EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
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AMONG
FAIRLANE CREDIT LLC
FORD MOTOR CREDIT COMPANY
TRIAD ACQUISITION CORP.
AND
TRIAD HOLDINGS, INC.
DATED AS OF DECEMBER 23, 2004
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms..................................................................................... 1
1.02. Definitions............................................................................................... 8
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.01. Purchase and Sale of the Shares........................................................................... 10
2.02. Purchase Price............................................................................................ 10
2.03. Payments on the Closing Date.............................................................................. 11
2.04. Closing; Payments......................................................................................... 11
2.05. Closing Date Debt Amount.................................................................................. 11
2.06. Preparation of Closing Date Balance Sheet................................................................. 12
2.07. Adjustment Amount......................................................................................... 13
2.08. Change of Control Premium................................................................................. 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PARENT
3.01. Organization, Authority and Qualification of the Seller and the Parent.................................... 14
3.02. Organization, Authority and Qualification of the Company.................................................. 15
3.03. Subsidiaries.............................................................................................. 15
3.04. Capitalization............................................................................................ 15
3.05. No Conflict............................................................................................... 16
3.06. Consents and Approvals.................................................................................... 16
3.07. Taxes..................................................................................................... 16
3.08. Employee Matters.......................................................................................... 17
3.09. Financial Statements...................................................................................... 18
3.10. Undisclosed Liabilities................................................................................... 18
3.11. Absence of Certain Changes or Events...................................................................... 18
3.12. Litigation................................................................................................ 19
3.13. Compliance with Laws; Permits............................................................................. 19
3.14. Contracts; No Defaults.................................................................................... 20
3.15. Brokers................................................................................................... 21
3.16. Securitization Transactions............................................................................... 21
3.17. Real Property............................................................................................. 22
3.18. Intellectual Property..................................................................................... 23
3.19. Insurance................................................................................................. 24
i
3.20. Transactions with Certain Affiliates...................................................................... 24
3.21. Electronic Files.......................................................................................... 25
3.22. Disclaimer of Other Representations and Warranties........................................................ 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND HOLDINGS
4.01. Organization and Authority of the Purchaser and Holdings.................................................. 25
4.02. No Conflict............................................................................................... 26
4.03. Consents and Approvals.................................................................................... 26
4.04. Litigation................................................................................................ 26
4.05. Brokers................................................................................................... 26
4.06. Acquisition of Shares for Investment...................................................................... 26
4.07. Investigation by Purchaser; Seller's and Parent's Liability............................................... 27
4.08. Financing................................................................................................. 28
ARTICLE V
PRE-CLOSING COVENANTS
5.01. Operation of the Business................................................................................. 28
5.02. Access to Information; Confidentiality.................................................................... 31
5.03. Notices and Consents...................................................................................... 32
5.04. Termination; Assignment................................................................................... 32
5.05. Notice of Developments.................................................................................... 32
5.06. Financing................................................................................................. 32
5.07. Certain Bank Accounts..................................................................................... 34
5.08. Exclusivity............................................................................................... 34
5.09. Hedge Agreement........................................................................................... 34
ARTICLE VI
POST CLOSING COVENANTS
6.01. Further Action............................................................................................ 34
6.02. Intellectual Property..................................................................................... 34
6.03. Access to Records......................................................................................... 34
6.04. Non-Solicitation of the Purchaser's Employees............................................................. 35
6.05. Confidentiality/ Seller and Parent........................................................................ 35
6.06. Confidentiality/ Purchaser................................................................................ 35
6.07. Participation Agreement................................................................................... 36
ARTICLE VII
TAX MATTERS
7.01. Allocation of Straddle of Non-Periodic Taxes.............................................................. 36
ii
7.02. Payment of Taxes.......................................................................................... 36
7.03. Transfer Taxes............................................................................................ 37
7.04. Filing of Tax Returns..................................................................................... 37
7.05. Tax Refunds, Overpayments or Credits...................................................................... 38
7.06. Post-Closing Actions...................................................................................... 38
7.07. Cooperation............................................................................................... 38
7.08. Section 338(h)(10) Elections.............................................................................. 39
7.09. Tax Indemnity............................................................................................. 40
7.10. Tax Contests.............................................................................................. 41
7.11. Sales and Use Tax......................................................................................... 42
ARTICLE VIII
INDEMNIFICATION
8.01. Survival.................................................................................................. 43
8.02. Indemnification by the Seller and the Parent.............................................................. 44
8.03. Indemnification by the Purchaser and Holdings............................................................. 45
8.04. Limits on Indemnification................................................................................. 46
8.05. Tax Treatment/ Insurance Claims........................................................................... 48
8.06. Third Party Claims........................................................................................ 48
8.07. Exclusive Remedy.......................................................................................... 49
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE PARENT
9.01. Representations, Warranties and Covenants................................................................. 50
9.02. No Proceeding or Litigation............................................................................... 50
9.03. Purchaser's Note; HFI Loan and Security Agreement......................................................... 50
9.04. Participation Agreement................................................................................... 50
9.05. Deliverables.............................................................................................. 51
9.06. Consents and Approvals.................................................................................... 51
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND HOLDINGS
10.01. Representations, Warranties and Covenants................................................................ 51
10.02. No Proceeding or Litigation.............................................................................. 51
10.03. Financing................................................................................................ 51
10.04. HFI Loan and Security Agreement.......................................................................... 51
10.05. Participation Agreement.................................................................................. 51
10.06. Consents and Approvals................................................................................... 52
10.07. Deliverables............................................................................................. 52
iii
ARTICLE XI
CLOSING DELIVERIES
11.01. Closing Deliveries of the Seller......................................................................... 52
11.02. Closing Deliveries of the Purchaser...................................................................... 52
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.01. Termination.............................................................................................. 53
12.02. Effect of Termination.................................................................................... 54
ARTICLE XIII
GENERAL PROVISIONS
13.01. Expenses.................................................................................................. 54
13.02. Headings.................................................................................................. 54
13.03. Construction.............................................................................................. 54
13.04. Notices................................................................................................... 55
13.05. Public Announcements...................................................................................... 56
13.06. Severability.............................................................................................. 57
13.07. Disclosure Schedule....................................................................................... 57
13.08. Entire Agreement.......................................................................................... 57
13.09. Assignment................................................................................................ 57
13.10. Amendment................................................................................................. 57
13.11. Waiver.................................................................................................... 57
13.12. No Third Party Beneficiaries.............................................................................. 57
13.13. Arbitration............................................................................................... 58
13.14. Governing Law............................................................................................. 58
13.15. Counterparts.............................................................................................. 59
iv
DISCLOSURE SCHEDULE
The Disclosure Schedule shall include the following Sections:
3.03 Subsidiaries
3.06 Consents and Approvals
3.07 Taxes
3.08 Employee Matters
3.10 Undisclosed Liabilities
3.11 Absence of Certain Changes or Events
3.12 Litigation
3.13 Compliance with Laws; Permits
3.14 Contracts; No Defaults
3.16 Securitization Transactions
3.17 Real Property
3.18 Intellectual Property
3.19 Insurance
3.20 Transactions with Certain Affiliates
3.21 Electronic Files
4.03 Consents and Approvals
4.04 Litigation
4.07 Investigation by Purchaser; Seller's and Parent's Liability
EXHIBITS
Exhibit A Company's Accounting Principles and Agreed Upon Procedures
Exhibit B Purchaser's Note
Exhibit C HFI Loan and Security Agreement
Exhibit D Intentionally Omitted
Exhibit E June 30th Balance Sheet
Exhibit F Instrument of Accession to Stock Purchase Agreement
Exhibit G Participation Agreement
Exhibit H Summary of Hedge Agreement
Exhibit I Section 338(h)(10) Elections
Exhibit J Consents and Approvals
Exhibit K Guaranty
v
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 23,
2004, by and among FAIRLANE CREDIT LLC, a Delaware limited liability company
(the "Seller"), FORD MOTOR CREDIT COMPANY, a Delaware corporation ("Parent"),
TRIAD ACQUISITION CORP., a Delaware corporation (the "Purchaser") and TRIAD
HOLDINGS, INC., a Delaware corporation ("Holdings").
WHEREAS, the Seller owns all the issued and outstanding shares (the
"Shares") of common stock, no par value (the "Common Stock"), of TRIAD FINANCIAL
CORPORATION, a California corporation (the "Company");
WHEREAS, the Seller is a wholly-owned subsidiary of Parent;
WHEREAS, the Purchaser is a wholly-owned subsidiary of Holdings;
WHEREAS, the Company and its Subsidiaries are engaged in the business of
purchasing retail installment sales contracts from automobile dealers and other
third-party lenders, originating motor vehicle loans directly to consumers,
purchasing motor vehicle loans from third party lenders and servicing such
installment sales contracts and loans (the "Business"); and
WHEREAS, the Seller wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Seller, the Shares, upon the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
and covenants hereinafter set forth, and intending to be legally bound, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. For purposes of this Agreement:
"Action" means any administrative, regulatory or judicial claim, action,
suit, arbitration, petition, appeal, demand, lien, notice of noncompliance or
violation, investigation, proceeding, consent orders or consent agreements,
inquiry, proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. For the
purpose hereof, the terms "control" or "controlled by" shall mean the possession
of the power to direct, or cause the direction of, management and policies of
the Company by contract or voting of securities or ownership interest.
"Agreed Upon Procedures" means the accounting procedures mutually agreed
upon by the parties expressly set forth on Exhibit A and described in reasonable
detail therein.
"Applicable Rate" means sixteen percent (16%) with respect to any
Prepayment of a component of the Final Cash Consideration and the Equity
Adjustment and six percent (6%) with respect to any Prepayment relating to the
Intercompany Debt, the Initial Debt Adjustment and the Second Debt Adjustment.
"Beneficial Owner" means beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
"Benefit Plan" means each "employee benefit plan," as defined in Section
3(3) of ERISA and each profit-sharing, bonus, stock option, stock purchase,
stock ownership, pension, retirement, severance, deferred compensation, excess
benefit, supplemental unemployment, post-retirement medical or life insurance,
welfare or incentive plan, or sick leave, long-term disability, medical,
hospitalization, life insurance, other insurance plan, or other employee benefit
plan, program, arrangement or agreement, whether written or unwritten, qualified
or non-qualified, funded or unfunded, maintained or contributed to by Seller or
the Company or any of their affiliates for the benefit of officers, directors,
employees or independent contractors of the Company or its Subsidiaries,
including but not limited to any individual contract, offer letter or agreement
with or addressed to any officer, director, employee or independent contractor
of the Company or its Subsidiaries pursuant to which any Person has any actual
or contingent liability or obligation to provide compensation and/or benefits in
consideration for past, present or future services.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which the banks in New York, NY are authorized by Law or executive order to
be closed.
"Change of Control" shall mean, with respect to the Company after the
Closing Date, (a) the sale or other disposition, or the approval by either the
stockholders or the board of directors of the Company of a sale or other
disposition, of all or substantially all of the assets of the Company in the
aggregate, whether pursuant to a single transaction or pursuant to a series of
transactions, other than through the sale of securitized assets in the ordinary
course of the Company's business; (b) any Person other than the Purchaser or the
Controlling Shareholders or any Control Affiliate, in the aggregate, becomes or
agrees to become the Beneficial Owner, directly or indirectly, of securities of
the Company or the surviving entity representing twenty-five percent (25%) or
more of the then issued and outstanding equity and equity-equivalent securities
of the Company or the surviving entity, other than any transaction that (i) is
neither required to be disclosed by any Law nor permitted by its terms to be
publicly announced or otherwise disclosed (other than pursuant to customary
disclosure exceptions relating to non-public disclosures required by law) by any
of the parties thereto (and does not otherwise constitute a Change of Control
under clause (c) of this definition) nor (ii) results in any Person becoming the
Beneficial Owner of fifty percent (50%) or more of the then issued and
outstanding equity and equity-equivalent securities of the ultimate parent
entity of the Company or the surviving entity; or (c) a merger or consolidation
of the Company with or into any other entity, or a merger of any other entity
into the Company, or the approval by either the stockholders or the board of
directors of the Company of any such merger or consolidation, as a result of
which the Purchaser, the Controlling Shareholders or any Control Affiliate, in
the aggregate, ceases to be the Beneficial Owner, directly or indirectly, of
securities of the Company or the surviving entity representing more than fifty
percent (50%) of the then issued and outstanding equity and equity-equivalent
securities of the Company or the surviving entity.
"Change of Control Date" means such time as the transaction underlying the
Change of Control has been consummated.
"Change of Control Purchase Price" shall mean (a) the total pre-tax fair
market value (as of the Change of Control Date) of all consideration (including
cash, securities, property, and any other form of consideration) paid or
payable, or otherwise to be distributed, directly or indirectly, to the
Purchaser, or the Controlling Shareholders or an Affiliate thereof in connection
with such Change of Control, in exchange for their shares of the Company (or any
successor thereto) or, the implied valuation of such shares in connection with
any primary share offering which constitutes a Change of Control, plus (b) the
cumulative amount of any distribution to any of such Persons in excess of net
income from Closing to such Change of Control Date plus (c) the amount by which
the Final Cash Consideration exceeded the Purchaser's cash equity investment in
the Company or Holdings as of the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company's Accounting Principles" means the accounting principles of the
Company expressly set forth in Exhibit A and described in reasonable detail
therein.
"Company Loan" means each currently outstanding motor vehicle loan or
motor vehicle installment sales contract owned or managed by the Company or any
Subsidiary (including any outstanding loans sold or pledged in a Securitization
Transaction).
"Control Affiliate" means (i) any Person, of which the Purchaser or any of
the Controlling Shareholders is the Beneficial Owner, directly or indirectly, of
fifty percent (50%) or more of the then issued and outstanding equity and
equity-equivalent securities; and (ii) any Person, which is the Beneficial
Owner, directly or indirectly, of fifty percent (50%) or more of the then issued
and outstanding equity and equity-equivalent securities of a Controlling
Shareholder; and (iii) any Person the issued and outstanding equity and
equity-equivalent securities of which are Beneficially Owned, directly or
indirectly, fifty percent (50%) or more by any Person owning securities of a
Controlling Shareholder and which meets the qualifications in the foregoing
clause (ii); and (iv) any investment fund the general partner or manager of
which is a Controlling Shareholder or is a Control Affiliate under any of
clauses (i) - (iii) above.
"Controlled Group Liabilities" means any liabilities attributable to the
compensation, benefit, welfare and other comparable plans or arrangements of the
Seller or its Affiliates (or any of their respective predecessors or successors)
or any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA to
which the Seller or any of its Affiliates (or any of their respective
predecessors or successors, but not including the Company and its Subsidiaries)
are or were obligated to contribute, (i) under Title IV of ERISA, (ii) under
Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a
result of a failure to comply with the continuation coverage requirements of
Section 601 et seq. of ERISA and Section 4980B of the Code, and (v) under
corresponding or similar provisions of foreign laws or regulations.
"Controlling Shareholders" means the Xxxxxxx Xxxxx Investor Group,
Xxxxxx'x Xxxx/Ford, Ltd. and GTCR Xxxxxx Xxxxxx XX, LLC.
"Disclosure Schedule" means the Disclosure Schedule attached hereto, dated
as of the date hereof, delivered by the Seller and the Parent or the Purchaser
and Holdings, as the case
may be, to the other party pursuant to this Agreement prior to the execution
hereof, as such Disclosure Schedule may be modified pursuant to Section 5.05(b)
hereof.
"Encumbrance" means any security interest, pledge, hypothecation,
mortgage, deed of trust, lien (including environmental and Tax liens),
assignment, charge or deposit arrangement, defect in title, violation, lease,
license, encumbrance, servient easement, adverse claim, reversion, reverter,
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including those created by, arising under or
evidenced by any conditional sale or other title retention agreement),
restrictive covenant, the interest of a lessor under a capital lease (meaning
any leasing or similar arrangement which is classified as a capital lease in the
Financial Statements in accordance with GAAP), any financing lease bearing
substantially the same economic effect as any of the foregoing, any contingent
or other agreement to provide any of the foregoing, and any other condition or
restriction of any kind, including any restriction on the use, voting, transfer,
receipt of income or any other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles for financial
reporting in the United States.
"Xxxxxxx Sachs Investor Group" means GS Capital Partners 2000, L.P., GS
Capital Partners 2000 Employee Fund, L.P., GS Capital Partners 2000 Offshore,
L.P., Xxxxxxx Xxxxx Direct Investment Fund 2000, L.P., GS Capital Partners 2000
GmbH & Co. BETEILIGUNGS KG and MTGLQ Investors, L.P.
"Governmental Authority" means any federal, national, supranational,
state, provincial, local, or similar government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body (except an arbitral body established pursuant to
Section 13.13) of competent jurisdiction.
"Governmental Authorizations" shall mean any material consent, license,
registration, filing, approval, franchise, concession or permit issued, granted,
given or otherwise made available by or under the authority of any Governmental
Authority or pursuant to any legal requirement, in each case for the ownership
or operation of the Business.
"HFI Receivables" means motor vehicle retail installment sales contracts
and loans identified on Section 3.21 of the Disclosure Schedule attached hereto
as an electronic compact disk file titled June302004HFS.xls.
"HFI Receivables Balance" means the outstanding principal balance of the
HFI Receivables (which shall not include any reserves) as disclosed on the
Preliminary Balance Sheet.
"Income Tax" means any federal, state, local, or foreign income or
franchise tax measured by or imposed on net income, including any interest,
penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Parties" means the Seller Indemnified Parties and the
Purchaser Indemnified Parties, or either the Seller Indemnified Parties or the
Purchaser Indemnified Parties pursuant to Section 8.06.
"Indemnifying Parties" means the Seller Indemnifying Parties and the
Purchaser Indemnifying Parties, or either the Seller Indemnifying Parties or the
Purchaser Indemnifying Parties pursuant to Section 8.06.
"Independent Accountant" means an internationally recognized certified
public accounting firm mutually agreed upon by the parties, excluding their
respective regular outside accounting firms.
"Insurer" shall mean Ambac Assurance Corporation and/or MBIA Insurance
Corporation.
"Intercompany Debt" means an amount equal to the outstanding indebtedness
from the Company and payable to the Seller or any of the Seller's Affiliates
(including any amounts due from the Company to the Seller or any of its
Affiliates for intercompany charges, other than amounts covered by the
definition of Net Deferred Tax Liability), any accrued but unpaid interest
thereon, and any other amounts payable with respect to such indebtedness.
"IRS" means the Internal Revenue Service.
"Knowledge" of the Seller and/or the Company means the actual knowledge,
after due inquiry, of the following individuals: Xxxxxxx Xxxxxxxxxx and Xxxx
Xxxxx.
"Law" means any federal, national, supranational, state, provincial, local
or similar statute, law, ordinance, regulation, rule, code, order, requirement
or rule of law (including common law) or any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority, including, without limitation, (i) the rules, regulations and
requirements of any agency with jurisdiction over the Business, (ii) any
applicable laws or ordinances, and any regulations or orders issued thereunder,
governing or pertaining to unlawful discrimination in lending (including without
limitation, equal credit opportunity, retail installment sales, and fair credit
reporting), truth-in-lending, consumer credit (including without limitation the
Federal Consumer Credit Protection Act, the Federal Truth-in-Lending Act and
Regulation Z thereunder, and the Federal Equal Credit Opportunity Act and
Regulation B thereunder) and the privacy regulations of the Federal Trade
Commission; (iii) all applicable usury and interest limitations laws; (iv) the
Xxxxx-Xxxxx-Xxxxxx Act and (v) all applicable laws pertaining to the
documentation, underwriting, origination, purchase, assumption, modification,
sale, pooling and servicing of any Company Loans by the Company and its
Subsidiaries.
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, known or unknown, matured or
unmatured or determined or determinable, including those arising under any Law
or Action and those arising under any
contract, agreement, arrangement, commitment or undertaking provided, however,
Liabilities shall not include any consequential, special, indirect or punitive
damages except as provided in Section 8.04 (f)(iv).
"Material Adverse Effect" means any change in, or effect on, the Company
that is, or would be reasonably expected to be, materially adverse to the
business, properties, assets, liabilities, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole; provided that
none of the following will constitute or be taken into account in determining
whether there has been a Material Adverse Effect: (a) any adverse change, event,
development, or effect, to the extent arising from (i) general business or
economic conditions affecting the industry in which Company operates, including
such conditions affecting the Business, (ii) general national or international
political or social conditions, including the engagement by the United States in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack upon the United
States, or any of its territories, possessions, or diplomatic or consular
offices or upon any military installation, equipment or personnel of the United
States, (iii) financial, banking, or securities markets (including any
disruption thereof and any decline in the price of any security or any market
index or general changes in interest rates and any implications thereof), (iv)
changes in GAAP taking effect after the date hereof, (v) changes in Law taking
effect after the date hereof (vi) changes in the interpretation or enforcement
of Law by any Governmental Authority generally applicable to similarly situated
companies or (vii) the taking of any action expressly required to be taken by
this Agreement and the other agreements contemplated hereby.
"Net Deferred Tax Liability" means the deferred Income Tax liability less
deferred Income Tax assets less amounts due from Parent or Affiliates of the
Parent for Income Taxes plus amounts due to Parent or Affiliates of the Parent
for Income Taxes plus any Income Tax payable less any Income Tax receivable, in
each case, as reflected in the Preliminary Balance Sheet or the Closing Date
Balance Sheet, as the case may be. For the avoidance of doubt the Net Deferred
Tax Liability is prior to giving effect to any of the Transactions contemplated
by this Agreement except as set forth in the Agreed Upon Procedures.
"Net Worth" means the amount of the Company's assets minus Company's
liabilities as reflected in the Preliminary Balance Sheet or the Closing Date
Balance Sheet, as the case may be.
"Non-Income Tax" means any Tax other than an Income Tax or sales and use
Tax.
"Non-Income Tax Return" means any return declaration, report, claim for
refund, or information return or statement relating to Non-Income Taxes,
including any schedule or attachment thereto.
"Operational Meetings" means meetings, either in person, telephonic or
otherwise, attended by senior management of the Company and representatives of
the Seller to be held in accordance with a schedule to be agreed upon by the
parties, at which time any actions contemplated by Section 5.01 hereof will be
discussed and if any affirmative action is to be taken thereon, authorized.
"Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Post-Closing Period" means any taxable year or period that begins after
the Closing Date and, with respect to any taxable year or period beginning on or
before and ending after the Closing Date, the portion of such taxable year or
period beginning after the Closing Date.
"Pre-Closing Period" means any taxable year or period that ends on or
before the Closing Date and, with respect to any taxable year or period
beginning on or before and ending after the Closing Date, the portion of such
taxable year or period ending on and including the Closing Date.
"Preliminary Balance Sheet" means the consolidated balance sheet of the
Company prepared by the Seller as of the month-end prior to the Closing Date in
accordance with the Agreed Upon Procedures, to be delivered by the Seller to the
Purchaser at least ten (10) days prior to the Closing Date.
"Property Taxes" means real, personal and intangible ad valorem property
taxes.
"Securities Act" means the Securities Act of 1933, as amended.
"Straddle Period" means any taxable year of the Company that begins on or
before and ends after the Closing Date.
"Subsidiaries" means any and all corporations, partnerships, limited
liability companies, joint ventures, associations and other entities controlled
by the Company directly or indirectly through one or more intermediaries. For
the purpose hereof, the term "controlled by" shall mean the possession of the
power to direct, or cause the direction of, management and policies of the
Subsidiary by contract or voting of securities or ownership interest.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Authority, including Income Tax and other taxes and
charges on or regarding franchises, windfall or other profits, escheat, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs' duties, tariffs, and similar charges.
"Tax Claim" means any claim with respect to Taxes made by any taxing
authority that, if pursued successfully, would reasonably be expected to serve
as the basis for a claim for indemnification under Article VII.
"Tax Returns" means any return, declaration, report, election, claim for
refund or information return or other statement or form relating to, filed or
required to be filed with any Governmental Authority, including any schedule or
attachment thereto, and including any amendment thereof.
"Transactions" means collectively, the transactions effectuated by this
Agreement, the Participation Agreement, the HFI Loan and Security Agreement and
the Hedge Agreement.
1.02. Definitions. The following terms have the meanings set forth in the
Sections set forth below:
Definition Location
---------- ------------
"Actual Value".................................... 2.06(e)(iii)
"Adjustment Amount"............................... 2.07
"Agreement"....................................... Preamble
"Arbitration Notice".............................. 13.13
"Audited Financial Statements..................... 3.09(a)
"Basket Amount"................................... 8.04(b)
"Business"........................................ Recitals
"Challenge"....................................... 7.08(d)
"Change of Control Premium"....................... 2.08
"Closing"......................................... 2.04(a)
"Closing Date".................................... 2.04(a)
"Closing Date Balance Sheet"...................... 2.06(b)
"Closing Date Debt Amount"........................ 2.05
"Closing Date Goodwill Amount".................... 2.08
"Commitment Letters".............................. 4.08
"Common Stock".................................... Recitals
"Company"......................................... Recitals
"Company Insurance Policies"...................... 3.19(a)
"Company Management".............................. 8.03(c)
"Consents and Approvals".......................... 3.06
"Copyrights"...................................... 3.18(a)
"Core Covenants".................................. 8.01(c)(ii)
"Discount"........................................ 2.02(a)
"Draft Closing Date Balance Sheet"................ 2.06(a)
"Draft Pages" 5.06(c))
"Equity Adjustment"............................... 2.07(a)
"ERISA"........................................... 3.08(a)
"Expiring Representations"........................ 8.02(a)
"Final Allocation"................................ 7.08(a)
"Final Cash Consideration"........................ 2.02(a)
"Final Debt Amount"............................... 2.02(b)
"Financial Statements"............................ 3.09(a)
"Hedge Agreement"................................. 5.09
"HFI Loan and Security Agreement"................. 2.02(c)
"High Value"...................................... 2.06(e)(ii)
"Highly Confident Letter"......................... 4.08
"Holdings"........................................ Preamble
"Income Tax Proceeding"........................... 7.10(b)
"Initial Cash Consideration"...................... 2.03(a)
"Initial Debt Adjustment"......................... 2.05
Definition Location
---------- ----------
"Initial Debt Amount"............................. 2.03(b)
"Interim Financial Statements".................... 3.09(a)
"Investment Company Act".......................... 3.16(b)
"June 30th Balance Sheet"......................... 3.09(a)
"Lender Group".................................... 4.08
"Losses".......................................... 8.02
"Low Value"....................................... 2.06(e)(i)
"Marketing Materials"............................. 8.03(c)
"Marks"........................................... 3.18(a)
"Material Contracts".............................. 3.14(b)
"Maximum Indemnification Amount".................. 8.04(c)
"Minimum Indemnification Amount" 8.04(a)
"Multiple Employer Plan" 3.08(a)
"Neutral Arbitrator".............................. 13.13
"Offering Circular"............................... 8.03(c)
"Oral Statements"................................. 8.03(c)
"Parent".......................................... Preamble
"Parent Guarantees"............................... 5.04
"Participation Agreement"......................... 6.07
"Patents"......................................... 3.18(a)
"Pension Plan".................................... 3.08(a)
"Post-Closing Sales and Use Tax Issues"........... 7.11(c)
"Pre-Closing Sales and Use Tax Issues"............ 7.11(a)
"Prepayments"..................................... 2.06(c)
"Proposed Allocation"............................. 7.08(a)
"Proposed Determination".......................... 7.08(a)
"Purchase Price".................................. 2.02(e)
"Purchaser"....................................... Preamble
"Purchaser Indemnified Parties.................... 8.02
"Purchaser Indemnifying Parties................... 8.03
"Purchaser Information"".......................... 6.05
"Purchaser Observers"............................. 5.02(b)
"Purchaser Parties"............................... 5.02(c)
"Purchaser's Rule 144A Offering".................. 5.06(b)
"Purchaser's Note"................................ 2.02(c)
"Purchaser Straddle Returns"...................... 7.04(a)
"Purchaser Straddle Statement".................... 7.04(a)
"Real Property"................................... 3.17
"Receiving Party"................................. 13.13
"Representatives"................................. 5.02(a)
"Return Threshold Amount"......................... 2.08
"Road Shows"...................................... 5.06(b)
"Road Show Date".................................. 5.05(b)
"Sales and Use Tax Issues"........................ 7.11
"Second Debt Adjustment".......................... 2.07(a)
"Securitization Entity"........................... 3.16(b)
Definition Location
---------- --------
"Securitization Instruments"...................... 3.16(a)
"Securitization Issuer"........................... 3.16(b)
"Securitization Servicer"......................... 3.16(a)
"Securitization Transaction"...................... 3.16(a)
"Section 338 Elections"........................... 7.08(b)
"Seller".......................................... Preamble
"Seller Indemnified Parties"...................... 8.03
"Seller Indemnifying Parties"..................... 8.02
"Seller Information".............................. 6.06
"Seller Parties".................................. 4.07(b)
"Seller Straddle Returns"......................... 7.04(b)
"Seller Straddle Statement"....................... 7.04(b)
"Shares".......................................... Recitals
"Straddle Period Sales and Use Tax Issues"........ 7.11(b)
"Technology Contracts"............................ 3.18(a)
"Third Party Claim" .............................. 8.06(a)
"Trade Secrets"................................... 3.18(a)
"Transfer Taxes".................................. 7.03
"Underwriter"..................................... 4.08
"Updated Letter".................................. 5.06(a)
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.01. Purchase and Sale of the Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Seller shall sell, assign,
transfer, convey and deliver to the Purchaser, free and clear of all
Encumbrances, the Shares of the Company and the Purchaser shall purchase the
Shares of the Company.
2.02. Purchase Price. In consideration for the Shares, and in accordance
with the procedures set forth in Sections 2.03 through 2.08 hereof, the
Purchaser agrees to the following:
(a) to pay to the Seller an amount equal to: (i) the Net Worth of the
Company as reflected on the Closing Date Balance Sheet; less (ii) Eighty One
Million One Hundred One Thousand Seven Hundred Thirty US Dollars
($81,101,730)(the "Discount"); plus (iii) the Net Deferred Tax Liability as
reflected on the Closing Date Balance Sheet (the combination of the foregoing
(i), (ii), and (iii) of this Section 2.02(a) is the "Final Cash Consideration")
(for purposes of the calculations in Sections 2.02(a), 2.03(a) and 2.08, Net
Deferred Tax Liability shall be a positive number if a net liability on the
Preliminary or Closing Date Balance Sheet, as applicable, and a negative number
if a net asset on the Preliminary or Closing Date Balance Sheet, as applicable);
(b) to cause the Company to repay to the Seller or the Seller's Affiliates
the Intercompany Debt as reflected on the Closing Date Balance Sheet, less the
amount of the Purchaser's Note (the "Final Debt Amount");
(c) to cause the Company to execute on the Closing Date (i) the promissory
note payable to the Parent or the Parent's assignee in the form attached hereto
as Exhibit B
("Purchaser's Note") in the stated principal amount equal to eighty seven
percent (87%) of the HFI Receivables Balance, and (ii) the loan agreement
attached hereto as Exhibit C (the "HFI Loan and Security Agreement"); and
(d) to pay or to cause to be paid to the Seller or the Seller's Affiliates
the Change of Control Premium (as defined in Section 2.08), if any.
(e) Payments pursuant to Sections 2.02(a), (b), (c) and (d) constitute the
"Purchase Price." At the Closing Date, the Seller and the Purchaser agree to
treat the fair market value of the Purchaser's Note as equal to the face amount
of such note for all Income Tax purposes.
2.03. Payments on the Closing Date.
(a) The Purchaser shall pay the Seller at Closing an amount equal to: (i)
the Net Worth of the Company reflected on the Preliminary Balance Sheet; less
(ii) the Discount; plus (iii) the Net Deferred Tax Liability reflected on the
Preliminary Balance Sheet (the combination of the foregoing (i), (ii), and (iii)
of this Section 2.03(a) is the "Initial Cash Consideration"); and
(b) The Purchaser shall cause the Company at Closing to repay the Seller
or the Seller's Affiliates the amount of the Intercompany Debt as of the date
that is five (5) Business Days before the Closing Date in accordance with a
calculation to be provided by the Seller to the Purchaser at least three (3)
Business Days prior to the Closing Date less the amount of the Purchaser's Note
(the "Initial Debt Amount").
2.04. Closing; Payments.
(a) Subject to the terms and conditions of this Agreement, the sale and
purchase of the Shares contemplated by this Agreement shall take place at a
closing (the "Closing") to be held at the offices of Xxxxxxxx & Xxxxx LLP, 000
Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, at 8:00 A.M. Central Standard Time
on the later of February 28, 2005 or the last Business Day of the month during
which all conditions to the obligations of the parties set forth in Articles IX
and X have been satisfied or waived or at such other place or at such other time
or on such other date as the Seller and the Purchaser may mutually agree upon in
writing (the "Closing Date").
(b) All payments required to be made under this Agreement by any party
shall be made by wire transfer in immediately available federal funds. If
payments are to be made to the Seller, the Purchaser shall include the Seller's
ABA Routing Number in the wiring instructions. If payments are to be made to the
Purchaser, the Seller shall include the Purchaser's ABA Routing Number in the
wiring instructions. Each of the parties shall provide to the other party its
ABA Routing Number no less than two (2) Business Days prior to the Closing.
2.05. Closing Date Debt Amount. Within five (5) Business Days of the
Closing Date the Seller and the Purchaser shall determine the amount of the
Intercompany Debt as of the Closing Date, less the amount of the Purchaser's
Note (the "Closing Date Debt Amount"). To the extent the Closing Date Debt
Amount exceeds the Initial Debt Amount, the Purchaser shall pay or cause the
Company to pay the excess to the Seller within (2) Business Days of the
determination of such amount. To the extent the Closing Date Debt Amount is less
than the Initial Debt Amount, the Seller shall repay the deficit to the
Purchaser within two (2) Business Days of the determination of such amount. In
the case of either adjustment (the "Initial Debt Adjustment"), there shall be
added to such amount interest thereon at the Applicable Rate from the Closing
Date until the date of such payment.
2.06. Preparation of Closing Date Balance Sheet.
(a) Within forty-five (45) days after the Closing Date, the Purchaser will
deliver to the Seller a draft consolidated balance sheet (the "Draft Closing
Date Balance Sheet") for the Company as of the close of business on the Closing
Date (determined on a pro forma basis as though the parties had not consummated
the Transactions) and prepared in accordance with the Agreed Upon Procedures.
(b) If, within forty-five (45) days following its receipt of the Draft
Closing Date Balance Sheet, the Seller does not dispute the Draft Closing Date
Balance Sheet, such balance sheet shall be deemed to be the consolidated balance
sheet of the Company on the Closing Date (the "Closing Date Balance Sheet").
(c) If the Seller has any objections to the Draft Closing Date Balance
Sheet, it will deliver a detailed statement in writing describing its objections
to the Purchaser within forty-five (45) days after receiving the Draft Closing
Date Balance Sheet. Purchaser and Seller will use commercially reasonable
efforts to resolve any such objections themselves. If Purchaser and Seller
achieve a final resolution of the Seller's objections to the Draft Closing Date
Balance Sheet within thirty (30) days after the Purchaser's receipt of the
Seller's written statement of such objections, such resolution shall be set
forth in writing and such Draft Closing Date Balance Sheet, together with any
revisions thereto agreed upon by and between the Purchaser and the Seller
pursuant to this Section 2.06(c), shall be deemed to be the Closing Date Balance
Sheet. The Purchaser and the Seller shall be entitled to prepay any amounts not
in dispute or as to which the parties achieve final resolution (such amounts
actually paid "Prepayments") plus interest at the Applicable Rate between the
Closing Date and the date of such Prepayment. Any party making a Prepayment
shall provide two (2) Business Days advanced written notice thereof to the other
party.
(d) If the Purchaser and the Seller do not achieve a final resolution of
the Seller's objections to the Draft Closing Date Balance Sheet within thirty
(30) days after the Purchaser's receipt of the Seller's written statement of
such objections, the parties will jointly engage an Independent Accountant to
resolve any disputes remaining between the parties. The Purchaser and the Seller
shall instruct the Independent Accountant to deliver its written determination
to the Purchaser and the Seller no later than the thirtieth (30th) day after
such dispute was referred to it. The Independent Accountant shall act to
determine, based solely on the provisions of this Section 2.06, related
definitions contained herein and the presentations by the Seller and the
Purchaser, and not by independent review, only those issues still in dispute and
only as to whether such amounts (i) were arrived at in conformity with the
Agreed Upon Procedures, (ii) were arrived at in conformity with the terms of
this Agreement or (iii) contain arithmetic error. The determination of the
Independent Accountant (i) will be set forth in writing, (ii) for any item in
dispute shall not be in excess of, nor less than, the greatest or lowest value,
respectively, claimed by either party for that particular item, (iii) will state
that the Draft Closing Date Balance Sheet has been prepared in accordance with
the Agreed Upon Procedures and in conformity with this Agreement and (iv) will
be conclusive and binding upon the parties. The Purchaser will revise the Draft
Closing Date Balance Sheet to reflect the resolution of any objections thereto
pursuant to this Section 2.06(d), whereupon such Draft Closing Date Balance
Sheet, together with any revisions thereto pursuant to this Section 2.06(d),
shall be deemed to be the Closing Date Balance Sheet.
(e) In the event the parties submit any unresolved objections to the
Independent Accountant for resolution as provided in Section 2.06(d) above, the
Independent Accountant shall resolve each of such objections in favor of either
the Purchaser or the Seller, and the Purchaser and Seller will share
responsibility for the fees and expenses of the Independent Accountant as
follows:
(i) if the Independent Accountant resolves all the remaining
objections in favor of the Purchaser (the "Low Value"), the Seller will be
responsible for all of the fees and expenses of the Independent Accountant;
(ii) if the Independent Accountant resolves all the remaining
objections in favor of the Seller (the "High Value"), the Purchaser will be
responsible for all of the fees and expenses of the Independent Accountant; and
(iii) if the Independent Accountant resolves some of the remaining
objections in favor of the Purchaser and the rest of the remaining objections in
favor of the Seller (the "Actual Value"), the Seller will be responsible for
that fraction of the fees and expenses of the Independent Accountant equal to
(x) the difference between the High Value and the Actual Value over (y) the
difference between the High Value and the Low Value, and the Purchaser will be
responsible for the remainder of the fees and expenses.
(f) The Purchaser will make the work papers and back-up materials and all
other data used in preparing the Draft Closing Date Balance Sheet, and the
books, records and financial statements of the Company and its Subsidiaries,
available to Seller and its accountants and other representatives during normal
business hours upon reasonable notice at any time during (i) the preparation by
Purchaser of the Draft Closing Date Balance Sheet, (ii) the review by the Seller
of the Draft Closing Date Balance Sheet and (iii) the resolution by the parties
of any objections thereto. Similarly, the Seller will make the work papers and
back-up materials and all other data used in connection with its objections to
the Draft Closing Date Balance Sheet available to Purchaser and its accountants
and other representatives during normal business hours upon reasonable notice at
any time during (i) the review by the Purchaser of the written objection to the
Draft Closing Date Balance Sheet and (ii) the resolution by the parties of such
objection.
2.07. Adjustment Amount. The "Adjustment Amount" shall be calculated and
paid as follows:
(a) The Adjustment Amount will be equal to (i) the Final Cash
Consideration less the Initial Cash Consideration adjusted up or down (as the
context requires) to reflect any Prepayment of a component of the Final Cash
Consideration (the "Equity Adjustment") plus (ii) the Final Debt Amount less the
Closing Date Debt Amount adjusted up or down (as the context requires) to
reflect any Prepayment of a component of the Final Debt Amount (the "Second Debt
Adjustment").
(b) If the Adjustment Amount is a positive number, then the Purchaser will
pay to the Seller, within three (3) Business Days after the date of the final
determination of the Closing Date Balance Sheet, an amount equal to such excess
plus interest thereon at the Applicable Rate for each of the Equity Adjustment
and Second Debt Adjustment, respectively, from the Closing Date until the date
of such payment.
(c) If the Adjustment Amount is a negative number, then the Seller will
pay to the Purchaser, within three (3) Business Days after the date of the final
determination of the Closing Date Balance Sheet, an amount equal to such deficit
plus interest thereon at the Applicable Rate related to each of the Equity
Adjustment and Second Debt Adjustment, respectively, from the Closing Date until
the date of such payment.
2.08. Change of Control Premium. If a Change of Control occurs during the
twelve (12) month period after the Closing Date, each of the Purchaser and
Holdings, as the case may be, will or will cause the Company or the surviving
entity to pay the Change of Control Premium to the Seller within forty-five (45)
days following the Change of Control Date. The "Change of Control Premium" shall
be determined as follows: (i) if the Change of Control Purchase Price is less
than or equal to an amount equal to the Final Cash Consideration plus a sixteen
percent (16%) annualized pre-tax return thereon through the Change of Control
Date (the "Return Threshold Amount"), then the Change of Control Premium shall
equal zero dollars ($0); (ii) if the Change of Control Purchase Price is greater
than the Return Threshold Amount, but less than or equal to the sum of (A) the
Return Threshold Amount and (B) the Closing Date Goodwill Amount (as defined
below), then the Change of Control Premium shall equal the Change of Control
Purchase Price less the Return Threshold Amount; and (iii) if the Change of
Control Purchase Price is greater than the sum of the Return Threshold Amount
and the Closing Date Goodwill Amount, the Change of Control Premium shall equal
the sum of the Closing Date Goodwill Amount and twenty percent (20%) of the
excess of the Change of Control Purchase Price over the sum of (A) the Return
Threshold Amount and (B) the Closing Date Goodwill Amount. The "Closing Date
Goodwill Amount" shall mean the amount (if positive) equal to (i) the Net Worth
as reflected on the Closing Date Balance Sheet, plus (ii) the Net Deferred Tax
Liability as reflected on the Closing Date Balance Sheet, minus (iii) the Final
Cash Consideration, minus (iv) $21,910,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND PARENT
As an inducement to the Purchaser and Holdings to enter into this
Agreement, the Seller, and solely where expressly so stated, the Parent, hereby
represent and warrant to the Purchaser (except as set forth in a correspondingly
enumerated section of the Disclosure Schedule) as follows:
3.01. Organization, Authority and Qualification of the Seller and the
Parent. The Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all necessary corporate power and authority to enter into
this Agreement, to carry out its obligations hereunder and to consummate the
Transactions. Parent is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and has all
necessary corporate power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the Transactions. The Seller is
a wholly-owned subsidiary of the Parent. The execution and delivery of this
Agreement by the Seller and the Parent, the performance by the Seller and the
Parent of their respective obligations hereunder, and the consummation by the
Seller and the Parent of the Transactions have been duly authorized by all
requisite action on the part of each of the Seller and the Parent and, to the
extent necessary or appropriate, by their respective boards
and shareholders or members, as the case may be. This Agreement has been duly
executed and delivered by the Seller and the Parent, and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes a legal, valid and binding obligation of both the Seller and the
Parent, enforceable against the Seller and the Parent in accordance with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and general equitable principles. The
Seller has the authority to transfer and convey valid and legal title of the
Shares to the Purchaser.
3.02. Organization, Authority and Qualification of the Company. 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 necessary
corporate power and authority to carry on the Business as it has been and is
currently being conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect. True and correct copies
of the certificate of incorporation and bylaws of the Company, each as in effect
on the date hereof, have been made available to the Purchaser.
3.03. Subsidiaries. Section 3.03(a) of the Disclosure Schedule sets forth
a true and complete list, containing the name, jurisdiction of organization and
capitalization of each Subsidiary of the Company and the jurisdictions in which
each Subsidiary is qualified to do business as a foreign corporation. All of the
issued and outstanding shares of capital stock or membership interests of each
Subsidiary of the Company have been duly authorized and are validly issued,
fully paid, and nonassessable. The Company holds of record and owns beneficially
and free and clear of all Encumbrances all of the outstanding shares or
membership interests of each Subsidiary of the Company and there are no
outstanding options, rights or contracts of any kind relating to the issuance,
sale or transfer of any capital stock or other equity securities of any
Subsidiary of the Company. Except as set forth in Section 3.03(b) of the
Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock or other equity securities of any Person that is not a Subsidiary
of the Company, other than publicly traded securities constituting less than
five percent of the outstanding equity of the issuing entity.
3.04. Capitalization. The authorized capital stock of the Company consists
of 9,069 shares of Common Stock and no shares of preferred stock. As of the date
hereof, 9,069 shares of Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company relating to the issuance, sale, purchase,
redemption or transfer of any equity securities of the Company, or to make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. The Shares constitute all of the issued and outstanding capital
stock of the Company and are owned of record and beneficially by the Seller free
and clear of all Encumbrances and there are no outstanding options, rights or
contracts of any kind relating to the issuance, sale or transfer of any capital
stock of the Company. Upon consummation of the Transactions and registration of
the Shares in the name of the Purchaser in the stock records of the Company, the
Purchaser will own all the issued and outstanding capital stock of the Company
free and clear of all Encumbrances. Upon consummation of the Transactions, the
Shares will be fully paid and nonassessable.
3.05. No Conflict. Neither the execution and the delivery of this
Agreement nor the consummation of the Transactions will (a) violate or conflict
with any Law applicable to the Parent, the Seller, the Company or any of its
Subsidiaries, assuming that all Consents and Approvals have been obtained,
except where such violation or conflict would not reasonably be expected to have
a Material Adverse Effect, (b) conflict with or result in the breach of any
provision of the organizational documents of the Parent, the Seller, the Company
or any of its Subsidiaries, or (c) assuming that all Consents and Approvals have
been obtained, result in the creation or imposition of any Encumbrance upon or
with respect to any of the assets owned or used by the Company or any of its
Subsidiaries or the Shares.
3.06. Consents and Approvals. All material consents, approvals,
ratifications, waivers, Governmental Authorizations and other authorizations
required to be obtained by each of the Parent, the Seller, the Company and its
Subsidiaries for the execution, delivery and performance by the Seller of the
Transactions are set forth in Section 3.06 of the Disclosure Schedule
(collectively, "Consents and Approvals").
3.07. Taxes. Except as set forth in Section 3.07 of the Disclosure
Schedule:
(a) All material Tax Returns that were required to be filed by, or with
respect to, the Company and its Subsidiaries have, in accordance with applicable
law, been timely filed (taking into account extensions), and all such Tax
Returns are true, correct and complete in all material respects. All material
Taxes due and owing by or with respect to the Company and its Subsidiaries
(whether or not shown on any Tax Return) have been paid.
(b) Neither the Company nor any of its Subsidiaries is doing business in
or maintains a taxable presence in a jurisdiction in which it does not file Tax
Returns, and no Tax Claim has been made in writing by any taxing authority in
such a jurisdiction that any of the Company or its Subsidiaries is or may be
subject to taxation by that jurisdiction.
(c) There is no action, suit, proceeding, claim for refund, investigation,
assessment, adjustment, audit or claim now proposed or pending against or with
respect to the Company or any of its Subsidiaries in respect of any Tax.
(d) Neither the Company nor any of its Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. There are no outstanding powers of
attorney enabling any party to represent the Company or any Subsidiary with
respect to Tax matters.
(e) There are no liens for Taxes (other than Taxes not yet due) upon the
assets of the Company or any of its Subsidiaries.
(f) Each of the Company and its Subsidiaries (i) has been a member of Ford
Motor Company's affiliated group for purposes of filing a consolidated federal
Tax Return since the taxable year ended December 31, 1999, and (ii) has never
been a member of any other affiliated, consolidated, combined or unitary group.
(g) Seller is not subject to withholding under Section 1445 of the Code
with respect to any of the Transactions.
(h) Neither the Company nor any Subsidiary will be required to include any
material item of income in, or exclude a material item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of any (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date under Section 481(c) of the Code
(or any corresponding or similar provision under state, local or foreign Income
Tax law), (ii) written and legally binding agreement with a taxing authority
relating to Taxes, (iii) installment sale or open transaction disposition or
intercompany transaction made on or prior to the Closing Date, (iv) prepaid
amount received on or prior to the Closing Date, or (v) deferred intercompany
gain or excess loss account described in Treasury regulations promulgated under
Section 1502 of the Code (or any corresponding or similar provision under state,
local or foreign Income Tax law).
(i) There are no unpaid deficiencies asserted or assessments made by any
Governmental Authority against the Company or any of its Subsidiaries with
respect to Taxes.
(j) Neither the Company nor any Subsidiary is (i) a party to any written
or unwritten Tax allocation or Tax sharing agreement, arrangement, understanding
or contract or (ii) liable for the Taxes of any Person other than the Company
and its Subsidiaries.
(k) The Company and each of its Subsidiaries have withheld and paid all
material Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(l) The Company has adopted the xxxx-to-market method of accounting
described in Section 475 of the Code with respect to its receivables, and the
valuation methodology used by the Company for purposes of its xxxx-to-market
method of accounting will be consistent with the methodology used to prepare
Exhibit I attached hereto.
3.08. Employee Matters.
(a) Section 3.08(a) of the Disclosure Schedule contains a complete and
accurate list of all Benefit Plans, copies of which have been made available to
the Purchaser. Other than the Benefit Plans listed on Section 3.08(a) of the
Disclosure Schedule, neither the Company nor any Subsidiary currently maintains,
contributes to, or has any liability under, any Benefit Plan. Each Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (a
"Pension Plan"), and which is intended to be qualified under Section 401(a) of
the Code, is subject to a current favorable tax-determination letter from the
IRS, and no events have occurred that could adversely affect in any material
respect the qualified status of any Pension Plan. No Benefit Plan (i) is subject
to Title IV of ERISA, (ii) is a "multiemployer plan" as defined under Section
3(37) of ERISA, and/or (iii) except as required by statute or as set forth on
Schedule 3.08(a), provides for life, health, medical or other welfare benefits
to former employees or beneficiaries or dependents thereof and/or (iv) is a plan
that has two or more contributing sponsors at least two of whom are not under
common control, within the meaning of Section 4063 of ERISA (a "Multiple
Employer Plan"). Neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (x) result in, cause the accelerated
vesting, funding or delivery of, or increase the amount or value of, any payment
or benefit to any officer, director, employee or independent contractor of the
Company or any of the Subsidiaries, or (y) result in any limitation on the right
of any Person to amend, merge or terminate any Benefit Plan or related trust.
Without limiting the generality of the foregoing, no amount paid or payable
(whether in cash, in property, or in the form of benefits) in connection with
the Transactions will
be an "excess parachute payment" within the meaning of Section 280G of the Code.
The Company has provided to the Purchaser prior to the date hereof materially
accurate information identifying all current officers, employees and independent
contractors of the Company and its Subsidiaries by name and years of service.
(b) There is not presently pending or existing with respect to the Company
or its Subsidiaries (i) any strike, slowdown, picketing or work stoppage or (ii)
any application for certification of a collective bargaining agent or similar
entity or individual. None of the Seller, the Company or any of the Subsidiaries
is a party, or otherwise subject to, any collective bargaining agreement with
any labor union or association representing employees of the Company or any
Subsidiary.
3.09. Financial Statements.
(a) The Seller has made available to the Purchaser (i) the audited
consolidated balance sheets and the related audited consolidated statements of
income and cash flows of the Company (including the related notes and schedules
thereto) at and for the fiscal years ended as of December 31, 2002 and December
31, 2003 (the "Audited Financial Statements") and (ii) the unaudited
consolidated balance sheet of the Company at June 30, 2004 attached hereto as
Exhibit E (the "June 30th Balance Sheet") and the related unaudited consolidated
statement of income for the period ended June 30, 2004 (the "Interim Financial
Statements," and together with the Audited Financial Statements, the "Financial
Statements").
(b) The Audited Financial Statements have been prepared in accordance with
GAAP and consistent with past practice and present fairly, in all material
respects, the consolidated financial condition, results of operations, changes
in shareholders' equity and cash flows of the Company, in each case, as of the
dates thereof or for the periods covered thereby.
(c) The Interim Financial Statements have been prepared in accordance with
Company's Accounting Principles, and present fairly in all material respects
(subject to normal year-end adjustments and the absence of footnotes), the
consolidated financial condition and results of operations of the Company, in
each case, as of the dates thereof or for the periods covered thereby.
3.10. Undisclosed Liabilities. Except as set forth in Section 3.10 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries has any
Liabilities except (i) Liabilities reflected in the June 30th Balance Sheet,
(ii) Liabilities that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and (iii) Liabilities incurred after
the date of the Interim Financial Statements in the ordinary course of business
and consistent with past practice that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. At the Closing,
the Company and its Subsidiaries will have possession of all of their respective
books and records, including sales and use Tax Returns.
3.11. Absence of Certain Changes or Events. Since June 30, 2004, except as
set forth in Section 3.11 of the Disclosure Schedule or as contemplated by this
Agreement, to the Knowledge of the Seller, (i) the Company and its Subsidiaries
have operated the Business in all material respects only in the ordinary course
of business consistent with past practice, (ii) there
has not occurred any event, development or change which, individually or in the
aggregate, has had or would be reasonably expected to have a Material Adverse
Effect and (iii) none of the Seller, the Company or any of its Subsidiaries has
taken any action or failed to take any action that would have been prohibited in
any material respect under Section 5.01 hereof had such action or failure to act
occurred or failed to occur after the date hereof.
3.12. Litigation. Except as set forth in Section 3.12(a) of the Disclosure
Schedule, and except for litigation of the Company against customers in the
ordinary course of business, there are no material written claims, lawsuits,
litigation, actions, arbitrations, administrative or other proceedings or
investigations, claim letters or charges pending before a court of competent
jurisdiction or, to the Knowledge of the Seller or the Company, threatened in
writing against the Company or any of its Subsidiaries. Except as set forth in
Section 3.12(b) of the Disclosure Schedule, there are no material unsatisfied
judgments or outstanding orders, injunctions, decrees, stipulations or awards
rendered by a Governmental Authority against the Company or any of its
Subsidiaries or any of their respective properties or businesses. Neither the
Seller, nor the Company and its Subsidiaries, is subject to any judgment,
decree, injunction or orders of any court or Governmental Authority, which would
reasonably be expected to materially impact the ability of the Seller or Parent
to perform its obligations hereunder and to consummate the Transactions or the
ability of the Company and its Subsidiaries to continue to operate the Business
as it is being conducted as of the date hereof.
3.13. Compliance with Laws; Permits. Except as set forth in Section 3.13
of the Disclosure Schedule, (A) each of the Company and its Subsidiaries (i)
conducts, and during the past twenty-four (24) months has conducted, the
Business in all material respects in accordance with all applicable Laws; (ii)
holds, owns or possesses all Governmental Authorizations necessary for the
ownership of the property and assets and the conduct of the Business as the same
has been conducted during the past twenty-four (24) months and is currently
conducted, and all such Governmental Authorizations are in full force and
effect; and (iii) is in compliance in all material respects with its respective
obligations under such Governmental Authorizations; and (B) except for matters
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, during the past twenty-four (24) months, none of such
Governmental Authorizations has been challenged in writing or revoked, no
written statement of an active violation or intention to suspend, challenge,
revoke or fail to renew any such Governmental Authorizations has been received
by the Company or any Subsidiary during the past twenty-four (24) months, and to
the Knowledge of Seller, no event has occurred during the past twenty-four (24)
months that would reasonably be expected to constitute or result in a violation
of a Governmental Authorization or the revocation, suspension, modification or
nonrenewal of any Governmental Authorization. The Company has made available to
the Purchaser true and complete copies of all of Governmental Authorizations
used by or in connection with the ownership or operation of the Company and its
Subsidiaries.
3.14. Contracts; No Defaults.
(a) Except as set forth in Section 3.14(a) of the Disclosure Schedule,
neither the Company nor any Subsidiary is a party to, beneficiary of, or
otherwise entitled to or bound by (as applicable):
(i) any note, mortgage, indenture or other written obligation or
agreement or other instrument for or relating to indebtedness for money borrowed
(including capitalized lease obligations), or any written guarantee, pledge,
surety or indemnification by the Company or any Subsidiary of third-party
obligations, in each case, excluding Securitization Instruments, and for an
amount in excess of Five Hundred Thousand US Dollars ($500,000) or pursuant to
which any material Encumbrances are or were created or imposed on the Company or
any Subsidiary or on any of their respective property or assets;
(ii) any lease of personal property with annual lease payments of
more than Five Hundred Thousand US Dollars ($500,000) or a total remaining
obligation of more than One Million Five Hundred Thousand US Dollars
($1,500,000);
(iii) any joint venture or partnership agreement;
(iv) any non-competition, non-solicitation or exclusive dealing
agreements or other agreements or arrangements that restrict or limit or purport
to restrict or limit in any material respect the ability of the Company or any
of its Subsidiaries, or any officer, employee or independent contractor of the
Company or any of its Subsidiaries, to solicit customers, potential employees or
the manner in which, or the localities in which, all or any portion of the
Business is or may be conducted;
(v) other than dealer agreements, repossession agent agreements and
auction house agreements in the ordinary course of business consistent with past
practice, any agreement or understanding with a value, or calling for payments
to be made or received by the Company or any of its Subsidiaries, of more than
Five Hundred Thousand US Dollars ($500,000) within any twelve month period;
(vi) any material agreement or understanding containing a "change of
control" or anti-assignment provision that would be triggered by the
Transactions;
(vii) other than auction house agreements in the ordinary course of
business consistent with past practice, any agreement or understanding providing
for the acquisition or disposition after the date of this Agreement of any of
the assets of the Business contemplating an exchange of value in excess of Five
Hundred Thousand US Dollars ($500,000); and
(viii) any other agreement or understanding that is material to the
ownership or operation of the Business.
(b) All of the agreements, arrangements, understandings and other items
responsive to Section 3.08 and Section 3.14(a) are at times referred to herein
as "Material Contracts." Each Material Contract is a legal, valid and binding
obligation of, and enforceable against, the Company and/or one of its
Subsidiaries and, to the Knowledge of the Seller and the Company, the other
parties thereto, and is in full force and effect and enforceable in accordance
with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and general equitable principles, and
except for such failures to be in force and effect and enforceable as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. True and complete copies of all Material Contracts have been
previously made available to the Purchaser. Except as set forth in Section
3.14(b) of the Disclosure Schedule, to the Knowledge of the Seller and the
Company, there is no default or breach or written claim of default or breach by
any party under, or dispute in writing regarding the material terms of, any such
Material Contract, and no event has occurred which with the passage of time or
the giving of notice or both would constitute a default or breach by any party
under any such Material Contract or would permit termination, modification or
acceleration of any such Material Contract or constitute a similar event
permitting the termination of the Company's or any Subsidiary's rights under any
such Material Contract except for such events, breaches or defaults, as would
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
3.15. Brokers. Except for Credit Suisse First Boston (the fees and
expenses of which are solely and exclusively the obligation of the Seller or the
Parent) and Sekits Capital Inc. and Strategic Transaction Advisors, LLC (the
fees and expenses of which are solely and exclusively the obligation of one or
more of the Controlling Shareholders), no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Parent, the Seller, the Company or any of its Subsidiaries.
3.16. Securitization Transactions.
(a) Section 3.16 (a) of the Disclosure Schedule contains a list of all
outstanding transactions under which the Company Loans have been sold or pledged
in a securitization in which securities backed by such Company Loans were sold
as a public or private placement under the Securities Act (each, a
"Securitization Transaction"). The Company or a Subsidiary, as the servicer (for
purposes of this Agreement, the "Securitization Servicer") of each
Securitization Transaction, is in compliance in all material respects with all
agreements to which it is bound under such Securitization Transaction
(collectively referred to as the "Securitization Instruments"). The Seller has
made available to the Purchaser true and complete copies of all Securitization
Instruments to which the Company or any of its Subsidiaries is a party as of the
date hereof. Each Securitization Issuer and Securitization Servicer, and to the
Knowledge of the Seller and the Company, each securitization trustee, has
performed in all material respects all of its respective obligations under the
Securitization Instruments, and there is no pending or, to the Knowledge of the
Seller and the Company, threatened, cancellation of any Servicing Agreement, and
neither the Company nor any of its Subsidiaries has received any notice to the
effect that any party to any Servicing Agreement intends to cease doing business
with the Company or any Subsidiary.
(b) Neither the Company nor any Subsidiary or other Affiliate or any of
them which is the issuer or depositor in any Securitization Transaction (a
"Securitization Issuer"), and no Securitization Servicer has taken any action
which would cause any trust, corporation, partnership or other entity
("Securitization Entity") to be registered as an investment company pursuant to
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
or which would cause any Securitization Entity to be "controlled by" an
investment company within the meaning of the Investment Company Act.
(c) Each Securitization Issuer and Securitization Servicer has made all
filings required to be made by or under the Exchange Act. There is no pending
or, to the Knowledge of the Seller and the Company, threatened, claim that any
private placement memorandum or other offering document, or any amendments or
supplements thereto contained, as of the date on which it was issued by a
Securitization Entity in any Securitization Transaction, any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No securities were
issued or sold by the Company or any Subsidiary in violation of Section 5 of the
Securities Act in any Securitization Transaction.
(d) No Securitization Issuer or Securitization Servicer and, to the
Knowledge of the Seller, no entity serving as trustee for any Securitization has
taken any action which would adversely affect the characterization or tax
treatment for federal, state or local income or franchise tax purposes of any
Securitization Entity or any securities issued in a Securitization Transaction,
and all required federal, state and local tax and information returns relating
to any Securitization Transaction have been properly filed.
(e) Since December 31, 2001, no rating agency has downgraded, or given the
Company any indication that it is considering a downgrading of any securities
issued in any Securitization Transaction.
(f) To the Knowledge of the Company, and except as would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect neither the Company nor any Subsidiary has done or failed to do, or has
caused to be done or omitted to be done, any act, the effect of which would
operate to invalidate or materially impair (x) any approvals of any rating
agency, insurer, investor or other party to any Servicing Agreement, or (y) any
fidelity bond, direct surety bond, or errors and omissions insurance policy
required by any agency, insurer or investor, or other party to any Servicing
Agreement.
3.17. Real Property. Section 3.17 of the Disclosure Schedule sets forth a
complete and correct list of all real property owned, leased, or operated by the
Company or and its Subsidiaries (the "Real Property"), and copies of each title
document, mortgage, lease or other agreement for all such Real Property have
been made available to the Purchaser prior to the date hereof. Except as set
forth in Section 3.17 of the Disclosure Schedule:
(i) the Company does not own any Real Property;
(ii) the Company and its Subsidiaries hold a valid leasehold
interest, free and clear of all Encumbrances, in each parcel of Real Property,
in each case in accordance with the provisions of the applicable lease, sublease
or other document for such interest in the applicable parcel of Real Property;
(iii) neither the Company nor any of its Subsidiaries has, within
the last two (2) years, made any material title claims, or has outstanding any
material title claims, under any policy of title insurance respecting any parcel
of Real Property;
(iv) there are no condemnation or eminent domain proceedings
pending, or to the Knowledge of the Seller, threatened in writing, with respect
to any of the Real Property; and
(v) there are no existing defaults (either on the part of the
Company or any of its Subsidiaries, or to the Knowledge of the Seller and the
Company, any other party thereto) under any lease, sublease or other document
for any parcel of Real Property, and no condition exists and no event has
occurred which, with notice, lapse of time or both, would constitute a default
under any such document.
3.18. Intellectual Property.
(a) The term "Intellectual Property" shall include all patents and patent
applications owned by the Company and its Subsidiaries ("Patents"), all
registered and material unregistered copyrights in both published works and
unpublished works owned by the Company and its Subsidiaries ("Copyrights"), all
know-how, trade secrets, confidential information, technical information,
process technology, plans, drawings and blue prints owned by the Company or any
of its Subsidiaries ("Trade Secrets"), and all trademarks, trade names and
service marks of the Company and its Subsidiaries ("Marks"). The Intellectual
Property also includes all such rights and assets of the Company and its
Subsidiaries under all contracts to which the Company or any of its Subsidiaries
is a party or by which it or they are bound relating to the Intellectual
Property, including, without limitation, contracts by which the Company or any
of its Subsidiaries licenses Intellectual Property to third parties and
contracts by which third parties license or otherwise permit the use of their
intellectual property by the Company or any of its Subsidiaries (including,
without limitation, the "Daytona" program) (collectively "Technology
Contracts"). As of the date hereof, each of the Company and its Subsidiaries is
in compliance with all Technology Contracts, none of the Company and its
Subsidiaries is currently in default under any of the Technology Contracts, and
no event has occurred that with the passing of time or the giving of notice or
both would constitute a default thereunder, which noncompliance or defaults
could reasonably be expected to result in a Material Adverse Effect.
(b) Section 3.18(b) of the Disclosure Schedule lists all Technology
Contracts requiring the payment by the Company and its Subsidiaries of license,
royalty or maintenance fees of $200,000 or more per annum individually or
$500,000 or more per annum in the aggregate. Except for the Technology Contracts
listed in Section 3.18(b) of the Disclosure Schedule or as otherwise disclosed
therein, the Company and its Subsidiaries own all right, title and interest in
and to all material Intellectual Property free and clear of all Encumbrances.
The Intellectual Property includes all such property necessary for the operation
of the Business without, to the Knowledge of the Seller, violating or infringing
upon the rights of any third party. Without limiting the foregoing, the Company
is properly licensed to use all material computer software (and copies thereof)
currently used by the Company.
(c) Section 3.18(c) of the Disclosure Schedule lists all Marks and all
Copyrights, including first use and registration dates and numbers, and
jurisdiction thereof, if any. Other than as set forth on Section 3.18(c) of the
Disclosure Schedule, (A) to the Knowledge of the Seller and the Company, there
is no allegation of superior trademark rights by a third party, (B) to the
Knowledge of the Seller and the Company, no Xxxx is infringed or has been
challenged or threatened in any material respect, (C) to the Knowledge of the
Seller and the Company, none of the Marks infringe or are alleged to infringe
any business name, trade name, trademark or service
xxxx of any third party, and (D) to the Knowledge of the Seller and the Company,
none of the Copyrights infringe or are alleged to infringe any copyright of any
third party.
(d) To the Knowledge of the Seller and the Company, no Trade Secret
material to the operation of the Company is subject to any adverse claim nor has
any such Trade Secret been challenged or threatened in any way. To the Knowledge
of the Seller and the Company, none of the Trade Secrets is alleged to infringe
any proprietary right of any third party, except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
3.19. Insurance.
(a) True, correct and complete copies of all policies and binders of
insurance currently maintained in respect of the assets, properties, business
operations, employees, officers or directors of the Company and its
Subsidiaries, excluding such policies pursuant to which Parent or an Affiliate
of Parent acts as the insurer and which are identified on Section 3.19 of the
Disclosure Schedule (collectively, the "Company Insurance Policies"), and all
material correspondence relating to any claims under the Company Insurance
Policies, have been previously made available to the Purchaser.
(b) All of the Company Insurance Policies are in full force and effect;
the premiums due and payable thereon have been or will be timely paid through
the Closing Date, and there is no breach or default (and no condition exists or
event has occurred which, with the giving of notice or lapse of time or both,
would constitute such a breach or default) by Parent, the Seller, the Company or
any of its Subsidiaries under any of the Company Insurance Policies nor, to the
Knowledge of the Company, by any other party to the Company Insurance Policies,
except for any such breach or default that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. None of
Parent, the Seller, the Company or any of the Subsidiaries has received any
written notice of cancellation or non-renewal of any Company Insurance Policy
nor, to the Knowledge of the Seller and the Company, is the termination of any
such policies threatened.
3.20. Transactions with Certain Affiliates. Except as disclosed in Section
3.20 of the Disclosure Schedule, none of the Seller or any Affiliates of the
Seller (other than the Company and its Subsidiaries) has been involved in any
business, operational or administrative arrangement or relationship with the
Company or any of its Subsidiaries within the past twelve (12) months. As of the
date hereof, except as contemplated by the Transactions or as set forth in
Section 3.20 of the Disclosure Schedule, (a) none of the Seller, any Affiliates
of the Seller (other than the Company and its Subsidiaries), or any stockholder
or non-executive director of the Company or any of its Subsidiaries, provides or
causes to be provided to any of the Company and its Subsidiaries any assets,
services or facilities, whether pursuant to any contract, agreement or
otherwise, and (b) none of the Company and its Subsidiaries provides or causes
to be provided to the Seller, or any Affiliates of the Seller (other than the
Company and its Subsidiaries), or to any stockholder or non-executive director
of the Company or any of its Subsidiaries, any assets, services or facilities,
whether pursuant to any contract, agreement or otherwise. Other than payments
contemplated by the Transactions, there will not be any amounts payable to or
receivable from Seller, Parent or any of their Affiliates (other than the
Company and its Subsidiaries), on the one hand, and the Company or any of its
Subsidiaries, on the other hand immediately following the Closing.
3.21. Electronic Files. The electronic compact disk files attached hereto
as Section 3.21(a) of the Disclosure Schedule reflect accurately in all material
respects (i) all material terms of all active Company Loans of the Company and
its Subsidiaries as reflected on the financial statements of the Company as of
October 31, 2004, and as reconciled in Section 3.21(b) of the Disclosure
Schedule, and (ii) to the Knowledge of the Seller, all open charged-off Company
Loans (primarily those Company Loans where collections efforts are still being
pursued) and excludes inactive charged-off Company Loans (primarily those
Company Loans where collections efforts have been abandoned), which are not
reflected on the financial statements of the Company as of October 31, 2004. The
motor vehicle retail installment sales contracts and loans identified as HFI
Receivables as of June 30, 2004 as reconciled on Section 3.21(c) of the
Disclosure Schedule are those contracts and loans reflected as "HFI Receivables"
on the Interim Financial Statements.
3.22. Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS ARTICLE III, NEITHER THE SELLER NOR THE PARENT MAKES
AND HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR
IMPLIED, RELATING TO THE COMPANY, ITS SUBSIDIARIES, OR THE BUSINESS, INCLUDING
ANY REPRESENTATIONS OR WARRANTIES AS TO THE PROFITABILITY OF THE BUSINESS, OR
REPRESENTATIONS OR WARRANTIES ARISING BY STATUTE OR OTHERWISE IN LAW, FROM A
COURSE OF DEALING OR USAGE OF TRADE. ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY THE SELLER AND THE PARENT. THE
PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY
SET FORTH IN THIS ARTICLE III, THE PURCHASER IS PURCHASING THE SHARES ON AN "AS
IS, WHERE IS" BASIS.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND HOLDINGS
As an inducement to the Seller and the Parent to enter into this
Agreement, the Purchaser and Holdings hereby represent and warrant to the Seller
and the Parent as follows:
4.01. Organization and Authority of the Purchaser and Holdings. Each of
the Purchaser and Holdings is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all necessary corporate power and authority to enter into this Agreement, to
carry out its obligations hereunder and to consummate the Transactions. The
Purchaser is a wholly owned subsidiary of Holdings. The execution and delivery
by the Purchaser and Holdings of this Agreement, the performance by the
Purchaser and Holdings of their respective obligations hereunder and the
consummation by the Purchaser and Holdings of the Transactions have been duly
authorized by all requisite corporate action on the part of the Purchaser and
Holdings, respectively. This Agreement has been duly executed and delivered by
the Purchaser and Holdings, and (assuming due authorization, execution and
delivery by the Seller and the Parent) this Agreement constitutes a legal, valid
and binding obligation of the Purchaser and Holdings, enforceable against the
Purchaser and Holdings in accordance with its terms, except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and general equitable principles.
4.02. No Conflict. Neither the execution and the delivery of this
Agreement, nor the consummation of the Transactions will (a) violate or conflict
with any Law applicable to either the Purchaser or Holdings, except where such
violation or conflict would not have a material adverse effect on the ability of
either the Purchaser or Holdings to consummate the Transactions, (b) conflict
with or result in the breach of any provision of the organizational documents of
either the Purchaser or Holdings, or (c) conflict, in any material respect with,
result in a material breach of any provision of, constitute (with or without
notice or lapse of time or both) a material default under, result in the
material modification or cancellation of, or give rise to any material right of
termination or acceleration in respect of, any contract, agreement, commitment,
understanding, arrangement or restriction of any kind to which either the
Purchaser or Holdings is a party or by which it or any of its assets or
properties may be bound, except where the conflict, breach, default,
modification, cancellation, termination or acceleration would not have a
material adverse effect on the ability of either the Purchaser or Holdings to
consummate the Transactions.
4.03. Consents and Approvals. All consents and approvals required to be
obtained by either the Purchaser or Holdings for the execution and delivery by
the Purchaser or Holdings of the Transactions are set forth in Section 4.03 of
the Disclosure Schedule.
4.04. Litigation. Except as set forth in Section 4.04 of the Disclosure
Schedule, as of the date of this Agreement, there are no suits, actions, claims,
proceedings or investigations pending, or, to the knowledge of the Purchaser or
Holdings, threatened against the Purchaser or any of its subsidiaries before any
Governmental Authority which, if adversely determined, would reasonably be
expected to materially impact the ability of the Purchaser to perform its
obligations under, and to consummate the Transactions. As of the date of this
Agreement, there are no such suits, actions, claims, proceedings or
investigations pending or, to the knowledge of the Purchaser or Holdings,
threatened challenging the validity or propriety of the Transactions. Neither
the Purchaser nor Holdings is subject to any judgment, decree, injunction or
orders of any court, which would reasonably be expected to materially impact the
ability of the Purchaser or Holdings to perform its obligations under, and to
consummate the Transactions.
4.05. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of either the
Purchaser or Holdings, other than such fees or commissions that will be solely
and exclusively the obligation of either the Purchaser or Holdings or the
Controlling Shareholders.
4.06. Acquisition of Shares for Investment. The Purchaser has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its purchase of the Shares. The Purchaser
confirms that the Company and the Seller have made available to the Purchaser
adequate opportunity to ask questions of the officers and management employees
of the Company and to acquire additional information about the business and
financial condition of the Company and its Subsidiaries, as further described in
Section 4.07(a) hereof. The Purchaser is acquiring the Shares for investment and
not with a view toward or for sale in connection with any distribution thereof,
or with any present intention of distributing or selling the Shares. The
Purchaser agrees that the Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933, as amended, or any
applicable state securities laws, except pursuant to an exemption from such
registration available under the Securities Act of 1933, as amended, or any
applicable state securities laws.
4.07. Investigation by Purchaser; Seller's and Parent's Liability.
(a) The Purchaser acknowledges and agrees that it (i) has conducted its
own independent review, investigation and analysis of the Business, operations,
assets, liabilities, results of operations, financial condition, software,
technology and prospects of the Company; (ii) has been provided adequate access
to the personnel, properties, premises and records of the Company and its
Subsidiaries for such purpose; and (iii) has relied in entering into this
Agreement solely upon (x) its own review, investigation and analysis and (y) the
provisions of this Agreement, including the representations and warranties
contained herein;
(b) except for the representations and warranties contained in Article III
of this Agreement, the Purchaser acknowledges and agrees that none of the
Seller, the Parent, the Company or its Subsidiaries or any of their respective
directors, officers, shareholders, members, Affiliates, controlling Persons,
employees, agents, advisors or representatives (collectively, the "Seller
Parties") makes or has made any representation or warranty, either express or
implied, with respect to the Business, the Shares, the Seller, the Parent, the
Company and its Subsidiaries or otherwise, or with respect to any information
provided to the Purchaser or any of its Affiliates or Representatives, whether
on behalf of the Seller, the Parent, the Company or its Subsidiaries or any
other Person, including as to (i) merchantability or fitness for any particular
use or purpose, (ii) the use of the assets of the Company and its Subsidiaries
and the operation of the Business after the Closing, (iii) the probable success
or profitability of the ownership, use or operation of the Business, the Shares,
or the Company and its Subsidiaries by the Purchaser after the Closing;
(c) except pursuant to the provisions of this Agreement, neither the
Seller Parties nor any other Person will have or be subject to any liability or
indemnification obligation to Purchaser, its Affiliates or any other Person with
respect to the sale of the Business in accordance with this Agreement resulting
from the distribution to or use by the Purchaser, its Affiliates or
Representatives of any information relating to the Business, the Seller, the
Parent, the Company and its Subsidiaries or otherwise, including any
information, document, or material made available to Purchaser, its Affiliates
or Representatives in any form in connection with the Transactions;
(d) except for the information addressed in the representations and
warranties contained in this Agreement, the Purchaser shall not be entitled to
rely, and has not relied in any respect, upon the accuracy or completeness of
any of the information provided or made available by any of the Seller Parties
to the Purchaser or any of its Affiliates or Representatives; and
(e) none of the persons listed on Section 4.07 of the Disclosure Schedule
has actual knowledge as of the date hereof of any matter that would constitute a
breach of any representation or warranty of the Seller or the Parent contained
in this Agreement.
4.08. Financing. The Purchaser has delivered to the Seller a copy of an
executed letter from Xxxxxxx, Xxxxx & Co. (the "Underwriter") dated November 23,
2004 stating that the Underwriter is highly confident (the "Highly Confident
Letter") that it will be able to obtain the financing contemplated by the
Purchaser's Rule 144A Offering, subject to the terms and conditions set forth
therein. In addition, the Purchaser has delivered to the Seller copies of
executed Commitment Letters committing Xxxxxxx Sachs Mortgage Company and CIGPF
I Corp. (collectively, the "Lender Group") to provide to the Purchaser on
commercially reasonable terms and conditions secured debt financing sufficient
to enable the Purchaser (in combination with the Controlling Shareholders'
equity contributions) to consummate the Transactions (other than the portion of
such financing to be provided by the Purchaser's Rule 144A Offering) (the
"Commitment Letters"). As of the date hereof, the Highly Confident Letter and
the Commitment Letters are in full force and effect and the Purchaser reasonably
believes that it or the Company will be able to satisfy the conditions contained
therein and obtain the funds contemplated by the Highly Confident Letter and the
Commitment Letters necessary to consummate the Transactions on or before the
Closing Date.
ARTICLE V
PRE-CLOSING COVENANTS
Between the date hereof and the earlier of the Closing or the
termination of this Agreement in accordance with its terms, the Seller and the
Parent on the one hand, and the Purchaser and Holdings on the other hand, hereby
covenant as follows:
5.01. Operation of the Business. Except as expressly contemplated by the
Transactions or as otherwise approved in writing by Purchaser (which approval
will not be unreasonably denied or delayed):
(a) From the date hereof until the Closing or termination of this
Agreement, the Seller will, and will cause the Company and its Subsidiaries to,
operate the Business only in the ordinary course of business consistent with
past practice. The Seller will not permit the Company or any of its Subsidiaries
to engage in any practice, take any action, or enter into any transaction
outside the ordinary course of business consistent with past practice or which,
individually or in the aggregate, will have or would be reasonably expected to
have a Material Adverse Effect. For the avoidance of doubt, the Purchaser and
Holdings acknowledge and agree that the Company shall execute and deliver to the
Seller and the Parent prior to the Closing in substantially the form attached
hereto as Exhibit F the Instrument of Accession to Stock Purchase Agreement,
pursuant to which the Company shall, effective immediately after the Closing,
become a party to this Agreement, as fully as though the Company had executed
and delivered the Agreement at the time originally executed and delivered by the
other parties thereto.
(b) Without limiting the generality of Section 5.01(a) hereof, from the
date hereof until the Closing or the termination of this Agreement, the Seller
will, and will cause the Company and each of its Subsidiaries to:
(i) continue to manage the servicing, collections and other
operating practices of the Company in all material respects in the ordinary
course of business consistent with past practice;
(ii) use commercially reasonable efforts to maintain and preserve
intact its business organization, employees and advantageous business
relationships;
(iii) use commercially reasonable efforts to continue in full force
and effect without material modification the Company Insurance Policies;
(iv) not take any action, or omit to take any action, that would
reasonably be expected to result in a breach or violation of any of the
Company's or the Seller's or the Parent's or Holdings' representations or
covenants contained herein or the failure of any of the conditions set forth in
Article IX or Article X hereof, or would otherwise reasonably be expected to
adversely affect or materially delay the ability of either the Seller, the
Parent, the Purchaser or Holdings to perform its covenants and agreements under
this Agreement or to consummate the Transactions;
(v) use its commercially reasonable 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 consummate the Transactions including, without limitation, using
its commercially reasonable efforts in promptly making any filings and
furnishing any information required in connection with all consents, approvals
and authorizations, including, but not limited to, submissions of information
required by Governmental Authorities;
(vi) not securitize any assets or otherwise engage in any sale or
other transfer of its material assets, or mortgage or pledge any assets or
subject any material assets to any Encumbrance;
(vii) not file any election under Treasury Regulation 301.7701-3
with respect to the Company or its Subsidiaries;
(viii) with respect to separate state and local Tax returns of the
Company and its Subsidiaries, not (A) change Tax accounting methods, principles
or practices for Tax purposes (except insofar as may be required by a change in
applicable Law), (B) make, revoke or amend any material Tax election, (C) enter
into any settlement or compromise of any material Tax liability, (D) enter into
any closing or other agreement with any taxing authority regarding material
Taxes, (E) file or cause to be filed any amended Income Tax Return or other
material Tax Return, (F) file or cause to be filed a claim for refund of Income
Taxes or other material Taxes previously paid (other than claims for refund of
sales and use Taxes filed in good faith in the ordinary course of business
consistent with past practice), (G) agree to an extension of a statute of
limitations with respect to the assessment or determination of Taxes, or (H)
grant any power of attorney with respect to Taxes;
(ix) not accelerate the timing of any loss recognition;
(x) not change in any material respect any credit or collection
policy in effect as of October 31, 2004;
(xi) not enter into, renew or terminate, or make any material
payment not then required under, any material contract or agreement, other than
entering into or renewing agreements in the ordinary course of business
consistent with past practice that (w) do not contain any non-competition,
non-solicitation or exclusive dealing agreements or other agreement or
obligation which limit or restrict or purport to limit or restrict in any
respect the ability of the Company or its Subsidiaries to solicit customers or
the manner in which, or the localities in which, all or any portion of the
Business may be conducted, (x) do not contain any agreement that grants any
right of first refusal or right of first offer or similar right or that limits
or purports to limit the ability of the Company or any of its Subsidiaries (or,
following consummation of the Transactions, the ability of Purchaser or any of
its Affiliates) to own, operate, sell, transfer, pledge or otherwise dispose of
any assets or business, and (y) do not call for aggregate annual payments of
$500,000 or more for any given agreement or series of related agreements and are
not terminable on thirty (30) days or less notice without payment of any non-de
minimis termination fee or penalty;
(xii) not amend its articles of incorporation, bylaws or similar
governing documents;
(xiii) other than separation agreements entered into from time to
time with persons who are not officers of the Company in the ordinary course of
business consistent with past practice, not grant any specific bonus or equity
compensation awards to, or increase the salaries or compensation payable to,
officers, employees or independent contractors of the Company or the
Subsidiaries, or make any change in its existing compensation, borrowing or
lending arrangements for or on behalf of any of such Persons pursuant to any
employee benefit plan or otherwise; not provide for or enter into any new or
additional pension, retirement or other employee benefits or employment or
severance agreement or arrangements, or increase any existing benefits; and not
amend or modify any Benefit Plans; provided, however, that the foregoing shall
not prohibit (i) immaterial changes to benefit plans made in the ordinary course
consistent with past practice or (ii) salary increases in the ordinary course of
business consistent with past practice;
(xiv) other than (x) cash dividends from Subsidiaries of the Company
to the Company and (y) cash dividends from the Company to the Seller the payment
of which shall be reflected in the Preliminary Balance Sheet and the Closing
Date Balance Sheet in accordance with the Agreed Upon Procedures and (z) any
amounts due to Parent or the Parents' assignee in connection with the Hedge
Agreement, not declare, pay or set aside for payment any dividend or other
distribution in respect of its capital stock, or redeem, sell or transfer, or
purchase or otherwise acquire, directly or indirectly, any shares of capital
stock or other securities;
(xv) not settle any claim, action or proceeding against it, except
for any claim, action or proceeding settled in the ordinary course of business
for cash, which shall have been either paid in cash prior to the Closing or
reflected as a liability on the Preliminary Balance Sheet and the Closing Date
Balance Sheet, and which settlement does not impose any restrictions or
limitations on the ownership or operation of the Company or its Subsidiaries or,
after the Closing, Purchaser or its Affiliates, or create precedent for
additional adverse claims; and
(xvi) except for the Hedge Agreement, agree or commit, whether in
writing or otherwise, to take any of the actions described in clauses (i)
through (xv) of this Section 5.01(b).
5.02. Access to Information; Confidentiality.
(a) Upon reasonable advance notice, the Seller shall cause the Company and
its Subsidiaries to give the Purchaser, its counsel, financial advisors,
financing sources, auditors and other authorized representatives (collectively,
"Representatives") reasonable access during normal business hours to the
offices, properties, personnel, books and records of the Company.
(b) Subject to the confidentiality restrictions contained in Section
5.02(c), the Seller shall cause the Company to permit two (2) representatives of
the Purchaser (the "Purchaser Observers") to attend Operational Meetings in an
observer capacity, provided, however, that the Company or the Seller shall have
the right to exclude the Purchaser Observers from portions of such meetings or
to omit to provide the Purchaser Observers with certain information if the
Company or the Seller believes in good faith, based on the advice of its
respective counsel, that such exclusion or omission is necessary in order to (a)
preserve attorney-client privilege, or (b) fulfill the Company's or the Seller's
obligations with respect to confidential or proprietary information of third
parties (provided, however, that the Purchaser Observers shall not be so
excluded unless all other persons whose presence at a meeting would result in a
violation of such third party confidentiality obligations are also excluded),
provided that the parties shall use commercially reasonable efforts to provide
alternative disclosure regarding such excluded or omitted information to the
Purchaser in a manner that does not require such exclusion or omission.
(c) Prior to the Closing, the Purchaser agrees to, and shall cause its
agents, Representatives, Affiliates, employees, officers and directors
("Purchaser Parties") to: (i) treat and hold as confidential (and not disclose
or provide access to any Person to) all confidential and proprietary information
of the Company and its Subsidiaries, (ii) in the event that the Purchaser or any
such agent, representative, Affiliate, employee, officer or director becomes
legally compelled to disclose any such information, provide the Seller with
prompt written notice of such requirement so that the Seller, the Company or its
Subsidiaries may seek a protective order or other remedy or waive compliance
with this Section 5.02(c), (iii) in the event that such protective order or
other remedy is not obtained, or the Seller and the Parent waive compliance with
this Section 5.02(c), furnish only that portion of such confidential information
which is legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such information, which
shall not be a breach of this Section 5.02(c), and (iv) promptly following any
termination hereof prior to the Closing Date furnish to the Company or the
Seller any and all copies (in whatever form or medium) of all such confidential
information then in the possession of the Purchaser Parties and destroy any and
all additional copies then in the possession of the Purchaser Parties of such
information and of any analyses, compilations, studies or other documents
prepared, in whole or in part, on the basis thereof; provided, however, that
this sentence shall not apply to any information that, at the time of
disclosure, (x) is available publicly other than as a result of a breach of this
Agreement by any Purchaser Party, or (y) is developed independently by or on
behalf of the Purchaser or any such other Person separate and apart from such
information.
(d) Notwithstanding anything in this Agreement to the contrary, Parent and
the Seller shall have no obligation to disclose any of the confidential or
proprietary information of Parent or its Affiliates that is not related to the
Business.
5.03. Notices and Consents. The Seller will cause the Company and its
Subsidiaries to give any notices to third parties, and will cause the Company
and its Subsidiaries to use its commercially reasonable efforts to obtain the
Consents and Approvals. Each of the parties will (and the Seller will cause the
Company and its Subsidiaries to) give any notices to, make any filings with, and
use its commercially reasonable efforts to obtain any Governmental
Authorizations that may be or become necessary for its execution and delivery
of, and the performance of its obligations pursuant to, this Agreement.
5.04. Termination; Assignment. The Parent and the Seller shall, and shall
cause the Company to, use commercially reasonable efforts to obtain any required
consents relating to the assignment of the lease obligations of the Company and
to effectuate the assignment or termination of any Parent guarantees of such
lease obligations ("Parent Guarantees") to the Purchaser, pursuant to the real
property leases set forth on Section 3.17(3)-(14) of the Disclosure Schedule,
and the Purchaser shall provide reasonable cooperation to the Parent and the
Seller in connection with the foregoing, provided that, in the event that the
assignment or termination of such guarantees cannot be effectuated prior to the
Closing Date and any such guaranty remains in effect, the Purchaser shall
provide the indemnification contemplated by Section 8.03(d) hereof.
5.05. Notice of Developments.
(a) Each party will give prompt written notice to the other party of any
adverse development causing a breach of any of its own representations and
warranties in Articles III and IV above. Except as provided by Section 5.05(b)
below, no disclosure by any party pursuant to this Section 5.05 shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation or breach of warranty.
(b) The Purchaser shall provide written notice to the Seller and the
Parent of the date on which the Purchaser reasonably anticipates the
commencement of its Road Show in connection with the Purchaser's Rule 144A
Offering (the "Road Show Date") not less than twenty-one (21) days prior to such
commencement. During the period from the date of such notice through the date
fourteen (14) days prior to the Road Show Date, subject to Section 12.01(f), the
Seller and the Parent shall be entitled to deliver to the Purchaser a supplement
to the Disclosure Schedule that discloses to the Purchaser in reasonable detail
any facts and circumstances arising after the date hereof that would constitute
a breach of the representations and warranties set forth in Article III hereof.
Such supplemented Disclosure Schedule shall be deemed to amend the Disclosure
Schedule as of the date of such supplement for all purposes of this Agreement.
5.06. Financing.
(a) The Purchaser has provided to the Seller as of the date hereof the
Highly Confident Letter and the Commitment Letters. The Purchaser shall notify
the Seller and the Parent immediately if any of the Highly Confident Letter and
the Commitment Letters are modified in any material respect or terminated, the
Purchaser has reason to believe that such modification or termination is
probable, or to the extent that any of the required closing conditions or other
transaction prerequisites contained in such Highly Confident Letter or the
Commitment Letters are unlikely to be satisfied by the Purchaser or the Company.
The Purchaser
shall use commercially reasonable efforts to provide to the Seller an updated
Highly Confident Letter dated the later of (x) five (5) Business Days prior to
the Road Show Date and (y) February 1, 2005 ("Updated Letter") reaffirming the
Underwriters' ability to obtain the financing on substantially the same terms as
set forth in the Highly Confident Letter.
(b) In connection with the offering of notes to qualified institutional
buyers in reliance on Rule 144A under the Securities Act contemplated by the
Purchaser (the "Purchaser's Rule 144A Offering"), the Seller agrees to use
commercially reasonable efforts to make available such officers of the Company
and information as the Purchaser may reasonably request for the purpose of the
Purchaser's Rule 144A Offering, including facilitating customary due diligence
and granting a paid leave of absence to senior officers of the Company as
necessary or advisable to meet with prospective lenders in customary
presentations or to participate in customary oral presentations to prospective
investors ("Road Shows"), in each case upon the Purchaser's request with
reasonable prior notice and at the Purchaser's cost and expense. At the
Purchaser's cost and expense, the Seller shall, and shall cause the Company to,
use commercially reasonable efforts to cause the Company's accountants to
provide assistance to the Purchaser, including providing consent, on a customary
basis, to the Purchaser to include in the Offering Circular their audit reports
relating to the Company and its Subsidiaries and, at the cost of the Purchaser,
to provide any necessary "comfort letters" and to prepare and deliver other
customary deliverables.
(c) The Purchaser acknowledges and agrees that (i) the assistance provided
by the Seller Parties is being provided at the request of the Purchaser, (ii)
none of the Seller Parties shall have any liability to lenders, investors,
prospective lenders, prospective investors, underwriters or placement agents in
connection with the activities contemplated by this Section 5.06, and (iii) the
Purchaser shall cause to be included on the inside front cover of the Offering
Circular or an equally prominent place therein the following legends or their
substantial equivalent: (A) "The notes are not issued or guaranteed by, and are
not otherwise an obligation of, Ford Motor Credit Company and/or any of its
affiliates"; (B) "Neither Ford Motor Credit Company nor any of its affiliates
has prepared this offering memorandum or is responsible for its contents. Ford
Motor Credit Company and its affiliates are not making, and hereby expressly
disclaim, any representation to you concerning the future performance of Triad
Financial Corporation or the accuracy or completeness of this offering
memorandum"; and (C) "Ford Motor Credit Company and its affiliates hereby
expressly disclaim any liability whatsoever for any loss arising from, or in
reliance upon, the whole or any part of the contents of this offering
memorandum." In addition, the Purchaser acknowledges and agrees that the
description of this Agreement contained in the Offering Circular will state that
investors are not entitled to rely on any of the provisions of the Agreement,
including the representations and warranties contained in the Agreement. The
Purchaser shall provide the Seller with the relevant pages of the most recent
draft of the Offering Circular containing the language referenced in Section
5.06(c)(iii)(A) - (C) above and in the immediately preceding sentence (the
"Draft Pages") ten (10) days prior to the Road Show Date.
(d) The Purchaser shall comply, and shall not request any Seller Party to
take any action that would result in non-compliance, with all applicable federal
and state securities laws in connection with the Purchaser's Rule 144A Offering,
including the Purchaser's Road Show and the Offering Circular.
5.07. Certain Bank Accounts. To the extent that any bank accounts or
similar facilities (including any lock-box processing agreements, lock-box
accounts and related products (e.g. Telecash)) used exclusively by the Company
are being maintained in the name of the Parent or any of its Affiliates (other
than the Company or its Subsidiaries) or in the name of both the Company and any
of such Persons as of the date hereof or as of the Closing Date, the Parent
shall, and shall cause its Affiliates (other than the Company and its
Subsidiaries) to, surrender all right and title in and to such accounts and
execute all documents necessary or advisable to effect such surrender and to
remove the Parent's or such Affiliate's (other than the Company's) name
therefrom, as of the Closing Date.
5.08. Exclusivity. The Parent shall not, and shall not knowingly permit or
authorize the Company and its Subsidiaries (and each of their respective
directors, officers, employees, advisors, representatives, agents and
Affiliates), to engage in, solicit or initiate any discussions or negotiations
with, or provide any information to (except to confirm that this Agreement
exists or as may be required by law or court order), or negotiate or enter into
any agreement with, any other Person with respect to a sale of the Company or
any of its Subsidiaries, the assets of the Company or any of its Subsidiaries,
the capital stock of the Company or any of its Subsidiaries or any similar
business combination transaction.
5.09. Hedge Agreement. Promptly after the execution hereof, Parent and the
Company will enter into a Hedge Agreement (the "Hedge Agreement") in accordance
with the terms set forth in Exhibit H.
ARTICLE VI
POST CLOSING COVENANTS
6.01. Further Action. If at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the parties
hereto shall use all commercially reasonable efforts to take, or cause to be
taken, all appropriate action, do or cause to be done all things necessary,
proper or advisable under applicable Law and to execute and deliver such
documents and other papers, as may be required to carry out the provisions of
this Agreement and to consummate the Transactions.
6.02. Intellectual Property. For the avoidance of doubt, the Purchaser and
its Affiliates shall not be authorized to use, and shall not use for any
purpose, any trademark, trade name or service xxxx of the Seller, the Parent or
any of their Affiliates other than the trademarks, trade names and service marks
set forth in Section 3.18(c) of the Disclosure Schedule.
6.03. Access to Records. The Purchaser shall grant to the Seller and its
counsel, financial advisors, auditors and other authorized representatives full
access to the records relevant to the Business delivered to it by the Seller
pursuant to this Agreement, during normal business hours upon at least
twenty-four (24) hours notice to the Purchaser, to the extent reasonably
necessary to enable the Seller to respond to any claim or objection made by the
Purchaser hereunder, to prepare its or its Affiliates' financial statements and
Tax Returns, and to secure any information which it may require in connection
with the audit of any Tax Return including the Company or any information of the
Company, or in connection with the defense of any litigation to which it is a
party.
6.04. Non-Solicitation of the Purchaser's Employees. For a period of two
(2) years following the Closing Date, the Parent and the Seller shall not, and
shall not permit any of their Affiliates to, directly or indirectly, hire, offer
to hire or entice away (whether as an employee or consultant) or in any other
manner persuade or attempt to persuade any officer, employee or agent of the
Company (including its Subsidiaries) to discontinue his or her relationship with
the Company or its Subsidiaries; provided, however, that this Section 6.04 shall
not apply (a) if any such officer, employee or agent has been terminated by the
Purchaser or the Company for any reason at least six (6) months prior to the
date of such solicitation, (b) if such officer, employee or agent is hired as a
result of a general newspaper solicitation not specifically targeted to
employees of the Purchaser or the Company, or (c) if such officer, employee or
agent, independently (without encouragement or inducement by the Seller, Parent,
or their Affiliates in violation of this Section 6.04) seeks employment with the
Seller, Parent or their Affiliates.
6.05. Confidentiality/ Seller and Parent. The Seller and the Parent hereby
covenant and agree that Purchaser Information shall in no event be used for the
benefit of the Seller, Parent, or any of their Affiliates. Without limiting the
foregoing, each of the Seller and Parent covenants and agrees that (i) it shall
not, and shall cause its Affiliates not to, disclose to any Person any customer
list, dealer list, software code, pricing model or score card model of the
Purchaser or the Company and its Subsidiaries, or any information received from
the Purchaser or the Company under the Participation Agreement (the "Purchaser
Information"), or any facts relating to the terms of this Agreement; (ii) it
shall, and shall cause each of its Affiliates to, upon the request of the
Purchaser, use its commercially reasonable efforts to provide the Purchaser with
the full benefit of any rights that the Seller and the Parent or any of their
Affiliates, as applicable, may have under any confidentiality agreement entered
into in connection with the sale of the Company and its Subsidiaries; (iii) it
shall not, and it shall cause each of its Affiliates not to, use the Purchaser
Information; and (iv) in the event that the Seller or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such Purchaser Information, it shall provide the
Purchaser with prompt written notice of such requirement so that the Purchaser
may seek a protective order or other remedy or waive compliance with this
Section 6.05 (provided that in the event that such protective order or other
remedy is not obtained, or the Purchaser waives compliance with this Section
6.05, it shall furnish only that portion of such Purchaser Information which is
legally required to be provided and exercise all reasonable efforts to obtain
assurances that confidential treatment will be accorded such information, which
disclosure shall not be a breach of this Section 6.05); provided, however, that
this sentence shall not apply to any information that, at the time of
disclosure, (x) is available publicly other than as a result of a breach of this
Agreement by any of the Parent, the Seller, its or their agents,
representatives, Affiliates, employees, officers or directors, or (y) is
developed independently by or on behalf of the Seller or any such other Person
separate and apart from such information.
6.06. Confidentiality/ Purchaser. The Purchaser and Holdings hereby
covenant and agree that Seller Information shall in no event be used for the
benefit of the Purchaser, Holdings, the Controlling Shareholders, or any of
their respective Affiliates. Without limiting the foregoing, each of the
Purchaser and Holdings covenants and agrees that (i) it shall not, and shall
cause its Affiliates not to, disclose to any Person any confidential information
or trade secrets of the Seller, the Parent or their Affiliates (other than the
Company and its Subsidiaries) (the "Seller Information"), or any facts relating
to the terms of this Agreement; (ii) it shall, and shall cause each of its
respective Affiliates to, upon the request of the Seller, use its reasonable
best efforts
to provide the Seller with the full benefit of any rights that the Purchaser or
any of its Affiliates, as applicable, may have under any confidentiality
agreement entered into in connection with the sale of the Company and its
Subsidiaries; (iii) it shall not, and it shall cause each of its Affiliates not
to, use the Seller Information; and (iv) in the event that any of the Purchaser
Parties becomes legally compelled to disclose any such Seller Information, it
shall provide the Seller with prompt written notice of such requirement so that
the Seller may seek a protective order or other remedy or waive compliance with
this Section 6.06 (provided that in the event that such protective order or
other remedy is not obtained, or the Seller waives compliance with this Section
6.06, it shall furnish only that portion of such Seller Information which is
legally required to be provided and exercise all reasonable efforts to obtain
assurances that confidential treatment will be accorded such information, which
disclosure shall not be a breach of this Section 6.06); provided, however, that
this sentence shall not apply to any information that, at the time of
disclosure, (x) is available publicly other than as a result of a breach of this
Agreement by any Purchaser Party, or (y) is developed independently by or on
behalf of the Purchaser or any such other Person separate and apart from such
information.
6.07. Participation Agreement. The Purchaser shall cause the Company or
the surviving entity to pay the amounts provided under and in accordance with
the participation agreement attached hereto as Exhibit G (the "Participation
Agreement").
ARTICLE VII
TAX MATTERS
7.01. Allocation of Straddle of Non-Periodic Taxes. (a) Income Taxes and
sales and use Taxes of or with respect to the Company and its Subsidiaries for
that portion of any Straddle Period ending on the Closing Date shall be computed
on a "closing-of-the-books" basis as if such taxable period ended as of the
close of business on the Closing Date, and (b) Income Taxes and sales and use
Taxes of or with respect to the Company and its Subsidiaries for that portion of
any Straddle Period beginning after the Closing Date shall be computed on a
"closing-of-the-books" basis as if such taxable period began on the day after
the Closing Date.
7.02. Payment of Taxes. Except as otherwise provided in this Agreement,
the Seller or its Affiliates shall pay or cause to be paid, on a timely basis,
all Income Taxes and sales and use Taxes due with respect to the Company and its
Subsidiaries for taxable periods ending on or before the Closing Date and the
portion of any Straddle Period ending on the Closing Date, except for sales and
use Taxes that have been reserved or otherwise accrued or reflected as a
liability on the Closing Date Balance Sheet. The Seller or its Affiliates shall
pay directly to or at the direction of the Purchaser, at least three (3) days
prior to the date payment thereof is due (including payments constituting a
repayment of a sales and use Tax refund or credit previously received that are
due and payable to the relevant taxing authority as a result of any collection
on defaulted indebtedness with respect to which a sales and use Tax refund was
previously received), the portion of such Income Taxes and sales and use Taxes
for that portion of any Straddle Period which ends on the Closing Date
(calculated pursuant to Section 7.01). The Purchaser shall pay or cause to be
paid, on a timely basis, (a) all Income Taxes and sales and use Taxes due with
respect to the Company and its Subsidiaries for taxable periods beginning after
the Closing Date and the portion of any Straddle Period beginning on the day
after the Closing Date and (b) all Non-Income Taxes of the Company and its
Subsidiaries for all periods.
7.03. Transfer Taxes. All transfer, documentary, sales, use, stamp, motor
vehicle, emissions, and registration taxes and fees and similar amounts incurred
in connection with this Agreement ("Transfer Taxes"), if any, shall be borne by
the Purchaser, and the Purchaser shall file all necessary Tax Returns and other
documentation with respect to all such Transfer Taxes, if any, and remit payment
for any Tax shown thereon.
7.04. Filing of Tax Returns.
(a) The Seller or its Affiliates shall prepare all Income Tax Returns
required to be filed by or with respect to the Company and its Subsidiaries for
any taxable periods ending on or before the Closing Date and file such Income
Tax Returns required to be filed on or before the Closing Date. The Seller shall
deliver to the Company a draft of any such Income Tax Return to be filed after
the Closing Date for signature not later than twenty (20) days before the due
date for such Income Tax Return and the Company or the appropriate Subsidiary
shall cause an authorized officer to sign such Income Tax Return unless
prohibited by law. The Purchaser shall prepare and timely file (i) all Income
Tax Returns and sales and use Tax Returns required to be filed by or with
respect to the Company and its Subsidiaries that are due after the Closing Date
for any Straddle Period (the "Purchaser Straddle Returns") and all taxable
periods beginning after the Closing Date and (ii) all Non-Income Tax Returns
required to be filed by or with respect to the Company and its Subsidiaries that
are due after the Closing Date. The Purchaser shall deliver to the Seller (A) a
draft of any Purchaser Straddle Return and (B) a draft statement setting forth
the Seller's pro rata portion of the Income Tax or sales and use Tax due, as
applicable, with respect to the Purchaser Straddle Return as determined pursuant
to Sections 7.01 and 7.02 (the "Purchaser Straddle Statement"), for comment and
approval not later than forty (40) days before such Purchaser Straddle Returns
are due. If, within ten (10) days after the receipt of such Purchaser Straddle
Return, the Seller notifies the Purchaser that the Seller disagrees with the
draft Purchaser Straddle Return or draft Purchaser Straddle Statement, then the
Purchaser and the Seller shall attempt in good faith to resolve their
disagreement within the ten (10) days following the Seller's notification to the
Purchaser of such disagreement. If the Seller and the Purchaser cannot resolve
their disagreement within ten (10) days following the Seller's notification, any
dispute with respect to the amount reflected on the Purchaser Straddle Statement
shall be submitted to an Independent Accountant for resolution within ten (10)
days of such submission. The cost of the Independent Accountant shall be borne
in accordance with the formula set forth in Section 2.06(e). The Seller shall
pay to the Purchaser the amount reflected on the Purchaser Straddle Statement
not more than ten (10) days after the receipt by the Seller of such Purchaser
Straddle Return or, in the event of a disagreement between the Purchaser and the
Seller regarding the Purchaser Straddle Return or the Purchaser Straddle
Statement, within ten (10) days after the resolution of such disagreement.
(b) Not later than sixty (60) days after the Closing Date, the Seller
shall deliver to the Purchaser (i) copies of any Income Tax Returns filed by or
with respect to the Company and its Subsidiaries that were due on or before the
Closing Date for any Straddle Period (the "Seller Straddle Returns") and (ii) a
statement setting forth (A) the Purchaser's pro rata portion of the Income Tax
due with respect to the Seller Straddle Return and (B) a statement setting forth
the Purchaser's pro rata portion of the sales and use Tax due with respect to a
Straddle Period sales and use Tax Return that was filed prior to the Closing
Date, in each case as determined pursuant to Sections 7.01 and 7.02 (the "Seller
Straddle Statement"). If, within ten (10) days after the receipt of such Seller
Straddle Statement, the Purchaser notifies the Seller that the Purchaser
disagrees with the Seller Straddle Statement, then the Purchaser and the Seller
shall attempt in good faith to resolve their disagreement within ten (10) days
following the Purchaser's notification to the Seller of such disagreement. If
the Seller and the Purchaser cannot resolve their disagreement within ten (10)
days following the Purchaser's notification, any dispute with respect to the
amount reflected on the Seller Straddle Statement shall be submitted to an
Independent Accountant for resolution within ten (10) days of such submission.
The cost of the Independent Accountant shall be borne in accordance with the
formula set forth in Section 2.06(e). The Purchaser shall pay to the Seller the
amount reflected on the Seller Straddle Statement not more than ten (10) days
after the receipt by the Purchaser of such Seller Straddle Return and Seller
Straddle Statement or, in the event of a disagreement between the Purchaser and
the Seller regarding the Seller Straddle Statement, within ten (10) days after
the resolution of such disagreement.
7.05. Tax Refunds, Overpayments or Credits.
(a) Except to the extent set forth as an asset on the Preliminary Balance
Sheet or the Closing Date Balance Sheet, any Income Tax or sales and use Tax
refund, Income Tax or sales and use Tax overpayment or Income Tax or sales and
use Tax credit, (including any interest in respect thereof) received by the
Seller or its Affiliates, the Company (whether for its own account or on behalf
of the securitization trusts or on behalf of the Company's customers), the
securitization trusts, the Purchaser or their respective Affiliates, and any
amounts credited against any Income Tax or sales and use Tax to which the Seller
or its Affiliates, the Company (whether for its own account or on behalf of the
securitization trusts or on behalf of the Company's customers), the
securitization trusts, the Purchaser or their respective Affiliates, becomes
entitled (including by way of any amended Income Tax Returns or sales and use
Tax Returns or any carry back filing), that relates to any Income Tax or sales
and use Tax with respect to a Pre-Closing Period shall be for the account of the
Seller and an amount equivalent to such refund or credit received shall be paid
to the Seller within thirty (30) days following the receipt of such refund or
credit. The Purchaser shall be entitled to Income Tax or sales and use Tax
refunds, Income Tax or sales and use Tax overpayments or Income Tax or sales and
use Tax credits with respect to the Post-Closing Periods.
(b) Each of the Seller and the Purchaser shall cooperate, and cause each
of its Affiliates to cooperate, in obtaining any Income Tax or sales and use Tax
refunds that the other party reasonably believes should be available, including
through filing appropriate forms with the applicable taxing authority.
7.06. Post-Closing Actions. Prior to knowingly undertaking any action that
the Purchaser reasonably determines would be likely to increase the Seller's or
any of its Affiliates liability for Income Taxes or sales and use Taxes
(including any liability of the Seller to indemnify the Purchaser for Income
Taxes pursuant to this Agreement), the Purchaser shall notify the Seller of such
possibility and shall consult with the Seller in good faith.
7.07. Cooperation. After the Closing Date, each of the Seller and its
Affiliates and the Purchaser shall, and shall cause the Company and their
respective Affiliates to, (i) assist the other party in preparing any Income Tax
Returns or sales and use Tax Returns which such other party is responsible for
preparing and filing and (ii) cooperate fully in preparing for any audits of, or
disputes with, any Governmental Authority regarding any Income Tax Returns or
sales and
use Tax Returns related to the Company; provided, however, in no event shall
the Seller or its Affiliates be required to provide consolidated, combined or
unitary Income Tax Return information of the Seller or its Affiliates. In
connection therewith, the Purchaser shall not, and shall cause the Company not
to, dispose of any Income Tax or sales and use Tax work papers, books or records
of the Company during the seven-year period following the Closing Date, and
thereafter shall give Seller reasonable written notice, and the opportunity to
make copies of any such items, before disposing of such items.
7.08. Section 338(h)(10) Elections.
(a) Within ninety (90) days of the determination of the Final Cash
Consideration, the Seller shall furnish the Purchaser with the Seller's proposed
determination of the ADSP (as defined in applicable Treasury Regulations under
Section 338 of the Code) (the "Proposed Determination") and the allocation of
ADSP among the assets of the Company and its eligible Subsidiaries on Seller's
Form 8883 (the "Proposed Allocation"). The Seller shall prepare the Proposed
Determination and Proposed Allocation in accordance with the methodology and
principles set forth on Exhibit I, and the Purchaser shall accept the Proposed
Determination and Proposed Allocation, if they are consistent with Exhibit I
(which, when accepted, shall become the "Final Allocation"). (If the Purchaser
does not believe that the Proposed Determination and Proposed Allocation are
consistent with Exhibit I, the Purchaser shall instead notify Seller of such
belief and the parties shall attempt to resolve such disagreement within ten
(10) days of notification. If the parties cannot resolve such dispute, the
parties shall submit the question of whether the Seller's Proposed Determination
and Proposed Allocation are consistent with Exhibit I or not to a mutually
acceptable nationally recognized attorney for final resolution within five (5)
days of such submission. The cost of such attorney shall be borne equally.) The
Purchaser shall prepare and deliver to Seller the Purchaser's Form 8883, which
shall reflect the Final Allocation (provided that the amount allocated to
goodwill may be increased for any capitalized acquisition costs incurred by the
Purchaser to acquire the Shares).
(b) Upon completion and delivery by the Purchaser to the Seller of the
Purchaser's Form 8883 consistent with the prior paragraph, the Seller or its
Affiliates shall join with the Purchaser in making an irrevocable election under
Code Section 338(h)(10) on IRS Form 8023 (and any corresponding elections under
state, local, or foreign tax law) (collectively, the "Section 338 Elections")
with respect to the Company and its eligible Subsidiaries on or before the last
date on which such election(s) may be made. The parties and their Affiliates
shall cooperate in good faith with the preparation of the Section 338 Elections.
(c) Solely for Tax purposes, the Seller and the Purchaser agree (i) to
report and cause their Affiliates to report the acquisition of the Company by
the Purchaser in a manner consistent with the making of the Section 338
Elections, (ii) not to take a Tax position or cause or permit their Affiliates
to take a Tax position in any Tax Return (including in any supplemental or
amended IRS Forms 8883) or Tax audit or any Tax proceeding before any
Governmental Authority or otherwise in any Tax matter that is inconsistent with
the Section 338 Elections, including the determination of the ADSP, AGUB, the
Final Allocation and the information provided on Seller's Form 8883 and the
Purchaser's Form 8883, unless and to the extent required to do so pursuant to a
determination (as defined in Section 1313(a) of the Code or any similar state or
local law), and (iii) to provide each other with copies of any supplemental or
amended IRS Forms 8883 at least twenty (20) days prior to filing with any taxing
authority.
(d) The Purchaser and the Seller shall promptly inform one another of any
challenge by any taxing authority to any allocation made pursuant to this
Section 7.08 (a "Challenge") and agree to consult and keep one another informed
with respect to the status of, and any discussion, proposal or submission with
respect to, such Challenge. Notwithstanding anything to the contrary contained
in this Agreement, in the event of (x) any Challenge with respect to which there
is a material risk of an adverse outcome or (y) an adjustment to the Final
Allocation as a result of a determination (within the meaning of Section 1313(a)
of the Code) with respect to either party or any of their respective Affiliates,
the Purchaser or the Seller, and their respective Affiliates, as the case may
be, shall have the right to file protective amended Tax Returns without regard
to Section 7.08(c) on or after the date that is thirty (30) days prior to the
expiration of any relevant statute of limitations (provided, however, that prior
to such filing, the filing party shall provide any proposed statements and
related material to the other party for its review and comment).
7.09. Tax Indemnity.
(a) Seller Indemnity. Parent and Seller shall jointly and severally
indemnify and hold harmless on an after-tax basis the Purchaser, the Company and
its Subsidiaries and their respective Affiliates from and against, without
duplication, (i) any Income Taxes of the Company and its Subsidiaries for any
Pre-Closing Period or resulting from any transaction in the Pre-Closing Period
(including any Taxes resulting from the Section 338 Elections); (ii) any Income
Taxes of any Person other than the Company and its Subsidiaries, including any
Taxes for which the Company or any of its Subsidiaries are liable under Section
1.1502-6 of the Treasury Regulations (or any similar provision of state, local
or foreign Tax law), as a transferee or successor, by contract or otherwise;
(iii) any sales and use Taxes of the Company and its Subsidiaries for any
Pre-Closing Period, except for sales and use Taxes that have been reserved or
otherwise accrued or reflected as a liability on the Closing Date Balance Sheet;
(iv) any Taxes imposed on the Purchaser, the Company and its Subsidiaries
resulting from the inability to make a valid election under Section 338(h)(10)
of the Code pursuant to Section 7.08 hereof due to the Company not being a
member, as of the Closing Date, of the "selling consolidated group" (as defined
in Section 338(h)(10)(B) of the Code) of which Ford Motor Company is the common
parent, provided that, but for such inability, a valid election under Section
338(h)(10) of the Code could have been made; and (v) any Loss incurred by the
Purchaser or any of its Affiliates to the extent arising out of or resulting
from any breach of (A) any covenant or agreement contained in Section
5.01(b)(viii) to the extent such covenant or agreement has been made with
respect to Income Taxes or sales and use Taxes or (B) any covenant or agreement
by the Seller contained in Article VII.
(b) Purchaser Indemnity. The Purchaser shall indemnify and hold harmless
on an after-tax basis the Seller and the Seller's Affiliates from and against
(i) any Income Taxes and sales and use Taxes imposed on the Company or any of
its Subsidiaries for any Post-Closing Period other than the Taxes described in
Section 7.09(a), (ii) any Non-Income Taxes for all periods, (iii) any Transfer
Taxes arising as a result of or otherwise incurred in connection with the
Transactions and (iv) any Loss incurred by the Seller or any of its Affiliates
to the extent arising out of or resulting from any breach of any covenant or
agreement by the Purchaser contained in Article VII.
(c) Payment. Payment in full of any amount due under this Section 7.09
shall be made to the affected party in immediately available funds at least two
Business Days before the date payment of the Taxes to which such payment relates
is due, or, if no Tax is payable, within ten (10) days after written demand is
made for such payment.
(d) Any indemnity payments made pursuant to this Section 7.09 shall
include reasonable attorneys' fees and expenses related thereto.
7.10. Tax Contests.
(a) If any taxing authority asserts a Tax Claim, then the party hereto
first receiving notice of such Tax Claim shall promptly (and in any event within
fifteen (15) Business Days) provide written notice thereof to the other party or
parties hereto; provided, however, that the failure of such party to give such
prompt notice shall not relieve the other party of any of its obligations under
this Article VII, except to the extent that the other party is actually
prejudiced thereby. Such notice shall specify in reasonable detail the basis for
such Tax Claim and shall include a copy of the relevant portion of any
correspondence received from the taxing authority.
(b) The Seller shall have the sole right to control, at its own expense,
any Income Tax audit, examination, contest, litigation or other proceeding by or
against any taxing authority (an "Income Tax Proceeding") in respect of the
Company and its Subsidiaries for any taxable period that ends on or before the
Closing Date; provided, however, to the extent such Income Tax Proceeding
relates to a separate state or local Tax Return of the Company or its
Subsidiaries and if Purchaser notifies Seller that it reasonably believes that
such Income Tax Proceeding could reasonably be expected to have a material
adverse effect on the Purchaser, the Company and its Subsidiaries or their
respective Affiliates for a Post-Closing Period, Seller shall consult in good
faith with Purchaser before taking any significant action in connection with
such proceeding and Purchaser shall be entitled to participate, at its own
expense, in such Income Tax Proceeding.
(c) In the case of an Income Tax Proceeding for a Straddle Period, the
Purchaser shall have the right to control, at its own expense, such Income Tax
Proceeding; provided, however, that (i) the Purchaser shall consult with the
Seller before taking any significant action in connection with such Income Tax
Proceeding, (ii) the Purchaser shall consult with the Seller and offer the
Seller an opportunity to comment before submitting any written materials
prepared or furnished in connection with such Income Tax Proceeding, (iii) the
Purchaser shall defend such Income Tax Proceeding diligently and in good faith
as if it were the only party in interest in connection with such Tax Proceeding,
(iv) the Seller shall be entitled to participate in such Income Tax Proceeding,
at its own expense, and with the written consent of the Purchaser (which consent
shall not be unreasonably withheld or delayed), assume the entire defense of
such Income Tax Proceeding, and (v) the Purchaser shall not settle, compromise
or abandon any such Income Tax Proceeding without obtaining the prior written
consent of the Seller, such consent shall not be unreasonably withheld or
delayed, and shall not be necessary to the extent that the Purchaser has
indemnified the Seller against the effect of such settlement.
(d) Except as provided in Section 7.11, the Purchaser shall have the right
to control, at its own expense, (i) any Income Tax Proceeding involving the
Company or any of its Subsidiaries (other than any Income Tax Proceeding
described in Section 7.10(b) or (c)), and (ii) any tax proceeding relating to
Non-Income Taxes, and the Seller shall have no information,
consultation, participation, consent or other rights with respect to such tax
proceedings; provided, however, to the extent such Income Tax Proceeding relates
to a separate state or local Tax Return of the Company or its Subsidiaries and
if Seller notifies Purchaser that it reasonably believes that such Income Tax
Proceeding could reasonably be expected to have a material adverse effect on the
Seller or its Affiliates for a Pre-Closing Period, Purchaser shall consult with
Seller in good faith before taking any significant action in connection with
such Income Tax Proceeding and Seller shall be entitled to participate, at its
own expense, in such Income Tax Proceeding.
7.11. Sales and Use Tax.
(a) The Purchaser shall, and shall cause the Company and their respective
Affiliates to, provide the Seller with written notice of any information or
documents received by the Purchaser relating to the sales and use Tax matters of
the Company with respect to any Pre-Closing Period, and provide the Seller with
the relevant portion of any correspondence received from the taxing authority
related to such matters ("Pre-Closing Sales and Use Tax Issues"). The Seller
shall have the sole right to control, at its own expense, all of the
communication and proceedings related to the Pre-Closing Sales and Use Tax
Issues including, without limitation, the audit, examination, contest,
litigation, refund claim or other proceeding relating thereto; provided,
however, if the Purchaser notifies the Seller that it reasonably believes such
Pre-Closing Sales and Use Tax Issue would have a material adverse effect on the
Purchaser, then Seller shall keep the Purchaser informed of any significant
developments concerning such Pre-Closing Sales and Use Tax Issue, shall
reasonably consider in good faith all suggestions by the Purchaser regarding
such Pre-Closing Sales and Use Tax Issue and shall conduct such proceedings
related to the Pre-Closing Sales and Use Tax Issues in good faith as if it were
the only party in interest. The Purchaser shall, and shall cause the Company and
their respective Affiliates to, provide the Seller with cooperation, assistance
and information regarding any Sales and Use Tax Issues as is reasonably
requested by the Seller. The Seller shall be entitled to any refund, overpayment
or tax credit relating to or arising from such Sales and Use Tax Issues.
(b) The Purchaser shall, and shall cause the Company and their respective
Affiliates to, provide the Seller with written notice of any information or
documents received by the Purchaser relating to the sales and use Tax matters of
the Company with respect to any sales and use Tax Return for periods that begin
on or before and ends after the Closing Date and provide the Seller with the
relevant portion of any correspondence received from the taxing authority
related to such matters ("Straddle Period Sales and Use Tax Issues"). The Seller
shall have the right to control, at its own expense, such Straddle Period Sales
and Use Tax Issues, including, without limitation, the audit, examination,
contest, litigation, refund claim or other proceeding relating thereto;
provided, however, that (i) the Seller shall consult with the Purchaser before
taking any significant action in connection with such Straddle Period Sales and
Use Tax Issue, (ii) the Seller shall consult with the Purchaser and offer the
Purchaser an opportunity to comment before submitting any written materials
prepared or furnished in connection with such Straddle Period Sales and Use Tax
Issue, (iii) the Seller shall defend such Straddle Period Sales and Use Tax
Issue diligently and in good faith as if it were the only party in interest in
connection with such Straddle Period Sales and Use Tax Issue, (iv) the Purchaser
shall be entitled to participate in such Straddle Period Sales and Use Tax
Issue, at its own expense, and with the written consent of Seller, assume the
entire defense of such Straddle Period Sales and Use Tax Issue, and (v) the
Seller shall not settle, compromise or abandon any such Straddle Period Sales
and Use Tax Issue
without obtaining the prior written consent of the Purchaser, such consent shall
not be unreasonably withheld or delayed, and shall not be necessary to the
extent that the Seller has indemnified Purchaser against the effect of such
settlement. The Purchaser shall, and shall cause the Company and their
respective Affiliates to, provide the Seller with cooperation, assistance and
information regarding any Straddle Period Sales and Use Tax Issues as is
reasonably requested by the Seller. The Seller shall be entitled to the portion
of any refund, overpayment or tax credit relating to or arising from such
Straddle Period Sales and Use Tax Issue that relates to a Pre-Closing Period and
the Purchaser shall be entitled to the portion of any refund, overpayment or tax
credit relating to or arising from such Straddle Period Sales and Use Tax Issue
that relates to a Post-Closing Period.
(c) The Purchaser shall have the sole right to control, at its own
expense, all of the communication and proceedings related to the sales and use
Tax matters of the Company with respect to any Post-Closing Period
("Post-Closing Sales and Use Tax Issues") including, without limitation, the
audit, examination, contest, litigation, refund claim or other proceeding
relating thereto; provided, however, if the Seller notifies the Purchaser that
it reasonably believes such Post-Closing Sales and Use Tax Issue would have a
material adverse effect on the Seller or its Affiliates, then the Purchaser
shall keep the Seller informed of any significant developments concerning such
Post-Closing Sales and Use Tax Issue , shall reasonably consider in good faith
all suggestions by the Seller regarding such Post-Closing Sales and Use Tax
Issue and shall conduct such proceedings related to the Pre-Closing Sales and
Use Tax Issues in good faith as if it were the only party in interest. The
Purchaser shall be entitled to any refund, overpayment or tax credit relating to
or arising from such Post-Closing Sales and Use Tax Issues.
ARTICLE VIII
INDEMNIFICATION
8.01. Survival.
(a) Representations and Warranties of the Seller and the Parent. None of
the representations and warranties of the Seller or the Parent contained in
Article III shall survive the Closing hereunder, except, that:
(i) the representations and warranties contained in Section 3.03
(Subsidiaries), Section 3.05 (No Conflict), Section 3.06 (Consents and
Approvals), Section 3.12 (Litigation), Sections 3.16(b), (c) and (d)
(Securitization Transactions), Section 3.19 (Insurance) and Section 3.20
(Transactions with Certain Affiliates) shall survive the Closing hereunder and
continue in full force and effect for a period of twelve (12) months thereafter;
(ii) the representations and warranties contained in Section 3.09
(Financial Statements) and Section 3.13 (Compliance with Laws; Permits) shall
survive the Closing hereunder and continue in full force and effect for a period
of eighteen (18) months thereafter; and
(iii) the representations and warranties contained in Section 3.01
(Organization, Authority and Qualification of the Seller and the Parent),
Section 3.02 (Organization, Authority and Qualification of the Company), Section
3.04 (Capitalization),
Section 3.15 (Brokers) and Section 3.22 (Disclaimer of Other Representations and
Warranties) shall survive until six (6) months after the expiration of all
applicable statute of limitations periods (or extensions or waivers thereof), or
in the absence of such applicable statute of limitations periods, indefinitely.
(iv) Notwithstanding the foregoing, if written notice of a claim for
indemnification has been given by the Purchaser to the Seller in accordance with
Section 13.04 prior to the expiration of the applicable survival period, then
the relevant representations and warranties of Seller and Parent shall survive
as to such claim, until such claim has been finally resolved.
(b) Representations and Warranties of the Purchaser and Holdings. All of
the representations and warranties of the Purchaser and Holdings contained in
Article IV shall survive the Closing hereunder as follows: (i) the
representations and warranties contained in Section 4.02 (No Conflict), Section
4.03 (Consents and Approvals) and Section 4.04 (Litigation) shall terminate
twelve (12) months following the Closing Date, (ii) the representations and
warranties contained in Section 4.01 (Organization and Authority of the
Purchaser and Holdings), Section 4.05 (Brokers), Section 4.06 (Acquisition of
Shares for Investment) and Section 4.07 (Investigation by Purchaser; Seller's
and Parent's Liability) shall survive until six (6) months after the expiration
of all applicable statute of limitations periods (or extensions or waivers
thereof), or in the absence of such applicable statute of limitations periods,
indefinitely and (iii) the representations and warranties contained in Section
4.08 (Financing) shall terminate at Closing. Notwithstanding the foregoing, if
written notice of a claim for indemnification has been given by the Seller or
the Parent to the Purchaser in accordance with Section 13.04 prior to the
expiration of the applicable survival period, then the relevant representations
and warranties of the Purchaser and Holdings shall survive as to such claim,
until such claim has been finally resolved.
(c) Covenants. None of the covenants and agreements of the Seller, the
Parent, the Purchaser or Holdings shall survive the Closing hereunder, except,
that:
(i) the covenants contained in Section 5.01 (Operation of the
Business) shall survive the Closing hereunder for a period of twelve (12) months
thereafter;
(ii) the covenants and agreements contained in Article II (Purchase
and Sale of Shares; Closing), Sections 5.06(c) and 5.06(d) (Financing), Article
VI (Post Closing Covenants), Article VIII (Indemnification) and Article XIII
(General Provisions) (collectively, the "Core Covenants") shall survive the
Closing hereunder indefinitely without restriction, except as expressly limited
by their terms; and
(iii) the covenants and agreements contained in Article VII (Tax
Matters) shall survive the Closing hereunder until six (6) months after the
expiration of all applicable statute of limitations periods (or extensions or
waivers thereof).
8.02. Indemnification by the Seller and the Parent. Subject to the
limitations set forth in Section 8.04 hereof, and provided the Purchaser makes a
written claim for indemnification against the Seller or the Parent pursuant to
Section 13.04 within the survival period provided under Section 8.01 in the case
of any claim for indemnification pursuant to this Section 8.02, the
Purchaser and its Affiliates (which after the Closing shall include the Company
and its Subsidiaries) and their respective directors, officers, employees and
agents and each of the successors and assigns of each of the foregoing (the
"Purchaser Indemnified Parties") shall be indemnified and held harmless by the
Seller and Parent, and their respective successors (the "Seller Indemnifying
Parties"), on a joint and several basis, from and against any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including reasonable attorneys' fees and expenses)
(hereinafter "Losses") actually suffered or incurred by any Purchaser
Indemnified Party, to the extent arising out of or resulting from or incurred in
connection with:
(a) the breach of any representation or warranty made by the Seller or the
Parent contained in this Agreement (except representations and warranties
contained in Article III that do not survive the Closing pursuant to Section
8.01 ("Expiring Representations")) provided, however, that the Seller's and the
Parent's indemnification obligations pursuant to this Section 8.02(a) shall be
determined without giving effect to any qualification or exception with respect
to "material," "materially," "Material Adverse Effect," or similar language
contained in any representation or warranty of Parent, the Seller or the
Company;
(b) the breach of any covenant or agreement by the Seller or the Parent
contained in this Agreement (except the covenants and agreements contained in
Article VII);
(c) any Controlled Group Liabilities; or
(d) any amounts payable by the Company or the Purchaser to Company
Management pursuant to any indemnification obligations arising out of a claim
made by the Seller Indemnified Parties against Company Management.
8.03. Indemnification by the Purchaser and Holdings. Subject to the
limitations set forth in Section 8.04 hereof, and provided the Seller or the
Parent makes a written claim for indemnification against the Purchaser pursuant
to Section 13.04 within the survival period provided under Section 8.01 in the
case of any claim for indemnification pursuant to this Section 8.03, the Seller,
Parent and their respective Affiliates, directors, officers, employees and
agents and each of the successors and assigns of each of the foregoing (the
"Seller Indemnified Parties") shall be indemnified and held harmless by the
Purchaser, Holdings, the Company and their respective successors (the "Purchaser
Indemnifying Parties"), on a joint and several basis, after the Closing Date
from and against any and all Losses actually suffered or incurred by any Seller
Indemnified Party, to the extent arising out of or resulting from or incurred in
connection with:
(a) the breach of any representation or warranty made by the Purchaser or
Holdings contained in this Agreement; provided, however, that the Purchaser
Indemnifying Parties' indemnification obligations pursuant to this Section
8.03(a) shall be determined without giving effect to any qualification or
exception with respect to "material," "materially," "Material Adverse Effect,"
or similar language contained in any representation or warranty of the Purchaser
or Holdings;
(b) the breach of any covenant or agreement by the Purchaser or Holdings
contained in this Agreement (except the covenants and agreements contained in
Article VII);
(c) (i) any untrue statement or alleged untrue statement of a material
fact (A) contained in the offering circular or any amendment thereof provided to
potential investors or other third parties in connection with the Purchaser's
Rule 144A Offering (the "Offering Circular"), or (B) contained in any materials
or information provided to potential investors or other third parties by, or
with the approval or knowledge of, the Purchaser in connection with the
marketing of the offering of the notes contemplated to be sold in the
Purchaser's Rule 144A Offering, including any Road Show held by the Purchaser or
officers of the Company ("Company Management") (whether in person or
electronically) ("Marketing Materials"), or (C) made orally by any of Purchaser
or Company Management to a potential investor or other third party in connection
with any Road Show held by the Purchaser or Company Management ("Oral
Statements"), or (ii) the omission or alleged omission to state in the Offering
Circular, any Marketing Materials, or any Oral Statements, a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided that no indemnification shall be available from Purchaser
under this paragraph (c) to the extent that any of the foregoing relate to
common law fraud on the part of Parent or the Seller;
(d) any material breach after the Closing Date by the Company, the
Purchaser or their respective Affiliates of any provision of any of the real
property leases set forth on Section 3.17 of the Disclosure Schedule that are
validly assigned to or otherwise continued to be used by the Purchaser on or
after the Closing Date; or any increase in the obligations or liabilities of
Parent under the Parent Guarantees from those existing on the date hereof; or
(e) any claims asserted against the Seller Indemnified Parties by any
Insurer, indenture or owner trustee under the Securitization Instruments
(including the related insurance and indemnity agreements) for any breach of
such Securitization Instruments due to a "Change of Control"(as defined under
such insurance and indemnity agreements) effected after the Closing.
8.04. Limits on Indemnification. Notwithstanding anything to the contrary
contained in this Agreement:
(a) Minimum Indemnification Amount. The Purchaser Indemnified Parties
shall not be entitled to assert, and the Seller Indemnifying Parties shall not
be liable for, any individual claim for indemnification pursuant to Sections
8.02(a), unless and until the amount of indemnifiable Losses which may be
recovered by the Purchaser Indemnified Parties pursuant to such individual claim
(or series of related claims) equals or exceeds (i) in the case of claims made
with respect to the representations and warranties of the Seller or the Parent
in Article III other than Section 3.13 (Compliance with Laws; Permits), Five
Thousand US Dollars ($5,000), and (ii) in the case of claims made with respect
to the representations and warranties of the Seller or the Parent in Section
3.13 (Compliance with Laws; Permits), Ten Thousand US Dollars ($10,000) (in each
case, the "Minimum Indemnification Amount"), in which case all such Losses shall
be subject to indemnification, provided that individual claims shall constitute
a series of related claims only to the extent that all such individual claims
include violations or alleged violations of the same individual provisions of
applicable Law or the same individual Government Authorization, in each case in
the same jurisdiction promulgating such Law or the same Governmental
Authorizations, as the case may be. No claim for which indemnification is not
available under this section 8.04(a) shall be counted toward the Basket Amount,
other than claims made under Section 7.09.
(b) Basket Amount. The Seller Indemnifying Parties shall not be liable for
any claim for indemnification pursuant to Sections 8.02(a) or Section 8.02(b)
(with respect to breaches of
Section 5.01 only) unless and until the aggregate amount of indemnifiable Losses
which may be recovered from them equals or exceeds Five Million US Dollars
($5,000,000) (the "Basket Amount"),
after which they shall be liable for all Losses exceeding the Basket Amount. The
Purchaser Indemnifying Parties shall not be liable for any claim for
indemnification pursuant to Section 8.03(a) unless and until the aggregate
amount of indemnifiable Losses which may be recovered from them equals or
exceeds the Basket Amount, after which they shall be liable for all Losses
exceeding the Basket Amount.
(c) Maximum Indemnification Amount. The maximum amount of indemnifiable
Losses which may be recovered from either the Seller Indemnifying Parties or the
Purchaser Indemnifying Parties, in the aggregate, arising out of or resulting
from the causes set forth in Section 8.02 or 8.03, as the case may be, shall be
an amount equal to 10% of the Final Cash Consideration (the "Maximum
Indemnification Amount").
(d) Reduction of Losses. The amount of any Losses under Article VIII
and/or Section 7.09 shall be (i) reduced by (A) any insurance proceeds actually
received relating to such Losses, net of (w) any related deductible, (y) any
actual recoupment of such proceeds by the insurance carrier, and (z) any
expenses incurred in obtaining such proceeds, and (B) the amount of any net Tax
benefit actually realized resulting from the incurrence or payment of such
Losses, and (ii) increased by the amount of any net Tax cost incurred as a
result of the receipt of such indemnity payments (grossed up for such increase).
(e) No Basket Amount or Maximum Indemnification Amount.
(i) The Seller Indemnified Parties' obligation and liability for any
and all breaches of the representations and warranties set forth in Sections
3.01, 3.02, 3.04, and 3.15, and the Purchaser Indemnified Parties' obligation
and liability for any and all breaches of the representations and warranties set
forth in Sections 4.01, 4.05, 4.06 and 4.07, shall not be subject to the Basket
Amount and shall not be limited by the Maximum Indemnification Amount.
(ii) The Indemnifying Parties' respective obligations and
liabilities for any and all breaches of the Core Covenants (other than those
contained in this Article VIII which shall be limited in amount to the extent
expressly set forth in this Article VIII), and the Purchaser Indemnifying
Parties' obligation and liability for indemnification pursuant to Sections
8.03(c), 8.03(d) and 8.03(e) hereof, and the Seller Indemnifying Parties'
obligation and liability for indemnification pursuant to Sections 8.02(c) and
8.02(d) hereof, shall not be limited by the Maximum Indemnification Amount.
(f) Additional Limitations.
(i) The Purchaser Indemnified Parties shall not be entitled to
assert, and the Seller and the Parent shall not be liable for, any claim for
indemnification under this Article VIII arising out of or resulting from or
incurred in connection with any conduct, action or failure to act of Purchaser,
the Company or the surviving entity occurring after the Closing Date that would
have constituted a breach of the Seller's representation and warranty in Section
3.13(A) if such conduct, action or failure to act had occurred prior to the
Closing Date, to the extent that such conduct, action or failure to act occurs
after the earlier of either (i) thirty (30) days after the Closing Date or (ii)
such time as the Purchaser has knowledge, or should have knowledge in the
commercially reasonable conduct of the Business, of such conduct, action or
failure to act.
(ii) Any claim for indemnification that may be made under more than
one subsection under Sections 8.02 or 8.03 shall not result in any duplicate
indemnification for Losses, notwithstanding that such claim may be made under
more than one subsection.
(iii) Notwithstanding anything contained herein to the contrary, in
no event shall the Purchaser Indemnified Parties be entitled to assert, and the
Seller Indemnifying Parties shall not be liable for, any claim for any Loss
suffered or incurred by any of the Purchaser Indemnified Parties as a result of
any claims or proceedings brought by or on behalf of any investor, potential
investor, underwriter or placement agent in connection with the Purchaser's Rule
144A Offering, regardless of whether all or any of the matters underlying such
claims or proceedings relate to a breach of this Agreement by Seller or Parent;
provided that the foregoing shall be without prejudice to the right of the
Purchaser Indemnified Parties to assert claims under Article VIII for Losses
suffered or incurred independent of the Purchaser's Rule 144A Offering.
(iv) Notwithstanding anything contained herein to the contrary, for
purposes of Article VIII, "Losses" shall not include any consequential, special,
indirect or punitive damages in connection with any breach or violation of this
Agreement or otherwise in connection with the Transactions; provided, however,
that (i) an Indemnified Party shall be entitled to recover consequential,
special or indirect damages (subject in the case of lost profits to the further
limitations described in the subsequent sentence) to the extent (and solely to
the extent) such damages are reasonably foreseeable in connection with such
breach or violation and (ii) the foregoing shall not limit the right of any
Indemnified Party to indemnification in accordance with the this Agreement with
respect to any component of any claim, settlement, award or judgment against
such party by any unaffiliated third party. In addition to the foregoing, (i)
the Purchaser Indemnified Parties shall be entitled to recover for profits lost
or otherwise not realized in respect of the Business following the Closing Date
solely to the extent that the applicable Loss (x) meets the requirements of the
preceding sentence (and is otherwise indemnifiable under this Agreement) and (y)
does not, in the aggregate with all other such Losses in respect of lost
profits, exceed twenty-five percent (25%) of the Maximum Indemnification Amount,
and (ii) the extent of the indemnification for any such Losses in respect of
lost profits to which any of the Purchaser Indemnified Parties shall be entitled
will be determined based upon the impact that the fact or circumstance
underlying the applicable breach would have had on the Purchase Price had such
fact or circumstance been known as of the date of the Agreement.
8.05. Tax Treatment/ Insurance Claims. All amounts paid under the
indemnification provisions of this Agreement shall be treated as adjustments to
Purchase Price for all Tax purposes. Purchaser agrees to use its commercially
reasonable efforts to submit all appropriate claims in connection with the
Losses under the then-available insurance policies of the Company.
8.06. Third Party Claims.
(a) If any third party shall notify any of the Indemnified Parties with
respect to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the other under this Article VIII, then the Indemnified
Party shall promptly notify the Indemnifying Party thereof in writing within
thirty (30) days of the receipt of such notice. Such notice will contain in
reasonable detail, the nature and the basis of the claim and the amount thereof,
to the extent known, and any other relevant information in the possession of the
Indemnified Party. No
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder except to the
extent that the Indemnifying Party is prejudiced thereby.
(b) The Indemnifying Party shall have the right at any time to assume and
thereafter conduct the defense of the Third Party Claim with counsel of its
choice, reasonably satisfactory to the Indemnified Party; provided, however,
that the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be unreasonably withheld)
unless the judgment or proposed settlement involves only the payment of money
damages to be paid in full by the Indemnifying Party and does not impose any
equitable relief upon the Indemnified Party. Notwithstanding the foregoing, in
connection with any Third Party Claim (i) that seeks an injunction or other
equitable or non-monetary relief against an Indemnified Party, (ii) that is
brought by, or relates to, a Third Party Claim against an Indemnified Party by
any Governmental Authority, (iii) the damages resulting from which may
reasonably be expected to exceed the maximum amount set forth in Section 8.04,
(iv) with respect to which the Indemnified Party shall reasonably conclude that
(x) there are specific defenses available to the Indemnified Party which are
different from or additional to those available to the Indemnifying Party, (y)
there is a reasonably apparent conflict of interest between the Indemnified
Party and the Indemnifying Party or (z) could reasonably be expected to
establish a significant negative precedential custom or practice with respect to
the Indemnified Party or (v) could reasonably be expected to result in a
liability of the Indemnified Party with respect to any material portion of such
Third Party Claim; then the Indemnifying Party shall not have the right to so
assume and conduct such defense unless the Indemnified Party shall have so
agreed in its sole discretion, and the Indemnified Party may defend against the
Third Party Claim in any manner it reasonably may deem appropriate. However, the
Indemnifying Party shall not be liable for the expenses of more than one
separate counsel (plus one local counsel in any jurisdiction), selected by
Indemnified Party, in any single action or proceeding for all of the indemnified
parties referred to in the first paragraph of this letter unless the
Indemnifying Party consents.
(c) Unless and until an Indemnifying Party assumes the defense of the
Third Party Claim as provided in Section 8.06(b) above, however, the Indemnified
Party may defend against the Third Party Claim in any manner it reasonably may
deem appropriate.
(d) In no event will the Indemnified Party consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim for
which indemnification is available hereunder without the prior written consent
of the Indemnifying Party (which consent will not be unreasonably withheld).
(e) The Indemnifying Party or the Indemnified Party, as the case may be,
who is controlling the defense of the Third Party Claim for which
indemnification is available hereunder shall keep the other fully informed of
such claim at all stages thereof. The parties hereto agree to render to each
other such assistance as they may reasonably require of each other in order to
ensure the proper and adequate defense of any Third Party Claim.
8.07. Exclusive Remedy. Following the Closing, except in the case of
common law fraud between the parties or with respect to matters for which the
remedy of specific performance, injunctive relief or other non-monetary
equitable remedies are available, the
indemnification provisions set forth in Section 7.09 and Article VIII of this
Agreement and the remedies set forth in the HFI Loan and Security Agreement and
the Participation Agreement are the exclusive remedies of the Purchaser,
Holdings, the Seller and the Parent and their respective Affiliates arising out
of or in connection with this Agreement, the Transactions, and the Offering
Circular and the Purchaser's Rule 144A Offering. Notwithstanding anything to the
contrary in this Article VIII, the above provisions of this Article VIII (other
than Sections 8.01(a), 8.04(d), 8.04(f)(iv) and 8.05) shall not apply to Tax
indemnification matters, which matters shall instead by governed by Article VII.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE PARENT
The obligations of the Seller and the Parent to consummate the
Transactions (which do not include the Purchaser's Rule 144A Offering) shall be
subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions.
9.01. Representations, Warranties and Covenants. (i) Each of the
representations and warranties of the Purchaser and/or Holdings contained in
this Agreement (read without giving effect to any qualifications or exceptions
contained therein regarding knowledge, materiality, material adverse effect or
the like) shall be true and correct in all respects on the date of this
Agreement and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date
(except, in each case, to the extent any such representation or warranty speaks
as of a specific date, in which case such warranty shall be so true and correct
as of such specific date), except for any such failures to be true and correct
as would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of each of Purchaser and/or Holdings to
perform its obligations hereunder, and (ii) the covenants and agreements
contained in this Agreement to be complied with by the Purchaser and/or Holdings
on or before the Closing Date shall have been complied with in all material
respects through the Closing. The Seller shall have received a certificate,
dated as of the Closing Date, of each of the Purchaser and Holdings to such
effect signed by a duly authorized executive officer, which certificate will
have attached thereto the final version of the Draft Pages.
9.02. No Proceeding or Litigation. No Action shall have been commenced by
or before any Governmental Authority against the Seller, the Parent, the
Purchaser or Holdings, seeking to restrain or materially and adversely alter the
Transactions which would be reasonably likely to render it impossible or
unlawful to consummate such Transactions; provided, however, that the provisions
of this Section 9.02 shall not apply if the Seller or the Parent has, directly
or indirectly, solicited or encouraged any such Action.
9.03. Purchaser's Note; HFI Loan and Security Agreement. The Parent shall
have received an executed Purchaser's Note and the HFI Loan and Security
Agreement as contemplated by Section 2.02(c).
9.04. Participation Agreement. The Seller shall have received an executed
Participation Agreement as contemplated by Section 6.07. The execution of the
Participation Agreement shall be treated as a distribution of the retained
interest of Triad Financial Special Purpose, L.L.C.,
which, for U.S. federal and state Income tax purposes shall be treated as a part
of the deemed liquidation under Sections 332 and 337 of the Code resulting from
the election under Section 338(h)(10) of the Code.
9.05. Deliverables. The Seller or the Parent shall have received all of
the deliverables required by Section 11.02(a) through (g).
9.06. Consents and Approvals. The Seller shall have received, each in form
and substance reasonably satisfactory to the Seller, all Consents and Approvals
set forth on Exhibit J.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND HOLDINGS
The obligations of the Purchaser and Holdings to consummate the
Transactions shall be subject to the fulfillment or written waiver, at or prior
to the Closing, of each of the following conditions:
10.01. Representations, Warranties and Covenants. (i) Each of the
representations and warranties of the Seller and the Parent contained in this
Agreement (read without giving effect to any qualifications or exceptions
contained therein regarding materiality or Material Adverse Effect) shall be
true and correct in all respects on the date of this Agreement and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date (except, in each case, to
the extent any such representation or warranty speaks as of a specific date, in
which case such warranty shall be so true and correct as of such specific date),
except for any such failures to be true and correct as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and (ii) the covenants and agreements contained in this Agreement to be complied
with by the Seller and the Parent on or before the Closing Date shall have been
complied with in all material respects through the Closing. The Purchaser shall
have received a certificate, dated as of the Closing Date, of the Seller and the
Parent to such effect signed by a duly authorized executive officer.
10.02. No Proceeding or Litigation. No Action shall have been commenced by
or before any Governmental Authority against the Seller, the Parent, the
Purchaser or Holdings, seeking to restrain or materially and adversely alter the
Transactions which is reasonably likely to render it impossible or unlawful to
consummate such Transactions; provided, however, that the provisions of this
Section 10.02 shall not apply if the Purchaser has, directly or indirectly,
solicited or encouraged any such Action.
10.03. Financing. Receipt by Purchaser of funding from the Underwriter and
the Lender Group in accordance with the Updated Letter and the Commitment
Letters, respectively.
10.04. HFI Loan and Security Agreement. The Purchaser shall have received
the HFI Loan and Security Agreement as contemplated by Section 2.02(c) executed
by the Parent.
10.05. Participation Agreement. The Purchaser shall have received the
Participation Agreement as contemplated by Section 6.07 executed by the Seller.
10.06. Consents and Approvals. The Purchaser shall have received, each in
form and substance reasonably satisfactory to the Purchaser, all Consents and
Approvals set forth on Exhibit J.
10.07. Deliverables. The Purchaser shall have received all of the
deliverables required by Section 11.01(a) through (i).
ARTICLE XI
CLOSING DELIVERIES
11.01. Closing Deliveries of the Seller. At the Closing, the Seller or the
Parent, as the case may be, shall deliver to the Purchaser, and shall cause the
Company and its Subsidiaries to deliver to the Purchaser, the following:
(a) stock certificates evidencing the Shares duly endorsed in blank, or
accompanied by stock powers duly executed in blank, in form satisfactory to the
Purchaser and with all required stock transfer tax stamps affixed;
(b) a receipt for the Purchase Price;
(c) true and complete copies, certified by the Secretary or an Assistant
Secretary of the Seller or the Parent, as the case may be, of the resolutions
duly and validly adopted of each of the Seller and the Parent evidencing its
authorization of the execution and delivery of this Agreement and the
consummation of the Transactions;
(d) corporate good standing certificates for the Company and for each
Subsidiary from the Secretary of State of the jurisdiction in which such entity
is incorporated or organized dated as of a date not earlier than five (5)
Business Days prior to the Closing;
(e) the HFI Loan and Security Agreement;
(f) the Participation Agreement;
(g) the certificates, dated the Closing Date, contemplated by Section
10.01;
(h) a certificate, in form and substance reasonably satisfactory to the
Purchaser, duly executed and acknowledged, certifying facts that would exempt
the Transactions from any withholding requirement under Section 1445 of the
Code; and
(i) such other documents and instruments reasonably requested by the
Purchaser to consummate the Transactions.
11.02. Closing Deliveries of the Purchaser. At the Closing, the Purchaser
shall deliver to the Seller or the Parent, as the case may be, the following:
(a) the Initial Cash Consideration and Initial Debt Amount by wire
transfer in immediately available funds as provided in Section 2.04(b);
(b) the Purchaser's Note;
(c) the HFI Loan and Security Agreement;
(d) the Participation Agreement;
(e) the certificates, dated the Closing Date, contemplated by Section
9.01;
(f) the Guaranty in the form attached hereto as Exhibit K, executed by the
Controlling Shareholders; and
(g) such other documents and instruments reasonably requested by the
Seller to consummate the Transactions.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.01. Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of the Seller and the Purchaser;
(b) by the Purchaser in the event the Seller or the Parent has breached
its representations, warranties, or covenants contained in this Agreement such
that Section 10.01 would not be satisfied, the Purchaser has notified the Seller
and the Parent of the breach and either such breach has not been cured, or is
not capable of being cured, prior to the earlier of May 31, 2005 and the last
Business Day of any month during which the condition set forth in Section 10.06
hereof has been (or is reasonably anticipated to be) satisfied or waived;
(c) by the Seller in the event Purchaser or Holdings has breached its
representations, warranties, or covenants contained in this Agreement such that
Section 9.01 would not be satisfied, the Seller has notified the Purchaser and
Holdings of the breach, and either such breach has not been cured, or is not
capable of being cured, prior to the earlier of May 31, 2005 and the last
Business Day of any month during which the condition set forth in Section 10.06
hereof has been (or is reasonably anticipated to be) satisfied or waived;
(d) by the Seller or the Purchaser if the Closing shall not have occurred
by May 31, 2005, unless the delay is caused by a breach by the other party;
(e) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Transactions
and such order, decree, ruling or other action shall have become final and
nonappealable;
(f) by the Purchaser if the Parent or the Seller shall have delivered to
the Purchaser updated Disclosure Schedule pursuant to Section 5.05(b) of this
Agreement, without regard to whether the matters disclosed therein would have
permitted the Purchaser to terminate this Agreement pursuant to Section
12.01(b); or
(g) by the Seller if the Purchaser does not deliver the Updated Letter in
a form reasonably satisfactory to the Seller as provided in Section 5.06(a).
12.02. Effect of Termination. In the event of termination of this
Agreement as provided in Section 12.01, this Agreement shall forthwith become
void and there shall be no Liability or obligation on the part of any party
hereto or any of such party's officers, directors, managers, employees, agents,
other representatives or Affiliates, except (a) that Sections 5.02(c), 12.02,
13.01, 13.05, 13.08 and 13.14 shall survive in accordance with their terms and
(b) that nothing herein shall relieve either party hereto from liability for any
willful breach of this Agreement, provided, that this Section 12.02 shall not
apply to, and the Seller and the Parent shall have no liability whatsoever in
connection with or as a result of, any Expiring Representations absent common
law fraud.
ARTICLE XIII
GENERAL PROVISIONS
13.01. Expenses. The parties will bear their own respective costs and
expenses, including fees and disbursements of counsel, financial advisors and
accountants incurred in connection with the Transactions prior to the Closing.
The Company shall not incur any out-of-pocket costs or expenses in connection
with the Transactions or in connection with the Purchaser's financing prior to
the Closing other than pursuant to Section 5.01(b)(v) hereof, which in any event
shall not exceed $25,000, and all such out-of-pocket costs or expenses of the
Company shall be paid in full prior to the Closing Date or fully reflected on
the Preliminary Balance Sheet and the Closing Date Balance Sheet, provided,
that, the Company shall not incur any out-of-pocket expenses on behalf of the
Purchaser in connection with the Purchaser's financing, other than incidental
out-of-pocket expenses which will be reflected on the Preliminary Balance Sheet
and the Closing Date Balance Sheet as an amount due from Purchaser.
13.02. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.03. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules, regulations
and interpretations promulgated thereunder, unless the context requires
otherwise. Whenever the words "include," "includes," "including" or their
cognates are used in this Agreement, they shall be deemed to be followed by the
words "without limitation." The capitalized terms defined in this Agreement have
the meanings assigned to them in this Agreement and include the plural as well
as the singular. Pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms. All references herein to designated
"Articles," "Sections" and other subdivisions and to "Exhibits" and "Disclosure
Schedule" are to the designated Articles, Sections and other subdivisions of the
body of this Agreement and to the exhibits and "Disclosure Schedule" to this
Agreement. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision. The term "date hereof" shall mean the date of this Agreement. When
used in reference to parties to this Agreement, the term "other party" will
refer to the Seller and/or Parent, as applicable, when used in reference to
Purchaser and Holdings, and vice versa.
13.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery (i) in
person; (ii) by an internationally recognized overnight courier service; (iii)
by facsimile transmission with confirmation; or (iv) registered or certified
mail, in each case, with delivery fees prepaid, return receipt requested, to the
respective parties hereto at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 13.04):
(a) if to the Seller:
Fairlane Credit LLC
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Ford Motor Credit Corporation
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
(b) if to the Parent:
Ford Motor Credit Corporation
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
(c) if to the Purchaser:
Triad Acquisition Corp.
c/o Hunter's/Xxxx, Ltd.
000 Xxxxxxxx Xxxxx, XXX 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Staff
with a copy (which shall not constitute notice) to:
Hunter's/Xxxx, Ltd.
000 Xxxxxxxx Xxxxx, XXX 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Staff
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
(d) if to Holdings:
Triad Acquisition Corp.
c/o Hunter's/Xxxx, Ltd.
000 Xxxxxxxx Xxxxx, XXX 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Staff
with a copy (which shall not constitute notice) to:
Hunter's/Xxxx, Ltd.
000 Xxxxxxxx Xxxxx, XXX 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Staff
13.05. Public Announcements. Neither the Purchaser nor the Seller nor any
of their respective officers, directors, employees, agents, representatives or
Affiliates shall make, or cause to be made, any press release or public
announcement in respect of the Transactions or otherwise communicate with any
news media without the prior written consent of the other party, provided, that
if such prior written consent shall have been given by the other party, the
parties hereto shall cooperate as to the timing and contents of any such press
release, public announcement or communication.
13.06. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect for so long as the economic or legal substance of the
Transactions is not affected in any manner materially adverse to either party
hereto. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
Transactions are consummated as originally contemplated to the greatest extent
possible.
13.07. Disclosure Schedule. Certain of the representations and warranties
set forth in this Agreement contemplate that there will be included in the
Disclosure Schedule information that might be "material" or have a "material
adverse effect." The Company, its Subsidiaries, Seller or Purchaser may, at
their option, include in such schedules items that are not material or are not
likely to have a material adverse effect, and, in order to avoid any
misunderstanding, any such inclusion shall not be deemed to be an acknowledgment
or representation that such items are material or would have a material effect,
to establish any standard of materiality or material adverse effect, or to
define further the meaning of such terms for purposes of this Agreement. All
capitalized terms used in the Disclosure Schedule and not otherwise defined
therein shall have the respective meanings set forth in this Agreement.
13.08. Entire Agreement. This Agreement, together with the other
Transaction documents referenced herein, constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, between the Seller and
the Purchaser with respect to the subject matter hereof.
13.09. Assignment. This Agreement may not be assigned without the express
written consent of the Seller and the Purchaser (which consent may be granted or
withheld in the sole discretion of the Seller or the Purchaser).
13.10. Amendment. This Agreement may not be amended or modified except (a)
by an instrument in writing signed by, or on behalf of, the Seller, the Parent,
the Purchaser and Holdings or (b) by a waiver in accordance with Section 13.11.
13.11. Waiver. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered by the other party pursuant hereto
or (c) waive compliance with any of the agreements of the other party or
conditions to such party's obligations contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition of this
Agreement. The failure of either party hereto to assert any of its rights
hereunder shall not constitute a waiver of any of such rights. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
13.12. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted
assigns; provided, however, that the provisions of Article VIII shall inure to
the benefit of the indemnified parties thereunder.
13.13. Arbitration. In the event of any dispute between the Purchaser and
the Seller with respect to the matters set forth in this Agreement (other than
matters to be resolved by the Independent Accountant as set forth in Section
2.06 and Article VII), the party initiating the dispute shall notify the other
party (the "Receiving Party") in writing of the matter or matters in dispute
(such notification in writing shall hereinafter be referred to as the
"Arbitration Notice"). The parties shall first use their commercially reasonable
efforts to resolve such dispute among themselves. If the parties are unable to
resolve the dispute within thirty (30) days of the receipt of the Arbitration
Notice by the Receiving Party, either party shall then have the option to
initiate arbitration proceedings as hereinafter provided which shall be the sole
and exclusive procedure for the resolution of any such dispute, except as set
forth in the last sentence of this Section 13.13, Section 2.06, and Article VII.
Within ten (10) calendar days after receipt by one party of written notice from
the other party that it is submitting the matter to arbitration, each party
shall designate in writing one (1) arbitrator to resolve the dispute. The two
arbitrators so designated shall, in turn, jointly select a third arbitrator (the
"Neutral Arbitrator") within twenty (20) calendar days of their designation,
with the third arbitrator to be selected in accordance with the procedure
established by the American Arbitration Association. Each of the arbitrators
shall be a professional experienced in commercial and business affairs who is
not an employee, consultant, officer or director of any party hereto or any
Affiliate of any party to this Agreement and shall not have received any
compensation, directly or indirectly, from any party hereto or any Affiliate of
any party to this Agreement during the two (2) year period preceding the Closing
Date. The arbitration shall be governed by the commercial arbitration rules of
the American Arbitration Association with limited discovery in the discretion of
the Neutral Arbitrator; provided, however, that the arbitrators shall have sole
discretion with regard to the admissibility of evidence. Delaware law shall
otherwise govern in all arbitration proceedings. The arbitrators shall use their
reasonable best efforts to rule on each disputed issue within thirty (30)
calendar days after the completion of the hearings. The determination of the
arbitrators as to the resolution of any dispute shall be binding and conclusive
upon all parties hereto and shall not be appealable. All rulings of the
arbitrators shall be in writing supported by reasons and shall be delivered to
the parties hereto. Each party shall pay the fees and expenses of its respective
designated arbitrator and the parties shall share equally in paying the fees and
expenses of the Neutral Arbitrator. The arbitrator shall not be permitted to
award damages in excess of the amounts set forth in Section 8.04. The parties
agree that an action to compel arbitration pursuant to this Agreement must be
brought in a court of competent jurisdiction located in the State of Delaware,
County of Newcastle and the parties hereby consent and commit themselves to the
jurisdiction of the courts of the State of Delaware for purposes of compelling
arbitration. Any arbitration award may be entered in and enforced by any court
having jurisdiction thereof and the parties hereby consent and commit themselves
to the jurisdiction of the courts of the State of Delaware for purposes of the
enforcement of any arbitration award. Except as set forth in Section 2.06 and
Article VII, the procedures set forth in this section shall be the sole and
exclusive procedures for the resolution of disputes arising under this
Agreement; provided, however, that a party may seek a preliminary injunction or
other provisional judicial relief if in its judgment such action is necessary to
avoid irreparable damage or to preserve the status quo.
13.14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the domestic laws of the State of Delaware without giving
effect to any choice
or conflict of law provision or rule (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
13.15. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SELLER:
FAIRLANE CREDIT LLC
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxxxx
-----------------------------
Title: Director
----------------------------
PARENT:
FORD MOTOR CREDIT COMPANY
By: /s/ Xxxx Xxxxx
-------------------------------
Name: Xxxx Xxxxx
-----------------------------
Title: Vice President-International
----------------------------
PURCHASER:
TRIAD ACQUISITION CORP.
By: /s/ J. Xxxxx Staff
-------------------------------
Name: J. Xxxxx Staff
-----------------------------
Title: Chairman and CEO
----------------------------
TRIAD HOLDINGS, INC.
By: /s/ J. Xxxxx Staff
-------------------------------
Name: J. Xxxxx Staff
-----------------------------
Title: Chairman and CEO
----------------------------
EXHIBIT I
SECTION 338(h)(10) ELECTIONS
The Proposed Determination and the Proposed Allocation shall be prepared in
accordance with, and the Final Allocation shall be consistent with, the
following principles:
1. The amounts allocated to Class I assets shall equal the face amount
thereof.
2. The amounts allocated to Class IV and Class V assets shall equal the book
value thereof.
3. The amount allocated to Class VII assets shall equal $173,000,000.
4. The balance of ADSP shall be allocated to Class III assets.
Notwithstanding the foregoing, for purposes of calculating Purchaser's AGUB (as
defined in applicable Treasury Regulations), the amount allocated to Class VII
assets shall be $173,000,000 plus any capitalized acquisition costs incurred by
the Purchaser to acquire the Shares.
