4
MERGER AGREEMENT
MERGER AGREEMENT (this "Agreement"), entered into this ____ day of
February, 1997, by and among XXXXXX INDUSTRIES, INC., a Florida corporation
(the "Buyer") through its wholly-owned, newly-formed Florida corporate
subsidiary, R. C. ACQUISITION, INC., which for purposes herein shall be
deemed to be included in the term "Buyer" unless the context shall be
inconsistent, in which case it shall be referred to as "NewCo"), and X. X.
XXXX, XX, an individual (the "Stockholder").
W I T N E S S E T H:
WHEREAS, Liberty Finance Co., a Florida corporation (the "Company"),
is engaged in a business consisting primarily of finance and leasing
activities in connection with the sale of used automobiles and other
consumer vehicles (the "Business"); and
WHEREAS, the Stockholder is the record and beneficial owner of all of
the issued and outstanding capital stock of the Company (the "Stock"); and
WHEREAS, the Buyer desires to acquire from the Stockholder, and the
Stockholder desires to transfer to the Buyer, all upon the terms and
subject to the conditions set forth in this Agreement, all (and not less
than all) of the Stock, and the business of the Company as a going concern;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree, as of the Effective
Date, as follows:
1. THE MERGER.
1.1 The Merger. At the time of the closing of the transactions
contemplated hereby and in accordance with the provisions of this Agreement
and the applicable provisions of the corporation laws of Florida (in such
instance, "Applicable Law"), NewCo shall be merged with and into the
Company, in accordance with the terms and conditions of this Agreement and
articles of merger as may be required by Florida law, hereinafter referred
to as the "Articles of Merger". The Company shall be the surviving
corporation of the Merger (the Company, in such capacity, being hereinafter
sometimes referred to as the "Surviving Corporation"). Thereupon, the
separate existence of NewCo shall cease, and the Company, as the Surviving
Corporation, shall continue its corporate existence under Applicable Law
under its current name, as a wholly-owned subsidiary of Buyer.
1.2 Effectiveness of the Merger. As soon as practicable upon or
after the execution of this Agreement, NewCo and the Company will execute
appropriate Articles of Merger, and shall file or cause to be filed such
Articles of Merger with the Secretary of State of Florida; and the subject
Merger shall become effective as of the date (the "Effective Date") set
forth in the Articles of Merger.
1.3 Effect of Merger. Upon the effectiveness of the Merger, (a)
the Surviving Corporation shall own and possess all assets and property of
every kind and description, and every interest therein, wherever located,
and all rights, privileges, immunities, power, franchises and authority of
a public as well as of a private nature, of NewCo and Company (the
"Constituent Corporations"), and all obligations owed to, belonging to or
due to each of the Constituent Corporations, all of which shall be vested
in the Surviving Corporation pursuant to Applicable Law without further act
or deed, and (b) the Surviving Corporation shall be liable for all claims,
liabilities and obligations of the Constituent Corporations, all of which
shall become and remain the obligations of the Surviving Corporation
pursuant to Applicable Law without further act or deed.
1.4 Surviving Corporation. Upon the effectiveness of the
Merger, the Articles of Incorporation and By-Laws of the Surviving
Corporation shall be identical to those of the Company as in effect
immediately prior to the effectiveness of such Merger. The directors and
officers of the Surviving Corporation shall be modified and shall be
determined by Buyer in its sole discretion.
1.5 Status and Conversion of Shares. Upon the effectiveness of
the Merger:
(a) Each share of capital stock held by the Company as
treasury stock immediately prior to the effectiveness of the Merger shall
be canceled and extinguished, and no payment or issuance of any
consideration shall be payable or shall be made in respect thereof;
(b) Each share of common stock of NewCo outstanding
immediately prior to the effectiveness of the Merger shall be converted
into and shall become one (1) share of common stock of the Surviving
Corporation; and
(c) Each share of $1.00 par value common stock of the
Company (the "Company Stock") issued and outstanding immediately prior to
the effectiveness of the Merger (excluding any shares as to which
dissenters' appraisal rights have been validly exercised and perfected and
for which cash is payable in accordance with applicable law) shall be
canceled and extinguished and converted into the right to receive 176,078
shares (the "Shares") of the Class B Common Stock, $.01 par value, of
Xxxxxx ("Xxxxxx Common Stock") for each share of Company Stock. For
purposes hereof the number of Shares multiplied by $17.50 shall be the
"Stock Valuation" hereunder.
1.6 Books and Records. On the date hereof, in addition to the
delivery and transfer of the Stock to the Buyer, the Stockholder is
delivering, and causing the Company to deliver, to the Buyer all of the
stock books, records and minute books of the Company, all financial and
accounting books and records of the Company, and all referral, client,
customer and sales records of the Company.
2. INTENTIONALLY OMITTED.
3. REORGANIZATION.
3.1 Tax-Free Reorganization. The parties intend that the
transactions pursuant to this Agreement qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, and the
parties shall report these transactions and take such actions and otherwise
conduct their affairs so as to give effect to such intention.
Specifically, the parties anticipate that NewCo will be merged into the
Company, with the Company as the survivor, as a wholly-owned subsidiary of
the Buyer, in a statutory merger, qualifying under Section 368(a)(2)(E) of
the Internal Revenue Code of 1986, as amended. Xxxxxx agrees for a period
of two (2) years from the Effective Date to not take further actions
regarding the corporate structure of the ownership of the Company without
Stockholder's prior written approval, which approval shall be given upon
receipt of an opinion of counsel, in form acceptable to Stockholder, that
such restructuring will not cause the disqualification of this transaction
for tax-free reorganization treatment to the Stockholder. Xxxxxx agrees to
indemnify and hold Stockholder harmless from any loss, including taxes,
interest and penalties (to the extent not mitigated) which arise as a
result of the Buyer's violation of this Section 3.1
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.
In connection with the sale and transfer of the Stock to the Buyer,
the Stockholder hereby represents and warrants to the Buyer as set forth
below. For purposes hereof "Material Adverse Effect" shall mean any event,
occurrence or circumstance which (a) has or is reasonably likely to have a
material adverse effect on the financial condition, results of operations,
business or prospects of the Company taken as a whole, or the Buyer and its
affiliates taken as a whole, as applicable, (b) would materially impair
such party's ability to perform its obligations under this Agreement or the
consummation of any of the transactions contemplated hereby, or (c) results
in an adverse effect that is Two Thousand and 00/100ths Dollars ($2,000.00)
or greater on any particular item related to the Buyer's purchase of the
Business hereunder.
4.1 Title to the Stock. The Stockholder is the valid and lawful
record and beneficial owner of all of the Stock. All of the Stock has been
duly authorized and validly issued and is fully paid and non-assessable,
and is free and clear of all pledges, liens, claims, charges, options,
calls, encumbrances, restrictions and assessments whatsoever (except any
restrictions which may be created by operation of state or federal
securities laws). The Buyer is receiving from the Stockholder good, valid
and marketable title to all of the Stock, free and clear of all pledges,
liens, claims, charges, options, calls, encumbrances, restrictions and
assessments whatsoever (except any restrictions which may be created by
operation of state or federal securities laws).
4.2 Valid and Binding Agreement; No Breach.
(a) The Stockholder has full legal right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws affecting creditors' rights generally, and except that the
remedy of specific performance or similar equitable relief is available
only at the discretion of the court before which enforcement is sought.
(b) Except as disclosed in Schedule 4.2 annexed hereto,
neither the execution and delivery of this Agreement by the Stockholder,
nor compliance with the terms and provisions of this Agreement on the part
of the Stockholder, will, under circumstances that would result in a
Material Adverse Effect: (i) violate any statute or regulation of any
governmental authority, domestic or foreign, affecting the Company or the
Stockholder; (ii) require the issuance of any authorization, license,
consent or approval of any federal or state governmental agency; or (iii)
conflict with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree, note, indenture,
loan agreement or other agreement or instrument to which the Company or the
Stockholder is a party, or by which the Company or the Stockholder is
bound, or constitute a default thereunder, or require the consent of any
other party to any of the foregoing.
(c) Possible Acceleration of GE Debt. The Buyer
acknowledges that the consummation of this transaction, without the prior
written consent of General Electric Capital Corporation ("GE") under that
certain Motor Vehicle Installment Contract Loan and Security Agreement
between GE and the predecessor to the Company, dated June 3, 1993, as
amended, and as modified by that certain Forbearance Agreement among GE,
the Company, the Stockholder and others dated January 21, 1997 (the
obligations of the Company under such agreements and the other agreements
related thereto are hereinafter referred to as the "GE Debt"), will be a
condition which, under the loan agreements for the GE Debt, will permit GE
to accelerate the GE Debt and cause it to be immediately due and payable.
As such, the Stockholder shall have no responsibility for or liability
arising from such occurrence.
4.3 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, with full corporate power and
authority to own its assets and conduct its business as owned and conducted
on the date hereof. The Company is not required to be qualified as a
foreign corporation under the laws of any jurisdiction. True and complete
copies of the Articles of Incorporation and Bylaws of the Company
(including all amendments thereto), and a correct and complete list of the
officers and directors of the Company, are annexed hereto as Schedule 4.3.
4.4 Capital Structure; Equity Ownership.
(a) The authorized capital stock of the Company is as set
forth in its Articles of Incorporation as included in Schedule 4.3, and the
Stock constitutes and represents all of the outstanding capital stock of
the Company.
(b) There are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements or calls,
demands or commitments obligating the Company to issue, transfer or
purchase any shares of its capital stock, or obligating the Stockholder to
transfer any shares of the Stock. No shares of capital stock of the
Company are reserved for issuance pursuant to stock options, warrants,
agreements or other rights to purchase capital stock.
4.5 Subsidiaries and Investments. The Company does not own,
directly or indirectly, any stock or other equity securities of any
corporation or entity, or have any direct or indirect equity or ownership
interest in any person, firm, partnership, corporation, venture or business
other than the business conducted by the Company.
4.6 Financial Information.
(a) Annexed hereto as Schedule 4.6(a) are the audited
financial statements (including balance sheet, income statement, statement
of stockholders' equity, statement of cash flows, and notes thereto) for
the Company as of December 31, 1994 and December 31, 1995 and for each of
the years then ended, and the unaudited financial statements for the
Company as of December 31, 1996 for the twelve (12) months then ended, and
as of January 31, 1997 and for the month then ended (collectively, the
"Financial Statements"), all of which fairly reflect, in all material
respects, the financial condition and results of operations of the Company
in accordance with generally accepted accounting principles consistently
applied, as of the dates thereof and for the periods then ended; and,
without limitation of the foregoing, the Company does not have any material
liabilities, fixed or contingent, known or unknown, except to the extent
reflected in the most recent of such Financial Statements or thereafter
incurred in the normal course of the Company's business. The Financial
Statements (as of the dates thereof and for the periods covered thereby)
are in accordance with the books and records of the Company, which are
complete and accurate in all material respects.
(b) The Buyer has been provided the payment histories of
each of the credit agreements, finance leases and other agreements
underlying the Receivables (defined below), all of which fairly present the
dates and amounts of all receipts and disbursements under or in respect of
such credit agreements, finance leases and other agreements. Except as and
to the extent reflected in such payment histories, (i) all payments under
such credit agreements, finance leases and other agreements have been made
in a full and timely manner, and (ii) there have been no prepayments made
in respect of any such credit agreements, finance leases or other
agreements.
(c) Annexed hereto as Schedule 4.6(c) is a listing of all
debts and obligations and guarantees to which the Company is a party and
all obligations of others which are secured by property of the Company, and
the current principal amount of, accrued interest on, and any amount
guaranteed under all such debts, obligations, or guarantees. Schedule
4.6(c) contains a separate listing of all debt obligations of the Company
to the Stockholder and members of the Stockholder's family. Except as set
forth on Schedule 4.6(c), the Company is not in default under any such debt
obligations or guarantees, and the consummation of the transactions
contemplated hereby will not result in any default on or acceleration of,
or any consent being required as to, any debt, obligation, or guarantee
described on Schedule 4.6(c).
4.7 No Material Changes. Except as disclosed in Schedule 4.7
annexed hereto, since the date of the most recent of the Financial
Statements, (a) the business of the Company has been operated solely in the
normal course, (b) there have been no changes which in the aggregate would
have a Material Adverse Effect in the financial condition, operations or
business of the Company from that reflected in such Financial Statements,
(c) the Company has not incurred any material obligation or liability
except in the normal course of business, (d) the Company has not effected
or suffered any material modification in its collection practices, or with
respect to the timing and manner of payment of its accounts payable, and
(e) there has not been any (i) sale, assignment or transfer by the Company
of any assets or other part of its business, excluding the sale or
disposition of inventory, and/or the sale of loans, in the ordinary course
of business, (ii) acquisitions or commitments to acquire (whether by
purchase, lease or otherwise) any capital assets by the Company wherein the
aggregate payments will exceed $10,000, (iii) increase or commitment to
increase the compensation or benefits of any employees of the Company, (iv)
implementation or institution of any bonus, benefit, profit-sharing,
pension, retirement or other plan or similar arrangement which was not in
existence on December 31, 1996, or (v) new employment agreement, or
modification of any existing employment agreement, by the Company.
4.8 Tax Matters.
(a) The Company has, to the date hereof, timely filed all
tax reports and tax returns required to be filed by the Company, and the
Company has paid all taxes, assessments and other impositions as and to the
extent required by applicable law. All federal, state and local income,
franchise, sales, use, property, employment, excise and other taxes
(including interest and penalties and including estimated tax installments
where required to be filed and paid) due from or with respect to the
Company as of the date hereof have been fully paid, and all taxes and other
assessments and levies which the Company is required by law to withhold or
to collect have been duly withheld and collected and have been paid over to
the proper governmental authorities to the extent due and payable. There
are no outstanding or pending claims, deficiencies or assessments for
taxes, interest or penalties with respect to any taxable period of the
Company.
(b) Except as disclosed in Schedule 4.8 (b) annexed hereto,
there are no audits pending with respect to any federal, state or local tax
reports or tax returns of the Company, and no waiver of statutes of
limitations have been given or requested with respect to any tax years or
tax filings of the Company.
(c) The Company has, since November 1, 1987 to the date
hereof, been an electing small business corporation under Subchapter S of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
corresponding tax provisions of Florida law, and has filed all tax reports
required to be filed by the Company on or prior to the date hereof. The
Company has further, to the date hereof, filed all other tax reports and
tax returns required to be filed by the Company, and the Company and the
Stockholder (as applicable) have paid all taxes, assessments and other
impositions as and to the extent required by applicable law. Without
limitation of the foregoing, the Company has made all required filings and
payments to the date hereof in respect of franchise, sales, use, property,
excise and other taxes (including interest and penalties and including
estimated tax installments as required), and there are no outstanding or
pending claims, deficiencies or assessments with respect to any taxes,
interest or penalties of the Company. The Company has previously
distributed to the Stockholder (and any former stockholder) all amounts
which have been, are, or will be distributable to such persons in respect
of all completed tax years of the Company and the 1997 tax year to date.
The amounts distributed in respect of the 1996 tax year were not (on a
proportionate basis) in excess of the distribution for prior years, and the
1997 distributions are not in excess of 40% of 1997 net income of the
Company.
4.9 Title and Condition of the Assets. Except for liens arising
under the instruments described on Schedule 4.9, the Company has and owns
good and marketable title to all of its assets, free and clear of all
liens, pledges, claims, security interests and encumbrances of every kind
and nature, except for liens, pledges, claims, security interests or
encumbrances which in the aggregate would not have a Material Adverse
Effect. The Company has delivered to the Buyer all material documents
pertaining to the liens referred to in the preceding sentence. All of the
Company's fixed assets (to the extent that a failure would have a Material
Adverse Affect) are in good operating condition and repair (reasonable wear
and tear excepted), are adequate for its use in the Business as presently
conducted, and are sufficient for the continued conduct of such Business,
except for circumstances that would not have a Material Adverse Effect.
All buildings, and all fixtures, equipment and other property and assets
which are material to the Company's Business on a consolidated basis, held
under leases or subleases by the Company are held under valid instruments
enforceable in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting creditors
rights generally and by general principles of equity (whether applied in a
proceeding at law or in equity).
4.10 Receivables. All of the Receivables (whether reflected in
the Financial Statements or thereafter created or acquired by the Company
prior to the Effective Date), (a) have arisen in the normal course of the
Company's business, (b) to the Stockholder's actual knowledge are not
subject to any counterclaims, set-offs, allowances or discounts of any
kind, except for counter claims, set-offs, allowances, or discounts which
would not result in a Material Adverse Effect on a per item basis, and (c)
have been, are and will be valid and generally collectible in the ordinary
course of the Business; and the Stockholder has no knowledge of any
material or unusual risk of non-payment for any of the Receivables. Except
as set forth on Schedule 4.10, the Company has possession of all documents
that represent the Receivables. Except for circumstances which would not
result in a Material Adverse Effect on a per item basis, all the
Receivables are genuine, valid, and legally binding obligations of the
borrowers thereunder, have been duly executed by a borrower of legal
capacity and are enforceable in accordance with their terms, except as
enforcement thereof may be limited by (i) bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether applied in a proceeding, in equity
or at law), (ii) state laws requiring creditors to proceed against the
collateral before pursuing the borrower, and (iii) state laws on
deficiencies, except where the invalidity or unenforceability of
Receivables would not have a Material Adverse Effect on a per item basis.
Neither the operation of any of the terms of the Receivables, nor the
exercise of any right thereunder has rendered the related security interest
or note unenforceable, in whole or in part, or subjected it to any right of
rescission, setoff, counterclaim or defense, and no such right of
rescission, setoff, counterclaim or defense has been asserted with respect
thereto. The instruments representing the Receivables are in compliance
with applicable laws and regulations and accurately represent the
principal, interest, payment and other terms of the Receivables, except for
circumstances which would not result in a Material Adverse Effect on a per
item basis. For purposes hereof, the "Receivables" shall mean all finance
receivables, accounts receivable, notes receivable and other rights to
receive payment (including any related guaranties, security deposits or
other collateral therefor) under credit agreements, finance leases and
other such agreements entered into in the Business, including but not
limited to those credit agreements, finance leases and other agreements
listed or described on Schedule 4.10 annexed hereto.
4.11 Inventory. All of the Company's inventory (the "Inventory")
(whether reflected in the Financial Statements or thereafter acquired by
the Company prior to the Effective Date) is of a quality, age and quantity
consistent with the historical practices of the Company, and is valued on
the Company's books at cost. Schedule 4.11 sets forth a true and complete
listing of the Inventory as of the date set forth on such schedule and
includes a listing of the make, model, year, and vehicle identification
number for each item of Inventory listed on such schedule. None of the
Inventory is subject to any lien, charge, or encumbrance, except as set
forth on Schedule 4.11.
4.12 Legal Compliance.
(a) To the actual knowledge of the Shareholder the Company
is, and for the past three (3) years has been, in compliance in all
material respects with all laws, statutes, regulations, rules and
ordinances applicable to the conduct of its Business (including, without
limitation, all applicable environmental laws, statutes, regulations, rules
and ordinances), and has in full force and effect all licenses, permits and
other authorizations required for the conduct of its Business as presently
constituted; and the Company is not in default or violation in respect of
or under any of the foregoing. The Stockholder is not aware of any past or
present condition or circumstance in the Company's Business (including,
without limitation, with respect to any real property now or previously
occupied by the Company) which could give rise to any material liability
under any such law, statute, regulation, rule or ordinance.
(b) Except as set forth on Schedule 4.12(b) attached hereto
the Company has not generated, operated, processed, distributed,
transported, used, treated, stored, handled, emitted, discharged, released
or disposed of (or caused any person or entity to do any of the foregoing
or assisted any person or entity in doing any of the foregoing) any oil,
gasoline, petroleum-related products, hazardous substances, hazardous
waste, or pollutants or contaminants (as defined by CERCLA), including,
without limitation, asbestos or asbestos containing materials, PCB's or
urea formaldehyde, except in accordance with applicable laws or any product
which may give ride to Hazardous Materials Liabilities. For purposes
hereof, the following terms shall have the following meanings:
(i) The term "Hazardous Materials" shall mean (a)
hazardous materials, contaminants, constituents, medical wastes, hazardous
or infectious wastes and hazardous substances as those terms are now
defined in any Environmental Laws, including without limitation the
following statutes and their implementing regulations: the Hazardous
Materials Transportation Act, 49 U.S.C. 9601 et seq. (the "HMTA"), the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. et
seq. (as so amended, "CERCLA"), THE Clean Water Act, 33 U.S.C. 1251 et
seq. (the "CWA"), and the Clean Air Act, 42 U.S.C. 7401 et seq. (the
"CAA"); (b) petroleum, including crude oil and any fractions thereof; (c)
natural gas, synthetic gas and any mixtures thereof; (d) asbestos and/or
asbestos-containing materials; and (e) polychlorinated biphenyl ("PCBs") or
materials or fluids containing PCBs in excess of 50 parts per million;
(ii) The term "Hazardous Materials Liabilities" shall
mean any and all damages, losses, liabilities, disabilities, fines,
penalties, costs or expenses (including reasonable attorneys' fees)
incurred or to be incurred, whether absolute, fixed or contingent, civil or
criminal, and whether arising under federal law or state law, incurred or
to be incurred in connection with the handling, storage, transportation, or
disposal of any Hazardous Materials; and
(iii) The term "Environmental Laws" shall mean any
statute, law, ordinance, code, rule, regulation, policy, guideline, permit,
consent, approval, license, judgment, order, writ, decree or authorization,
including the requirement to register storage tanks, established or enacted
for, or relating to, the protection of the environment or the health and
safety of any person (including, without limitation, those relating to 9a)
the HMTA, CERCLA, the CWA, the CAA or the Resource Conservation and
Recovery Act, 42 U.S.C. 6903 et seq.; (b) emissions, discharges, releases
or threatened releases of Hazardous Materials into the environment,
including, without limitation, into ambient air, soil, sediments, land
surface or subsurface, buildings or facilities, surface water, ground
water, publicly-owned treatment works, septic systems or land; or (c) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Materials.
(c) Neither the Company nor the Stockholder has received
any written notice of default or violation, nor, to the best of the
Stockholder's knowledge, is the Company or any of its directors, officers
or employees in default or violation, with respect to any judgment, order,
writ, injunction, decree, demand or assessment issued by any court or any
federal, state, local, municipal or other governmental agency, board,
commission, bureau, instrumentality or department, domestic or foreign,
relating to any aspect of the Company's business, affairs, properties or
assets. Neither the Company nor the Stockholder has received written
notice of, been charged with, or is, to the best of the Stockholder's
knowledge, under investigation with respect to, any violation of any
provision of any federal, state, local, municipal or other law or
administrative rule or regulation, domestic or foreign, relating to any
aspect of the Company's business, affairs, properties or assets, which
violation would have a material adverse effect on the Company, its business
or any material portion of its assets.
4.13 Real Property.
(a) Schedule 4.13 annexed hereto lists and describes all
real property owned, held or leased by the Company. The Company holds good
and marketable title to the real property and leasehold interests listed in
Schedule 4.13, subject only to those liens and mortgages set forth in
Schedule 4.13, except for liens, pledges, claims, security interests or
encumbrances which in the aggregate would not have a Material Adverse
Effect. Neither the Company nor the Stockholder has received notice that
any such real property or any buildings or improvements thereon
(collectively, the "Facilities") or the use thereof by the Company is in
violation of any applicable building, zoning or other law, ordinance or
regulation affecting such real property, and no covenants, easements,
rights-of-way or conditions of record impair such use, except as set forth
in Schedule 4.13. The Company does not own or lease any real property
which is not listed in Schedule 4.13, nor does the Company have any
interest in any other real property, including partnerships, joint
ventures, trust deeds or land sale contracts.
(b) Each of the leases described in Schedule 4.13 is in
full force and effect and constitutes a valid and binding obligation of the
Company and, to the best knowledge of the Stockholder, the other parties
thereto. Neither the Company nor the Stockholder has received any notice
of default with respect to any term or condition of any of the leases
identified in Schedule 4.13, nor is the Company in default or arrears in
the performance or satisfaction of any material agreement or condition on
its part to be performed or satisfied thereunder. Except as disclosed in
Schedule 4.13, no waiver of default or indulgence has been granted by any
of the lessors under said leases, and no event has occurred which, after
notice or lapse of time or both, would constitute a default thereunder, or
would permit the acceleration of any obligation of any party thereto.
(c) Except as set forth in Schedule 4.13, all of the
buildings, fixtures and other improvements located on the Facilities are
accessible by public roads, and are adequate for use in the Company's
business as presently conducted; and the operation of the Facilities as
presently conducted is not in violation of any applicable building code,
zoning ordinance or other law or regulation.
4.14 Insurance. The Company maintains, has in full force and
effect, and has paid all premiums in respect of insurance covering its
business and assets against such hazards and in such amounts as are set
forth on the attached Schedule 4.14.
4.15 Employees. Except as disclosed in Schedule 4.15 annexed
hereto, the Company is not a party to or bound by any collective bargaining
agreement, employment agreement, consulting agreement or other commitment
for the employment or retention of any person, and no union is now
certified or has claimed the right to be certified as a collective
bargaining agent to represent any employees of the Company. The Company
has not had any material labor difficulty in the past two (2) years, and
neither the Company nor the Stockholder has received notice of any unfair
labor practice charges against the Company or any actual or alleged
violation by the Company of any law, regulation, or order affecting the
collective bargaining rights of employees, equal opportunity in employment,
or employee health, safety, welfare, or wages and hours.
4.16 Employee Benefits. The Company does not maintain and is not
required to make any contributions to any pension, profit-sharing,
retirement, deferred compensation or other such plan or arrangement for the
benefit of any employee, former employee or other person, and the Company
does not have any obligations with respect to deferred compensation or
future benefits to any past or present employee. Schedule 4.16 annexed
hereto fairly summarizes the employee benefits currently granted by the
Company to its employees.
4.17 Contracts and Commitments. The Company has previously
provided reasonable access to the Buyer and its representatives to permit
such persons to inspect and copy all of the credit agreements, finance
leases and other agreements underlying the Receivables. Other than (a)
such credit agreements, finance leases and other agreements underlying the
Receivables, and (b) those contracts and commitments listed on Schedule
4.17 annexed hereto, there is no other contract, agreement, commitment or
understanding which is material to the ongoing operation of the Business.
To the best of the Stockholder's knowledge, all of such agreements and
contracts are in full force and effect, and there is no material default or
non-performance outstanding thereunder.
4.18 Litigation. Except as set forth on Schedule 4.18, there is
no pending or, to the actual knowledge of the Stockholder, threatened
litigation, arbitration, administrative proceeding or other legal action or
proceeding against the Company or relating to its business. The
Stockholder is not aware of any state of facts, events, conditions or
occurrences which the Stockholder reasonably believes would properly
constitute grounds for or the basis of any suit, action, arbitration,
proceeding or investigation against or with respect to the Company.
4.19 Intellectual Property. To the Stockholder's actual
knowledge the Company has the valid right to utilize all trade names and
other intellectual property utilized in its business, and has not received
notice of any claimed infringement of any of such intellectual property
with the rights or property of any other person. The Buyer acknowledges
that the trade name/trademark/service xxxx, "R.C. Hills," will not be
usable by the Company or the Buyer and on the ninetieth (90th) day after
the date of Closing all use by the Company will cease.
4.20 Bank Accounts. Annexed hereto as Schedule 4.20 is a correct
and complete list of all bank accounts and safe deposit boxes maintained by
or on behalf of the Company, with indication of all persons having
signatory, access or other authority with respect thereto.
4.21 Going Concern. The Stockholder has no knowledge of any
fact, event, circumstance or condition (including but not limited to any
announced or anticipated changes in the policies of any material supplier,
referral source, client or customer) that would materially impair the
ability of the Company to continue the Business in substantially the manner
heretofore conducted (other than general, industry-wide conditions).
4.22 The Shares. The Stockholder hereby confirms that the Shares
constitute "restricted securities" under applicable federal and state
securities laws, and that the Shares may not be resold in the absence of an
effective registration thereof under federal and state securities laws or
an available exemption from such registration requirements. The
Stockholder further confirms that he has received no assurance whatsoever
as to whether or when any of the Shares will be registered under federal or
state securities laws (except as provided herein), and that, accordingly,
the Stockholder may be required to hold the Shares indefinitely. The
Stockholder and Buyer are entering into a separate Registration Rights
Agreement that provides the Stockholder registration rights on the Shares
being issued to the Stockholder hereunder.
4.23 Disclosure and Duty of Inquiry. The Buyer is not and will
not be required to undertake any independent investigation to determine the
truth, accuracy and completeness of the representations and warranties made
by the Stockholder in this Agreement.
4.24 Allowance for Uncollectible Accounts. The Buyer accepts the
amount of the allowance for uncollectible accounts shown in the Financial
Statements as adequate in each case as of the dates thereof. Stockholder
shall have no responsibility related to such allowance and makes no
representation or warranty in regard thereto.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
In connection with the Buyer's acquisition of the Stock, the Buyer
hereby represents and warrants to the Stockholder as follows:
5.1 Organization, Good Standing and Qualification. The Buyer is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Florida, with all necessary power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Buyer is qualified to do business in each foreign
jurisdiction in which its business requires it to be qualified.
5.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Buyer has been duly and validly authorized by
the Board of Directors of the Buyer. No further corporate authorization is
required on the part of the Buyer to consummate the transactions
contemplated hereby.
5.3 Valid and Binding Agreement; No Breach.
(a) The Buyer has full legal right, power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement constitutes the legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, except to the extent that such enforceability
may be limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the remedy of
specific performance or similar equitable relief is available only at the
discretion of the court before which enforcement is sought.
(b) Except as disclosed in Schedule 5.3 annexed hereto,
neither the execution and delivery of this Agreement by the Buyer, nor
compliance with the terms and provisions of this Agreement on the part of
the Buyer, will, under circumstances that would result in a Material
Adverse Effect: (i) violate any statute or regulation of any governmental
authority, domestic or foreign, affecting the Buyer or any of its
subsidiaries; (ii) require the issuance of any authorization, license,
consent or approval of any federal or state governmental agency; or (iii)
conflict with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree, note, indenture,
loan agreement or other agreement or instrument to which the Buyer or any
of its subsidiaries is a party, or by which the Buyer or any of its
subsidiaries is bound, or constitute a default thereunder, or require the
consent of any other party to any of the foregoing.
5.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement by the Buyer, nor compliance with the terms and
provisions of this Agreement on the part of the Buyer, will: (a) violate
any statute or regulation of any governmental authority, domestic or
foreign, affecting the Buyer; (b) require the issuance of any
authorization, license, consent or approval of any federal or state
governmental agency; (c) conflict with or result in a breach of any of the
terms, conditions or provisions of any judgment, order, injunction, decree,
note, indenture, loan agreement or other agreement or instrument to which
the Buyer is a party, or by which the Buyer is bound, or constitute a
default thereunder; or (d) require the consent of any third party under any
outstanding statute, regulation, judgment, order, injunction, decree,
agreement or instrument to which the Buyer is a party, or by which the
Buyer is bound.
5.5 Issuance of Shares. The issuance of the Shares hereunder
has been duly authorized by all necessary corporate action on the part of
the Buyer, and the Shares are validly issued, fully paid and non-
assessable. The Stockholder will receive from Buyer good, valid, and
marketable title to all of the Shares, free and clear of all pledges,
liens, claims, charges, options, calls, encumbrances, restrictions and
assessments whatsoever, (except any restrictions which may be created by
operation of state or federal securities laws).
5.6 Investment. The Buyer is purchasing the Stock for its own
account for investment, and not with a view to the resale or distribution
thereof in violation of any applicable securities laws.
5.7 Disclosure and Duty of Inquiry. The Stockholder is not and
will not be required to undertake any independent investigation to
determine the truth, accuracy and completeness of the representations and
warranties made by the Buyer in this Agreement.
5.8 Buyer's Information. The financial information and reports
(the "Buyer's Information") which have been delivered or made available to
Stockholder, including the items specifically listed on the attached
Schedule 5.8, fairly present in all material respects the financial status
of Xxxxxx, and its subsidiaries (jointly referred to as "Xxxxxx") as of the
date of such information and do not contain a materially misleading
statement or omit information or statements reasonably necessary to make
such information reasonably illustrative of the financial condition,
assets, liabilities, and other material matters as would be reasonably
necessary to a prudent investor to reach an informed decision regarding an
investment in the Shares.
5.9 Contingent Liabilities. There are no contingent
liabilities, whether or not asserted, known to Buyer or the principal
shareholders of Buyer, which are not reflected in the Buyer's Information
which, if such contingent liabilities become actual liabilities, would or
could have a material and adverse impact on Buyer and/or its subsidiaries
or their prospects.
5.10 No Litigation. Neither the Buyer nor any of its affiliates
or subsidiaries, is subject to or involved in any material litigation,
arbitration, administrative proceedings, or other controversy.
5.11 No Tax Controversies. Neither the Buyer nor any of its
subsidiaries have failed to file when due all of their respective income,
franchise, sales and use, employment, property, excise and other federal,
state and local tax returns or have failed to pay when due any tax
liability shown to be due on such return. Neither the Buyer nor any of its
subsidiaries have been notified of any audit of any of their respective
activities by any governmental authority.
5.12 Title and Condition of Assets. All of the Buyer's assets,
and all of its subsidiaries' assets, as shown in the Buyer's Information as
provided to the Stockholder, are owned by the entity which is shown to own
such asset, subject only to such liabilities as are disclosed in the
Buyer's Information, and all of such assets are in good operating condition
and repair (ordinary wear and tear excepted) and are adequate for their use
in the respective businesses as conducted by the Buyer and its subsidiaries
and are sufficient for the continued conduct of such businesses
5.13 Legal Compliance.
(a) To the actual knowledge of the Buyer and its principal
shareholders, the Buyer (and its subsidiaries) are, and for the past three
(3) years have been, except for circumstances which in the aggregate would
not result in a Material Adverse Effect, in compliance in all material
respects with all laws, statutes, regulations, rules and ordinances
applicable to the conduct of its business (including, without limitation,
all applicable environmental laws, statutes, regulations, rules and
ordinances), and has in full force and effect all licenses, permits and
other authorizations required for the conduct of its business as presently
constituted; and the Buyer and its subsidiaries are not in default or
violation in respect of or under any of the foregoing. Neither the Buyer
nor its principal shareholders, are aware of any past or present condition
or circumstance in the Buyer's (or its subsidiaries) business (including,
without limitation, with respect to any real property now or previously
occupied by any of them) which could give rise to any material liability
under any such law, statute, regulation, rule or ordinance.
(b) Except as set forth on Schedule 5.13 attached hereto,
the Buyer has not generated, operated, processed, distributed, transported,
used, treated, stored, handled, emitted, discharged, released or disposed
of (or caused any person or entity to do any of the foregoing or assisted
any person or entity in doing any of the foregoing) any oil, gasoline,
petroleum-related products, hazardous substances, hazardous waste, or
pollutants or contaminants (as defined by CERCLA), including, without
limitation, asbestos or asbestos containing materials, PCB's or urea
formaldehyde, except in accordance with applicable laws or any product
which may give rise to Hazardous Materials Liabilities.
(c) Neither the Buyer nor any of its principal shareholders
has received any written notice of default or violation, nor, to the best
of their knowledge, is the Buyer, its subsidiaries, or any of their
respective directors, officers or employees in default or violation with
respect to any judgment, order, writ, injunction, decree, demand or
assessment issued by any court or any federal, state, local, municipal or
other governmental agency, board, commission, bureau, instrumentality or
department, domestic or foreign, relating to any aspect of the Buyer's or
its subsidiaries' business, affairs, properties or assets. Neither the
Buyer nor its principal shareholders has received written notice of, been
charged with, or is, to the best of their knowledge, under investigation
with respect to, any violation of any provision of any federal, state,
local, municipal or other law or administrative rule or regulation,
domestic or foreign, relating to any aspect of the Buyer's or its
subsidiaries' business, affairs, properties or assets, which violation
would have a Material Adverse Effect.
5.14 Intellectual Property. The Buyer and its subsidiaries have
the valid right to utilize all trade names and other intellectual property
utilized in their business, and have not received notice of any claimed
infringement of any of such intellectual property with the rights or
property of any other person.
5.15 Transactions with Related Parties. There are no agreements
or contracts between the Buyer, and/or its subsidiaries, with any party who
owns, directly or indirectly, or has the right to acquire more than ten
percent (10%) of the common stock of the Buyer, or any affiliate of such
person, other than as disclosed on the attached Schedule 5.15.
5.16 Status of NewCo. NewCo is a newly formed Florida
corporation and has no assets, or liabilities.
5.17 No Material Changes. Except as disclosed in Schedule 5.17
annexed hereto, since the delivery of the Buyer's Information to the
Stockholder, and except as set forth in the Buyer's Information (a) the
business of the Buyer has been operated solely in the normal course, (b)
there has been no changes in the financial condition, operations or
business of the Company from that reflected in the Buyer's Information
which in the aggregate would have a Material Adverse Effect, (c) the Buyer
has not incurred any material obligation or liability except in the normal
course of business, (d) the Buyer has not effected or suffered any material
modification in its collection practices, or with respect to the timing and
manner of payment of its accounts payable, and (e) there has not been any
sale, assignment or transfer by the Buyer of any assets or other part of
its business, excluding the sale or disposition of inventory, and/or the
sale of loans, in the ordinary course of business.
6. ADDITIONAL AGREEMENTS.
6.1 Resignations. In addition to the other deliveries being
made pursuant to this Agreement on the date hereof, the Stockholder is
causing to be executed and delivered to the Company the resignations of all
officers and directors of the Company (except to the extent that such
resignations are not being required by the Buyer).
6.2 Audit of Financial Statements. The Stockholder shall, from
time to time as and when requested by the Buyer from and after the date
hereof, cooperate with and assist the Buyer in all reasonable respects in
dealing with the accountants heretofore retained by the Company, in order
that the Buyer and its accountants may obtain copies of all work papers
utilized or prepared by the Company's accountants in connection with their
review of the Financial Statements, and consult with the Company's
accountants as and to the extent necessary or appropriate in connection
with the preparation of audited financial statements of the Company for all
periods from and after January 1, 1993 in accordance with Regulation S-X
promulgated under the Securities Act of 1933, as amended. Any reasonable
out-of-pocket expenses incurred or paid to third parties by Stockholder in
complying with this Section 6.2 shall be reimbursed by Buyer, except that
any such expenses exceeding $500 shall be approved by Buyer prior to such
expenses being incurred.
6.3 1997 Tax Treatment. The parties hereby confirm and consent
that the Company's income in respect of 1997 shall not be prorated as
between the Stockholder (on the one hand) and the Buyer (on the other
hand), but shall be determined based on actual income for that portion of
1997 through the date hereof and for that portion of 1997 subsequent to the
date hereof, with the Company having been deemed to have closed its books
for these purposes on and as of the date hereof. The "closing of the
books" shall be accomplished in a manner that is consistent with accounting
conventions and procedures used in closing the books in prior years for
year end closings. All allocations or determinations of accounting
questions will be handled in cooperation with the Shareholder. It is
agreed that the intent shall be to minimize, to the extent possible, the
income to be allocated to the Stockholder for the short period.
6.4 Intentionally Omitted.
6.5 Assumption of GE Debt; Hold Harmless. The Buyer will assume
the obligation of the Company to GE, and to the extent that the GE Debt is
the obligation of the Stockholder, or any other entity owned by the
Stockholder, including Orange Acceptance Corporation, Motorcycle Insurance
Agency, Inc., X.X. Xxxx Enterprises, Inc., Deltona House Rentals, Inc.,
Affordable Leasing, Inc., and Polaris of Orlando, Inc. (herein referred to
as the "GE Guarantors"), whether as co-obligors or guarantors, the Buyer
shall cause the release of the Stockholder, the GE Guarantors, and X.X.
Xxxx, Xx. (as to his collateral assignment of mortgage provided to GE as
part of the Forbearance Agreement arrangements entered into on January 21,
1997) (the "Indemnitees") from any obligation for the GE Debt, however
arising, on or before the expiration of ninety (90) days from the date of
this Agreement. The Buyer hereby agrees to indemnify and hold the
Indemnitees harmless from and against the GE Debt, including principal,
interest, defaults, default interest, penalties, and liens and security
interests against the property of the Indemnitees, in accordance with the
terms of the separate Indemnification Agreement attached hereto as Schedule
6.5. The dollar amount owed to GE by the Stockholder, X.X. Xxxx, Xx., and
the GE Guarantors is set forth on Schedule 6.5.
6.6 Lease of West Colonial Property. As a precondition of the
Stockholder's obligations to close hereunder, Buyer shall execute and
deliver to Stockholder a commercial lease agreement in the form of that
attached as Schedule 6.6, providing for a net lease of the Stockholder's
property at 0000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx.
6.7 Access to Records of Company. Subsequent to the
consummation of the acquisition and merger contemplated by this Agreement,
the Buyer agrees to reasonably cooperate with the Stockholder in permitting
Stockholder and his agents reasonable access to the records of the Company
for periods prior to the Effective Date for Stockholder's reasonable needs,
including, but not limited to, responding to inquiries from tax
authorities, determining information related to transactions occurring in
such prior periods, and the other reasonable business and personal needs of
the Stockholder.
6.8 Conversion of Stockholder Capital Debt. The Stockholder
shall cause the debt of the Company to the Stockholder, referenced as the
"Notes Payable AmSouth $347,574.08" on the compiled Balance Sheet for the
Company as of February 1997 to be converted to a capital contribution of
the Stockholder, effective immediately prior to the consummation of this
Merger, and there shall be no further liability of the Company to the
Stockholder regarding such debt.
6.9 Conversion of Stockholder Finance Debt. As of the Effective
Date, $281,367 in debt owed to the Stockholder by the Company, including
accrued interest through February 12, 1997 (the "Finance Debt") shall be
converted into a capital contribution by the Stockholder to the Company,
and there shall be no further liability of the Company to the Stockholder
regarding the Finance Debt.
6.10 Release/Indemnification From Specified Loans. The Buyer
indemnifies and agrees to hold the Stockholder harmless, from and after
closing, from the following loans made to the Company, which loans were co-
signed or guaranteed personally by the Stockholder:
(i) Xxx Xxxxxx, Inc.-dated January 1, 1993, for $70,000,
due on December 31, 1997, plus interest at 16% per annum.
(ii) Xxx Xxxxxx, Inc.-dated April 17, 1992, for $50,000,
due on April 17, 1997, plus interest at 16% per annum.
(iii) Xxx Xxxxxx, Inc.-dated August 1, 1992, for $60,000,
due on July 31, 1997, plus interest at 16% per annum.
(iv) Xxxxxx Xxxx-dated June 1, 1992, for $1,500, due on
demand, plus interest at 15% per annum.
(v) Xxxx Xxxxxxxxxx-undated in 1994, for $10,000, due on
demand, with interest at 15% per annum.
(vi) Xxxx Xxxxxxxxxx-dated December 30, 1994, for $5,000,
due on demand, plus interest at 15% per annum.
(vii) Xxxx Xxxxxxxxxx-date December 27, 1994, for $5,000,
due on demand, plus interest at 15% per annum.
(viii) Xxxx Xxx Xxxxxx-dated January 1, 1995, for $100,000,
due on October 30, 2001, plus interest at 10% per annum.
(ix) Xxxx X. Xxxxxx-dated February 17, 1995, for
$101,006.68, due on October 30, 2001, with interest at 10% per annum.
(x) X.X. Xxxx, Xx.-dated August 1, 1993, for $200,000, due
on December 31, 2001, with interest at 10% per annum.
(xi) X.X. Xxxx III - $190,468.41, dated July 12, 1996,
payable November 15, 2001, with interest at 15% per annum.
(xii) Xxxxxxx Bank, N.A. - current balance $32,548.75,
dated October 8, 1996.
The Buyer shall cause the Stockholder to be released as a co-obligor
or guarantor on or before the expiration of one hundred and eighty (180)
days after the Effective Date.
7. [INTENTIONALLY OMITTED].
8. INDEMNIFICATION.
8.1 General.
(a) The Stockholder shall defend, indemnify and hold
harmless the Buyer from, against and in respect of any and all claims,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees,
that the Buyer may incur, sustain or suffer ("Buyer Losses") as a result of
any breach of, or failure by the Stockholder to perform, any of the
representations, warranties, covenants or agreements of the Stockholder
contained in this Agreement or in any Schedule(s) furnished by or on behalf
of the Company or the Stockholder under this Agreement.
(b) The Buyer shall defend, indemnify and hold harmless the
Stockholder from, against and in respect of any and all claims, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees,
that the Stockholder may incur, sustain or suffer ("Stockholder Losses") as
a result of any breach of, or failure by the Buyer to perform, any of the
representations, warranties, covenants or agreements of the Buyer contained
in this Agreement.
(c) Subject to the limitations of Section 8.2, the
representations, warranties and covenants contained herein shall survive
the closing hereunder to the extent any party hereto is entitled to
indemnification hereunder for any breach of any representation, warranty or
covenant contained herein.
(d) The Stockholder's indemnification obligations hereunder
are secured by a Stock Pledge and Security Agreement of even date herewith
among the Stockholder, the Buyer, and First Choice Auto Finance, Inc.
8.2 Limitations on Indemnity.
(a) Notwithstanding any other provision of this Agreement
to the contrary, (i) the Stockholder shall not be liable to the Buyer with
respect to Buyer Losses unless and until the aggregate amount of all Buyer
Losses shall exceed the sum of Fifty Thousand Dollars ($50,000) (the
"Stockholder Basket"), and (ii) the Stockholder shall thereafter be liable
for all Buyer Losses in excess of the Stockholder Basket, provided that the
Stockholder's maximum aggregate liability in respect of all Buyer Losses
shall not, in the absence of proven fraud by the Stockholder in respect of
any particular Buyer Losses, in any event exceed the limitations set forth
in Section 8.2(c) below; provided, however, that the Stockholder Basket and
such limitation on liability shall not be available with respect to, and
there shall not be counted against the Stockholder Basket or such
limitation of liability, any Buyer Losses arising by reason of any proven
fraud by the Stockholder.
(b) Notwithstanding any other provision of this Agreement
to the contrary, (i) the Buyer shall not be liable to the Stockholder with
respect to Stockholder Losses unless and until the aggregate amount of all
Stockholder Losses shall exceed the sum of Fifty Thousand Dollars ($50,000)
(the "Buyer Basket"), and (ii) the Buyer shall thereafter be liable for all
Stockholder Losses in excess of the Buyer Basket; provided, however that
the Buyer Basket shall not be available with respect to, and there shall
not be counted against the Buyer Basket any Stockholder Losses arising by
reason of any Stockholder Losses involving proven fraud by the Buyer, its
principal shareholders, officers, employees or directors.
(c) Except with respect to any Buyer Losses involving
proven fraud by the Stockholder, the Stockholder shall not be required to
pay indemnification hereunder in an aggregate amount in excess of the Stock
Valuation received by the Stockholder under the terms of this Agreement.
The Stockholder shall have the option of satisfying all or any portion of
any claim in respect of Buyer Losses by tendering to the Buyer for
cancellation a number of Shares having an aggregate value (determined as
provided below, subject to appropriate arithmetic adjustment to account for
any stock split, stock dividend, combination of shares or other such event
which may occur at any time or from time to time subsequent to the date
hereof in respect of the outstanding Common Stock) equal to the amount of
the subject claim which is to be satisfied in such manner.
(d) The Buyer shall be entitled to indemnification by the
Stockholder for Buyer Losses only in respect of claims for which notice of
claim shall have been given to the Stockholder on or before March 31, 1998.
The Stockholder shall be entitled to indemnification by the Buyer for
Stockholder Losses only in respect of claims for which notice of claim
shall have been given to the Buyer on or before March 31, 1998.
(e) For purposes of Section 8.2(b) above, the Shares shall
be deemed to have a value of $17.50 per Share.
8.3 Claims for Indemnity. Whenever a claim shall arise for which
any party shall be entitled to indemnification hereunder, the indemnified
party shall notify the indemnifying party or parties in writing within
sixty (60) days of the indemnified party's first receipt of notice of, or
the indemnified party's obtaining actual knowledge of, such claim, and in
any event within such shorter period as may be necessary for the
indemnifying party or parties to take appropriate action to resist such
claim. Such notice shall specify all facts known to the indemnified party
giving rise to such indemnity rights and shall estimate (to the extent
reasonably possible) the amount of potential liability arising therefrom.
If an indemnifying party shall be duly notified of such dispute, the
parties shall attempt to settle and compromise the same or may agree to
submit the same to arbitration or, if unable or unwilling to do any of the
foregoing, such dispute shall be settled by appropriate litigation, and any
rights of indemnification established by reason of such settlement,
compromise, arbitration or litigation shall promptly thereafter be paid and
satisfied by those indemnifying parties obligated to make indemnification
hereunder.
8.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by
any third party against the indemnified party or any of its affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel
of its own choosing), at their expense and through a single counsel of
their own choosing, to defend or prosecute such claim in the name of the
indemnifying party or parties, or any of them, or if necessary, in the name
of the indemnified party. In any event, the indemnified party shall give
the indemnifying party advance written notice of any proposed compromise or
settlement of any such claim. If the remedy sought in any such action or
demand is solely money damages, the indemnifying party shall have fifteen
(15) days after receipt of such notice of settlement to object to the
proposed compromise or settlement, and if it does so object, the
indemnifying party shall be required to undertake, conduct and control,
through counsel of its own choosing and at its sole expense, the settlement
or defense thereof, and the indemnified party shall cooperate with the
indemnifying party in connection therewith.
9. POST-CLOSING EVENTS.
9.1 Announcements. With respect to the initial announcement of
the consummation of the transactions pursuant to this Agreement and of any
of the terms thereof, neither party shall make such an announcement without
the prior review and approval thereof by the Buyer (in the case of any
proposed disclosure or public announcement by the Stockholder) or the
Stockholder (in the case of any proposed disclosure or public announcement
by the Buyer), such approval not to be unreasonably withheld or delayed.
9.2 Bank Accounts. Upon the consummation of the transactions
pursuant to this Agreement, the Stockholder shall cooperate with the Buyer
to promptly modify to the Buyer's satisfaction the signatory and access
arrangements for all bank accounts and safe deposit boxes maintained by or
in the name of the Company.
9.3 Further Assurances. From time to time from and after the
date hereof, the parties will execute and deliver to one another any and
all further agreements, instruments, certificates and other documents as
may reasonably be requested by any other party in order more fully to
consummate the transactions contemplated hereby, and to effect an orderly
transition of the ownership and operations of the Business.
10. COSTS.
10.1 Finder's or Broker's Fees. Each of the Buyer and the
Stockholder represents and warrants that neither they or any of their
respective affiliates have dealt with any broker or finder in connection
with any of the transactions contemplated by this Agreement, or that any
broker or other person is entitled to any commission or finder's fee in
connection with any of these transactions.
10.2 Expenses. The parties (except as provided in Section 10.3)
shall each pay all costs and expenses incurred or to be incurred by them,
respectively, in negotiating and preparing this Agreement and in closing
and carrying out the transactions contemplated by this Agreement.
10.3 Stockholder's Costs. The Buyer shall pay the reasonable
attorneys' and accountants' fees and costs associated with the negotiation
and consummation of this transaction. Such fees and costs shall be paid
immediately upon receipt of an invoice from the Stockholder's attorneys or
accountants. The attorneys and accountants shall have the rights of
enforcement provided in this Agreement and are intended beneficiaries of
this provision.
11. FORM OF AGREEMENT.
11.1 Effect of Headings. The Section headings used in this
Agreement and the titles of the Schedules hereto are included for purposes
of convenience only, and shall not affect the construction or
interpretation of any of the provisions hereof or of the information set
forth in such Schedules.
11.2 Entire Agreement; Waivers. This Agreement and the other
agreements and instruments referred to herein constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior agreements or understandings as to such subject matter.
No party hereto has made any representation or warranty or given any
covenant to the other except as set forth in this Agreement, the Schedules
hereto, and the other agreements and instruments referred to herein. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
11.3 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12. PARTIES.
12.1 Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or
by reason of this Agreement on any persons other than the parties to it and
their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligations or liability of
any third persons to any party to this Agreement, nor shall any provision
give any third persons any right of subrogation or action over or against
any party to this Agreement.
12.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given (a) on the date of service if served personally on
the party to whom notice is to be given, (b) on the day after the date sent
by recognized overnight courier service, properly addressed and with all
charges prepaid or billed to the account of the sender, or (c) on the third
day after mailing if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed as follows:
(i) If to the Stockholder:
X. X. Xxxx, XX
0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
(ii) With a copy to:
Xxxxx X. Xxxxxxx, Esquire
Milam, Otero, Xxxxxx, Xxxxxx & Xxxxxx, P.A.
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
(iii) If to the Buyer:
Xxxxxx Industries, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn.: Xxxxx Xxxx Xxxxxxxxxx, Jr.
General Counsel
or to such other address as any party shall have specified by notice in
writing given to the other party.
13. MISCELLANEOUS.
13.1 Amendments and Modifications. No amendment or modification
of this Agreement or any Schedule hereto shall be valid unless made in
writing and signed by the party to be charged therewith.
13.2 Non-Assignability; Binding Effect. Neither this Agreement,
nor any of the rights or obligations of the parties hereunder, shall be
assignable by any party hereto without the prior written consent of all
other parties hereto. Otherwise, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors and
permitted assigns.
13.3 Governing Law; Jurisdiction. This Agreement shall be
construed and interpreted and the rights granted herein governed in
accordance with the laws of the State of Florida applicable to contracts
made and to be performed wholly within such State.
13.4 Costs of Enforcement. In the event that any party is
required to bring an action to enforce its rights hereunder, the
substantially prevailing party shall recover from the substantially non-
prevailing party all of the substantially prevailing party's attorneys'
fees and costs (the "Expenses") incurred in such action. For purposes
herein, the Expenses shall include investigatory, trial, appeal,
bankruptcy, mediation and arbitration expenses, and all costs of collection
and shall cover fees and costs for the lawyers, experts, paralegals and
clerks, and all other persons reasonably necessary as part of the
enforcement process. All such Expenses shall bear interest from the date
incurred until the date paid at the highest rate of interest permitted in
Florida. The parties request that a court award the actual Expenses
incurred by the substantially prevailing party, recognizing that it is the
parties intention that the substantially prevailing party should be made
completely whole. Costs incurred in enforcing this Section shall be
included in Expenses.
13.5 Time of Essence. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on and as
of the date first set forth above.
The Buyer:
XXXXXX INDUSTRIES, INC.,
a Florida corporation
By: /s/ J. Xxxx Xxxxxxxxxx, Xx.
Name:
Its: Asst. V.P.
The Stockholder:
/s/X.X. Xxxx,XX
X. X. XXXX, XX
