EXHIBIT 2(a)
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 26, 2003
BY AND AMONG
XXXXX FARGO FINANCIAL LEASING, INC.
AGWAY INC.
TELMARK, LLC
TELMARK LEASE FUNDING II, LLC
TELMARK LEASE FUNDING III, LLC
AND
TELEASE FINANCIAL SERVICES, LTD.
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this "AGREEMENT") is
made and entered into as of the 26th day of February, 2003, by and among XXXXX
FARGO FINANCIAL LEASING, INC., an Iowa corporation ("BUYER"); TELMARK, LLC, a
Delaware limited liability company ("TELMARK"); the following wholly owned
subsidiaries of Telmark: TELMARK LEASE FUNDING II, LLC, a Delaware limited
liability company, TELMARK LEASE FUNDING III, LLC, a Delaware limited liability
company, and TELEASE FINANCIAL SERVICES, LTD., an Ontario corporation
(collectively, the "SUBSIDIARIES" and, together with Telmark, collectively
referred to herein as "SELLER"); and Agway Inc., a Delaware corporation and the
owner of all the issued and outstanding limited liability interests (within the
meaning of Section 18-701 of the Delaware Limited Liability Company Act, as
amended) of Telmark ("AGWAY"). Buyer, Agway and Seller may be referred to herein
as the "PARTIES."
WHEREAS, Seller is engaged in the business of providing customized lease
financing for equipment, buildings and vehicles for agricultural and commercial
use (the "BUSINESS");
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from Seller both directly and through certain Affiliates, on
the terms and subject to the conditions set forth in this Agreement,
substantially all of the assets and certain liabilities of Seller in connection
with the Business;
WHEREAS, Seller and Buyer entered into that certain Asset Purchase
Agreement dated as of December 20, 2002 (as amended and/or supplemented,
including, without limitation, by that certain Amendment to Asset Purchase
Agreement dated as of January 8, 2003, that certain Second Amendment to Asset
Purchase Agreement dated as of January 10, 2003, and that certain Addendum to
Asset Purchase Agreement dated as of January 15, 2003, the "ORIGINAL
AGREEMENT"), for the purposes stated therein; and
WHEREAS, Seller and Buyer now desire to amend and restate the Original
Agreement in its entirety to reflect modifications to the Original Agreement
that Seller and Buyer have agreed to make and other matters as hereinafter set
forth;
NOW, THEREFORE, in exchange for the mutual promises and agreements
hereinafter set forth, the Parties hereby agree that, from and after the date
hereof, the Original Purchase Agreement shall be and hereby is amended and
restated in its entirety to read as follows:
SECTION 1. DEFINITIONS. The following terms used in this Agreement have the
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meanings set forth below:
"ACCOUNTING FIRM" has the meaning set forth in Section 2(f) below.
"ACQUIRED ASSETS" means all assets (for clarity, specifically including the
contra asset account known as allowance for losses) of Seller set forth on the
Final Closing Statement of Assets and Liabilities and specifically including,
without limitation, all Leases (and rights thereunder), all Leased Property and
all miscellaneous rights and assets of the Business, whether or not recorded on
the Final Closing Statement of Assets and Liabilities (including, without
limitation, any and all Intellectual Property Rights, Domain Names, Lease
Documents, Third Party Contracts, lockboxes, certificates of title, mortgages,
commodity assignments, Uniform Commercial Code filings, rights in security
deposits held in connection with Leases or any other Acquired Asset, and rights
to recovery by Seller arising out of collection litigation related to the
Business that is pending as of or commenced after the Closing Date (except for
rights to recovery under Leases in Defensive Litigation), and specifically
excluding the Excluded Assets.
"ADJUSTED ESTIMATED PURCHASE PRICE" has the meaning set forth in Section
2(f)(i) below.
"ADJUSTMENTS RESERVE HOLDBACK" has the meaning set forth in Section 2(h)(b)
below.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, claims,
demands, judgments, damages, reasonable amounts paid in settlement, liabilities,
obligations, losses, fines, penalties, costs and expenses (including court costs
and reasonable attorneys' fees and expenses).
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"AGWAY PETROLEUM HAULER CONTRACTS" means, collectively, all Leases entered
into between Seller and Obligors which provide petroleum hauling services to
Agway or any Agway Affiliate, which shall include, without limitation, the
Leases identified in Schedule 1 hereto.
"ASSUMED LIABILITIES" means (a) to the extent reflected on the Final
Closing Statement of Assets and Liabilities, all: (i) obligations associated
with advance payments and security deposits received by Seller in connection
with Leases, (ii) liabilities included in Seller's general ledger account number
292800 titled "Other Liabilities - Other Reserves", provided that the balance of
said account shall be equal to or greater than Five Hundred Twenty-three
Thousand Dollars ($523,000.00), and (iii) all vendor payables directly
attributable to the Acquired Assets, (b) all obligations of Seller under the
Leases, the Leased Property, the Third Party Contracts, the Securitization
Agreements and the Intellectual Property Rights, and (c) personal property tax
Liabilities relating to the Leases and Leased Property but only to the extent
that such tax relates to the twelve (12) month period immediately preceding the
Closing Date; but specifically excluding the Excluded Liabilities.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
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Xxxxxxxx Xxxxxxxx xx Xxx Xxxx in which Agway's proceeding under Title 11 of the
United States Bankruptcy Code is pending.
"BHC ACT" means the United States Bank Holding Company Act.
"BUYER" has the meaning set forth in the preface above.
"BUYER AFFILIATES" has the meaning set forth in Section 2(a) below.
"BUYER'S EMPLOYEE BENEFITS" has the meaning set forth in Section
6(c)(iii)(A) below.
"CHANGE IN CONTROL AGREEMENT" has the meaning set forth in Section 4(i)
below.
"CLOSING" has the meaning set forth in Section 2(d) below.
"CLOSING DATE" has the meaning set forth in Section 2(d) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Official Unsecured Creditors' Committee of Agway,
Inc., appointed in Agway's case under chapter 11 of title 11 of the United
States Code.
"COMPETITIVE BUSINESS" has the meaning set forth in Section 6(d)(i) below.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in Section 5(b)
below.
"CURRENT PROGRESS PAYMENT LEASE" has the meaning set forth in Section
4(g)(xviii) below.
"DOMAIN NAMES" has the meaning set forth in Section 4(o) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan which is an Employee Pension Benefit Plan (including any
Multiemployer Plan) or (d) Employee Welfare Benefit Plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section
3(1).
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"ENVIRONMENTAL LAWS" means all applicable federal, state and local laws,
rules and regulations, orders, decrees, judgments, permits and licenses relating
to the protection or clean-up of the environment and activities or conditions
related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous
materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESTIMATED PURCHASE PRICE" has the meaning set forth in Section 2(c) below.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED ASSETS" means:
(a) corporate charters, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and
other documents relating to the organization, maintenance, and
existence of Seller;
(b) all stock (or any ownership interest in) the Subsidiaries;
(c) any of the rights of Seller under this Agreement (or under any
supplemental agreement between Seller and Buyer entered into on or
after the date of this Agreement);
(d) rights of Seller or any Affiliates under any governmental license,
permit or authorization;
(e) any rights to insurance (or proceeds of insurance) for claims arising
out of or related to Liabilities (other than Assumed Liabilities);
(f) all Tax-related assets (including claims or rights to any refunds of
Taxes and any deferred Income Tax assets), except personal property
tax receivables related to the Leases and Leased Property but only to
the extent that such tax receivable relates to the twelve (12) month
period immediately preceding the Closing Date;
(g) all Leases in Defensive Litigation and the Leased Property applicable
thereto;
(h) all Leases between Seller and any Affiliate of Seller and the Leased
Property applicable thereto;
(i) all Agway Petroleum Hauler Contracts and the Leased Property applicable
thereto;
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(j) all Third Party Contracts listed in Schedule 4(e)-2, attached hereto
and made part hereof;
(k) all cash accounts/balances other than restricted cash specifically
related to the Securitization Transactions;
(l) any and all asset balances related to the LeasePak conversion
(including, without limitation, accounts receivables and capitalized
costs);
(m) all capitalized debt issuance costs not specifically attributable to
the Securitization Transactions;
(n) prepaid postage;
(o) receivables from, and Leases with, Seller's employees and the Leased
Property applicable thereto;
(p) the equity interest in CoBank currently owned by Seller;
(q) all of the Rejected Leases and the Leased Property applicable thereto;
(r) all of the Progress Payment Leases rejected pursuant to Section
2(i)(ii) and the Leased Property applicable thereto;
(s) all of the Leases referred to in Schedule 4(h) and the Leased Property
applicable thereto; and
(t) Telmark's choses in action which (1) do not arise out of any Acquired
Asset(s) and/or (2) are not related to any Acquired Asset(s)
(including, without limitation, any choses in action that Telmark may
have against its officers and directors for breach of fiduciary duty).
"EXCLUDED LIABILITIES" means:
(a) any Liability of Seller for costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
(including, without limitation, as provided in Section 7(h) below);
(b) any intercompany debt owed by Seller to an Affiliate thereof;
(c) any Liability or obligation of Seller under this Agreement (or under
any supplemental agreement by and between Buyer and Seller entered into
on or after the date of this Agreement);
(d) Liabilities in connection with Leases in Defensive Litigation;
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(e) all unaccrued and/or undisclosed Liabilities;
(f) all Liabilities retained by Seller under Section 6(c) hereof;
(g) all Tax-related Liabilities for (1) any taxable year or period that
ends on or before the Closing Date and (2) with respect to any taxable
year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the
Closing Date, except for personal property tax Liabilities related to
the Leases or the Leased Property but only to the extent that such tax
relates to the twelve (12) month period immediately preceding the
Closing Date;
(h) all deferred Income Tax Liabilities and the contingency Tax reserves
reflected in Accounts 291600 and 291800 of Seller's book and records;
(i) Liabilities in connection with Leases between Seller and any Affiliate
of Seller;
(j) Liabilities in connection with Agway Petroleum Hauler Contracts;
(k) Liabilities in connection with the Third Party Contracts listed in
Schedule 4(e)-2;
(l) Liabilities in connection with any True Lease Guaranty;
(m) Liabilities under any Environmental Laws or otherwise in connection
with any environmental hazard or condition associated with any Acquired
Asset;
(n) Liabilities in connection with the Rejected Leases; and
(o) Liabilities in connection with the Progress Payment Leases rejected
pursuant to Section 2(i)(ii).
"EXECUTIVE OFFICER" means an "officer" as such term is defined in Rule
16a-1 of the regulations promulgated under the Exchange Act.
"FINAL ADJUSTMENT DATE" has the meaning set forth in Section 2(f) below.
"FINAL CLOSING STATEMENT OF ASSETS AND LIABILITIES" means the consolidated
statement of assets and liabilities of the Seller as of the last day of the
month in which all conditions to the obligations of the Parties to consummate
the transactions contemplated hereby have been satisfied or waived, which shall
be prepared by Buyer in the same manner as the Statements of Assets and
Liabilities, except as limited or restricted or modified by Sections 2(f) and
5(a) hereof.
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"FLORIDA MORTGAGE LEASE" means that certain Lease between Telmark and Sun
Valley of the River, Inc., successor-in-interest to Sun Valley Citrus, dated
July 13, 2000, Lease No. 51-700-64122-01-48206.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL ENTITY" has the meaning set forth in Section 3(a)(iii) below.
"GROSS FINANCE RECEIVABLES" means the total gross amount of Obligor
payments due now and in the future for all Leases managed in the Business. For
the sake of clarity, the term "Gross Finance Receivables" shall include, without
limitation, residuals, but no deduction shall be made for unearned finance
charges.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"INCOME TAX" means any federal, foreign, state or local income Tax,
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 PARTY" has the meaning set forth in Section 9(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9(d) below.
"INITIAL ADJUSTMENT" has the meaning set forth in Section 2(f)(i) below.
"INITIAL ADJUSTMENT DATE" has the meaning set forth in Section 2(f)(i)
below.
"INTELLECTUAL PROPERTY RIGHTS" means, collectively, all Proprietary
Intellectual Property and all Other Intellectual Property Rights.
"IRS" means the United States Internal Revenue Service.
"LEASE" means, collectively, all lease agreements, rental agreements,
master lease or rental agreements, conditional sales agreements, loan and
security agreements and promissory notes, however titled, with respect to
equipment or other property owned and/or provided by Seller, each evidencing the
payment obligation of an Obligor and entered into with respect to a Lease
Transaction (including, without limitation, those which have been or are
charged-off by Seller), together with all schedules, supplements and addenda
relative to any of the foregoing.
"LEASE DOCUMENTS" means all agreements, arrangements, understandings and
documents entered into in connection with or otherwise applicable to any Lease
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Transaction, including without limitation, all Leases and other agreements,
delivery and acceptance certificates, assignment agreements, waivers, Uniform
Commercial Code filings, warranties and guarantees, together with all schedules,
supplements and addenda relative to any of the foregoing.
"LEASE NET INVESTMENT" means, with respect to a given Lease, that amount of
the Portfolio Net Investment attributable to the Lease.
"LEASE PAYOFF AMOUNT" has the meaning set forth in Section 4(g)(xv) below.
"LEASES IN DEFENSIVE LITIGATION" means all those Leases and/or Lease
Transactions involved in litigation wherein Telmark or any other Seller is a
defendant, or wherein a counterclaim has been asserted against Telmark or any
other Seller, as listed in Appendix A, which appendix shall be updated as of the
Closing Date.
"LEASE TRANSACTION" means any lease or financing arrangement provided by
Seller with respect to any type of equipment or property and regardless of
whether the transaction takes the form of a lease agreement, a conditional sales
agreement, loan and security agreement, promissory note or other form, under
which Seller is the lessor, seller, lender, secured party or assignee thereof.
"LEASED PREMISES" means the premises to be leased by Buyer from Agway
pursuant to the terms and conditions of the Sublease Agreement.
"LEASED PROPERTY" means all buildings, equipment, vehicles and other
property leased, rented or otherwise provided pursuant to a Lease.
"LEASE IN PROCESS" has the meaning set forth in Section 4(g)(xviii) below.
"LIABILITY" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due.)
"LIBOR" means the offered rate for deposits in United States Dollars
(rounded upwards, if necessary, to the nearest sixteenth (1/16) of one percent
(1.00%)) for an interest period of one month which appears on the Reuters Screen
LIBOR Page as of
11:00 a.m., London time, on each business day.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) liens for property taxes not yet due and
payable or for property taxes that the taxpayer is contesting in good faith
through an appropriate proceeding
and (b) rights to use or ownership of assets provided by the Lease Documents.
"MATERIAL ADVERSE EFFECT" OR "MATERIAL ADVERSE CHANGE" means, with respect
to Seller, a material adverse effect on or change to (as the case may be) the
business or financial condition of Seller.
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"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"MOST RECENT STATEMENT OF ASSETS AND LIABILITIES" has the meaning set forth
in Section 4(b) below.
"NEW PROGRESS PAYMENT LEASE" has the meaning set forth in Section
4(g)(xviii) below.
"OBLIGOR(S)" means, with respect to any Lease, the Person(s) obligated to
make payments with respect to such Lease, including without limitation, any
guarantor thereof.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past practice.
"OTHER INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in Section
4(m) below.
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity.
"PORTFOLIO NET INVESTMENT" means the Gross Finance Receivables reduced by
unearned finance charges.
"PRELIMINARY CLOSING STATEMENT OF ASSETS AND LIABILITIES" means the
consolidated statement of assets and liabilities of Seller as of the end of the
last day of the month that is one (1) month prior to the month in which the
Closing takes place (for example, if the Closing Date were February 28, 2003,
the statement would be based upon Seller's assets and liabilities as of the end
of January 31, 2003), which will be prepared by Seller in the same manner as the
Statements of Assets and Liabilities, adjusted for the net cash activity
resulting from receivable payment receipts less receivable disbursement fundings
during the month in which the Closing takes place, except as limited or
restricted or modified by Sections 2(f) and 5(a) hereof.
"PRIMARY RESERVE HOLDBACK" has the meaning set forth in Section 2(h)(a)
below.
"PROGRESS PAYMENT LEASE" means each Lease in Process with respect to which
any partial, progress or other such payment(s) have been made by Seller. The
term includes, without limitation, each Current Progress Payment Lease and each
New Progress Payment Lease identified by Seller pursuant to Section 4(g)(xviii).
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"PROPRIETARY INTELLECTUAL PROPERTY" has the meaning set forth in Section
4(m) below.
"PURCHASE PRICE" has the meaning set forth in Section 2(c) below.
"REJECTED LEASES" has the meaning set forth in Section 2(i)(i) below.
"RETAINED EMPLOYEES" has the meaning set forth in Section 6(c)(i)(A) below.
"RETENTION BONUS AGREEMENT" has the meaning set forth in Section 4(i)
below.
"SEC" means the Securities and Exchange Commission.
"SECURITIZATION AGREEMENTS" has the meaning set forth in Section 4(n)(i)
below.
"SECURITIZATION TRANSACTIONS" has the meaning set forth in Section 4(n)(i)
below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning set forth in the preface above.
"SELLER PERMITS" has the meaning set forth in Section 4(d) below.
"SERVICING AGREEMENT" means a Servicing Agreement relative to Buyer's
servicing of those Leases which are not acquired by Buyer pursuant to this
Agreement.
"STATEMENTS OF ASSETS AND LIABILITIES" has the meaning set forth in Section
4(b) below.
"SUBLEASE AGREEMENT" means a Sublease Agreement relative to Buyer's
occupation of a portion of the real property located at 000 Xxxxxxxxx Xxxxx,
Xxxxxx, Xxx Xxxx .
"SUBSIDIARIES" has the meaning set forth in the preface above.
"TAX" or "TAXES" has the meaning set forth in Section 7(a)(i) below.
"TAX RETURN" has the meaning set forth in Section 7(a)(ii) below.
"TERMINATION WINDOW" has the meaning set forth in Section 10(a)(v) below.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9(d)(i) below.
"THIRD PARTY CONTRACTS" has the meaning set forth in Section 4(e) below.
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"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 6(c)(i)(B)
below.
"TRANSITION SERVICES AGREEMENT" means a Transition Services Agreement
relative to services to be provided by Agway to Buyer after the Closing.
"TREASURY REGULATIONS" means the rules and regulations promulgated under
the Code.
"TRUE LEASE GUARANTY" means any oral or written tax, true lease or other
guaranty, however titled, given to an Obligor by or on behalf of Seller and/or
Agway relative to the tax treatment associated with any Leased Property or any
Lease or amounts expended by an Obligor thereunder.
"WARN ACT" has the meaning set forth in Section 6(c)(vi) below.
"WORKER SAFETY LAWS" means all applicable federal, state or local laws,
rules and regulations, orders, decrees, judgments, permits and licenses relating
to public and worker health and safety.
SECTION 2. PURCHASE AND SALE OF ASSETS; OTHER CLOSING TRANSACTIONS.
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(a) Purchase and Sale of Assets. On and subject to the terms and conditions
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of this Agreement, Buyer agrees to purchase and as applicable cause certain of
its Affiliates (the "BUYER AFFILIATES") to purchase from Seller, and Seller
agrees to sell, transfer, convey, and deliver to Buyer and the Buyer Affiliates,
all of the Acquired Assets at the Closing for an aggregate amount equal to the
Purchase Price.
(b) Assumption of Liabilities. On and subject to the terms and conditions
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of this Agreement, Buyer agrees to assume and become responsible, together with
the Buyer Affiliates, for all of the Assumed Liabilities at the Closing. Neither
Buyer nor any Buyer Affiliate will assume or have any responsibility with
respect to any other Liability or obligation of Seller not included in the
definition of Assumed Liabilities.
(c) Purchase Price. The purchase price (the "PURCHASE PRICE") to be paid by
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Buyer to Seller shall be equal to the tangible net book value of the Acquired
Assets reported on the Final Closing Statement of Assets and Liabilities, less
the book value of the Assumed Liabilities reported on the Final Closing
Statement of Assets and Liabilities, less Four Million Dollars ($4,000,000.00).
In addition, if the delinquency percentage for the Portfolio Net Investment
which are sixty (60) or more days contractually delinquent is greater than one
and seventy-four hundredths percent (1.74%) of the Portfolio Net Investment
(which percentage shall be calculated consistently with information provided
Buyer by Seller during Buyer's due diligence), the Purchase Price will be
reduced in relation to the number of basis points in excess of one and
seventy-four hundredths percent (1.74%) as follows: (i) if the excess is less
than twenty-six (26) basis points, the Purchase Price reduction will be equal to
one-quarter percent (0.25%) of the then-current Portfolio Net Investment; (ii)
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if the excess is twenty-six (26) to fifty (50) basis points, the Purchase Price
reduction will be equal to one-half percent (0.50%) of the then-current
Portfolio Net Investment; (iii) if the excess is fifty-one (51) to seventy-five
(75) basis points, the Purchase Price reduction will be equal to three-quarters
percent (0.75%) of the then-current Portfolio Net Investment; (iv) if the excess
is seventy-six (76) to one hundred (100) basis points, the Purchase Price
reduction will be equal to one percent (1.00%) of the then-current Portfolio Net
Investment; and (v) without limiting Section 5(a)(1)(x), if the excess is
greater than one hundred (100) basis points, such excess shall constitute a
Material Adverse Change.
The Purchase Price will be calculated by Seller on a preliminary basis (the
"ESTIMATED PURCHASE PRICE") at Closing based on the Preliminary Closing
Statement of Assets and Liabilities which Seller shall provide to Buyer and
legal counsel to the Committee by 2:00 p.m. Eastern Time on the Closing Date.
The method for calculating the Estimated Purchase Price and the Purchase Price
is set forth in Exhibit A hereto; for the avoidance of doubt, an example of the
application of that method to Seller's balance sheet dated as of September 30,
2002 is set forth therein. The Estimated Purchase Price is subject to
post-Closing adjustment as provided in Section 2(f). The Estimated Purchase
Price, less the Primary Reserve Holdback as set forth in Section 2(h)(a) below
and the Adjustments Reserve Holdback as set forth in Section 2(h)(b) below,
shall be paid at Closing by Buyer's delivery of cash by wire transfer to one or
more bank accounts, or otherwise, in accordance with the settlement statement
executed and delivered by Seller to Buyer pursuant to Section 8(a)(xii) below.
(d) The Closing. The closing of the transactions contemplated by this
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Agreement (the "CLOSING") shall take place at the offices of Seller's counsel,
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X., commencing at 9:00 a.m. local time on the last business day of the month
in which all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby have been satisfied or waived (other than
conditions with respect to actions the respective Parties will take at the
Closing itself), or such other date and time as the Parties may mutually
determine (the "CLOSING DATE").
(e) Deliveries at the Closing. At the Closing, (i) Agway and Seller will
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deliver to Buyer the various certificates, instruments, and documents referred
to in Section 8(a) below; (ii) Buyer will deliver to Agway and Seller the
various certificates, instruments, and documents referred to in Section 8(b)
below; (iii) with respect to the Acquired Assets, Seller will execute,
acknowledge (if appropriate), and deliver to Buyer (A) one or more assignments
(including any applicable real property and Intellectual Property transfer
documents) in substantially the form of Exhibit B, attached hereto and
incorporated herein by reference, and such additional form(s) as may be
hereafter agreed upon by Buyer and Seller, (B) such other instruments of sale,
transfer, conveyance, and assignment as Buyer and its counsel reasonably may
request (including, without limitation, mortgage and UCC-3 assignments), and (C)
such other instruments and documents as Buyer and its counsel reasonably may
request (including, without limitation, powers of attorney); (iv) Buyer will
execute, acknowledge (if appropriate), and deliver to Seller (A) one or more
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assumptions in substantially the form of Exhibit C, attached hereto and
incorporated herein by reference, and (B) such other instruments of assumption
as Seller and its counsel reasonably may request; and (v) Buyer will deliver to
Seller the consideration specified in Section 2(c) above.
(f) Post-Closing Adjustments to Estimated Purchase Price.
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(i) Initial Post-Closing Adjustment. The Parties acknowledge and agree
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that, because the Closing will take place on the last day of a month, certain
components of the Estimated Purchase Price (including, without limitation, the
final cash flow adjustment required under the definition of "Preliminary Closing
Statement of Assets and Liabilities", the delinquency percentage adjustment
referred to in Section 2(c) and the adjustment associated with Xxxxx Fargo's
rejection of certain Progress Payment Leases pursuant to Section 2(i)(ii)) will
be unascertainable as of the Closing and the Estimated Purchase Price paid at
Closing will be based, in part, upon Seller's and Buyer's estimate of such
components. Therefore, on or before the third (3rd) day immediately following
the Closing Date, Buyer and Seller shall agree in writing upon the initial
adjustment (if any) required to be made to the Estimated Purchase Price based
upon the cash flows and other activities of Seller that may occur through the
close of business on the Closing Date (the "INITIAL ADJUSTMENT"). On the day
immediately following the Closing Date, Seller shall provide to Buyer all data
and information necessary and/or desirable to appropriately determine the
Initial Adjustment. The Estimated Purchase Price, as adjusted by the Initial
Adjustment, may be hereinafter referred to as the "ADJUSTED ESTIMATED PURCHASE
PRICE". If Buyer and Seller agree upon the Initial Adjustment in writing as
aforesaid, Seller shall immediately deliver a copy of said writing to the
Committee. If Buyer and Seller are unable to agree upon the Initial Adjustment
in the manner set forth above, the Initial Adjustment shall be determined via
arbitration using an independent accounting firm under the same terms and
conditions as described in Subsection (ii), immediately below, except that the
matter shall be submitted to such accounting firm as soon as practicable after
the third (3rd) day immediately following the Closing Date. The date upon which
the Initial Adjustment is finally determined may be hereinafter referred to as
the "INITIAL ADJUSTMENT DATE", provided that, if the Initial Adjustment is
finally determined prior to the third (3rd) day immediately following the
Closing Date, the Initial Adjustment Date shall be deemed to be the third (3rd)
day immediately following the Closing Date.
(ii) Final Post-Closing Adjustment. Not later than sixty (60) days
-------------------------------
following the Closing, Buyer shall cause to be prepared and delivered to Seller
and legal counsel to the Committee a Final Closing Statement of Assets and
Liabilities as modified and limited by Section 5(a) hereof and prepared in
accordance with GAAP consistently applied and on a basis consistent with the
preparation of the Preliminary Closing Statement of Assets and Liabilities, and
Buyer shall calculate the Purchase Price based upon the Final Closing Statement
of Assets and Liabilities and all of the adjustments set forth in this
Agreement. Seller shall provide Buyer with such assistance as may be requested
by Buyer in connection with the preparation of the Final Closing Statement of
Assets and Liabilities. Seller, if it disputes the calculation of the Purchase
Price or the Final Closing Statement of Assets and Liabilities, shall notify
13
Buyer in writing within thirty (30) days after receipt of the Final Closing
Statement of Assets and Liabilities and Purchase Price computation, which notice
shall specify in reasonable detail each adjustment proposed by Seller. If Seller
does not so notify Buyer, then the Purchase Price shall be as set forth on
Buyer's computation. If Seller gives notice of any proposed adjustments, during
the thirty (30) day period following the date of such notice, Seller and Buyer
shall attempt to resolve the appropriateness of such proposed adjustments. If at
the end of such thirty (30) day period Seller and Buyer shall have failed to
reach a written agreement with respect to all such proposed adjustments, the
proposed adjustments remaining in dispute shall be referred to arbitration to an
accounting firm mutually acceptable to Buyer and Seller. If Buyer and Seller are
unable to agree on an accounting firm, a nationally recognized accounting firm
shall be chosen by lot by Buyer and Seller (other than KPMG, LLP and
PricewaterhouseCoopers LLP) to determine the appropriateness of the remaining
proposed adjustments. Such agreed upon or chosen (as the case may be) accounting
firm may be hereinafter referred to as the "ACCOUNTING FIRM". The adjustments so
determined by written agreement of Seller and Buyer or by arbitration, as the
case may be, shall be reflected in the final Purchase Price. Notwithstanding the
foregoing, if the aggregate of all amounts in dispute with respect to all good
faith disputes referred to in this Section 2.5(f) shall be less than $100,000,
such disputes shall not be resolved by the Accounting Firm (as set forth in this
Section 2.5(f)), but shall instead be resolved as follows: (x) fifty percent
(50%) of the aggregate of all amounts in dispute shall be deemed to have been
resolved in Seller's favor, and (y) fifty percent (50%) of the aggregate of all
amounts in dispute shall be deemed to have been resolved in Buyer's favor. The
date that the Purchase Price is finally determined means the "FINAL ADJUSTMENT
DATE." The costs of the Accounting Firm shall be borne by the party whose
position is not supported by the Accounting Firm's final determination, or
equally by Buyer and Seller if the Accounting Firm's final determination of the
Purchase Price supports neither Buyer's nor Seller's position, and each of Buyer
and Seller will promptly provide such information to the Accounting Firm as such
firm shall request.
(g) Payment of Purchase Price Adjustments.
-------------------------------------
(i) Payment Based Upon Initial Post-Closing Adjustment. If the
-----------------------------------------------------
Adjusted Estimated Purchase Price exceeds the Estimated Purchase Price,
Buyer shall, on the Initial Adjustment Date, pay such excess, together with
interest thereon from the Closing Date to the date such excess is paid at a
fluctuating rate per annum which at all times shall be equal to the
Effective Federal Funds Rate as published in the Wall Street Journal on the
Closing Date, by wire transfer of immediately available funds, to such bank
account in the United States as Seller shall designate; provided that Buyer
shall withhold therefrom and place in the Primary Reserve Holdback an
amount equal to one percent (1.00%) of such excess amount. If the Estimated
Purchase Price exceeds the Adjusted Estimated Purchase Price, on the
Initial Adjustment Date (i) Seller shall pay such excess, together with
interest thereon from the Closing Date to the date such excess is paid at a
fluctuating rate per annum which at all times shall be equal to the
Effective Federal Funds Rate as published in the Wall Street Journal on the
Closing Date, by wire transfer of immediately available funds, to such bank
account in the United States as Buyer shall designate, and (ii) Buyer shall
14
withdraw from the Primary Reserve Holdback and pay to Seller an amount
equal to one percent (1.00%) of such excess.
(ii) Payment Based Upon Final Post-Closing Adjustment. With respect to
------------------------------------------------
the adjustment (if any) required pursuant to Section 2(f)(ii), if the final
Purchase Price exceeds the Adjusted Estimated Purchase Price, Buyer shall
pay such excess, together with interest thereon from the Closing Date to
the date such excess is paid at a fluctuating rate per annum which at all
times shall be equal to the LIBOR as in effect from time-to-time, within
seven (7) days after the Final Adjustment Date, by wire transfer of
immediately available funds, to such bank account in the United States as
Seller shall designate; provided that Buyer shall withhold therefrom and
place in the Primary Reserve Holdback an amount equal to one percent
(1.00%) of such excess amount. If the Adjusted Estimated Purchase Price
exceeds the final Purchase Price, (i) Seller shall pay such excess,
together with interest thereon from the Closing Date to the date such
excess is paid at a fluctuating rate per annum which at all times shall be
equal to the LIBOR as in effect from time-to-time, within seven (7) days
after the Final Adjustment Date, by wire transfer of immediately available
funds, to such bank account in the United States as Buyer shall designate,
and (ii) Buyer shall withdraw from the Primary Reserve Holdback and pay to
Seller an amount equal to one percent (1.00%) of such excess.
(iii) Payments by Buyer; Adjustments Reserve Holdback. To the
----------------------------------------------------
extent Buyer is required to pay any amount to Seller pursuant to Section
2(g)(i) and/or Section 2(g)(ii), Xxxxx Fargo may, at its option, withdraw
and pay to Seller all or any part of such amount(s) from the Adjustments
Reserve Holdback.
(h) Primary Reserve Holdback and Adjustments Reserve Holdback. Buyer
-----------------------------------------------------------
shall hold back from the Estimated Purchase Price (a) an amount equal to
one percent (1.00%) thereof, and shall place said amount in a reserve fund
(the "PRIMARY RESERVE HOLDBACK") which shall be established, maintained and
administered as set forth herein and pursuant to Addendum 1, attached
hereto and made a part hereof, and (b) an amount equal to one and one-half
percent (1.50%) of the Estimated Purchase Price, and shall place said
amount in a reserve fund (the "ADJUSTMENTS RESERVE HOLDBACK") which shall
be established, maintained and administered as set forth herein and
pursuant to Addendum 2.
(i) Review of Certain Leases.
------------------------
(i) Pre-Closing Review of Post June 30, 2002 Leases. From the date
-------------------------
hereof until the Closing Date, Buyer shall be entitled to perform
additional review of Leases approved, entered into, acquired and/or
extended or otherwise modified by Seller on or after July 1, 2002. In
the event Buyer determines, in its sole discretion, that any of such
Leases were not made in Seller's ordinary course of business or
otherwise do not comply with Seller's stated credit policies, Buyer
may, at any time on or before the sixth (6) day immediately preceding
the Closing Date, notify
15
Seller in writing (which writing shall specifically identify the deficiency
identified by Buyer) that Buyer has rejected the relevant Leases (the
Leases so rejected, if any, may be collectively referred to as the
"REJECTED LEASES").
(ii) Progress Payment Leases.
-----------------------
(A) Pre-Closing Review. At any time on or before the sixth
-------------------
(6th) day immediately preceding the Closing Date, Buyer may, in its sole
discretion, reject in writing any or all Progress Payment Leases.
(B) Post-Closing Review. At any time on or before the third
--------------------
(3rd) day immediately following the Closing Date, Buyer may, in its sole
discretion, reject in writing any or all New Progress Payment Leases.
SECTION 3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
---------------------------------------------------------
(a) Representations and Warranties Regarding Seller and Agway. Seller
---------------------------------------------------------
and Agway, jointly and severally, hereby represent and warrant to Buyer as
follows:
(i) Organization. Agway is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware.
Telmark is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
requisite limited liability company power and authority to carry on its
business as now being conducted. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
it is organized and has the requisite corporate (in the case of a
Subsidiary that is a corporation) or other power and authority to carry on
its business as now being conducted. Telmark and each of the Subsidiaries
are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary.
(ii) Authority. Seller and Agway have all requisite corporate or
---------
other power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Seller and Agway and the consummation by each of Seller and
Agway of the transactions contemplated hereby have been duly authorized by
all necessary corporate or other action on the part of Seller and Agway.
This Agreement has been duly executed and delivered by Seller and Agway,
and (assuming the valid authorization, execution and delivery of this
Agreement by Buyer and the validity and binding effect hereof on Buyer)
constitutes the valid and legally binding obligation of Seller and Agway,
enforceable against each of Seller and Agway in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or limiting
16
creditors' rights generally and by general principles of equity and public
policy.
(iii) Consents and Approvals; No Violation. Assuming that all
---------------------------------------
consents, approvals, authorizations and other actions described below in
this Section 3(a)(iii) or in Schedule 3(a)(iii) relative to any Government
Entity have been obtained and all filings and obligations described below
in this Section 3(a)(iii) or in Schedule 3(a)(iii) relative to any
Government Entity have been made, and except as described in Schedule
3(a)(iii), the execution and delivery of this Agreement by each of Seller
and Agway does not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof by Seller and Agway will
not, result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give to others a right of termination,
cancellation or acceleration of any obligation or the loss of a material
benefit under, or result in the creation of any Lien upon any of the
Acquired Assets under, any provision of (i) the charter or bylaws of
Telmark or Agway, (ii) any provision of the comparable charter or
organization documents of any of the Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Agway or
Seller (other than the Lease Documents) or (iv) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Agway or
Seller or any of their respective properties or assets. No filing or
registration with, or authorization, consent or approval of, any United
States or Canadian federal, state or provincial court, commission,
governmental body, regulatory agency, authority or tribunal (each, a
"GOVERNMENTAL ENTITY") is required by or with respect to Agway or Seller in
connection with the execution and delivery of this Agreement by Agway and
Seller or is necessary for the consummation of the transactions
contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx Act or the BHC
Act, (ii) such filings as may be required in connection with the Taxes
described in Section 7, (iii) such filings and consents as may be required
under federal and state finance, lending and banking laws, (iv) approval by
the Bankruptcy Court, and (v) such other consents, orders, authorizations,
registrations, declarations and filings identified in Schedule 3(a)(iii).
(iv) Brokers. No broker, investment banker or other person
-------
(other than Xxxxxxx Sachs & Co., the fees and expenses of which will be
paid by Seller) is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Agway or Seller.
(b) Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to Agway and Seller as follows:
(i) Organization. Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Iowa.
17
(ii) Authority. Buyer has all requisite corporate power and
---------
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer, and (assuming the valid
authorization, execution and delivery of this Agreement by Agway and
Seller and the validity and binding effect hereof on Agway and Seller)
constitutes the valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or limiting creditors'
rights generally and by general principles of equity and public
policy.
(iii) Consents and Approvals; No Violation. Assuming that all
--------------------------------------
consents, approvals, authorizations and other actions described below
in this Section 3(b)(iii) relative to any Government Entity have been
obtained and all filings and obligations described below in this
Section 3(b)(iii) relative to any Government Entity have been made,
the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give to others a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of
Seller under, any provision of (i) the charter or bylaws of Buyer,
(ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or
license applicable to Buyer or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or its
properties or assets. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is
required by or with respect to Buyer in connection with the execution
and delivery of this Agreement by Buyer or is necessary for the
consummation of the transactions contemplated by this Agreement,
except for (i) in connection, or in compliance, with the provisions of
the Xxxx-Xxxxx-Xxxxxx Act or the BHC Act, (ii) such filings as may be
required in connection with the Taxes described in Section 7, (iii)
such filings and consents as may be required under federal and state
commercial finance, lending and banking laws and (iv) such other
consents, orders, authorizations, registrations, declarations and
filings identified in Schedule 3(b)(iii).
(iv) Brokers. No broker, investment banker or other person is
-------
entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Buyer.
18
SECTION 4. REPRESENTATIONS AND WARRANTIES CONCERNING THE BUSINESS. Agway
-------------------------------------------------------
and Seller, jointly and severally, represent and warrant to Buyer that the
statements contained in this Section 4 are true and correct as of the date
hereof and will be true and correct as of the Closing Date.
(a) Title to Acquired Assets. Except as set forth in Schedule 4(a), Seller
------------------------
has good and marketable title to the Acquired Assets and to all other properties
and assets of Seller (including, without limitation, those shown on the Most
Recent Statement of Assets and Liabilities or acquired after the date thereof,
except for properties and assets disposed of or repaid in the Ordinary Course of
Business since the date of the Most Recent Statement of Assets and Liabilities),
free and clear of all Liens, and a valid leasehold interest in the leased
properties and leased equipment used by Seller in connection with the Business.
(b) Financial Information. Included in Schedule 4(b) is a statement of
----------------------
assets and liabilities for Seller as of November 30, 2002 (the "MOST RECENT
STATEMENT OF ASSETS AND LIABILITIES") and as of June 30, 2002 (together with the
Most Recent Statement of Assets and Liabilities, prepared in accordance with
GAAP consistently applied, the "STATEMENTS OF ASSETS AND LIABILITIES") derived
from Telmark's unaudited consolidating balance sheets as of such date. The
Statements of Assets and Liabilities have been prepared on a basis consistent
with the financial information provided to Buyer during due diligence. All
Acquired Assets which are either material or which would be required to be
recorded on the books and records of Seller in accordance with GAAP and Seller's
past accounting practices, are set forth in the Most Recent Statement of Assets
and Liabilities. All Assumed Liabilities which are material and which would be
required to be recorded on the books and records of Seller in accordance with
GAAP and Seller's past accounting practices, are set forth in the Most Recent
Statement of Assets and Liabilities. The Statements of Assets and Liabilities
are prepared in accordance with GAAP and are complete and accurate in all
material respects and are consistent with the internal books and records of
Seller. Neither the Estimated Purchase Price, nor the Purchase Price agreed upon
or otherwise determined pursuant to Section 2(f), includes any amount which is
not attributable to an Acquired Asset.
(c) Subsequent Events. Except as set forth in Schedule 4(c), since the date
-----------------
of the Most Recent Statement of Assets and Liabilities, there has not been any
Material Adverse Change in the Business.
(d) Permits and Compliance. Seller is in possession of all licenses,
------------------------
grants, authorizations, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Seller to lease and operate its properties or to carry on the Business as it is
now being conducted (the "SELLER PERMITS"). Except as set forth in Schedule
4(d), no suspension or cancellation of any of the Seller Permits is pending or,
to the knowledge of Seller, threatened. Seller is not in violation of (A) its
charter, bylaws or other organizational documents, (B) any applicable law,
ordinance, administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction over Seller.
19
Except as set forth in Schedule 4(d), no event of default or event that, but for
the giving of notice or the lapse of time or both, would constitute an event of
default exists under any indenture, mortgage, loan agreement, note or other
agreement or instrument for borrowed money, any guarantee of any agreement or
instrument for borrowed money or any lease (other than the Lease Documents),
contractual license or other agreement or instrument to which Seller is a party
or by which Seller is bound or to which any of the properties, assets or
operations of Seller is subject.
(e) Contracts. Schedule 4(e), attached hereto and made a part hereof, lists
---------
all written contracts and other written agreements, other than Lease Documents,
to which Seller is a party, including without limitation, all software licenses
and assignments, all other licenses and assignments relative to Intellectual
Property Rights, and all vendor, dealer and broker agreements (collectively, the
"THIRD PARTY CONTRACTS"). Seller has delivered to Buyer correct and complete
copies of the Third Party Contracts listed on Schedule 4(e) (as amended to
date). Buyer shall, at any time prior to the consummation of the Closing,
identify on Schedule 4(e)-2 those Third Party Contracts which it does not wish
to acquire. With respect to each Third Party Contract not listed in Schedule
4(e)-2 and except as set forth in Schedule 4(e), as of the date hereof: (A) the
agreement is valid and enforceable in accordance with its terms in all material
respects, subject to limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium, and other similar laws affecting creditor's
rights generally and subject to the effect of public policy and general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, and other similar doctrines affecting the enforceability
of agreements generally; (B) the agreement will continue to be valid and
enforceable to the same extent as described in clause (A), and in full force and
effect following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above); (C)
no party is in breach or default, and no event has occurred which, with the
giving of notice, the lapse of time or both, would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement, and (D) the written agreement(s) provided to Buyer during due
diligence relative thereto is an exclusive statement of the terms and conditions
of the agreement between the parties thereto.
(f) Real Property. Other than as set forth on Schedule 4(f) and except to
--------------
the extent any Leased Property which is attached to real property might be
considered a part thereof, Seller owns no real property related to the
operations of the Business. Schedule 4(f) attached hereto and made a part hereof
lists and describes briefly all real property leased or subleased to Seller,
relating to the Business. Seller is not a party to any written real property
lease or sublease agreement, and all oral real property leases and subleases to
which Seller is a party shall be terminated effective as of Closing without
penalty or further obligation on the part of Seller.
(g) Lease Transactions and Lease Documents.
--------------------------------------
(i) Except as set forth in Schedule 4(g)(i), each Lease constitutes a
valid, binding, non-cancelable and enforceable (except as such enforcement
20
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or limiting creditors' rights generally)
payment obligation of the Obligor in accordance with its terms, and no
Obligor is bankrupt, deceased or Out of Business as of the Closing Date. As
used herein, "OUT OF BUSINESS" shall mean, as to any Obligor, its not
actively engaging in or otherwise conducting the business conducted by it
as of the time it entered into its Lease. Each Lease Document is genuine,
true and correct, and, to the extent applicable, has been duly executed by,
and is binding and enforceable (except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or limiting creditors' rights generally) against, all of
the parties thereto.
(ii) Except as set forth in Schedule 4(g)(ii), each Lease was
originated by Seller in the Ordinary Course of Business or, in the case of
any Lease purchased by Seller, was acquired by Seller for proper
consideration and on arm's length terms and was validly assigned to Seller
by the originator of such Lease without recourse.
(iii) Each Lease contains customary and enforceable provisions
adequate to enable realization against the Obligor and/or the related
Leased Property.
(iv) Except as set forth in Schedule 4(g)(iv), each Lease complies
with all requirements of applicable United State and Canadian federal,
state, provincial and local laws and regulations.
(v) Subject only to the Securitization Transactions, Seller has good
and marketable title to each Lease and Seller's interest in the Leased
Property (subject to the terms of the applicable Lease) and is the sole
owner thereof, free of all Liens.
(vi) Subject only to the Securitization Transactions or as described
in Schedule 4(g)(vi), no Person (other than Seller) has a participation in
or other right to receive scheduled payments under any Lease, and Seller
has not taken any action to convey any right to any Person that would
result in such Person having a right to scheduled payments received with
respect to any Lease.
(vii) Each Lease was originated or acquired by Seller without any
fraud or misrepresentation.
(viii) Each Obligor had a location in the United States or Canada at
the inception of the Lease; and the asset location for each Lease and
address for each Lease in Seller's records is within the United States or
Canada and is accurate.
(ix) Seller warrants that Buyer shall suffer no Adverse Consequences
due to the failure by Seller or any other Person to make a proper filing
21
and or take other actions required to be made, taken or performed in any
jurisdiction to give Seller an ownership or perfected security interest in
all Leased Property and all other collateral securing an Obligor's
performance under any Lease.
(x) There exists a separate lease file pertaining to each Lease, and,
except as set forth in Schedule 4(g)(x), each such lease file contains the
original Lease and the original or a copy of all of the other Lease
Documents applicable thereto.
(xi) Each Lease prohibits the sale, assignment or transfer of the
Obligor's interest therein, the assumption of the Lease by another person
in a manner that would release the Obligor thereof from the Obligor's
obligation, or any sale, assignment or transfer of the related Leased
Property, without the prior consent of the lessor, other than Leases which
may (a) permit assignment to a subsidiary, corporate parent or other
affiliate, (b) permit the assignment to a third party, provided the Obligor
remains liable under the Lease or (c) permit assignment to a third party
with a credit standing (determined by Seller in accordance with its
underwriting policy and practice at the time for an equivalent contract
type, term and amount) equal to or better than the original Obligor.
(xii) The Obligor under each Lease is required to make payments
thereunder (a) in United States dollars (except, as to each Obligor located
in Canada at the time its Lease was entered into, in Canadian dollars) and
(b) in fixed amounts and on fixed and predetermined dates.
(xiii) Each Lease requires the Obligor to assume responsibility for
payment of all expenses in connection with the maintenance and repair of
the applicable Leased Property, the payment of all premiums for insurance
of such Leased Property and the payment of all taxes (including sales and
property taxes) relating to such Leased Property.
(xiv) Each Lease requires the Obligor thereunder to make all scheduled
payments thereon under all circumstances and regardless of the condition or
suitability of the related Leased Property and notwithstanding any defense,
set-off or counterclaim that the Obligor may have against the manufacturer,
supplier, lessor or lender (as the case may be); all payments were made by
the Obligors when and as indicated on the data tape information provided
during due diligence, and will have been made on the dates indicated on the
data tape provided on the Closing Date; and no payment or other amount due
under any Lease has been made by any party other than the applicable
Obligor other than payments made by a party pursuant to a written
assignment of proceeds which is included in the applicable lease file.
(xv) The terms of each Lease provide that, if the Leased Property is
damaged or destroyed, the Obligor is required either (a) to repair such
equipment, (b) to make a termination payment to the lessor in an amount not
less than the sum of all unpaid scheduled payments through the end of the
22
original (or, as applicable, renewal) term of the Lease plus the booked
residual of the Leased Property, or, as appropriate, the principal amount
then outstanding plus accrued interest thereon and the booked residual of
the Leased Property (except some amounts be discounted at a rate set forth
in the Lease Documents) (the "LEASE PAYOFF AMOUNT") or (c) in some cases,
to replace such damaged or destroyed Leased Property with other property of
comparable age, use and value.
(xvi) Seller and Agway warrant that Buyer shall suffer no Adverse
Consequence as a result of or in connection with (a) the termination or
cancellation of, or the return of any Leased Property applicable to, a
Lease with any federal, state, municipal or other government entity (or any
other entity entitled to exercise rights of any of the foregoing) caused by
non-funding, non-appropriation or otherwise, (b) any True Lease Guaranty,
or (c) any environmental hazard or condition associated with any Acquired
Asset or the Leased Premises (including, without limitation, asbestos).
(xvii) No provision of any Lease has been waived, altered or modified
in any material respect; provided that, with respect to any given Lease,
this Subsection (xvii) shall not apply to any waiver(s), alteration(s)
and/or modification(s) thereto which (a) were made in the ordinary course
of Seller's business and within Seller's credit and collection policies as
presented to Buyer during due diligence, and (b) are documented in the
applicable lease file, to the extent that such waiver(s), alteration(s)
and/or modification(s) has not and does not cause the financial obligations
of the Obligor to differ from that represented on Seller's system of
record.
(xviii) All Leased Property has been properly delivered and installed,
and each Obligor has accepted the related Leased Property and has had a
reasonable opportunity to inspect and test such Leased Property, except
with respect to Leases in process in the ordinary course of business (each
such Lease may be referred to as a "LEASE IN PROCESS"). Each Lease in
Process with respect to which any partial, progress or other such
payment(s) have been made by Seller is listed in Schedule 4(g)(xviii)
(each, a "CURRENT PROGRESS PAYMENT LEASE"), which identifies as to each
Progress Payment Lease, without limitation, the date upon which the first
partial, progress or other such payment was made and the aggregate amount
of such payments. At Closing, Schedule 4(g)(xviii) shall also identify,
with respect to each Progress Payment Lease, the name of the party(ies) to
whom the partial, progress or other such payment(s) have been made. Within
two (2) days after the Closing Date, Seller shall supplement Schedule
4(g)(xviii) in writing, identifying all Progress Payment Leases that were
in existence as of the close of business on the Closing Date but not
identified in Schedule 4(g)(xviii) as of the time Xxxxx Fargo gave notice
pursuant to Section 2(i)(ii)(A) of this Agreement. Each Progress Payment
Lease identified in such written supplement may be hereinafter referred to
as a "NEW PROGRESS PAYMENT LEASE". With respect to each Progress Payment
Lease not rejected by Buyer pursuant to Section 2(i)(ii), each party to
23
whom such payment(s) was/were made is obligated to pay such payment(s) to
Buyer if the applicable Lease Property is not properly delivered, installed
and accepted on or before the ninetieth (90th) day following the Closing
Date (or, with respect to those Leases in process under which the Lease
Property is a building, on or before the one hundred eightieth (180th) day
following the Closing Date).
(xix) Each Lease constitutes and will continue to constitute a valid
reservation of title by Seller to the related Leased Property.
(xx) No consent of any Obligor is required to assign and transfer any
Lease to Buyer and each Lease is a complete and exclusive statement of the
entire agreement between Seller and Obligor.
(xxi) All security deposits held by Seller in connection with Obligors
are maintained in an account in compliance with all applicable laws.
(xxii) All of the information concerning the Leases, the Leased
Property and the Obligors which has been furnished
by the Seller to the Buyer is true, correct and complete.
(xxiii) Seller has provided all notices and performed such other acts
as may be required by law or otherwise in order to cause all Lease renewal
provisions to be enforceable in accordance with the terms thereof.
(xxiv) No extension, deferral or renewal has been granted to any
Obligor other than in strict accordance with Seller's written policies
provided to Buyer during due diligence.
(xxv) Schedule 4(g)(xxv) lists each Lease Transaction with respect to
which a mortgage, deed of trust or similar instrument applicable to
security interests in real property has been recorded, and includes,
without limitation, (a) the name and address of the Obligor, (b) the
applicable Lease Net Investment, (c) the type of security instrument
recorded (e.g., mortgage, deed of trust, etc.), and (d) the state (or, with
respect to filings made in Canada, the province) within which the office
where the mortgage, deed of trust or other instrument is recorded is
located.
(xxvi) As of the Closing Date, each assignment delivered to Buyer
pursuant to Section 2(e) of this Agreement relative to a mortgage, deed of
trust or other security instrument listed in Schedule 4(g)(xxv) shall be,
without change (a) recordable in the in the office where the applicable
mortgage, deed of trust or other security instrument is recorded, and (b)
otherwise legally sufficient to transfer all of Seller's rights under the
applicable mortgage, deed of trust or other security instrument to Buyer.
24
(h) Actions and Proceedings. Except as set forth in Schedule 4(h): (i)
-----------------------
there are no outstanding orders, judgments, injunctions, awards or decrees
of any Governmental Entity against or involving Seller, or against or
involving any of the present or former directors, officers, employees,
consultants, agents or equity holders of Seller, acting in their capacity
as such, or any of its or their properties, assets or business; (ii) there
are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the knowledge of Agway and/or
Seller, threatened against, involving or affecting Seller or any of its
present or former directors, officers, employees, consultants, agents or
equity holders, acting in their capacity as such, or any of its or their
properties, assets or business that, individually or in the aggregate,
would have a Material Adverse Effect on Seller or materially impair the
ability of Seller to perform its obligations hereunder; and (iii) there are
no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to
the knowledge of Agway and Seller, threatened against, involving or
affecting Seller or any of its present or former officers, directors,
employees, consultants, agents or stockholders, acting in their capacity as
such, or any of its properties, assets or business relating to the
transactions contemplated by this Agreement.
(i) Certain Agreements. Except as set forth in Schedule 4(i), Seller
-------------------
is not a party to any oral or written agreement or plan, including any
employment agreement or severance agreement, any of the benefits of which
will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement (collectively, "CHANGE IN CONTROL AGREEMENTS"). Except as set
forth in Schedule 4(i), no officer, director or employee of Seller is a
party to, or will receive benefits under, any Change in Control Agreement.
Notwithstanding the foregoing, Agway or Seller has entered into agreements
with certain employees of Seller under a retention bonus program pursuant
to which Telmark will be obligated to make payments to such employees upon
or within a certain period of time after the Closing (collectively,
"RETENTION BONUS AGREEMENTS"). All Retention Bonus Agreements are
obligations and liabilities of Seller. Seller will continue to be obligated
under the Retention Bonus Agreements after the Closing Date. Schedule 4(i)
sets forth each officer, director or employee of Seller who is a party to a
Retention Bonus Agreement and the total amount that each such person is
eligible to receive thereunder.
(j) Employee Benefit Plans. All Employee Benefit Plans covering
------------------------
employees of Seller are sponsored by (i) Agway or (ii) an Affiliate of
Agway other than Seller.
(k) Compliance with Worker Safety and Environmental Laws. The
-----------------------------------------------------------
properties, assets and operations of Seller are in compliance with all
applicable Worker Safety Laws and Environmental Laws. With respect to such
properties, assets and operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of Seller
that interfere with or prevent compliance or continued compliance with
applicable Worker Safety Laws and Environmental Laws.
25
(l) Labor Matters. Seller is not a party to any collective bargaining
-------------
agreement or labor contract. There is no labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of Agway and Seller, threatened against or
affecting Seller which may interfere with the respective business activities of
Seller
(m) Intellectual Property.
---------------------
(i) Schedule 4(m)(i) describes all patents, trademarks, trade
names, service marks, trade secrets, copyrights, software, web sites
and related code, and all other intellectual property owned by Seller
in connection with the Business (collectively, and together with all
goodwill associated therewith, the "PROPRIETARY INTELLECTUAL
PROPERTY"). Schedule 4(m)-2 describes all patents, trademarks, trade
names, service marks, trade secrets, copyrights, software, web sites
and related code, and all other intellectual property rights licensed
to or otherwise controlled, but not owned, by Seller in connection
with the Business (collectively, the "OTHER INTELLECTUAL PROPERTY
RIGHTS").
(ii) Seller owns and possesses all right, title and interest in
and to all of the Proprietary Intellectual Property, and Seller holds
a valid and freely-transferable license in and to all of the Other
Intellectual Property Rights. Except as set forth in Schedule
4(m)(ii), no claim by any third party contesting the validity,
enforceability, use or ownership of any Intellectual Property Rights
has been made or is currently outstanding or threatened, Seller has
not infringed upon or misappropriated any right(s) of any third party
with respect to any of the Intellectual Property Rights, and the
continued use of the Intellectual Property Rights will not constitute
or result in any infringement upon, misappropriation of or conflict
with any right(s) of any third party.
(iii) Except as described in Schedule 4(m) and Schedule 4(m)-2,
Seller has not assigned, licensed or sublicensed any of the
Intellectual Property Rights to any third party or parties. Ownership
of all Proprietary Intellectual Property, and all of Seller's rights
in and to all Other Intellectual Property Rights, shall be properly
conveyed and assigned by Seller to Buyer at the Closing.
(iv) All fees, royalties and other payments associated with the
Other Intellectual Property Rights have been paid current, and shall
be paid current as of the Closing. Except as described on Schedule
4(m)(iv), the transactions contemplated by this Agreement will have no
material adverse effect on Seller's right, title and interest in and
to any of the Intellectual Property Rights. Seller has taken all
necessary and/or desirable action to protect Intellectual Property
Rights and will continue to maintain all Intellectual Property Rights
prior to the Closing so as to not materially adversely affect the
validity or enforcement of the Intellectual Property Rights.
(n) Securitizations.
---------------
26
(i) Schedule 4(n)(i) sets forth a true and correct list of
securitization transactions for which Seller (or one or more
Subsidiaries included within "Seller" as that term is defined herein)
(the "SECURITIZATION TRANSACTIONS") is currently acting as one or more
of "servicer" or "master servicer," together with a true and correct
list of all sale and servicing agreements, indentures of trust,
insurance contracts, undertakings with rating agencies, sub-servicing
agreements, and any other contract of any type or description relating
to such Securitization Transactions (all of the foregoing referred to
herein as the "SECURITIZATION AGREEMENTS") and Seller has furnished to
the Buyer true, correct and complete copies of all Securitization
Agreements, and there are no agreements, written or oral, that modify
or amend any of such Securitization Agreements, except as disclosed on
Schedule 4(n)(i) and except for notifications for change of address.
(ii) Each of the Securitization Agreements is a valid and binding
agreement of the Seller and is enforceable by Seller against the other
parties thereto in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time-to-time in effect and subject to general equity
principles.
(iii) The Seller has the right under the Securitization
Agreements, subject only to the consents, notices, and other
requirements contemplated therein, to transfer and assign all of its
rights thereunder to the Buyer, including without limitation, the
right to re-purchase any assets pursuant to the Securitization
Agreement. Subject to the giving of notice to, and Seller's receipt of
any consents from third parties, as well as the agreement of Buyer and
the Buyer Affiliates to be bound and obligated and Buyer and the Buyer
Affiliates meeting any requirements with respect to successor entities
set forth therein, as may be required by the Securitization
Agreements, the execution, delivery and performance of this Agreement,
and the transfer and assignment by Seller of its rights under each
Securitization Agreement pursuant hereto will not constitute a breach
of any Securitization Agreement and will vest Buyer with good and
marketable title to the rights of Seller thereunder, free and clear of
any liens or claims.
(iv) The Seller has complied in all respects with the terms of
the Securitization Agreements, and all reports delivered by Seller in
its capacity as "servicer" pursuant to the terms of any Securitization
Agreement are true, correct and complete in all material respects. No
event of default, or event that would result in an event of default
which has not been cured, has occurred that would give rise to a right
of another party thereto to terminate any Securitization Agreement or
Seller's rights as "servicer" or "master servicer" thereunder, and
Seller has not received any notice of such termination.
(v) Each Lease sold and currently held in connection with a
Securitization Transaction complied at the time of sale in all
27
respects with the representations set forth in the Securitization
Agreements, and to the extent that Seller was obligated to repurchase
or substitute Leases in connection with a Securitization Transaction,
all such repurchases or substitutions have complied with the terms of
the Securtization Agreements pursuant to which they were made, and
Seller, as of the date hereof, and as of the Closing Date, has no
outstanding obligation to repurchase any such Lease.
(vi) On the Closing Date, all representations and warranties,
other than those relating to Buyer or the Buyer Affiliates or solely
under the control of Buyer and the Buyer Affiliates, required to be
made pursuant to Section 2 of the respective Sales and Servicing
Agreements set forth on Schedule 4(n)(i), shall be true and correct.
(o) Domain Names. All of the World Wide Web domain names used in
------------
connection with the Business are described in Schedule 4(o), attached hereto and
incorporated herein (the "DOMAIN NAMES"). All of the Domain Names are properly
registered in Seller's name, and all of Seller's right, title and interest in
and to the Domain Names will be properly conveyed and assigned by Seller to
Buyer at the Closing.
(p) Schedules. Appendix A and each schedule referenced in this
---------
Agreement that has been prepared, supplied or otherwise created using
information provided by Seller (other than those schedules the contents of which
are determined solely by Buyer) are complete, and all of the information
contained therein is true and accurate.
SECTION 5. PRE-CLOSING COVENANTS. The Parties agree as follows with
----------------------
respect to the period between the execution of this Agreement and the Closing:
(a) Conduct of Business of the Company.
----------------------------------
(1) Except as permitted by clauses (i) through (xiii) of Section
5(a)(2), during the period from the date of this Agreement through the
Closing Date, Seller shall:
(i) except as otherwise specifically required under the terms and
conditions of this Agreement, in all material respects carry on
the Business in the Ordinary Course of Business, including but
not limited to, maintaining Seller's credit approvals consistent
with past practices and in accordance with all documented credit
policies provided to Buyer during due diligence, and, to the
extent consistent therewith, use reasonable efforts to preserve
intact its current business organizations;
(ii) keep available the services of its current officers and
employees and preserve its relationships with customers,
suppliers, brokers, vendors, dealers and others having business
dealings with Seller to the end that its goodwill and the
Business shall be unimpaired as of the Closing Date;
28
(iii) continue to account for Seller's SFAS 91 deferred expenses
under the accounting method in place on June 30, 2002, provided
however, that the deferred asset shall be no more that two and
fifteen-hundredths percent (2.15%) of the Portfolio Net
Investment on the Closing Date;
(iv) continue to book residuals consistent with past practice;
(v) maintain an allowance for losses consistent with current
life of lease reserve methodology, but in no event less than five
percent (5.00%) of the Portfolio Net Investment on the Closing
Date;
(vi) charge-off all Leases more than three hundred sixty-five
(365) days contractually delinquent;
(vii) record accrued interest payable on all outstanding debt;
(viii) write-off unreconciled balance sheet items over ninety
(90) days old;
(ix) not enter into any off-balance sheet securitizations. In
addition, Seller shall not enter into any term-debt
on-balance-sheet securitizations or commercial paper conduit
funding;
(x) maintain a delinquency percentage for the Portfolio Net
Investment which are sixty (60) or more days contractually
delinquent, of no greater than two and seventy-five hundredths
percent (2.75%) of the Portfolio Net Investment and such
percentage shall be calculated consistently with information
provided Buyer by Seller during Buyer's due diligence;
(xi) within ten (10) days after each month-end between the date
of this Agreement and the Closing Date provide Buyer with a data
tape, in the same format as provided to Buyer for due diligence
purposes, containing information on Leases;
(xii) ten (10) days prior to the Closing Date provide Buyer with
a data tape, in the same format as provided to Buyer for due
diligence purposes, containing information on Leases entered into
between the date hereof and fifteen (15) days prior to the
Closing Date which are outside the parameters of Section
5(a)(2)(xiii).
(2) Without limiting the generality of the foregoing, and except as
otherwise contemplated by this Agreement, Seller shall not without the prior
written consent of Buyer (which consent shall not be unreasonably withheld or
delayed):
(i) amend its charter or bylaws;
29
(ii) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any Person or
division thereof or otherwise acquire or agree to acquire any
assets, other than transactions that are in the Ordinary Course
of Business;
(iii) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, including the
Leases, other than transactions that are in the Ordinary Course
of Business;
(iv) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital
contributions to, or other investments in, any other person,
other than in the Ordinary Course of Business;
(v) enter into or adopt any, or amend any existing, severance
plan or Change in Control Agreement or enter into or amend any
Employee Benefit Plan or employment or consulting agreement,
except as required by applicable law or as will not result in a
net increase in benefits or amounts payable thereunder;
(vi) increase the compensation payable or to become payable to
its directors, officers or employees (except for increases in the
Ordinary Course of Business in salaries or wages of employees of
Seller) or grant any severance or termination pay to, or enter
into or amend (except as will not increase benefits or amounts
payable thereunder) any employment or severance agreement with,
any director or officer of Seller, or establish, adopt, enter
into, or, except as may be required to comply with applicable law
or as will not increase benefits or amounts payable thereunder,
amend in any material respect or take action to enhance in any
material respect or accelerate any rights or benefits under, any
labor, collective bargaining, bonus, profit sharing, thrift,
compensation, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any
director, officer or employee;
(vii) knowingly violate or knowingly fail to perform any
obligation or duty imposed upon Seller by any applicable law,
rule, regulation, guideline or ordinance of any Governmental
Entity;
(viii) make any change to accounting policies or procedures,
except as required by another provision of this Agreement;
(ix) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods;
30
(x) enter into or amend any non-Lease agreement or contract or
make or agree to make any new capital expenditure or expenditures
which, individually, is in excess of Ten Thousand Dollars
($10,000.00) or, in the aggregate, are in excess of Fifty
Thousand Dollars ($50,000.00) per month;
(xi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the Ordinary Course of Business or in accordance
with their terms, of liabilities reflected or reserved against
in, or contemplated by, the Final Closing Statement of Assets and
Liabilities or incurred in the Ordinary Course of Business, or
make any distribution to equity holders of Seller;
(xii) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing; or
(xiii) enter into any Lease and/or Lease Transaction which is in
an amount greater than Two Hundred Fifty Thousand Dollars
($250,000.00).
(b) Access to Information. Seller and Agway shall afford to the
------------------------
accountants, counsel, financial advisors and other representatives of Buyer
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during normal business hours during the period from the
date of this Agreement through the Closing Date, all properties, books,
contracts, commitments and records (including, without limitation, the work
papers of independent accountants, if available and subject to the consent of
such independent accountants) of Seller or relating to Seller's business. During
such period, Seller and Agway shall furnish promptly to Buyer all information
concerning the business, properties and personnel of Seller or relating to
Seller's business as Buyer may reasonably request. All information obtained by
Buyer pursuant to this Section 5(b) shall be kept confidential in accordance
with the Confidentiality Agreement dated February 4, 2002 (the "CONFIDENTIALITY
AGREEMENT") among Agway, Telmark and Buyer.
(c) Reasonable Efforts.
------------------
(i) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Parties agrees to use reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other Party in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement, including, but not limited to: (A) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of
all reasonable steps as may be necessary to obtain an approval or waiver
31
from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the Xxxx-Xxxxx-Xxxxxx Act or the BHC
Act), (B) the obtaining of all necessary consents, approvals or waivers
from third parties, (C) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (D) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by this Agreement. None of the
Parties shall consent to any voluntary delay of the consummation of the
transactions contemplated hereby at the behest of any Governmental Entity
without the consent of the other Parties, which consent shall not be
unreasonably withheld.
(ii) Each of the Parties shall use all reasonable efforts to not take
any action, or enter into any transaction, which would cause any of the
representations or warranties of such Party contained in this Agreement to
be untrue or result in a breach of any covenant made by it in this
Agreement.
(iii) Seller agrees to reasonably cooperate with Buyer to convert the
Business to Buyer's general ledger system as soon as practicable after
Closing.
(d) Public Announcements. None of the Parties will issue any press release
--------------------
with respect to the transactions contemplated by this Agreement or otherwise
issue any written public statements with respect to such transactions without
the prior written approval of the other party, except as may be required by
applicable law or required by obligations pursuant to any listing agreement with
any national securities exchange. Notwithstanding the foregoing, each Party
shall have the right to issue a press release regarding the transactions
contemplated hereby upon the signing of this Agreement and upon the Closing;
provided, however, that each Party will notify the other Parties if it intends
-------- -------
to issue such a press release and provide the other Parties with the text of the
press release and reasonable opportunity to comment in advance of its release to
the public.
(e) Notification of Certain Matters Buyer shall use its reasonable efforts
-------------------------------
to give prompt notice to Seller and Agway, and Seller and Agway shall use their
reasonable efforts to give prompt notice to Buyer, of: (i) the occurrence or
non-occurrence of any event of which any of them is aware that would be
reasonably likely to cause (x) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in all material respects, (ii) any failure of Buyer or of
Seller or Agway, as the case may be, to comply in a timely manner with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder or (iii) any change or event which would be reasonably likely to
have a Material Adverse Effect on Buyer or Seller, as the case may be; provided,
--------
32
however, that the delivery of any notice pursuant to this Section 5(e) shall not
-------
limit or otherwise affect the remedies available hereunder.
SECTION 6. POST-CLOSING COVENANTS. The Parties agree as follows with
-----------------------
respect to the period following the Closing:
(a) General. In case at any time after the Closing any further action is
-------
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9 below).
(b) Litigation Assistance. In the event and for so long as any of the
----------------------
Parties actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand in
connection with (i) any transactions contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving the Business, the other Parties shall cooperate
with the contesting or defending Party and its counsel in the defense or
contest, make available its personnel, and provide such testimony and access to
their books and records as shall be necessary in connection with the defense or
contest, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 9 below). In addition, Agway agrees to provide Buyer with
such assistance as Buyer may reasonably request in connection with the
assumption by Buyer of the Assumed Litigation Obligations.
(c) Employee Benefits and Employment.
--------------------------------
(i) Except as otherwise provided herein or as otherwise clearly
required by the context, the following terms shall have the respective
meanings indicated when used in this Agreement:
(A) "RETAINED EMPLOYEES" means those persons who are employees
of Seller in connection with the Business on the Closing Date immediately
prior to consummation of the Closing and are identified in Schedule
6(c)(i). Buyer shall be entitled to, at its option, update Schedule 6(c)(i)
at any time until the consummation of the Closing.
(B) "TRANSFERRED EMPLOYEES" means those persons who are employees
of Seller in connection with the Business on the Closing Date (including,
without limitation, those who are absent due to vacation, illness or
maternity/paternity leave) and are not Retained Employees. The
determination of whether a person is a Transferred Employee shall be made
immediately before putting into effect the provisions of Subsection
(c)(ii), below.
33
(ii) Effective at 12:01 a.m. on the day immediately following the Closing
Date, all Transferred Employees shall cease to be employed by Seller, and Buyer
shall offer employment with Buyer to each Transferred Employee in a position
that is reasonably comparable to that held as of the Closing Date. All
Transferred Employees shall be employees-at-will of Buyer. Prior to the Closing
Date, Seller shall identify all of its employees on short-term and long-term
disability leave (including, without limitation, those on maternity/paternity)
to Buyer, and, to the extent necessary, shall update such list prior to the
consummation of the Closing.
(iii) (A) In General. Buyer shall provide the Transferred Employees with
----------
the employee benefits being provided to Buyer's own employees, subject to the
terms of those Employee Benefit Plans of Buyer (the "BUYER'S EMPLOYEE
BENEFITS"), and shall credit Transferred Employees' service with Seller based on
the Agway adjusted service date (as determined in accordance with Agway's
employment policy as provided to Buyer during due diligence) for purposes of
eligibility and vesting under all of Buyer's welfare benefit plans, severance
plans and qualified pension and profit sharing plans, and for purposes of
calculating benefits under Buyer's severance plan, to the extent that such
service credit would be relevant. No exclusions for pre-existing conditions
shall apply to any medical benefit plan for which Transferred Employees may be
eligible with respect to any condition for which the Transferred Employees were
covered under any medical benefit plan maintained by Seller or Agway. With
respect to Buyer's long term disability plan (the "BUYER LTDP"), if a
Transferred Employee was covered by Seller's long term disability plan (as in
existence as of Buyer's due diligence, "SELLER'S LTDP") on the day immediately
before the Closing Date, the effective date for purposes of the pre-existing
condition limitation contained in the Buyer LTDP shall be the effective date of
coverage under Seller's LTDP, such that if continuous coverage under the
Seller's LTDP and the Buyer LTDP is more than twelve (12) months as of the
initial date of disability, a Transferred Employee will not be subject to the
pre-existing condition limitation. If the disability occurs in the first (1st)
year of coverage under the Buyer LTDP and is approved, benefits will be limited
to the lesser of the benefit amounts contained in Seller's LTDP and the Buyer
LTDP. If a Transferred Employee has been a participant in Seller's LTDP less
than twelve (12) months, the Transferred Employee will be subject to the
pre-existing exclusion, but the Transferred Employee shall be credited for the
amount of time in which the Transferred Employee has been a participant in
Seller's LTDP for satisfying the twelve (12) month pre-existing exclusion
period.
(B) Notice. Except as otherwise expressly provided in this Section
------
6(c), Seller, and effective as of the Closing Date, Buyer shall give notice to
all Transferred Employees that, except as otherwise expressly provided herein,
all benefits and/or accruals previously provided under the Employee Benefit
Plans of Agway will terminate on the Closing Date and will be replaced by
Buyer's Employee Benefits.
34
(iv) Liability Retained By Seller and Liability Assumed By Buyer. Except as
-----------------------------------------------------------
otherwise specifically provided in this Section 6(c), Seller shall retain all
Liabilities for all salary and other compensation and employee benefits due any
Retained Employee arising out of employment by Seller before, on, or after the
Closing Date; Seller shall retain all Liabilities for all salary and other
compensation and employee benefits due any Transferred Employee arising out of
employment by Seller before the Closing Date; and Buyer shall assume all
Liabilities for all salary and other compensation and employee benefits due any
Transferred Employee arising out of employment by Buyer after the Closing Date.
Seller shall retain Liability for medical and other welfare benefit claims
incurred by Transferred Employees before the Closing Date, and, to the extent
any given Transferred Employee is enrolled in Buyer's medical and other welfare
benefit plans on and after the Closing Date, Buyer shall assume Liability for
medical and other welfare benefit claims incurred by that Transferred Employee
on or after the Closing Date.
(v) Change in Control Agreements and Variable Pay Plans. Seller shall
-------------------------------------------------------
retain Liability for amounts due under the Change in Control Agreements,
including minimum vested variable pay amounts due upon the Closing; provided,
however, that nothing in this Agreement shall be construed to obligate either
Agway or the Seller to continue the variable pay plans in effect after Closing.
(vi) Paid Time Off. Transferred Employees shall receive credit for service
-------------
with Seller for purposes of computing paid time off benefits (including
vacation, sick leave and personal holidays) to which similarly situated
employees of Buyer are or may become entitled under the terms of Buyer's paid
time off policies. Within twenty-one (21) days after the Closing Date, Seller
shall pay all Transferred Employees the value of their unused paid time off
available to them as of the Closing Date under Seller's paid time off policies,
pro-rated for the period from January 1, 2003, through the Closing Date. The
Parties acknowledge that Seller has agreed with the Committee to not pay the
Transferred Employees (x) for unused paid time off in excess of such pro-rated
amount or (y) for accrued vacation or severance, except to the extent they are
entitled to severance payments in accordance with Seller's severance program
because such persons received non-comparable job offers, as defined in the
severance program.
(vii) WARN Act Compliance. Following the Closing Date, Buyer shall comply
-------------------
in all respects with the Worker's Adjustment and Retraining Notification Act, as
amended (the "WARN ACT"), and Buyer shall not take any action which would
subject Seller to any disclosure or announcement obligations under the WARN Act
with respect to employees of Seller, including by designation of employees on
Schedule 6(c)(i), assuming that the employment of all such employees will be
terminated by Seller immediately following the Closing. As of the date hereof,
Buyer does not contemplate any "plant closing" or "employee mass layoff," as
such terms are used in the WARN Act, with respect to the Business or the
36
Transferred Employees on or before ninety-one (91) days following Closing.
(viii) Retirement Plan. Agway shall retain and be responsible for benefits
---------------
under Agway's 401(k) plan for the Transferred Employees through the Closing
Date. Agway shall cause its 401(k) plan to make available distributions of the
amount of account balances vested as of the Closing Date to Transferred
Employees pursuant to Section 401(k)(10)(A)(iii) of the Code to the same extent
as distributions are available to similarly situated former employees of Agway.
(ix) Cooperation.
-----------
(A) With respect to all benefits for which Seller or Agway is
responsible under this Section 6(c), Buyer shall cooperate with Seller and Agway
by promptly providing the information reasonably requested by Seller or Agway to
enable Seller or Agway to perform its obligations. Buyer shall direct all
claimants and claims for such benefits to Seller.
(B) With respect to all benefits for which Buyer is responsible
under this Section 6(c) or otherwise provides to Transferred Employees, Seller
shall cooperate with Buyer by promptly providing the information reasonably
requested by Buyer to enable Buyer to perform its obligations. Seller shall
direct all claimants and claims for such benefits to Buyer. Seller shall provide
Buyer with such reasonable access prior to the Closing Date as may be necessary
or appropriate to enable Buyer to enroll Transferred Employees into Buyer's
Employee Benefits and otherwise fulfill its obligations under this Section 6(c).
(C) After the Closing Date, Seller and Buyer each will cooperate
with the other in providing reasonable access to all information required for
the operation of, or the preparation and submission of reports or notices
required in connection with the operation of the employee benefit programs
maintained by Seller, Agway or Buyer or their Affiliates which covers any of the
Transferred Employees, including, without limitation, the preparation and
submission of reports or notices to the PBGC, the Department of Labor, the
Internal Revenue Service, or any other agency of the U.S. Government.
(d) Noncompetition.
--------------
(i) For a period of four (4) years from and after the Closing Date,
neither Agway nor any present or future Affiliate of Agway will:
(A) engage, anywhere in the United States of America or Canada, in
any Competitive Business (as hereinafter defined); or
(B) acquire, own or hold any interest in any Competitive Business
in the United States.
36
"COMPETITIVE BUSINESS" means any business of commercial equipment,
building or vehicle financing in the agricultural, forestry, retail,
service, computer, medical, office products or telecommunications
markets. "Competitive Business" does not include (A) leases between
Agway and its subsidiaries (or between any subsidiaries of Agway), (B)
financing for individual, family or household purposes, or (C) Leases
not acquired by Buyer under this Agreement.
(ii) If the final judgment of a court of competent jurisdiction
declares that any term or provision of Section 6(d)(i) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision,
and this Agreement shall be enforceable as so modified after the expiration
of the time within which the judgment may be appealed.
(iii) Notwithstanding the foregoing, nothing contained in this Section
6(d) shall prohibit or be deemed to prohibit Agway or Seller from taking
any action in connection with the servicing of any Lease that constitutes
an Excluded Asset.
(e) Non-Solicitation of Employees. For a period of four (4) years following
-----------------------------
the Closing Date, without the prior approval of Buyer, neither Agway nor any
present or future Affiliate of Agway shall solicit any Transferred Employee or
induce or attempt to induce any Transferred Employee out of the employ of Buyer.
(f) Continued Existence. Telmark and each of the Subsidiaries shall
--------------------
continue their respective independent legal existence throughout the thirty-six
(36) month period immediately following the Closing Date.
(g) SELLER'S AND AGWAY'S ACCESS TO RECORDS. Following the Closing Date, and
for a period of at least seven (7) years from the Closing Date, Buyer shall: (i)
maintain copies of all books and records relating to the Business as are
reasonably necessary for the preparation or examination of Tax Returns,
regulatory filings and financial statements, and the conduct of any litigation
or regulatory dispute resolution, whether pending or threatened, relating to or
involving the conduct of the Business prior to the Closing Date; and (ii) allow
Agway and Seller, upon reasonable prior notice and during regular business
hours, the right to examine and make copies of such books and records for any
reasonable business purpose in connection with any matter(s) identified in
Subsection (g)(i), above; provided, however, that the scope of books and records
that Buyer shall be required to maintain with regard to the conduct of the
Business prior to the Closing shall be limited to only those books and records
actually delivered to Buyer by Seller upon the Closing. Access to the books and
37
records relating to the Business shall be at Agway's sole expense and may not
unreasonably interfere with Buyer's business operations.
(h) Remittance of Payments. If, after the Closing, Seller or Agway receive
----------------------
from or on the account of an Obligor any lease payment(s) or other amount(s) due
under or in connection with a Lease, or any other amount(s) in respect of any
Acquired Asset, Seller or Agway (as applicable) shall forward such payments and
other amounts to Buyer within five (5) days after Seller's or Agway's receipt
thereof.
SECTION 7. TAX MATTERS.
-----------
(a) Definitions. Except as otherwise provided herein or as otherwise
-----------
clearly required by the context, the following terms shall have the respective
meanings indicated when used in this Agreement:
(I) "TAX" or "TAXES" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental (including Code Section 59A), customs, duties, real property,
personal property, capital stock, intangibles, social security, employment,
unemployment, disability, payroll, license, employee, or other tax,
withholding tax or levy, of any kind whatsoever (including any deferred
tax), including any interest, penalties or additions to tax in respect of
the foregoing.
(II) "TAX RETURN" means any return, declaration, report, claim for
refund, information return, or other document (including any related or
supporting estimates, elections, schedules, statements, or information)
filed or required to be filed in connection with the determination,
assessment, or collection of any Tax or the administration of any laws,
regulations, or administration requirements relating to any Tax.
38
(b) Tax Representations. Seller and Agway represent and warrant to Buyer as
-------------------
follows:
(i) Any and all Taxes relating to the Acquired Assets and the Assumed
Liabilities which are due and payable on or prior to the Closing Date have
been paid in full, or will be so paid on or prior to the Closing Date
except to the extent the non-payment of which would not result in a lien on
any Acquired Asset or would not result in Buyer becoming liable or
responsible therefor. All Tax Returns (including extensions or amendments
thereto) required to be filed with any relevant taxing authority on or
prior to the Closing Date with respect to any and all Taxes relating to the
Acquired Assets or Assumed Liabilities, have been timely filed or will be
timely filed on or prior to the Closing Date except to the extent the
non-filing of which would not result in a lien on any Acquired Asset or
would not result in Buyer becoming subject to any liability therefor.
(ii) With respect to any Securitization Transaction, no action has
been taken nor has any action failed to be taken which would adversely
affect the characterization or Tax treatment for federal, state, or local
Income or franchise Tax purposes of the issuer or any securities issued in
a Securitization Transaction or would create any entity level of taxation
with respect to the trusts. All Tax Returns (including extensions or
amendments thereto) required to be filed with any relevant taxing authority
on or before the Closing Date with respect to any and all Taxes relating to
any Securitization Transaction have been timely and properly filed, or will
be timely and properly filed, on or before the Closing Date.
(c) Liability for Taxes.
-------------------
(i) Liability of Seller and Agway. Except for (A) personal property
-----------------------------
tax liabilities related to the Leases or the Leased property to the extent
that such tax relates to the twelve (12) month period immediately preceding
the Closing Date, and (B) sales, use, transfer or similar tax liabilities
relating to the Leases and Leased Property to the extent any such tax
relates to a Lease payment not made on or before the Closing Date, with
respect to the Acquired Assets and the Assumed Liabilities transferred at
the Closing, Seller and/or Agway shall be liable for and shall, jointly and
severally upon Buyer's demand, indemnify Buyer for all Taxes imposed on or
with respect to such Acquired Assets for (1) any taxable year or period
that ends on or before the Closing Date and (2) with respect to any taxable
year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing
Date.
(ii) Liability of Buyer. With respect to the Acquired Assets and the
------------------
Assumed Liabilities transferred at the Closing, Buyer shall be liable for
and indemnify Seller and Agway for all Taxes imposed on or with respect to
such Acquired Assets for (1) any taxable year or period that begins after
the Closing Date, (2) with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable year
39
beginning after the Closing Date, (3) to the extent relative to the twelve
(12) month period immediately preceding the Closing Date, all personal
property tax liabilities related to the Leases or the Leased Property, and
(4) to the extent relative to any Lease payment not made on or before the
Closing Date, all sales, use, transfer or similar tax liabilities relating
to the Leases and Leased Property.
(iii) Proration of Taxes. Except as otherwise agreed to by the
--------------------
parties, for purposes of Subparagraphs (i) and (ii) above, whenever it is
necessary to determine the liability for Taxes for a portion of a taxable
year or period that begins before and ends after the Closing Date, (A) the
determination of the Taxes for the portion of the year or period ending on,
and the portion of the year or period beginning after, the Closing Date
shall be determined by assuming that the taxable year or period ended at
the close of business on the Closing Date and (B) with respect to any real
property or personal property and similar ad valorem Taxes for a period
that begins before and ends after the Closing Date, such Taxes shall be
apportioned based on the number of days in the taxable period on or prior
to the Closing Date.
(iv) Notification. As soon as practical after the Closing (but in no
------------
event later than the filing of the sales tax returns for the period
including the Closing Date), Seller shall notify all applicable sales tax
authorities of its sale of the Acquired Assets to Buyer, indicating that
Seller shall be and remain solely liable for all sales tax obligations
arising prior to the Closing except to the extent any such tax relates to a
Lease payment not made on or before the Closing Date.
(d) Sales and Transfer Taxes. All excise, sales, use, transfer and similar
------------------------
taxes that are payable or that arise as a result of the consummation of the
purchase and sale contemplated by this Agreement shall be borne by Seller,
whether such Taxes are imposed upon Seller or Buyer.
(e) Payments of Amounts Due under this Section 7. All payments subsequent
---------------------------------------------
to the Closing Date under this Section 7 shall be made as soon as determinable
or when payment is due to the applicable taxing authority, whichever is later,
and shall be made and bear interest from the date determinable or when payment
is due to the applicable taxing authority, whichever is later, to the date of
payment at the average of the Federal Funds Rate or Rates in effect from
time-to-time during such period.
(f) Tax Returns. Except as otherwise provided in this Section 7 and as
------------
otherwise agreed to by the parties, with respect to the Acquired Assets and
Assumed Liabilities, (i) Seller and/or Agway shall file or cause to be filed
when due all Tax Returns that are required to be filed with respect to such
Acquired Assets or income therefrom, and such Assumed Liabilities or payments in
respect thereof, for taxable years or periods ending on or before the Closing
Date and shall pay any Taxes due in respect of such Tax Returns and (ii) Buyer
shall file or cause to be filed when due all Tax Returns with respect to such
Acquired Assets or income therefrom, and such Assumed Liabilities or payments in
respect thereof, for taxable years or periods ending after the Closing Date and
40
shall remit any Taxes due in respect of such Tax Returns. If Seller or Agway, on
the one hand, or Buyer, on the other hand, shall be liable hereunder for any
portion of the Tax shown due on any Tax Return prepared by the other party, the
party preparing the Tax Return shall deliver a copy to the party so liable not
less than ten (10) days prior to the date on which such Tax Return is due to be
filed (taking into account any applicable extensions). Seller, Agway or Buyer as
the case may be, shall pay in immediately available funds the Taxes for which it
is liable pursuant to Section 7(c)(i) or 7(c)(ii) but which are payable with Tax
Returns to be filed by the other party pursuant to the previous sentence on the
due date for the payment of such Taxes.
(g) Assistance and Cooperation. Seller and Agway, on the one hand, and
----------------------------
Buyer, on the other hand, shall after the Closing Date:
(i) Assist (and cause their respective Affiliates to assist) the other
party in preparing any Tax Returns which such other party is
responsible for preparing and filing in accordance with this Section
7, including any Tax Returns or forms required pursuant to Section
7(f); provided, however, that either party may withhold, or excise
portions of, confidential records, documents or information if it is
necessary to do so to reasonably protect the confidentiality thereof;
(ii) Cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns with respect to the
Acquired Assets or income therefrom or the Assumed Liabilities or
payments in respect thereof;
(iii) Make available to the other party and to any taxing authority as
is reasonably requested all relevant information, records, and
documents relating to Taxes with respect to the Acquired Assets or
income therefrom or the Assumed Liabilities or payments in respect
thereof;
(iv) Provide timely notice to the other in writing of any pending or
proposed tax audits or assessments with respect to the Acquired Assets
or the income therefrom, or the Assumed Liabilities or payments in
respect thereof, for taxable periods for which the other may have a
liability under this Section 7;
(v) Furnish the other with copies of all relevant correspondence
received from any taxing authority in connection with any Tax audit or
information request with respect to any taxable period referred to in
Subsection (iv) above; and
(vi) The party requesting assistance or cooperation shall bear the
other party's reasonable out-of-pocket expenses in complying with such
41
request to the extent that those expenses are attributable to fees and
other costs of Persons other than such other party or its Affiliates.
(h) Notification and Contest. Without limiting the provisions of Section
-------------------------
7(g), the notification and contest provisions of Section 9 shall apply to claims
for indemnification under Section 7; provided, however, that notice of claim for
indemnification pursuant to Section 9 shall be given as promptly as practicable,
but no later than sixty (60) days after the notice of a claim or demand for
Taxes for which indemnification may be sought from the indemnifying party
pursuant to this Section 7 is received from the relevant Tax authority.
(i) [RESERVED.]
(j) True Lease Guaranty.
-------------------
(i) Buyer shall not report any Lease to which a True Lease Guaranty
relates as other than a true lease for Income Tax Purposes or take a position
before any taxing authority or in any Tax Return (including any allocation
pursuant to Section 1060 of the Code or any similar provision) with respect to
any such Lease that is contrary to or inconsistent with true lease treatment.
(ii) In the event that any Obligor makes a claim against Buyer with
respect to any True Lease Guaranty, Buyer shall promptly notify the Obligor to
make the claim against Seller and provide Seller with a copy of such claim.
(iii) Buyer shall cooperate fully with Seller in the event of any
claim under a True Lease Guaranty, including providing Seller with copies of any
documents relating to the relevant Lease or True Lease Guaranty.
SECTION 8. CONDITIONS TO OBLIGATION TO CLOSE.
---------------------------------
(a) Conditions to Obligation of Buyer. The obligation of Buyer to
-----------------------------------
consummate the transactions contemplated hereby at the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties of Seller and Agway set
forth in Section 3(a) and Section 4 above shall be true and correct in
all material respects (except to the extent such representations and
warranties speak as of an earlier date) when made and as of the
Closing Date;
(ii) Seller and Agway shall have performed and complied in all
material respects with all of the covenants to be performed and
complied with by them on or before Closing;
42
(iii) there shall not be any injunction, judgment, order, decree,
ruling or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Seller and Agway shall have delivered to Buyer a certificate
to the effect that each of the conditions specified above in Section
8(a)(i) and (ii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act or the BHC Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents and approvals of Governmental Entities
referred to in Section 3(a)(iii) and Section 3(b)(iii) above, except
that any filings which are not either (i) specifically required by
this Agreement or (ii) mandatory filings with a Governmental Entity,
shall be deemed to be excluded from this Section 8(a)(v);
(vi) Agway shall have properly executed and delivered to Buyer
the Sublease Agreement in substantially the form of Exhibit D,
attached hereto and incorporated herein by reference;
(vii) Seller (as applicable) and Agway shall have properly
executed and delivered to Buyer the Transition Services Agreement in
substantially the form of Exhibit E, attached hereto and incorporated
herein by reference;
(viii) all certificates, instruments, and other documents
required to be delivered hereunder or otherwise effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Buyer;
(ix) Seller shall have received all consents; all approvals shall
have been given; all notices shall have been sent; and all conditions
shall have been met which are required under the Securitization
Agreements set forth on Schedule 4(n)(i), as may be required by the
terms of the Securitization Agreements to permit the Seller to assign
all of its right, title, and interest in such agreements to the Buyer
or the applicable Buyer's Affiliate, including without limitation all
required consents from any and all note holders, trustees, rating
agencies, and insurers (hereinafter called the "SECURITIZATION
CONSENTS");
(x) Seller shall have delivered to Buyer the results of a Uniform
Commercial Code search on Seller with the Delaware Secretary of State,
the New York Secretary of State, and the county of Onondaga, New York,
which reflect no material liens on the Acquired Assets;
(xi) Agway shall have delivered to Buyer a final, non-appealable
order of the Bankruptcy Court, in form and substance acceptable to the
Buyer in its sole discretion, approving this Agreement and authorizing
Agway to enter into and perform all of its obligations under this
Agreement;
43
(xii) Seller shall have executed and delivered to Buyer a
settlement statement setting forth Seller's reasonable and lawful
Purchase Price disbursement instructions in a form acceptable to
Buyer; and
(xiii) Seller shall have delivered to Buyer such additional
certificates, instruments and documents as Buyer may reasonably
request.
Buyer may waive any condition specified in this Section 8(a) (other than the
condition specified in Section 8(a)(xi)) if it executes a writing so stating at
or prior to the Closing.
(b) Conditions to Obligation of Seller. The obligation of Seller and
----------------------------------
Agway to consummate the transactions contemplated hereby at the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties of Buyer set forth in
Section 3(b) above shall be true and correct in all material respects
when made and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Buyer shall have delivered to Seller and Agway a certificate
to the effect that each of the conditions specified above in Section
8(b)(i) and (ii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act or the BHC Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents and approvals of Governmental Entities
referred to in Section 3(a)(iii) and Section 3(b)(iii) above, except
that any filings which are not either (i) specifically required by
this Agreement or (ii) mandatory filings with a Governmental Entity,
shall be deemed to be excluded from this Section 8(b)(v);
(vi) all certificates, instruments, and other documents required
to effect the transactions contemplated hereby will be satisfactory in
form and substance to Seller and Agway;
(vii) Buyer shall have properly executed and delivered to Seller
the Servicing Agreement in substantially the form of Exhibit F,
attached hereto and incorporated herein by reference; and
44
(viii) Agway shall have delivered to Buyer a final,
non-appealable order of the Bankruptcy Court, in form and substance
acceptable to the Buyer in its sole discretion, approving this
Agreement and authorizing Agway to enter into and perform all of its
obligations under this Agreement.
Seller and Agway may waive any condition specified in this Section 8(b) (other
than the condition specified in Section 8(b)(viii)) if they execute a writing so
stating at or prior to the Closing.
SECTION 9. INDEMNIFICATION.
---------------
(a) Survival of Representations and Warranties. All of the
-------------------------------------------------
representations and warranties of Seller and/or Agway contained in Section 3(a),
Section 4 and Section 7(b) above and Buyer contained in Section 3(b) above shall
survive the Closing hereunder and continue in full force and effect for a period
of three (3) years thereafter, except that the representations and warranties of
Seller and/or Agway which relate expressly or by necessary implication to Taxes
will survive the Closing until ninety (90) days after the expiration of the
relevant limitations periods for the assertion of claims by the relevant Tax
authority.
(b) Indemnification Provisions for Benefit of Buyer. In the event (i)
------------------------------------------------
Seller and/or Agway breach any of their representations, warranties or covenants
contained in this Agreement, and provided that Buyer makes a written claim for
indemnification against Seller and/or Agway (as applicable) pursuant to this
Section 9(b) within the applicable survival period specified in Section 9(a)
above, or (ii) on or before the sixth (6th) anniversary of the Closing Date, any
Third Party Claim or threatened Third Party Claim is made against Buyer that
relates to the actions or inactions of Seller and/or Agway, then Seller and
Agway jointly and severally agree to indemnify Buyer from and against any
Adverse Consequences Buyer shall suffer as a result of or, directly or
indirectly, relating to such breach or claim. In addition, without limiting the
foregoing, Seller and Agway jointly and severally agree to indemnify Buyer from
and against any Adverse Consequences Buyer may suffer in connection with any
Liability which is not an Assumed Liability. The provisions of this Subsection
(b) shall survive the Closing.
(c) Indemnification Provisions for Benefit of Seller. In the event (i)
------------------------------------------------
Buyer breaches any of its representations and warranties contained in Section
3(b) above or any of the covenants contained in this Agreement to be performed
by Buyer and provided that Seller or Agway makes a written claim for
indemnification against Buyer pursuant to this Section 9(c) within the
applicable survival period specified in Section 9(a) above, or (ii) on or before
the sixth (6th) anniversary of the Closing Date, any Third Party Claim or
threatened Third Party Claim is made against Seller or Agway that relates to the
actions or inactions of Buyer or any of the Subsidiaries with respect to the
Business after the Closing, then Buyer agrees to indemnify Seller or Agway from
and against any Adverse Consequences either Seller or Agway shall suffer through
and after the date of the claim for indemnification caused by such breach or
claim. The provisions of this Subsection (c) shall survive the Closing.
45
(d) Matters Involving Third Parties.
-------------------------------
(i) If any third party shall notify a Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may
give rise to a claim for indemnification against another Party (the
"INDEMNIFYING PARTY") under this Section 9, then the Indemnified Party
shall promptly notify the Indemnifying Party thereof in writing;
provided, however, that the Indemnified Party's failure to perform in
------------------
accordance with this Section 9(d)(i) shall not reduce any its rights
or the Indemnifying Party's obligations under Section 7, Section 9(b)
or Section 9(c) (as the case may be) unless, and only to the extent,
the Indemnifying Party has been directly and materially prejudiced by
such failure to perform.
(ii) The Indemnifying Party will 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 withheld or delayed unreasonably) unless
the judgment or proposed settlement involves only the payment of money
damages and does not impose an injunction or other equitable relief
upon the Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes the defense
of the Third Party Claim as provided in Section 9(d)(ii) above,
however, the Indemnified Party may defend against the Third Party
Claim in any manner it reasonably may deem appropriate.
SECTION 10. TERMINATION.
-----------
(a) Termination of Agreement. The Parties may terminate this Agreement
------------------------
as provided below:
(i) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing in the event (A) Seller has
within the then previous forty (40) business days given Buyer any
notice pursuant to Section 5(e)(i) above and the breach referred to in
such notice has continued without cure for a period of thirty (30)
days after such notice and (B) the development that is the subject of
the notice has had a Material Adverse Effect on Seller;
(iii) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing (A) in the event (x) Seller
or Agway has breached any representation, warranty or covenant
46
contained in this Agreement in any respect, which breach results in a
Material Adverse Effect on Seller or reflects the occurrence of a
Material Adverse Change with respect to Seller, (y) Buyer has notified
Seller of the breach and (z) the breach has continued without cure for
a period of thirty (30) days after the notice of breach or (B) if the
Closing shall not have occurred on or before March 3, 2003, by reason
of the failure of any condition precedent under Section 8(a) hereof
(unless the failure results primarily from Buyer itself breaching any
representation, warranty or covenant contained in this Agreement);
(iv) Seller may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing (A) in the event Buyer has
breached any representation, warranty, or covenant contained in this
Agreement in any material respect, Seller has notified Buyer of the
breach, and the breach has continued without cure for a period of
thirty (30) days after the notice of breach or (B) if the Closing
shall not have occurred on or before March 1, 2003, by reason of the
failure of any condition precedent under Section 8(b) hereof (unless
the failure results primarily from Seller or Agway themselves
breaching any representation, warranty or covenant contained in this
Agreement); and
(v) If the sum of the Lease Net Investments of all Leases
rejected by Buyer pursuant to Sections 2(i)(i) and 2(i)(ii)(A) of this
Agreement is greater than Ten Million Dollars ($10,000,000.00), then
Seller and Agway may, at their option during the five (5) day period
immediately following the date upon which Buyer identifies the
Rejected Leases (the "TERMINATION WINDOW"), terminate this Agreement
upon written notice to Buyer. If Seller and Agway become entitled to
terminate this Agreement under this Subsection (v) and fail to provide
notice of termination within the Termination Window, then Seller and
Agway shall have no right to terminate this Agreement as a result of
or in connection with Buyer's rejection of Leases under Section 2(i).
(b) Effect of Termination. If any Party terminates this Agreement
----------------------
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder (but not under the Confidentiality Agreement) shall terminate
without any liability of any Party to any other Party (except for any
liability of any Party then in breach).
SECTION 11. SECTION 363 SALE.
----------------
(a) Auction. Buyer acknowledges that Seller may (but is not required to)
-------
conduct an auction sale of the Acquired Assets in connection with Agway's
bankruptcy proceeding prior to the hearing contemplated by Section 3(a)(iii) of
this Agreement on a motion seeking approval of the transactions under this
Agreement (the "AUCTION"). Seller may solicit and obtain bids during the Auction
for the Acquired Assets in accordance with the Bid Procedures (defined below),
or such other procedures as the Bankruptcy Court may order.
47
(b) Bid Procedures. In the event Seller elects to conduct an Auction, Agway
--------------
shall seek expedited approval of the following bid procedures (the "BID
PROCEDURES") and the Break-Up Fee (as defined below):
(i) The Auction shall be set on the same date and one (1) hour prior
to the sale approval hearing before the Bankruptcy Court.
(ii) To participate in the Auction, a bidder must become a "QUALIFIED
BIDDER" by submitting the following to the Seller at least two (2) business
days prior to the date of the Auction:
(A) An executed version of this Agreement, clearly marked to show
changes in the definition of the Buyer to the name of the bidder and the
purchase price equal to the original Purchase Price plus Eleven Million
Dollars ($11,000,000.00) (the "363 PURCHASE PRICE");
(B) A letter stating the offer is (i) irrevocable until the
Seller closes a sale of the Acquired Assets with a third party, (ii) not
contingent upon due diligence, and (iii) not contingent upon obtaining
financing;
(C) Evidence of ability to consummate the transaction; and
(D) A certified check payable to Telmark in an amount equal to
five percent (5.00%) of the 363 Purchase Price (the "DEPOSIT").
Seller shall determine in its sole discretion whether a bidder who has
timely submitted the required items constitutes a Qualified Bidder. Buyer
is deemed to be a Qualified Bidder upon execution of this Agreement.
(iii) At the Auction, which shall occur only if there is a
Qualified Bidder other than Buyer, the initial bid shall be equal to the
original Purchase Price plus Eleven Million Dollars ($11,000,000.00).
Thereafter, bids shall be increased in increments of One Million Dollars
($1,000,000.00) (or more). The Auction shall continue until no Qualified
Bidder is willing to make a higher bid (the "FINAL BID"). Agway shall
immediately seek approval from the Bankruptcy Court for a sale to the
Qualified Bidder who made the Final Bid.
(iv) Any Qualified Bidder who did not make the Final Bid shall be
entitled to return of the Deposit within two (2) business days after the
Bankruptcy Court approves the proposed transaction with the Qualified
Bidder who made the Final Bid.
48
(c) Break-Up Fee. If a Qualified Bidder other than Buyer makes the
-------------
Final Bid, then Seller may accept such Final Bid, provided that Seller shall pay
--------
to Buyer at the closing of the sale of the Acquired Assets an amount equal to
Ten Million Dollars ($10,000,000.00) (the "BREAK-UP FEE") in compensation for
Buyer's expenses and efforts in negotiating this Agreement and in recognition of
the value created for Seller by Buyer's participation in the transaction.
SECTION 12. [RESERVED.]
SECTION 13. MISCELLANEOUS.
-------------
(a) Entire Agreement. This Agreement and the Confidentiality Agreement
-----------------
constitute the entire agreement among the Parties and supersede any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter of this
Agreement or the Confidentiality Agreement.
(b) 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.
(c) Succession and Assignment. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties.
(d) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are included
--------
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications under this Agreement must
-------
be in writing and will be deemed to have been duly given if delivered,
telecopied or mailed, by certified mail, return receipt requested, first-class
postage prepaid, to the parties at the following addresses:
If to Buyer Xxxxx Fargo Financial Leasing, Inc.
to: 000 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
49
If to Seller Telmark LLC
to: 000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. X'Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Agway Agway Inc.
to: 000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. X'Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Section will, if delivered personally, be
deemed given upon delivery, will, if delivered by facsimile, be deemed delivered
when confirmed and will, if delivered by mail in the manner described above, be
deemed given on the third business day after the day it is deposited in a
regular depository of the United States mail. Any of the Parties from
time-to-time may change its address for the purpose of notices to that Party by
giving a similar notice specifying a new address, but no such notice will be
deemed to have been given until it is actually received by the Party sought to
be charged with the contents thereof.
(g) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
---------------------------------------------------------------
(i) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Iowa without giving effect to any
choice or conflict of law provision or rule (whether of the State of Iowa
or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Iowa. Any and all actions or
proceedings arising out of this Agreement may be venued in any state of
federal court within the State of Iowa or such other courts that may have
jurisdiction.
(ii) EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED IN
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (1) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
50
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (2) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH
SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (3) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 13(G).
(h) Amendments and Waivers. No amendment of any provision of this Agreement
----------------------
shall be valid unless the same shall be in writing and signed by the Parties. No
waiver by any of the Parties of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(i) Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Each Party will bear its own costs and expenses (including
--------
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. Without limiting the generality of the
foregoing, Buyer shall pay all filing fees in connection with filings under the
Xxxx-Xxxxx-Xxxxxx Act or the BHC Act.
(k) 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 or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Except as otherwise
specifically set forth herein, all dollar amounts referred to in this Agreement
shall refer to United States dollars.
(l) Offset. Buyer shall have the right, at its sole discretion, to offset
------
or recoup any obligation of Agway to Buyer under this Agreement or otherwise
against any amount which may be payable to Seller by Buyer for any reason. To
the extent applicable to any offset or recoupment under this Subsection (l),
Agway shall consent to relief from the automatic stay of 11 U.S.C. 362(a) in
Agway's bankruptcy case. Buyer shall seek relief from the automatic stay of 11
U.S.C. 362(a) in Agway's bankruptcy case, if such automatic stay is still in
effect, before exercising its right of offset, provided that Buyer shall have no
obligation to seek relief from the automatic stay to withdraw funds from or
51
charge the Primary Reserve Holdback or the Adjustments Reserve Holdback as set
forth herein and in Addendum 1 and Addendum 2 hereto.
52
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
XXXXX FARGO FINANCIAL LEASING, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Its Senior Vice President
TELMARK, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Its: President
-------------------------------------
AGWAY, INC.
By: /s/ Xxxxx X. X'Xxxxx
-------------------------------------
Its: Senior Vice President
-------------------------------------
TELMARK LEASE FUNDING II, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Its: President
-------------------------------------
TELMARK LEASE FUNDING III, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Its: President
-------------------------------------
TELEASE FINANCIAL SERVICES, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Its: President
-------------------------------------
[EXECUTION PAGE TO AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT]
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXX FARGO FINANCIAL LEASING, INC.
AGWAY, INC.
TELMARK, LLC
TELMARK LEASE FUNDING II, LLC
TELMARK LEASE FUNDING III, LLC
AND
TELEASE FINANCIAL SERVICES, LTD.
FEBRUARY 26, 2003
* * * * * * * * * *
Displayed below is a summary of Exhibits and Disclosure Schedules that have not
been filed. We will furnish supplementally a copy of any omitted Exhibit and/or
Disclosure Schedule to the Commission upon request.
Items
-----
Exhibit A Estimated Calculation of Purchase Price as of
September 30, 2002
Exhibit B Assignments
Exhibit C Assumption
Exhibit D Sublease Agreement
Exhibit E Transition Services Agreement
Exhibit F Servicing Agreement
Appendix A Leases in Defensive Litigation
Schedule 1 Agway Petroleum Hauler Contracts
Schedule 3(a)(iii) Consents and Approvals; No Violation
Schedule 4(a) Title to Acquired Assets
Schedule 4(b) Financial Information
Schedule 4(c) Subsequent Events
Schedule 4(d) Permits and Compliance
Schedule 4(e) Third Party Contracts (to which Seller is a Party)
Schedule 4(f) Real Property
Schedule 4(g)(i) Lease Transactions and Lease Documents
Schedule 4(g)(ii) Lease Transactions and Lease Documents
Schedule 4(g)(iv) Lease Transactions and Lease Documents
Schedule 4(g)(x) Lease Transactions and Lease Documents
Schedule 4(g)(xviii) Leases in Progress
Schedule 4(g)(xxv) Lease Transactions and Lease Documents
Schedule 4(h) Actions and Proceedings
Schedule 4(i) Certain Agreements
Schedule 4(m)(i) Intellectual Property
Schedule 4(m)-2 Other Intellectual Property Rights
Schedule 4(m)(ii) Potential Infringement Matters
Schedule 4(m)(iv) Intellectual Property Rights
Schedule 4(n)(i) Securitizations
Schedule 4(o) Domain Names
Exhibit 6(c)(i) Retained Employees
EXHIBIT 2(b)
ADDENDUM 1 TO ASSET PURCHASE AGREEMENT
PRIMARY RESERVE HOLDBACK
1. Buyer shall hold back from the Purchase Price a sum equal to one percent
(1.00%) thereof, plus one percent (1.00%) of the amount (if any) paid by Buyer
to Seller pursuant to Section 2(g) of the Agreement, which amount(s) shall be
placed in a reserve fund (the "PRIMARY RESERVE FUND") and held and administered
as set forth in this Addendum. The sum total of all amounts placed into the
Primary Reserve Fund pursuant to the Amended and Restated Asset Purchase
Agreement (the "AGREEMENT") may be hereinafter referred to as the "PRIMARY
RESERVE FUND DEPOSIT".
2. Subject to Section 3, below, from time-to-time at Buyer's option, Buyer may
charge to the Primary Reserve Fund: (a) the Finance Receivable for any Lease
with a federal or municipal entity under which any payment remains or becomes
unpaid due to cancellation, non-funding or non-appropriation; (b) any obligation
of Seller and/or Agway under the Agreement under which any payment remains or
becomes unpaid by Seller and/or Agway, and/or (c) any other amounts that may
become due Buyer from Seller or Agway under the terms and conditions of the
Agreement, the Real Property Lease or otherwise. In the event of a withdrawal
from the Primary Reserve Fund by Buyer pursuant to Subsection (b) or Subsection
(c), above, Seller's monetary obligation to Buyer which gave rise to the
withdrawal shall be satisfied to the extent of the withdrawal.
3. Notwithstanding anything contained in Section 2, above, to the contrary:
A. Subject to Subsection B, below, Buyer shall not (i) make more than one
(1) withdrawal from the Primary Reserve Fund during any three (3)
month period, or (ii) make any withdrawal from the Primary Reserve
Fund unless and until the aggregate amount to be withdrawn is equal to
or greater than Fifty Thousand Dollars ($50,000.00).
B. Notwithstanding anything contained in Subsection A, above, to the
contrary, each year, at any time during the month immediately
preceding the anniversary date of the Closing, Buyer shall be entitled
to withdraw from the Primary Reserve Fund any and all amounts to which
it is entitled under Section 2, above, and the restrictions set forth
in Subsection A, above, shall be inapplicable to each such withdrawal.
4. Subject to any charges by Buyer pursuant to 2(a) through 2(c), above: (a) on
the last day of the eighteenth (18th) month immediately following the month of
the Closing, Buyer shall pay to Seller the amounts (if any) in the Primary
Reserve Fund in excess of fifty percent (50.00%) of the Primary Reserve Fund
Deposit, and (b) on the last day of the thirty-sixth (36th) month immediately
following the month of the Closing, Buyer shall pay to Seller the amounts (if
any) remaining in the Primary Reserve Fund.
5. Buyer shall pay into the Primary Reserve Fund interest on the credit balance
in Primary Reserve Fund at a fluctuating rate per annum which at all times shall
be equal to the LIBOR as in effect from time-to-time, and such interest shall be
calculated on the credit balance prior to payment of amounts due to Seller under
Section 4, above.
6. Except as otherwise specifically defined herein, all capitalized terms used
herein shall have the meaning set forth in the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
EXECUTION PAGE FOLLOWS]
2
Dated as of February 26, 2003.
XXXXX FARGO FINANCIAL LEASING, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Its Senior Vice President
TELMARK, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
AGWAY, INC.
By: /s/ Xxxxx X. X'Xxxxx
-----------------------------------------
Its: Senior Vice President
-----------------------------------------
TELMARK LEASE FUNDING II, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
TELMARK LEASE FUNDING III, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
TELEASE FINANCIAL SERVICES, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
[EXECUTION PAGE TO ADDENDUM 1]
EXHIBIT 2(c)
ADDENDUM 2 TO AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
ADJUSTMENTS RESERVE HOLDBACK
1. Buyer shall hold back from the Purchase Price a sum equal to one and one-half
percent (1.50%) thereof, which shall be placed in a reserve fund (the
"ADJUSTMENTS RESERVE FUND") and held and administered as set forth in this
Addendum..
2. From time-to-time at Buyer's option, Buyer may charge to the Adjustments
Reserve Fund: (a) any amount(s) due Buyer under Section 2(g) of the Amended and
Restated Asset Purchase Agreement (the "AGREEMENT"), and/or (b) any other
amounts that may become due Buyer from Seller or Agway under the terms and
conditions of the Agreement, the Real Property Lease or otherwise. Buyer may, at
its option, make one or more withdrawals from the Adjustments Reserve Fund
pursuant to Section 2(g)(iii) of the Agreement.
3. Subject to any charges by Buyer pursuant to Section 2, above: (a) on the
Initial Adjustment Date, Buyer shall pay to Seller the amount (if any) by which
the then-current balance of the Adjustments Reserve Fund exceeds one-half
percent (0.50%) of the Estimated Purchase Price, and (b) on the ninety-first
(91st) day immediately following the Closing Date, Buyer shall pay to Seller the
amounts (if any) remaining in the Adjustments Reserve Fund.
4. Buyer shall pay into the Adjustments Reserve Fund interest on the credit
balance in the Adjustments Reserve Fund at a fluctuating rate per annum which at
all times shall be equal to the LIBOR as in effect from time-to-time, and such
interest shall be calculated on the credit balance prior to payment of amounts
due to Seller under Section 3, above.
5. Except as otherwise specifically defined herein, all capitalized terms used
herein shall have the meaning set forth in the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
EXECUTION PAGE FOLLOWS]
Dated as of February 26, 2003.
XXXXX FARGO FINANCIAL LEASING, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Its Senior Vice President
TELMARK, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
AGWAY, INC.
By: /s/ Xxxxx X. X'Xxxxx
-----------------------------------------
Its: Senior Vice President
-----------------------------------------
TELMARK LEASE FUNDING II, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
TELMARK LEASE FUNDING III, LLC
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
TELEASE FINANCIAL SERVICES, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Its: President
-----------------------------------------
[EXECUTION PAGE TO ADDENDUM 2]
EXHIBIT 2(d)
CLOSING ADDENDUM TO
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS CLOSING ADDENDUM TO AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
(this "ADDENDUM") is made and entered into as of the 26th day of February, 2003,
by and among XXXXX FARGO FINANCIAL LEASING, INC., an Iowa corporation ("BUYER");
TELMARK, LLC, a Delaware limited liability company ("TELMARK"); the following
wholly owned subsidiaries of Telmark: TELMARK LEASE FUNDING II, LLC, a Delaware
limited liability company, TELMARK LEASE FUNDING III, LLC, a Delaware limited
liability company, and TELEASE FINANCIAL SERVICES, LTD., an Ontario corporation
(collectively, the "SUBSIDIARIES" and, together with Telmark, collectively
referred to herein as "SELLER"); and Agway Inc., a Delaware corporation and the
owner of all the issued and outstanding limited liability interests (within the
meaning of Section 18-701 of the Delaware Limited Liability Company Act, as
amended) of Telmark ("AGWAY"). Buyer, Agway and Seller may be referred to herein
as the "PARTIES."
WHEREAS, Seller, Buyer and Agway are parties to that certain Amended and
Restated Asset Purchase Agreement dated as of February 26, 2003 (the
"Agreement");
WHEREAS, pursuant to the terms and conditions of the Agreement, Seller has
agreed to sell to Buyer, and Buyer has agreed to purchase from Seller, certain
assets of Seller upon the terms and conditions set forth in the Agreement;
WHEREAS, Buyer currently does not hold all of the licenses necessary and/or
desirable to take ownership of certain leases to be sold and purchased under the
Agreement, and Buyer does not anticipate having such licenses on or before the
scheduled date of closing; and
WHEREAS, with respect to such leases only, the Parties have agreed upon a
delayed closing, as more fully set forth herein;
NOW, THEREFORE, in exchange for the mutual promises and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties hereby
agree as follows:
1. DEFINITIONS. Except as otherwise specifically defined in this Addendum,
-----------
capitalized terms used herein shall have the meanings set forth in the
Agreement. The following terms used in this Addendum shall have the
following-described meanings:
"MMV ASSETS" means those Leases the origination, ownership and/or servicing
of which necessitates or makes desirable one or more of the MMV Licenses (which
includes, without limitation, those Leases identified in Exhibit A, attached
hereto and incorporated herein), together with the Leased Property applicable
thereto.
"MMV CLOSING" means each Closing with respect to one or more MMV Assets and
the MMV Liabilities associated therewith, as described in Section 2 of this
Addendum.
"MMV CLOSING DATE" means, with respect to any given MMV Asset and the MMV
Liabilities associated therewith, the date upon which the MMV Closing takes
place pursuant to Section 2 of this Addendum.
"MMV LIABILITIES" means all Liabilities associated with the MMV Assets.
"MMV LICENSES" means a finance, mortgage lending, motor vehicle dealer,
motor vehicle lease or other license applicable to the origination, ownership
and/or servicing of one or more Leases under the laws of the State of
California, the State of Connecticut, the State of Iowa, the State of North
Dakota, the State of Rhode Island, the State of South Dakota and the State of
West Virginia, respectively, together with the motor vehicle retail seller's
license applicable to the origination, ownership and/or servicing of one or more
Leases under the laws of the State of Florida.
"PRIMARY ASSETS" means all of the Acquired Assets other than the MMV
Assets.
"PRIMARY CLOSING" means the Closing with respect to the Primary Assets and
Primary Liabilities.
"PRIMARY LIABILITIES" means all of the Assumed Liabilities other than the
MMV Liabilities.
2. DELAYED CLOSING DATE WITH RESPECT TO MMV ASSETS AND MMV LIABILITIES.
-----------------------------------------------------------------------
Notwithstanding anything contained in the Agreement to the contrary:
(a) No amount required to be paid by Buyer to Seller at or with respect to
the Primary Closing shall include any amount(s) associated with the
MMV Assets or the MMV Liabilities. In other words, the Primary Closing
shall be consummated under the terms and conditions set forth in the
Agreement as though the MMV Assets were Excluded Assets and the MMV
Liabilities were Excluded Liabilities.
(b) With respect to each MMV Asset and the MMV Liabilities associated
therewith, the Closing shall take place within ten (10) business days
after Buyer has received the MMV License(s) applicable thereto and all
conditions preceding to Closing (as set forth in the Agreement) are
satisfied, or at such other time as the Parties may hereafter agree
upon in writing.
(c) The final Purchase Price associated with each MMV Asset shall be
calculated using the formula set forth in Section 2(c) of the
Agreement and agreed upon by the Parties in writing as of the Primary
2
Closing Date, and shall be paid by Buyer to Seller on the applicable
MMV Closing Date (less the amount to be withheld pursuant to Section
2(h)(a) with respect to the Primary Reserve Holdback), together with
interest thereon from the Primary Closing Date through such MMV
Closing Date at a fluctuating rate per annum which at all times shall
be equal to the LIBOR as is in effect from time-to-time.
(d) Except as set forth in Section 2(h) with respect to the Primary Reserve
Holdback, no adjustments or holdbacks shall be made to or in
connection with Buyer's payment of any Purchase Price at any MMV
Closing. However, that portion of the Purchase Price attributable to
each MMV Asset shall be included in determining the amount of the
Adjustments Reserve Holdback pursuant to Section 2(h) and in
calculating the Estimated Purchase Price for purposes of Section 3 of
Addendum 2 to Amended and Restated Asset Purchase Agreement dated
February 26, 2003.
(e) Except as specifically set forth above, the following provisions shall
be inapplicable to all MMV Closing:
(1) Section 2(c) (Purchase Price);
(2) Section 2(f) (Post-Closing Adjustments to Estimated Purchase
Price);
(3) Section 2(g) (Payment of Purchase Price Adjustments);
(4) Section 2(h)(b) (Adjustments Reserve Holdback);
(5) Section 2(i) (Review of Certain Leases);
(6) Section 5(a)(1);
(7) Section 5(a)(2)(i) through (vi), (viii) and (x) through (xiii);
(8) Section 5(c)(iii);
(9) Section 6(c) (Employee Benefits and Employment);
(10) Section 8(a)(x);
(11) Section 10(a)(v); and
(12) Section 11 (Section 363 Sale).
3
Nothing in this Subsection (c) shall be construed as limiting the
applicability of any of the provisions identified herein to the
Primary Closing, any Primary Asset or any Primary Liability.
(d) After consummation of the Primary Closing, Buyer shall not be entitled
to reject any of the MMV Assets.
(e) With respect to the MMV Closings only, the dates set forth in Sections
10(a)(iii)(B) and 10(a)(iv)(B) are hereby changed from March 3, 2003,
to September 1, 2003. Any termination pursuant to Section 10 of the
Agreement which occurs after consummation of the Primary Closing shall
be applicable only to MMV Assets and MMV Liabilities not acquired or
assumed by Buyer pursuant to an MMV Closing prior to such termination,
and shall not affect the Primary Closing or any MMV Closing(s) which
have be consummated prior to such termination.
(f) In the event the Agreement is terminated pursuant to Subsection (e),
above, as a result of Buyer's failure to obtain any MMV License, then,
with respect to the MMV Assets not acquired by buyer pursuant to an
MMV Closing prior to such termination, within ten (10) business days
after the date of such termination, Buyer shall pay to Seller the sum
of all amounts that would have been remitted to Seller pursuant to
Section 2.C. of the Servicing Agreement, less the Monthly Servicing
Fees and other fees that Buyer would have been entitled to receive
under the Servicing Agreement, had such MMV Assets not been MMV
Assets, together with interest thereon from the dates such amounts
would have been remitted to Seller under Section 2.C. of the Servicing
Agreement through the date such amounts are paid hereunder at a
fluctuating rate per annum which at all times shall be equal to the
LIBOR as is in effect from time-to-time.
(g) Except as specifically set forth above in this Section 2, all of the
terms and conditions set forth in the Agreement shall be applicable to
each MMV Closing, all of the MMV Assets and all of the MMV
Liabilities. For purposes of the Agreement, each MMV Closing shall
constitute a "Closing" and each MMV Closing Date shall constitute a
"Closing Date", as those terms are used in the Agreement.
3. INCORPORATION. The terms and conditions of this Addendum are hereby
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incorporated in and added to the Agreement. As supplemented and amended by this
Addendum, the provisions of the Agreement shall remain in full force and effect,
provided that, to the extent any provision of the Agreement is inconsistent with
any provision of this Addendum, the provision of this Addendum shall control.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
EXECUTION PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the Parties hereto have executed this Addendum as of
the date first above written.
XXXXX FARGO FINANCIAL LEASING, INC.
By: /s/ Xxxxxx X. Xxxx
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Its Senior Vice President
TELMARK, LLC
By: /s/ Xxxxxx X. Xxxxxxx
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Its:President
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AGWAY, INC.
By: /s/ Xxxxx X. X'Xxxxx
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Its: Senior Vice President
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TELMARK LEASE FUNDING II, LLC
By: /s/ Xxxxxx X. Xxxxxxx
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Its: President
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TELMARK LEASE FUNDING III, LLC
By: /s/ Xxxxxx X. Xxxxxxx
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Its: President
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TELEASE FINANCIAL SERVICES, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
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Its: President
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[EXECUTION PAGE TO CLOSING ADDENDUM TO
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT]
