lease, transfer or dispose of any of its
properties or assets except in the ordinary course of business and consistent
with past practice or any of its properties or assets that are material,
individually or in the aggregate, to the business or operations of the Company
or any Company Subsidiary or enter into any material commitment or transaction
except in the ordinary course of business and consistent with past practice;
(g) modify any policy or procedure with respect to credit to
customers or collection of receivables;
(h) pay, discharge or satisfy before it is due any material
claim or liability of the Company or any Company Subsidiary, or fail to pay any
such item in a timely manner given the Company's or any Company Subsidiary's
prior practices;
41
(i) cancel any material debts or waive any claims or rights of
substantial value;
(j) except to the extent required by applicable law or as is
customary in the ordinary course of business, change any accounting principle or
method or make any election for foreign, federal, state or local Income Tax
purposes;
(k) take or suffer any action that would result in the
creation, or consent to the imposition, of any Lien on any of the properties or
assets of the Company or any Company Subsidiary;
(l) make any capital expenditure or commitment for additions
to property, plant, equipment or other capital assets in excess of $30,000;
(m) except in the ordinary course of business consistent with
past practice, amend, waive, surrender or terminate or agree to the amendment,
waiver, surrender or termination of any Material Contract, Material Lease or
Approval;
(n) except in the ordinary course of business consistent with
past practice, exercise any right or option under any Lease or extend or renew
any Material Contract or Material Lease; or
(o) take, or agree in writing or otherwise to take or consent
to, any of the foregoing actions.
Section 6.2 Access to Information.
(a) Between the date of this Agreement and the Closing, during
normal business hours, Seller shall give Purchaser and its authorized
representatives reasonable access to all offices and other facilities and to all
books and records of Seller with respect to the Company and each Company
Subsidiary, and the Company will permit Purchaser to make such
42
inspections as it may reasonably require and will cause its officers and those
of each Company Subsidiary to furnish Purchaser with such financial and
operating data and other information as Purchaser may from time to time
reasonably request. Purchaser and its authorized representatives will conduct
all such inspections in a manner which will minimize any disruptions of the
business and operations of the Company or any Company Subsidiary.
(b) Purchaser and Seller agree that the provisions of the
confidentiality agreement between Seller and Purchaser, dated August 27, 1998
(the "Confidentiality Agreement") shall remain binding and in full force and
effect until the Closing, that the information contained herein, in the Seller
Disclosure Letter and provided to Purchaser or its authorized representatives
pursuant hereto shall be subject to the Confidentiality Agreement as
"Information" (as defined therein) until the Closing and that, for that purpose
and to that extent, the terms of the Confidentiality Agreement are incorporated
herein by reference.
(c) Following the Closing, Purchaser shall cause the Company
and each Company Subsidiary to provide to Seller, in a timely manner and at the
Company's expense, such financial and other information as the Seller may
reasonably require in order to account properly for the financial results and
operations of the Company and each Company Subsidiary prior to the Closing.
(d) Following the Closing and for so long as Purchaser's
obligations under Section 6.17 are in effect, Purchaser shall give Seller and
its authorized representatives, during normal business hours, reasonable access
to all books and records of Seller with respect to the Company and each Company
Subsidiary, and the Company will permit Seller and its authorized
representatives to make such inspections as it may reasonably require and will
cause its officers and those of each Company Subsidiary to furnish Seller with
such financial and operating data and other information as Seller may from time
to time reasonably request, in each case in order to permit Seller to account
for any obligation it may owe to Purchaser, or Purchaser may owe to it, pursuant
hereto. Purchaser and its authorized representatives will conduct all such
inspections in a manner which will minimize any disruptions of the business and
operations of the Company or any Company Subsidiary.
43
(e) Unless otherwise consented to in writing by Seller, at no
time after the Closing shall Purchaser cause or permit the Company or any
Company Subsidiary to destroy or otherwise dispose of any of its respective
books and records that (i) exist as of the Closing and (ii) are less than five
years old at the time of such destruction or disposition.
Section 6.3 Best Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its 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 laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Section 6.4 Consents. Seller and Purchaser shall cooperate, and use
their respective best efforts, in as timely a manner as is reasonably
practicable, to make all filings with, and obtain all licenses, Permits,
consents, approvals, authorizations, qualifications and orders from, all
Governmental Entities and other Persons necessary or required to be obtained for
Purchaser and Seller, as applicable, to consummate the transactions contemplated
by this Agreement (collectively, the "Consents"). Each of the parties hereto
shall furnish to the other party such necessary information and reasonable
assistance as such other Persons may reasonably request in connection with the
foregoing and shall provide the other party with (i) copies of all filings made
by such party with any Governmental Entity or other Person or any other
information supplied by such party in connection with this Agreement and the
transactions contemplated hereby and (ii) all consents obtained from any third
party to any Contract or any Material Lease and any Approval with respect to any
Material Leased Real Property and the Owned Real Property.
44
Section 6.5 HSR Filings.
(a) In addition to and without limiting the agreements of the
parties contained in Section 6.4, Seller and Purchaser shall (i) take promptly
all actions necessary to make the filings required of them or any of their
Affiliates under the HSR Act and seek early termination of the waiting period
thereunder, (ii) comply at the earliest practicable date with any request for
additional information or documentary material received by Seller or Purchaser,
as applicable, or any of their Affiliates from the FTC or DOJ pursuant to the
HSR Act, (iii) cooperate with each other in connection with any filing under the
HSR Act and in connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement commenced by the FTC,
DOJ or any attorney general and (iv) use all reasonable commercial efforts to
resolve such objections, if any, as may be asserted under any Antitrust Law with
respect to the transactions contemplated by this Agreement.
(b) Each of Seller and Purchaser shall promptly inform the
other party of any material communication received by such party from the FTC,
DOJ or any other Governmental Entity regarding any of the transactions
contemplated hereby, and of any understandings, undertakings or agreements (oral
or written) that such party proposes to make or enter into with the FTC, DOJ or
any other Governmental Entity in connection with the transactions contemplated
hereby.
(c) Seller and Purchaser shall each pay one-half of the HSR filing fee
at the time of filing.
45
Section 6.6 Public Announcements. Purchaser and Seller shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law.
Section 6.7 Employee Receivables and Payables. Seller shall ensure
that (a) any receivable due to the Company or any Company Subsidiary from any
employee of the Company will be paid in full on or before the Closing Date and
(b) any payable due from the Company or any Company Subsidiary to any employee
of the Company, excluding such payables as become payable in the ordinary course
of business, will be waived or paid on or before the Closing Date.
Section 6.8 Employee Benefits. Each employee of the Company or any
Company Subsidiary as of the Closing Date (an "Existing Employee") who continues
as an employee of the Company or a Company Subsidiary shall be entitled to
participate in all Purchaser Plans. For purposes of determining the level of
benefits to which an Existing Employee is entitled and the vesting of such
benefits, all years (or any portion thereof) of service of such Existing
Employee while in the employ of the Company or a Company Subsidiary shall be
counted.
Section 6.9 Notification of Certain Matters.
(a) Subject to Section 6.9(b), Seller shall give prompt notice
to Purchaser, and Purchaser shall give prompt notice to Seller, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would cause any representation or warranty contained in this Agreement
(including the Seller Disclosure Letter) to be untrue or inaccurate in any
material respect at the Closing and (ii) any material failure of the Seller or
Purchaser, as the case may be, to comply with or satisfy any covenant, warranty,
obligation, condition or agreement to be observed, complied with or satisfied by
it hereunder.
46
(b) Seller may from time to time prior to or on the Closing
Date by notice in accordance with this Agreement supplement or amend the Seller
Disclosure Letter, including one or more supplements or amendments to correct
any matter that would otherwise constitute a breach of any representation,
warranty or covenant contained herein. If a supplement or amendment of any
section of the Seller Disclosure Letter materially and adversely affects the
benefits to be obtained by Purchaser under this Agreement, then Purchaser shall
have the right to terminate this Agreement with such termination being
Purchaser's sole remedy relating to matters set forth in amendments to
supplements to any section of the Seller Disclosure Letter. Notwithstanding any
other provision hereof, the Seller Disclosure Letter and the representations and
warranties made by the Seller shall be deemed to include and reflect such
supplements and amendments as of the date hereof and as of the Closing Date.
Section 6.10 Tax Matters.
(a) With respect to the Company and the Company Subsidiaries,
Seller and Purchaser shall jointly make the election provided for by Section
338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations
and any comparable election under state or local tax law (the "Election"). As
soon as practicable after the Closing, with respect to such Election, Seller and
Purchaser shall mutually prepare a Form 8023-A, with all attachments, and Seller
and Purchaser shall sign such Form 8023-A. Purchaser and Seller shall cooperate
with each other to take all actions necessary and appropriate (including filing
such additional forms, returns, elections, schedules and other documents as may
be required to effect and preserve timely the Election in accordance with the
provisions of Section 1.338(h)(10)-1 of the Treasury Regulations (or any
comparable provisions of state or local tax law) or any successor provisions).
47
(b) With respect to the Election, Purchaser and Seller shall
agree upon the modified Aggregate Deemed Sales Price (the "modified ADSP") and
allocate the modified ADSP among the assets of the Company pursuant to Treasury
Regulation 1.338(h)(10)-1. Purchaser shall provide to Seller a schedule and
supporting material reflecting such allocation. The parties shall take no action
inconsistent with, or fail to take any action necessary for the validity of, the
Election, and shall adopt and utilize the asset values determined from such
allocation for the purpose of all Tax Returns filed by them, and shall not
voluntarily take any position inconsistent therewith upon examination of any
Return, in any refund claim, in any litigation or otherwise with respect to such
Returns.
(c) Seller and Purchaser shall and shall cause their
respective Affiliates to provide the requesting party with such assistance and
documents as may be reasonably requested by such party in connection with (i)
the preparation of any Tax Returns of the Company, (ii) the conduct of any Tax
Audit relating to liability for or refunds or adjustments with respect to Taxes,
and (iii) any other Tax-related matter that is a subject of this Agreement.
(d) (i) For purposes of this Agreement, (x) the amount of
Taxes attributable to the pre-closing portion of a Straddle Period shall be
determined based on an interim closing of the books as of the close of the
Closing Date, except that the amount of any such Taxes that are imposed on a
periodic basis shall be determined by reference to the relative number of days
in the pre-closing and post-closing portions of such Straddle Period and (y) the
taxable year of any partnership or other pass-through entity in which the
Company is partner or other beneficial interest holder shall be deemed to
terminate on the Closing Date.
48
(ii) Purchaser shall cause the Company to join, for
all Pre-Closing Periods for which the Company is required or eligible to do so,
in all consolidated, combined or unitary federal, state or local Income Tax or
franchise Tax Returns of Seller (or any Tax Affiliate) for all Pre-Closing
Periods, and shall, in each jurisdiction where this is required or permissible
under applicable law, cause the taxable year of the Company to terminate as of
the close of the Closing Date. Seller shall cause to be prepared and timely
filed all Tax Returns relating to Pre-Closing Periods ("Seller Tax Returns") and
shall cause to be timely paid all Taxes shown to be due on such Seller Tax
Returns.
(iii) Purchaser shall cause to be prepared and timely
filed all Income Tax Returns of the Company other than those referred to in
Sections 6.10(d)(ii) and all other Tax Returns of the Company required to be
filed for the Straddle Period.
(iv) The Tax Returns referred to in Section
6.10(d)(ii) and (iii) shall be prepared in a manner consistent with past
practice, unless a contrary treatment is required by an intervening change in
applicable law. Purchaser shall cause each such Tax Return that covers any
Straddle Period, together with all relevant work papers and other information,
to be made available to Seller for its review and approval no later than 30 days
prior to the due date for the filing of such Tax Return (taking into account
proper extensions).
(e) (i) Without duplication, Seller shall indemnify, defend
and hold the Purchaser Indemnified Persons harmless from and against any and all
Damages that may be suffered or incurred by them in respect of or relating to,
directly or indirectly (i) Taxes of or attributable to the Company with respect
to all Pre-Closing Periods, (ii) Taxes of or attributable to the Company with
respect to the pre-closing portion of any Straddle Period, (iii) Taxes payable
by the Company with respect to any Pre-Closing Period or Straddle Period by
reason of the Company being severally liable for the Tax of any Tax Affiliate
pursuant to
49
Treasury Regulation Section 1.1502-6 or any analogous state or local Tax law,
and (iv) any liability for Taxes attributed to breaches by Seller with respect
to its obligations under Sections 6.10(a) and 6.10(b); provided, however, that
payment pursuant to this Section 6.10(e)(i) shall be made by Seller only if, and
to the extent that, any Damages attributable to such Taxes exceed (x) the total
aggregate amount of Taxes accrued on the Closing Date Balance Sheet less (y) any
amounts paid to Seller pursuant to Section 6.10(d) (ii) of this Agreement; and
provided, further, that Damages shall not include, and the Purchaser shall not
be entitled to indemnification with respect to, any amounts paid to Seller
pursuant to Section 6.10(d)(ii) of this Agreement.
(ii) Without duplication, Purchaser shall indemnify,
defend and hold the Seller Indemnified Persons harmless from and against any and
all Damages that may be suffered or incurred by them in respect of or relating
to, directly or indirectly (i) Taxes of or attributable to the Company with
respect to all Post-Closing Periods, (ii) Taxes of or attributable to the
Company with respect to the post-Closing portion of any Straddle Period, and
(iii) any liability for Taxes attributable to breach by Purchaser with respect
to its obligations under Section 6.10(a) and 6.10(b).
(iii) Any payment required to be made pursuant to
this Section 6.10(e) shall be made within 15 Business Days after written request
therefor.
(f) (i) Each of Seller and Purchaser shall notify the other
party in writing within 30 days of receipt of written notice of any pending or
threatened examination, audit or other administrative or judicial proceeding (a
"Tax Audit") that could reasonably be expected to affect the liability for Taxes
of such other party pursuant to this Agreement. If the recipient of such notice
of a Tax Audit fails to provide such prompt notice to the other party, it shall
not be entitled to indemnification for any Taxes arising in connection with such
Tax Audit.
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(ii) If a Tax Audit relates to any period ending on or prior
to the Closing Date or for any Taxes for which the Seller is liable in full
hereunder, Seller shall at its expense control the defense and settlement of
such Tax Audit. If such Tax Audit relates to any period beginning after the
Closing Date or for any Taxes for which Purchaser is liable in full hereunder,
Purchaser shall at its expense control the defense and settlement of such Tax
Audit. The party not in control of the defense shall have the right to observe
the conduct of any Tax Audit at its own expense, including through its own
counsel and other professional experts. Purchaser and Seller shall jointly
represent the Company in any Tax Audit relating to a Straddle Period, and fees
and expenses related to such representation shall be paid by Purchaser and
Seller in proportion to each party's liability for such Taxes as determined
pursuant to this Agreement.
(g) In the event that a dispute arises between Seller and
Purchaser as to the amount of Taxes or indemnification or any other matter
relating to Taxes, the parties shall attempt in good faith to resolve such
dispute, and any agreed upon amount shall be paid to the appropriate party. If
such dispute is not resolved within 15 days, the parties shall submit the
dispute to the national office of the Designated Accounting Firm for resolution,
which resolution shall be final, conclusive and binding on the parties hereto.
Notwithstanding anything in this Agreement to the contrary, the fees and
expenses of the Settlement Accountants in resolving the dispute shall be borne
equally by Seller and the Buyer, other than fees and expenses relating to a
dispute as to the amount of the Taxes owed by either of the Parties with respect
to the Straddle Period Tax Return, in which case such fees and expenses shall be
paid by Seller and Purchaser in proportion to each party's respective liability
for Taxes as determined by the Settlement Accountants. Following the decision of
the Settlement Accountants, the parties shall each take or cause to be taken any
action that is necessary or appropriate to implement such decision of the
Settlement Accountants, including the prompt payment of underpayments or
overpayments, with interest calculated on such underpayments or overpayments at
the rate specified under Section 6621(a)(2) of the Code from the date that such
payment was due through the date such underpayment or overpayment is due or
refunded.
(h) Any Tax sharing agreement or contract between the Company
and any other Person shall be terminated on, and effective as of, the Closing
Date, and no Person shall have any rights or obligations under such Tax sharing
agreement or contract after such termination, and no such rights or obligations
shall be included in the Closing Date Balance Sheet.
(i) Purchaser shall be responsible for any and all sales or
use Taxes, real or personal property transfer Taxes, recording fees and charges
and all other similar charges and transfer Taxes imposed by any taxing authority
upon or by reason of the transactions to be effected pursuant to this Agreement.
(j) Any refunds or credits of Taxes of the Company plus any
interest received with respect thereto from the applicable taxing authorities
for any Pre-Closing Period (including refunds or credits arising from amended
returns filed after the Closing Date) shall be for the account of Seller and
shall be paid by Purchaser to Seller within 10 days after Purchaser receives
such refund or after the relevant Tax Return is filed in which the credit is
applied against Purchaser or the Company's liability for Taxes. Any refunds or
credits of Taxes of the Company for any Straddle Period shall be apportioned
between Seller and Purchaser in the same manner as the liability for such Taxes
is apportioned pursuant to Section 6.10(d)(i).
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(k) Notwithstanding anything to the contrary in this
Agreement, the covenants of the parties contained in this Section 6.10 shall
survive the Closing until the date 90 days after the expiration of any
applicable statute of limitations, including extensions.
Section 6.11 Seller Non-Competition and Non-Solicitation Covenants .
Seller agrees that, for a period of three years following the Closing, Seller
shall not, and Seller shall cause its Corporate Affiliates (it being understood
that for the purposes of this Section only that JLC shall be deemed to be the
ultimate parent of Seller) not to, directly or indirectly, (a) engage or
participate (other than for existing arrangements) as an owner, partner,
shareholder, joint venturer or in any other capacity calling for the making of
any investment or the rendering of any services or any acts of management,
operation or control in any business in the United States that is the same as,
similar to or competitive with the Business as it has been or is being conducted
as of the date hereof or (b) materially alter the Company's or any Company
Subsidiary's relationship with, take away or employ (or attempt to materially
alter the Company's or any Company Subsidiary's relationship with, solicit,
divert, take away or employ) any of the customers, business or employees
(excluding Mitsumasa Sakka and Xxxx Xxxx) of the Company or any Company
Subsidiary; provided, however, that during such three-year period neither Seller
nor any Corporate Affiliate of Seller shall employ Mitsumasa Sakka or Xxxx Xxxx
in the United States except with the Company's consent or pursuant to a
consulting agreement with the Company. Notwithstanding anything contained in the
foregoing sentence, nothing in this Section 6.11 shall, during such three-year
period or otherwise, prevent or otherwise limit (a) Seller or any Corporate
Affiliate of Seller from continuing to engage in cross-border leasing
transactions into the United States where such transactions involve one or more
items of equipment and each such item of equipment has a cost of $2,500,000 or
more, (b) Seller or any Corporate Affiliate of Seller from employing [outside
the United States] any former employee of the Company or any Company Subsidiary
whose employment has been terminated by the Company or such Company Subsidiary
without cause, or (c) any Person (including any of such Person's Affiliates)
that may, following the date hereof, control JLC from engaging in any of the
prohibited activities described herein.
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Section 6.12 Payment of Company Debt; Release of Guaranties.
(a) Purchaser agrees that prior to or at the Closing, it shall
(i) pay, or cause to be paid, to the Persons, including Affiliates of the
Company other than Seller, (collectively, the "Company Lenders") listed in
Section 6.12 of the Seller Disclosure Letter the amount necessary to discharge
and terminate the debt obligations of the Company to the Company Lenders and
(ii) shall secure, or cause to be secured, the release by the Company Lenders of
the guaranties and letters of awareness listed in Section 6.12 of the Seller
Disclosure Letter. Not less than five Business Days prior to the Closing Date,
Seller shall deliver, or cause to be delivered, to Purchaser copies of payoff
letters and waivers of payment of any interest at default rates, late payment
fees and Company Lender expenses from each of the Company Lenders.
(b) Purchaser agrees that, at the Closing, Purchaser shall
execute and deliver to Seller a promissory note in substantially the form of
Exhibit 6.12(b) (the "Promissory Note") in a principal amount equal to (i) the
amount necessary to discharge and terminate all outstanding indebtedness of the
Company or any Company Subsidiary to Seller as of the Closing, including
$3,500,000 in respect of federal and state income Tax liabilities of the Company
payable to Seller, less (ii) an amount equal to the book value of the
Securitized 90+ Contracts on a net investment basis as of the date that is two
Business Days prior to the Closing Date. Each of the parties hereto acknowledges
that, in determining the principal amount of the Promissory Note pursuant to
this Section 6.12(b), (i) the amount of $3,500,000 set forth in the foregoing
sentence shall account for the entire indebtedness of the Company to Seller in
respect of federal and state income Tax liabilities as of the Closing (it being
understood that such amount is in lieu of the actual net of (A) aggregate
federal and state income Tax benefits of the Company and (B) aggregate federal
and state income Tax liabilities of the Company, which aggregate benefits and
liabilities netted $3,774,326 at October 31, 1998, as disclosed in the October
Financial Statements) and (ii) the outstanding indebtedness of the Company and
the Company Subsidiaries to Seller as of the Closing will be reduced by the sum,
as set forth on Schedule A of the Assignment, of the book values (on a net
investment basis) of the Financing Contracts set forth on Schedule A of the
Assignment. In connection with the foregoing, each of the parties hereto further
acknowledges that no amounts received by the Company following the date hereof
in respect of any income Tax refund from the State of California shall be deemed
an indebtedness of the Company or any Company Subsidiary to Seller and,
accordingly, shall not be payable to Seller pursuant hereto. For purposes of
determining the principal amount of the Promissory Note pursuant to this Section
6.12(b), not less than one Business Day prior to the Closing Date, Seller shall
deliver, or cause to be delivered, to Purchaser (i) a statement of all
outstanding indebtedness of the Company or any Company Subsidiary to Seller as
of the Closing (without giving effect to any of the transactions contemplated
hereby to occur on the Closing Date), (ii) Schedule A to the Assignment,
including a statement of the book value (on a net investment basis) of each
Financing Contract set forth thereon as of the date that is two Business Days
prior to the Closing Date, and (iii) a separate schedule setting forth a list of
the Securitized 90+ Contracts, including a statement of the book value (on a net
investment basis) of each such contract as of the date that is two Business Days
prior to the Closing Date.
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Section 6.13 Powers of Attorney; Accounts. Seller shall cause to be
prepared and provided to Purchaser at least seven Business Days prior to the
Closing Date a schedule setting forth a list of the names and addresses of all
persons holding a power-of-attorney on behalf of the Company or any Company
Subsidiary, the names and addresses of all banks or other financial institutions
at which the Company or any Company Subsidiary has any account, deposit, lockbox
or safe-deposit box, with the names of all persons authorized to draw on such
accounts or deposits or to have access to such boxes and the account or other
box numbers thereof. Seller shall, on or before the Closing Date, take all
actions reasonably necessary to remove those persons who are signatories or
holders of powers-of-attorney in respect of any such accounts, deposits,
lockboxes or safe-deposit boxes (except such as shall be specified in writing by
Purchaser) and otherwise to extinguish their signing authority or access with
respect thereto. To the extent requested in writing by Purchaser at least five
Business Days prior to the Closing Date, Seller shall, on or before the Closing
Date, (i) terminate any and all arrangements pursuant to which the Company's and
the Company Subsidiaries' funds or receipts are swept into or otherwise
transferred into any bank account or other deposit account maintained by or
under the control of Seller or any of its affiliates, (ii) use its reasonable
best efforts to transfer and close any deposit accounts relating to lockboxes
maintained by the Company or any Company Subsidiary and (iii) take all actions
necessary to terminate any other powers-of-attorney made by the Company and any
Company Subsidiary in favor of any person.
Section 6.14 Inquiries and Negotiations.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, prior to receipt from Purchaser of a copy of the Commitment Letter,
Seller shall be entitled to (i) continue existing, and solicit and initiate new,
activities, discussions and negotiations with
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any Person in respect of the acquisition of all or any substantial part of the
business and properties of the Company and the Company Subsidiaries, whether by
sale of assets or the Shares, or by merger, consolidation, recapitalization,
liquidation or similar transaction (each, an "Acquisition Transaction") and (ii)
accept an offer for an Acquisition Transaction and enter into a definitive
agreement in respect thereof. Notwithstanding anything to the contrary set forth
in this Agreement, prior to receipt from Purchaser of a copy of the Commitment
Letter, (i) Seller, and Seller's officers, employees, representatives and
agents, shall be permitted, directly and indirectly, to (A) solicit and initiate
discussions and negotiations with, and provide any non-public information to,
any Person concerning an Acquisition Transaction, and (B) otherwise solicit,
initiate and encourage inquiries and the submission of any proposal
contemplating an Acquisition Transaction and (ii) Seller shall be under no
obligation to communicate to Purchaser the terms of any inquiry or proposal that
it may receive in respect of an Acquisition Transaction. The parties hereto
hereby acknowledge that (i) at any time prior to Seller's receipt from Purchaser
of a copy of the Commitment Letter, Seller shall be entitled to terminate this
Agreement by paying to Purchaser Two Million Dollars as liquidated damages and
(ii) upon the making of such liquidated damages payment, this Agreement shall be
deemed automatically terminated, null and void and without further force or
effect..
(b) Upon receipt from Purchaser of a copy of the Commitment
Letter, Seller shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Person conducted theretofore in
respect of any and all Acquisition Transactions. Following receipt from
Purchaser of a copy of the Commitment Letter, Seller shall not, and shall not
permit its officers, employees, representatives or agents to, directly or
indirectly, (i) solicit or initiate discussions or negotiations with, or provide
any non-public
57
information to, any Person other than Purchaser or its Affiliates concerning an
Acquisition Transaction, or (ii) otherwise solicit, initiate or encourage
inquiries or the submission of any proposal contemplating an Acquisition
Transaction. Following receipt from Purchaser of a copy of the Commitment
Letter, Seller shall promptly communicate to Purchaser the terms of any inquiry
or proposal that it may receive in respect of an Acquisition Transaction, or has
received or solicited, directly or indirectly, after the date of such receipt.
Seller's notification under this Section 6.14(b) shall include the identity of
the Person making such proposal or any other such information with respect
thereto as Purchaser may reasonably request. Nothing contained in this Agreement
shall be construed to prohibit Seller, following receipt from Purchaser of a
copy of the Commitment Letter, from (i) if advised in writing by counsel to be
required by fiduciary obligations under applicable law, providing non-public
information to, and participating in negotiations with, a Person who has made a
bona fide offer to effect an Acquisition Transaction for a purchase price in
excess of the Purchase Price and payment of all amounts required by Section 6.12
and (ii) accepting an offer for an Acquisition Transaction which the Board of
Directors of Seller, on the advice in writing of its financial advisor, believes
is more favorable to the Seller than the transaction contemplated hereby. If an
offer for an Acquisition Transaction is accepted pursuant to clause (ii) of the
immediately preceding sentence, Seller shall immediately upon acceptance of such
offer pay to Purchaser Four Million Dollars as liquidated damages. The parties
hereto hereby acknowledge that, upon the making of such liquidated damages
payment, this Agreement shall be deemed automatically terminated, null and void
and without further force or effect. THE PARTIES HEREBY ACKNOWLEDGE THAT THE
EXTENT OF DAMAGES TO PURCHASER OCCASIONED BY THE FAILURE OF THIS TRANSACTION TO
BE CONSUMMATED FOLLOWING DELIVERY OF A COPY OF THE COMMITMENT LETTER BY
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PURCHASER TO SELLER WOULD BE IMPOSSIBLE OR EXTREMELY DIFFICULT TO ASCERTAIN AND
THAT FOUR MILLION DOLLARS IS A FAIR AND REASONABLE ESTIMATE OF SUCH DAMAGES
UNDER THE CIRCUMSTANCES AND DOES NOT CONSTITUTE A PENALTY.
Section 6.15 Delivery of November Financial Statements and December
Financial Statements . Seller hereby agrees to deliver to Purchaser promptly
upon completion, and in any event not later than December 15, 1998 and January
15, 1999, respectively, copies of the November Financial Statements and the
December Financial Statements.
Section 6.16 Employee Bonuses.
(a) Seller agrees to pay to the Company at the Closing (i) all
amounts (the "Change-in-Control Amounts") required to be placed into escrow
pursuant to Section 6 of the Employment Agreements in view of the Change in
Control to be constituted by the consummation of the transactions contemplated
by this Agreement and (ii) an amount equal to the sum of the escrow agent fees
expressly set forth in Paragraph 18 of each of the Employee Escrow Agreements.
In addition, at the Closing, Seller shall cause the Company to (i) execute and
deliver each of the Employee Escrow Agreements and (ii) deposit into escrow in
accordance with the terms of each such agreement the applicable
Change-in-Control Amount. Following the Closing, Seller shall reimburse the
Company, promptly following receipt of copies of invoices of the Escrow Agent
(as defined in the Employee Escrow Agreements) reasonably satisfactory to
Seller, for all reasonable out-of-pocket expenses incurred by the Escrow Agent
in performing its duties under the Employee Escrow Agreements. Any amounts in
respect of such out-of-pocket expenses incurred by the Escrow Agent not paid by
Seller within ten days following receipt of such invoices shall be paid by the
Purchaser and shall be deducted from the principal amount payable under the
Promissory Note.
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(b) Following the Closing, Purchaser shall cause the Company
to honor the terms of each of the Employment Agreements.
(c) Seller agrees to pay when due any "retention" bonuses that
may become due to any Existing Employees resulting from any agreement or promise
existing prior to the Closing. Any amounts due but not paid by Seller within ten
days following the applicable due date shall be paid by Purchaser and shall be
deducted from the principal amount payable under the Promissory Note.
Section 6.17 Collection of Certain Receivables and Partial Remittance.
(a) Following the Closing, Purchaser shall cause the Company
(i) to use its reasonable best efforts consistent with its own practices at that
time to recover all amounts due under the Financing Contracts transferred to
Seller pursuant to the Assignment and (ii) to remit to Seller, within 15 days
following the end of each calendar quarter to an account to be designated by
Seller, 85% of all payments received under or arising out of such Financing
Contracts during the immediately preceding calendar quarter, whether as
contractual obligations, damages, insurance proceeds, condemnation awards or
otherwise.
(b) Following the Closing, Purchaser shall cause the Company
and the Company Subsidiaries (i) to use their reasonable best efforts consistent
with their own practices at that time to recover all amounts due under the
Securitized 90+ Contracts and (ii) to remit to Seller, within 15 days following
the end of each calendar quarter to an account to be designated by Seller, 85%
of all payments received under or arising out of the Securitized 90+ Contracts
during the immediately preceding calendar quarter, whether as contractual
obligations, damages, insurance proceeds, condemnation awards or otherwise.
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(c) Seller agrees to pay the reasonable costs and expenses of
the Company in carrying out the collection activities provided for in Sections
6.17(a) and 6.17(b).
Section 6.18 Assignment. Immediately prior to the Closing, Seller
shall (a) cause the Company to execute and deliver the Assignment to Seller and
(b) on behalf of itself, execute and deliver the Assignment to the Company.
Section 6.19 Commitment Letter; Certain Termination Rights.
(a) Purchaser agrees to use its 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 to have sufficient funds available, in
cash and pursuant to a firm commitment letter to be issued by First Union
Capital Markets, Inc. (the "Commitment Letter"), to purchase all the Shares for
the Purchase Price, to pay all amounts required pursuant to Section 6.12, and to
perform all of its obligations hereunder. Purchaser agrees to use its reasonable
best efforts to obtain the Commitment Letter, and to cause a copy thereof to be
delivered to Seller, on or before December 31, 1998 (the "Commitment Letter Due
Date").
(b) If Purchaser fails to obtain the Commitment Letter on or
before the Commitment Letter Due Date, Purchaser shall thereafter have the right
to terminate this Agreement at any time on or before the date (the "Section
6.19(b) Last Termination Date") that is two Business Days following the
Commitment Letter Due Date.
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(c) If Purchaser fails to deliver the Commitment Letter to
Seller on or before the Commitment Letter Due Date and elects not to terminate
this Agreement pursuant to Section 6.19(b) on or before the Section 6.19(b) Last
Termination Date, Seller shall thereafter have the right to terminate this
Agreement at any time on or before the date that is two Business Days following
the Section 6.19(b) Last Termination Date.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Seller's Obligations. The obligations of
Seller to consummate the transactions contemplated hereby are subject to the
satisfaction or waiver by Seller, at or prior to the Closing, of the following
conditions:
(a) The representations and warranties of Purchaser contained
in this Agreement will be true and correct in all respects (without reference to
any materiality qualifications contained therein) as of the date made and as of
the Closing Date as if made on and as of the Closing Date (except to the extent
that any representation or warranty is made expressly as of a specific date, in
which case such representation or warranty will be true and correct as of such
specified date) unless the failure of such representations of warranties to be
true and correct as of any of such dates would not in the aggregate have a
Purchaser Material Adverse Effect;
(b) Purchaser will have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing pursuant to the terms hereof, including without limitation, payment
of the amounts necessary under Section 6.12 hereof;
62
(c) Seller will have received a certificate of the President
or the Chief Financial Officer of Purchaser as to the satisfaction of the
conditions set forth in Section 7.1(a) and (b);
(d) Any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act will have expired or been
terminated;
(e) There will be no order, decree or injunction of a court of
competent jurisdiction or other governmental entity that prevents the
consummation of the transactions contemplated by this Agreement;
(f) Seller will have received Purchaser's Closing Documents in
form and substance reasonably satisfactory to Seller and its counsel;
(g) Seller will have received the Consents set forth in
Exhibit 7.1(g);
(h) The Escrow Agreement will have been executed and delivered
by Purchaser to Seller;
(i) Each of the Promissory Note and the Security Agreement
will have been executed and delivered by Purchaser to Seller; and
(j) The Assignment will have been executed and delivered by
Seller and the Company.
Section 7.2 Conditions to Purchaser's Obligations. The obligations of
Purchaser to consummate the transactions contemplated hereby are subject to the
satisfaction or waiver by Purchaser, at or prior to the Closing, of the
following conditions:
(a) The representations and warranties of Seller contained in
this Agreement will be true and correct in all respects (without reference to
any materiality qualifications contained therein) as of the date made and as of
the Closing Date as if made on and as of the Closing Date (except to the extent
that any representation or warranty is made expressly
63
as of a specific date, in which case such representation or warranty will be
true and correct as of such specified date) unless the failure of such
representations of warranties to be true and correct as of any of such dates
would not in the aggregate reasonably be likely to have a Company Material
Adverse Effect;
(b) Seller will have performed in all material respects each
of its obligations under this Agreement required to be performed by it at or
prior to the Closing pursuant to the terms hereof;
(c) Purchaser will have received a certificate of the
President of Seller as to the satisfaction of the conditions set forth in
section 7.2(a), (b), and (g);
(d) Any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act will have expired or been
terminated;
(e) There will be no order, decree or injunction of a court of
competent jurisdiction or other governmental entity that prevents the
consummation of the transactions contemplated by this Agreement;
(f) Purchaser will have received Seller's Closing Documents in
form and substance reasonably satisfactory to Purchaser and its counsel;
(g) No Company Material Adverse Effect will have occurred
since the date hereof;
(h) Purchaser will have received the Consents set forth in
Exhibit 7.1(g);
(i) The Escrow Agreement will have been executed and delivered
by Seller to Purchaser;
(j) Purchaser will have received an opinion of Counsel from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, dated as of the Closing Date, in
substantially the form attached as Exhibit 7.2(j);
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(k) Except as otherwise requested by Purchaser, Purchaser
shall have received the written resignation, effective as of the Closing Date,
of each of the directors and officers of the Company and the Company
Subsidiaries;
(l) Purchaser will have received the November Financial
Statements and the December Financial Statements pursuant to Section 6.15;
(m) The Company will have deposited the Change-in-Control
Amounts into escrow in accordance with the Employee Escrow Agreements;
(n) Seller will have paid to the Company in cash amounts
sufficient to pay, to the extent waivers have not been received in respect
thereof, excess interest accrued at default rates, late payment fees and Company
Lender expenses, if any, due on the indebtedness of the Company to the Company
Lenders outstanding as of the Closing Date;
(o) The Assignment will have been executed and delivered by
Seller and the Company; and
(p) Purchaser will have received a certificate of an officer
of Seller in substantially the form of Exhibit 7.2(p).
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
Section 8.1 Documents to Be Delivered by Seller. At the Closing,
Seller shall deliver, or cause to be delivered, to Purchaser the following
("Seller's Closing Documents"):
(a) stock certificates representing the Shares, duly endorsed
in blank or accompanied by stock transfer powers and with all requisite stock
transfer tax stamps attached;
(b) the certificate referred to in Section 7.2(c);
(c) the Escrow Agreement; and
(d) the Security Agreement.
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Section 8.2 Documents to Be Delivered by Purchaser . At the Closing,
Purchaser shall deliver to Seller the following ("Purchaser's Closing
Documents"):
(a) evidence of payment of the Purchase Price in accordance
with Section 2.2;
(b) the certificate referred to in Section 7.1(c);
(c) the Escrow Agreement;
(d) the Promissory Note; and
(e) the Security Agreement.
ARTICLE IX
TERMINATION
Section 9.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated at any time prior to the Closing:
(a) by mutual written consent of Purchaser and Seller;
(b) by Purchaser, on the one hand, or Seller, on the other
hand, if the Closing will not have occurred on or before February 28, 1999.
(c) by Purchaser, on the one hand, or Seller, on the other
hand, if any court of competent jurisdiction or other Governmental Entity will
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby and such
order, decree, ruling or other action will have become final and nonappealable;
(d) by Purchaser, if (i) there has been a violation or breach
by Seller of any agreement, representation, warranty or covenant of Seller
contained in this Agreement (including the Seller Disclosure Letter), which
violation or breach would have a Company Material Adverse Effect and which
violation or breach is not curable or, if curable, is not cured within 30 days
after written notice of such violation or breach is given by Purchaser or Seller
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and such violation or breach has not been waived by
Purchaser or (ii) there has been any Company Material
Adverse Effect;
(e) by Seller, if there has been a violation or breach by
Purchaser of any agreement, representation, warranty or covenant of Purchaser
contained in this Agreement, which violation or breach would have a Purchaser
Material Adverse Effect and which violation or breach is not curable or, if
curable, is not cured within 30 days after written notice of such violation or
breach is given by Seller to Purchaser, and such violation or breach has not
been waived by Seller;
(f) by Purchaser pursuant to Section 6.9(b);
(g) by Seller by paying the liquidated damages payment
provided for in Section 6.14(a);
(h) by Seller by paying the liquidated damages payment
provided for in Section 6.14(b);
(i) by Purchaser pursuant to Section 6.19 (b); or
(j) by Seller pursuant to Section 6.19(c).
Section 9.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 9.1, written notice thereof shall
forthwith be given to the other party or parties specifying the Section of this
Agreement pursuant to which such termination is made, and upon any such
permitted termination this Agreement shall forthwith terminate and become null
and void, without liability on the part of Purchaser or Seller except (a) as set
forth in Sections 6.2(b) and 11.1, which provisions shall not be affected by
such termination, and (b) as set forth in Section 6.14(b). Nothing contained in
this Section 9.2 shall relieve any party from liability for any material and
willful breach of this Agreement prior to such termination; provided, however,
that (a) Seller shall have no liability (except with respect to the liquidated
damages payment provided for in Section 6.14(a) or Section 6.14(b), as the case
may be) for any such breach that does not result in a Company Material Adverse
Effect and (b) Purchaser shall have no liability for any such breach that does
not result in a Purchaser Material Adverse Effect.
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ARTICLE X
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION; REMEDIES
Section 10.1 Indemnification by Seller.
(a) Except as otherwise set forth herein, Seller shall
indemnify, defend and hold harmless Purchaser and the Company, and each of their
respective representatives, employees, officers, directors, stockholders,
controlling persons and Affiliates (collectively, the "Purchaser Indemnified
Persons"), for, and shall pay to the Purchaser Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including interest, penalties, costs of investigation and
defense and the reasonable fees and expenses of attorneys and other
professionals and experts) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), directly or indirectly, arising
from or in connection with (i) any breach by Seller of any covenant,
representation, warranty, agreement or obligation of Seller contained in this
Agreement, (ii) any contingent liabilities disclosed by Seller to Purchaser
pursuant to Section 6.9 after the date hereof that do not materially or
adversely affect the benefits to be obtained by Purchaser under this Agreement,
(iii) any claim by any Person that the transactions contemplated by this
Agreement may be a fraudulent transfer, or (iv) any claims in respect of
Change-in-Control Amounts arising out of Section 6 of the Employment Agreements.
(b) Without duplication and subject to the terms and
limitations set forth in this Section 10.1(b), Seller shall indemnify, defend
and hold harmless the Company for,
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and shall pay to the Company or any Company Subsidiary the amount of any Damages
actually incurred by the Company or such Company Subsidiary following the
Closing relating to any amounts actually paid by the Company to Barclays Bank
PLC ("Barclays") on or before January 31, 1999 in respect of a"swap breakage
amount" (such amounts, the "Special Contingent Liability").
Section 10.2 Indemnification by Parent and Purchaser. Parent and
Purchaser shall, jointly and severally, indemnify, defend and hold harmless
Seller, the Company and each Company Subsidiary, and each of their respective
representatives, employees, officers, directors, stockholders, controlling
persons and Affiliates (collectively, the "Seller Indemnified Persons"), for,
and shall pay to the Seller Indemnified Persons the amount of any Damages,
directly or indirectly, arising from, attributable to or in connection with any
breach by Purchaser of any covenant, representation, warranty, agreement or
obligation of Purchaser contained in this Agreement; provided, however, that the
representations and warranties of Purchaser set forth in Section 5.1 shall not
survive the Closing.
Section 10.3 Certain Other Indemnity Matters. Notwithstanding anything
to the contrary contained in this Agreement, if the Closing occurs, (i) no claim
for indemnification may be asserted by a Purchaser Indemnified Person against
Seller under this Article X if any fact, event or circumstance giving rise to
such claim was discovered by or known to Purchaser on or before the Closing
Date, and not known to Seller, the Company or any Company Subsidiary, and (ii)
no claim for indemnification may be asserted by any Purchaser Indemnified Person
with respect to any breach by Seller of any representation or warranty set forth
in this Agreement or in the Seller Disclosure Letter if such breach or
information regarding such breach will have been disclosed in writing at or
prior to the Closing; provided, however, that nothing in this Section 10.3 shall
limit or otherwise affect Purchaser's right to be indemnified by Seller with
respect to the Special Contingent Liability in accordance with the terms of
Section 10.1(b). For purposes of this Section, "known to Purchaser" shall mean
all matters actually known by any of Xxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxx
Xxxxx, Crit XxXxxx, Xxxxx Xxxxxxx or Xxxxxxx Xxxxxxxxxx.
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Section 10.4 Time Limitations.
(a) If the Closing occurs, Seller shall have no liability
under Section 10.1(a), other than with respect to the representations and
warranties in Sections 4.2, 4.9 and 4.14 as provided below, unless on or before
the date that is 14 months following the Closing Date, Purchaser notifies Seller
of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by Purchaser. A claim with respect to representations and
warranties in Section 4.2 may be made at any time without any time limitation. A
claim with respect to the representations and warranties in Section 4.9 may be
made at any time prior to the third anniversary of the Closing Date. A claim
with respect to the representations and warranties in Section 4.14 may be made
within the time limits set forth in Section 6.10(k).
(b) If the Closing occurs, neither Parent nor Purchaser shall
have any liability under Section 10.2 unless on or before the date that is 14
months following the Closing Date, Seller notifies Purchaser of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Seller.
Section 10.5 Limitations on Amount.
(a) Seller shall have no liability (for indemnification or
otherwise) with respect to the matters described in Section 10.1(a), other than
those representations and warranties in Sections 4.9, 4.14 and 4.17, until the
total of all Damages with respect to such matters exceeds $500,000, and then
Seller shall be responsible to the extent and by the
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amount that the aggregate amount of all Damages incurred as a result of such
breaches exceeds $500,000; provided, however, Seller shall have no liability for
and to the extent that the aggregate amount of all Damages exceeds the Purchase
Price.
(b) Neither Parent nor Purchaser shall have any liability (for
indemnification or otherwise) with respect to the matters described in Section
10.2, other than with respect to claims arising under Section 6.17, the
Promissory Note or the Escrow Agreement, until the total of all Damages with
respect to such matters exceeds $500,000, and then Parent and Purchaser shall be
responsible to the extent and by the amount that the aggregate amount of all
Damages incurred as a result of such breaches exceeds $500,000; provided,
however, other than with respect to claims arising under Section 6.17, the
Promissory Note or the Escrow Agreement, neither Parent nor Purchaser shall have
any liability for and to the extent that the aggregate amount of all Damages
exceeds $7,000,000.
Section 10.6 Procedure for Indemnification; Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 10.1 or 10.2 of written notice (a "Notice of Claim") of the commencement
of any action, suit or proceeding against it, or written threat thereof, such
indemnified party shall, if a claim is to be made against an indemnifying party
under either of said Sections, as applicable, give notice to the indemnifying
party of the commencement of such action, suit or proceeding. The indemnified
party shall furnish to the indemnifying party in reasonable detail such
information as the indemnified party may have with respect to such
indemnification claims (including copies of any summons, complaint or other
pleading that may have been served on it and any written claim, demand, invoice,
billing or other document evidencing or assenting the same). Subject to the
limitations set forth in this Section 10.6(a), no failure or delay by the
indemnified party in the performance of the foregoing shall reduce or otherwise
affect the obligation of
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the indemnifying party to indemnify and hold the indemnified party harmless,
except to the extent that such failure or delay will have adversely affected the
indemnifying party's ability to defend against, settle or satisfy any action,
suit or proceeding against it, damage, loss, claim or demand for which the
indemnified party is entitled to indemnification hereunder.
(b) If the claim or demand set forth in the Notice of Claim
given by the indemnified party is a claim or demand asserted by a third party,
the indemnifying party shall have 30 days after the Date of Notice of Claim to
notify the indemnified party in writing of its election to defend such
third-party claim or demand on behalf of the indemnified party. If the
indemnifying party elects to defend such third-party claim or demand, the
indemnified party shall make available to the indemnifying party and its agents
and representatives all records and other materials that are reasonably required
in the defense of such third-party claim or demand and shall otherwise cooperate
with, and assist the indemnifying party in the defense of, such third-party
claim or demand, and so long as the indemnifying party is defending such
third-party claim in good faith, the indemnified party shall not pay, settle or
compromise such third-party claim or demand. If the indemnifying party elects to
defend such third-party claim or demand, the indemnifying party shall have the
right to control the defense of such third-party claim or demand, at the
indemnifying party's own expense. If the indemnifying party does not elect to
defend such third-party claim or demand or does not defend such third-party
claim or demand in good faith, the indemnified party shall have the right, in
addition to any other right or remedy it may have hereunder, to defend such
third-party claim or demand at the indemnifying party's expense.
(c) In the event any indemnified party shall have a claim
under Section 10.1 or 10.2 against any indemnifying party that does not involve
a third party claim, the indemnified party shall deliver a notice with
reasonable promptness to the indemnifying party. The
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failure by any indemnified party to give an indemnity notice shall not impair
such party's rights hereunder except to the extent that an indemnifying party
demonstrates that is has been materially prejudiced thereby. If the indemnifying
party notifies the indemnified party that it does not dispute the claim
described in such notice or fails to notify the indemnified party within 30
calendar days whether the indemnifying party disputes the claim described in
such indemnity notice, the amount specified in the notice will be conclusively
deemed a liability of the indemnifying party under Section 10.1 or 10.2 and the
indemnifying party shall pay or agree to release from escrow, as the case may
be, the amount of such loss to the indemnified party on demand. If the
indemnifying party has timely disputed its liability with respect to such claim,
the indemnifying party and the indemnified party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiation
within 30 calendar days of timely response by the indemnifying party, such
dispute shall be resolved by litigation in a court of competent jurisdiction.
(d) The term "Date of Notice of Claim" shall mean the date the
Notice of Claim is effective pursuant to Section 11.3 of this Agreement.
(e) To the extent this Section 10.6 is inconsistent with
Section 6.10(e)(iii), (f), or (g), Section 6.10 shall govern matters related to
Taxes.
Section 10.7 Security for Indemnification. Seller shall deposit the
sum of $5,000,000 in escrow pursuant to the Escrow Agreement for the purpose of
providing security for the satisfaction of the obligation to make payment
hereunder (a) in respect of the Special Contingent Liability and (b) of Damages.
After termination of the Escrow Account (as defined in the Escrow Agreement),
the principal amount payable under the Promissory Note shall be reduced to the
extent of any Damages subject to indemnification hereunder and attributable to
breaches of Sections 4.2, 4.9 or 4.14.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Fees and Expenses. Except as otherwise expressly set forth
in this Agreement, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses, and the Company shall not pay any of
the costs of this Agreement or the transactions contemplated hereby incurred on
behalf of Seller (including the fees and expenses of Seller's attorneys, tax and
accounting advisors and investment bankers). Without limiting the foregoing,
Seller shall pay all costs and expenses related to obtaining the Consents listed
on Exhibit 7.1(g), including any unusual costs or charges expressly payable
pursuant to any of the agreements to which such Consents relate that are
directly attributable to the consummation of the transactions contemplated
hereby.
Section 11.2 Amendments. This Agreement can be amended, supplemented or
modified only by a written instrument signed by each of the parties hereto
making specific reference to this Agreement.
Section 11.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand or (c) the expiration of
five Business Days after the day when mailed in the United States by certified
or registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as may be specified by like notice) (a) if to
Seller, to:
Japan Leasing (U.S.A.), Inc.
1251 Avenue of the Xxxxxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
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Attn: Mr. Jun Ogihara
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Purchaser before December 21, 1998, to:
Fidelity Leasing, Inc.
0 X. Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxx
if to Purchaser on or after December 21, 1998, to:
Fidelity Leasing, Inc.
0000 Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxx
in either case, with a copy to:
Ledgewood Law Firm, P.C.
0000 Xxxxxx Xxxxxx - 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Abt, Esquire
Section 11.4 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". The phrase "made available" when used in this
Agreement shall mean that the information referred to has been made available by
the party to whom such information is to be made available.
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Section 11.5 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall be considered one and the same agreement.
Section 11.7 Entire Agreement. This Agreement, together with the
Confidentiality Agreement, constitutes the entire agreement, and supersedes all
other prior or contemporaneous negotiations, commitments, agreements and
understandings (whether written or oral) between the parties with respect to the
subject matter hereof.
Section 11.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 11.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Purchaser may assign its rights
to purchase the Shares to any of its Affiliates; provided, however, that
Purchaser shall remain liable for all its obligations hereunder regardless of
any such assignment. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by, the parties and
their respective successors and assigns, and except to the extent necessary to
enforce the provisions of Section 6.16, the provisions of this Agreement are not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
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Section 11.11 Specific Performance; Submission to Jurisdiction. Each
of the parties hereto acknowledges and agrees that in the event of any breach of
this Agreement, each nonbreaching party would be irreparably and immediately
harmed and could not be made whole by monetary damages. It is accordingly agreed
that the parties hereto (a) shall waive, in any action for specific performance,
the defense of adequacy of a remedy at law and (b) shall be entitled (without
having to post a bond or other security), in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in any state or federal district
court sitting in Wilmington, Delaware. Each of the parties hereto consents to
submit itself to the personal jurisdiction of any state or federal court located
in Wilmington, Delaware and irrevocably agrees that it will not bring any action
or proceeding relating to this Agreement in any court other than a state or
federal court located within Wilmington, Delaware. Each of the parties hereto
furthermore consents to service of process upon it in the manner set forth in
Section 11.3 and accepts for itself and in connection with its respective
properties, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and waives any defense of forum non conveniens, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.
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Section 11.12 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, whether under this Agreement or afforded by law or otherwise, shall be
cumulative and not alternative.
Section 11.13 Time of Essence. Each of the parties hereto agrees that,
with regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
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IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first above written.
FIDELITY LEASING, INC.
By:
Name:
Title:
JAPAN LEASING (U.S.A.), INC.
By:
Name:
Title:
THE UNDERSIGNED ACKNOWLEDGES AND AGREES that it is bound by and subject
to the provisions of, and otherwise a party to, Article X.
RESOURCE AMERICA, INC.
By:
Name:
Title:
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