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EXHIBIT 10.33
MERGER AGREEMENT
AMONG
A.C.F. IMPORTS, INC.
A.C.F. ACQUISITION, INC.
▇▇▇▇▇▇▇'▇ FLEET SERVICE CO., INC.
AND
OAKHURST COMPANY, INC.
DATED: JUNE 30, 2000
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is entered into as of the 30th
day of June, 2000 by and among A.C.F. IMPORTS, INC., a New York corporation (the
"Buyer"); A.C.F. ACQUISITION, INC., a New York corporation and a wholly-owned
Subsidiary of the Buyer (the "Transitory Subsidiary"); ▇▇▇▇▇▇▇'▇ FLEET SERVICE
CO., INC., a New York corporation (the "Target"); and OAKHURST COMPANY, INC., a
Delaware corporation and parent of the Target (the "Target Stockholder"). The
Buyer, the Transitory Subsidiary, the Target and the Target Stockholder are
referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
acquire by merger all of the outstanding capital stock of the Target for cash
through a reverse subsidiary merger of the Transitory Subsidiary with and into
the Target.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Buyer" has the meaning set forth in the preface, above.
"Buyer Disclosure Schedule" has the meaning set forth in Section 4.
"Buyer Indebtedness" has the meaning set forth in the Section 2(f).
"Cash Consideration" has the meaning set forth in Section 2(b).
"Certificate of Merger" has the meaning set forth in Section 2(d)(i).
"Closing" has the meaning set forth in Section 2(c).
"Closing Date" has the meaning set forth in Section 2(c).
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidential Information" means any information concerning the
businesses and affairs of the Target and its Subsidiaries that is not already
generally available to the public.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"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).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FINOVA" means FINOVA Capital Corporation.
"FINOVA Debt" means the debt due from the Target to FINOVA, but only
with respect to amounts borrowed by the Target in connection with the operations
of the Target, the outstanding principal balance of which was $1,470,000 as of
May 26, 2000.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(c)(i) below.
"Indemnifying Party" has the meaning set forth in Section 8(c)(i)
below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications,
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registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"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), including any liability for Taxes.
"Merger" has the meaning set forth in Section 2(a).
"Merger Consideration" has the meaning set forth in Section 2(b).
"Most Recent Financial Statements" has the meaning set forth in Section
3(h).
"Most Recent Fiscal Quarter End" has the meaning set forth in Section
3(h).
"Most Recent Fiscal Year End" has the meaning set forth in Section
3(h).
"Oakhurst Plan" means The Oakhurst Company, Inc. Profit Sharing Plan.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface, above.
"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 (or any
department, agency, or political subdivision thereof).
"Pre-Closing Board" has the meaning set forth in Section 2(f).
"Pre-Closing Period" shall mean the period beginning on the date of
this Agreement and ending on the earlier of (a) the Closing Date, (b) the day
which is one hundred twenty (120) days after the date of this Agreement, as the
same may be extended in writing by the Parties, or (c) the date this Agreement
is terminated in accordance with the provisions of Section 7(a).
"Securities Act" means the Securities Act of 1933, as amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialman's,
and similar liens; (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings; (c)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2(a).
"Target" has the meaning set forth in the preface, above.
"Target Disclosure Schedule" has the meaning set forth in Section 3.
"Target Share" means any share of the Common Stock, $10.00 par value
per share, of the Target.
"Target Stockholder" has the meaning set forth in the preface, above.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(c) below.
"Transitory Subsidiary" has the meaning set forth in the preface,
above.
2. BASIC TRANSACTION.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary will merge with and into the Target (the
"Merger") on the Closing Date. The Target shall be the corporation surviving the
Merger (the "Surviving Corporation").
(b) Merger Consideration. The consideration for the Merger (the
"Merger Consideration") to be paid by the Buyer shall be equal to the sum of (i)
$1.00 (the "Cash
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Consideration") and (ii) the balance, including principal and accrued interest,
of the FINOVA Debt as of the Closing Date. The Merger Consideration shall be
paid as provided in Section 2(d)(ii) and Section 2(d)(iii).
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP in Buffalo, New York on such date as the parties shall agree
upon (the "Closing Date"); provided, however, that the Closing Date shall occur
no later than one hundred twenty (120) days following the date of this
Agreement.
(d) Actions at the Closing. At the Closing (or on such other date
indicated below):
(i) the Target and the Transitory Subsidiary will file with
the Secretary of State of the State of New York a Certificate of Merger in the
form attached hereto as Exhibit 2(d)(i) (the "Certificate of Merger");
(ii) the Buyer will deliver to the Target Stockholder the Cash
Consideration;
(iii) on the Closing Date (or such other date as may be agreed
upon by the Buyer and FINOVA), the Buyer will pay to FINOVA an amount equal to
the outstanding balance, including principal and accrued interest, of the FINOVA
Debt;
(iv) the Buyer and the Transitory Subsidiary will deliver to
the Target Stockholder the various certificates, instruments, and documents
referred to in Section 6(b), below;
(v) the Target will deliver to the Buyer the various
certificates, instruments, and documents referred to in Section 6(a), below; and
(vi) the Target Stockholder will deliver at and as of the
Closing Date, to the Buyer the various certificates, instruments and documents
referred to in Section 6(a) below.
(e) Effect of the Merger.
(i) General. The Merger shall become effective at the time the
Target and the Transitory Subsidiary file the Certificate of Merger with the
Secretary of State of the State of New York. The Merger shall have the effect
set forth in the Business Corporation Law of the State of New York. The
Surviving Corporation may, at any time after the Closing Date, take any action
(including executing and delivering any document) in the name and on behalf of
either the Target or the Transitory Subsidiary in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended and restated at and
as of the Closing Date to read as did the Certificate of Incorporation of the
Transitory Subsidiary immediately prior to the Closing Date.
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(iii) Bylaws. The Bylaws of the Surviving Corporation shall be
amended and restated at and as of the Closing Date to read as did the Bylaws of
the Transitory Subsidiary immediately prior to the Closing Date.
(iv) Directors and Officers. The directors and officers of the
Transitory Subsidiary shall become the directors and officers of the Surviving
Corporation at and as of the Closing Date (retaining their respective positions
and terms of office).
(v) Status of Target Shares. No Target Share shall be deemed
to be outstanding or to have any rights after the Closing Date other than the
right to receive the Merger Consideration.
(vi) Conversion of Capital Stock of the Transitory Subsidiary.
At and as of the Closing Date, each share of common stock, no par value per
share, of the Transitory Subsidiary shall be converted into one share of Class A
Voting common stock, $10.00 par value per share, of the Surviving Corporation.
(f) Operation of Business Prior to the Closing. The Target
Stockholder agrees to vote its shares of the Target to elect the following three
Persons to serve as directors of the Target during the Pre-Closing Period (the
"Pre-Closing Board"): Maarten ▇. ▇▇▇▇▇▇▇ (or such other person as is nominated
in writing by the Target Stockholder) and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ (or such other two Persons as are nominated in writing by the Buyer). The
Pre-Closing Board shall be responsible for the management of the operations of
the Target during the Pre-Closing Period, subject to the terms of this
Agreement. Notwithstanding the foregoing, unless authorized by the Board of
Directors of the Target Stockholder, the Pre-Closing Board shall not authorize
or permit the Target to (i) borrower from FINOVA any amount which, when added to
the FINOVA Debt, exceeds the amounts available under the existing loan documents
relating to the FINOVA Debt, or (ii) incur any indebtedness for borrowed money
(other than for purchases of inventory in the ordinary course of business) to
any lender other than FINOVA or the Buyer. The Buyer agrees that during the
Pre-Closing Period, it shall make loans to the Target for working capital, as
needed by the Target from time to time, in an aggregate amount of up to
$500,000. In addition, the Buyer may, within its discretion from time to time,
extend credit to the Target for purchases of inventory on Buyer's customary
credit terms. The Target Stockholder hereby consents to, and agrees to vote if
necessary to approve, the following actions of the Target during the Pre-Closing
Period, as authorized from time to time by the Pre-Closing Board: (1) the
borrowing of funds for working capital from the Buyer, which borrowings shall
bear a reasonable rate of interest, be payable within sixty (60) days after
demand (provided that such demand shall not be made prior to the earlier of the
Closing or the termination of this Agreement), subject to the provisions of any
applicable promissory notes, and be secured by a security interest in all of the
Target's tangible and intangible assets (subject to the consent of FINOVA), all
of which may but need not be evidenced by a promissory note; and (2) the
purchasing of inventory on credit from the Buyer, which purchase obligations
(for purchases of inventory both prior to and subsequent to the date hereof) are
to be secured by a security interest in all of the Target's tangible and
intangible assets (subject to the consent of FINOVA) and are to be in accordance
with Buyer's customary credit terms. All indebtedness (including principal,
interest and other amounts) due to the Buyer from the Target
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pursuant to the working capital loans and inventory sales described in this
Section 2(f) shall be referred to herein as the "Buyer Indebtedness." During the
Pre-Closing Period, the Pre-Closing Board may authorize the Target to repay any
or all of the Buyer Indebtedness with available cash, to the extent permitted by
FINOVA. Any renewal fee or similar fee which becomes due to FINOVA as a result
of the obtaining FINOVA's consent to the transactions contemplated hereby shall
be paid by the Target, and the Target Stockholder shall have no obligation to
pay such fee.
3. REPRESENTATIONS AND WARRANTIES OF THE TARGET AND TARGET STOCKHOLDER.
The Target and the Target Stockholder jointly and severally represent and
warrant to the Buyer and the Transitory Subsidiary that the statements contained
in this Section 3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3), except (i) as set forth in the disclosure schedule
accompanying this Agreement (the "Target Disclosure Schedule"), (ii) for any
non-conformity resulting from matters authorized by the Pre-Closing Board during
the Pre-Closing Period, as provided in Section 2(f), and (iii) those
representations and warranties which address matters only as of a particular
date, which representations and warranties are true and correct as of that date.
The Target Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3.
(a) Organization, Qualification, and Corporate Power. Each of the
Target and its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.
Each of the Target and its Subsidiaries is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a material adverse effect on the financial condition, business or assets of
the Target and its Subsidiaries taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement. The
jurisdiction of incorporation and each jurisdiction in which the Target and its
Subsidiaries are qualified to conduct business are set forth in Section 3(a) of
the Target Disclosure Schedule. Each of the Target and its Subsidiaries has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. Section 3(a) of the
Target Disclosure Schedule lists the directors and officers of the Target. The
Target has delivered to the Buyer correct and complete copies of the charter and
bylaws of the Target (as amended to date). The minute books (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of the Target are correct and complete. The Target is not in
default under or in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the
Target consists of 2,000 Target Shares, $10 par value per share, of which one
thousand (1,000) shares are designated Class A Voting Shares and one thousand
(1,000) shares are designated Class B Non-Voting Shares. One hundred (100) Class
A Voting Target Shares are issued and outstanding and one hundred (100) Class A
Voting Target Shares are held in treasury. All of the issued and outstanding
Target Shares have been duly authorized and are validly issued, fully paid, and
non-assessable and all are held of record and beneficially owned by the Target
Stockholder, free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws). There are no
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outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, or similar rights with respect to the Target.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of the Target.
(c) Authorization of Transaction. The Target has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder; provided, however, that the Target cannot consummate the Merger
unless and until it receives the Target Stockholder's approval. Subject to the
approval by the Target Stockholder's board of directors, the execution and
delivery of this Agreement by Target and the Target's consummation of the
transactions contemplated hereby have all been duly and validly authorized by
all necessary corporate action. This Agreement constitutes the valid and legally
binding obligation of the Target and the Target Stockholder, enforceable in
accordance with its terms and conditions except as enforceability may be limited
by any bankruptcy, insolvency, reorganization, moratorium and other similar laws
now or hereafter in effect relating to creditors' rights generally.
(d) Noncontravention. To the Knowledge of the officers and
directors of the Target Stockholder and the Target, neither the execution and
the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which any of the Target and
its Subsidiaries is subject or any provision of the charter or bylaws of any of
the Target and its Subsidiaries; or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which any of the Target and its Subsidiaries is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets) other than with respect to certain
agreements evidencing the FINOVA Debt, which is to be repaid by the Buyer as a
portion of the Merger Consideration, and except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a material adverse effect on
the business, assets or financial condition of either the Target or its
Subsidiaries or the ability of the Parties to consummate the transactions
contemplated by this Agreement. To the Knowledge of the officers and directors
of the Target Stockholder and the Target, and other than in connection with the
provisions of the Business Corporation Law of the State of New York and
applicable state securities laws, none of the Target and its Subsidiaries needs
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement except
where the failure to give notice, file or obtain any authorization, consent or
approval would not have a material adverse effect on the business, assets or
financial condition of either the Target or its Subsidiaries or on the ability
of the Parties to consummate the transactions contemplated by this Agreement.
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(e) Brokers' Fees. None of the Target and its Subsidiaries or the
Target Stockholder has any Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(f) Title to Assets. Except as provided in Section 3(f) of the
Target Disclosure Schedule, the Target and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by them, located on their premises, or shown in the Most Recent Financial
Statements, or acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary Course
of Business since the date of the Most Recent Financial Statements and except
for security interests securing the FINOVA Debt, which is to be repaid by the
Buyer as a portion of the Merger Consideration.
(g) Subsidiaries.
(i) The Target's sole Subsidiary is G&O Sales Company, a
Pennsylvania corporation, which has 250 authorized shares, $100 par value per
share, of which all 250 shares have been issued to, and are held beneficially
and of record by, the Target; all such shares have been duly authorized and are
validly issued, fully paid, and non-assessable and are free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), Security Interests (other than those that will be
released concurrently with the Closing), options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands.
(ii) The Target has delivered to the Buyer correct and
complete copies of the charter and bylaws of each Subsidiary of the Target (as
amended to date) and the names of the officers and directors of such Subsidiary.
(iii) There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require any of the Target
and its Subsidiaries to sell, transfer, or otherwise dispose of any capital
stock of any of its Subsidiaries or that could require any Subsidiary of the
Target to issue, sell, or otherwise cause to become outstanding any of its own
capital stock (other than this Agreement).
(iv) There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of any capital stock of any
Subsidiary of the Target.
(v) None of the Subsidiaries of the Target is in default under
or in violation of any provision of its charter or bylaws.
(vi) None of the Target and its Subsidiaries controls directly
or indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association, other than
control by the Target of its Subsidiaries.
(h) Financial Statements. Attached hereto as Exhibit 3(h) are the
following financial statements (collectively the "Financial Statements"): (i)
balance sheets and statements of income as of and for the fiscal years ended
February 28, 1998 and February 28, 1999 and for the
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fiscal year ended February 29, 2000 (the "Most Recent Fiscal Year End") for the
Target and its Subsidiaries; and (ii) interim balance sheets and statements of
income as of and for the one month period ended March 31, 2000 for the Target
and its Subsidiaries. The Financial Statements as of the Most Recent Fiscal Year
End are referred to herein as the "Most Recent Financial Statements". The
Financial Statements have been included in the consolidated financial statements
of the Target Stockholder for the same periods, which consolidated financial
statements of the Target Stockholder, with the exception of the interim
financial statements, have been audited, have been prepared, with the exception
of the interim financial statements in that no footnotes are provided, in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, and present fairly the consolidated financial condition of the
Target Stockholder, the Target and its subsidiaries. The foregoing balance
sheets exclude the FINOVA Debt, inter-company debt between the Target and the
Target Stockholder, and cash.
(i) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End through May 26, 2000, there has not been any material
adverse change in the business, financial condition, assets, operations, results
of operations, or future prospects of any of the Target and its Subsidiaries.
Without limiting the generality of the foregoing, between the date of the Most
Recent Fiscal Year End and May 26, 2000:
(i) none of the Target and its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business;
(ii) none of the Target and its Subsidiaries has entered into
any agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $10,000 or outside
the Ordinary Course of Business;
(iii) no party (including any of the Target and its
Subsidiaries) has accelerated, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) involving more than $10,000, to which any of the Target and its
Subsidiaries is a party or by which any of them is bound;
(iv) none of the Target and its Subsidiaries has imposed any
Security Interest upon any of its assets, tangible or intangible;
(v) none of the Target and its Subsidiaries has made any
capital expenditure (or series of related capital expenditures) either involving
more than $10,000, or outside the Ordinary Course of Business;
(vi) none of the Target and its Subsidiaries has made any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person either involving more than $10,000, or outside the
Ordinary Course of Business;
(vii) none of the Target and its Subsidiaries has issued any
note, bond, or other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed
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money with the exception of the FINOVA Debt, which is to be repaid by the Buyer
as a portion of the Merger Consideration;
(viii) except as set forth in Section 3(i)(viii) of the Target
Disclosure Schedule, none of the Target and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities beyond the
applicable due dates or outside the Ordinary Course of Business;
(ix) except as set forth in Section 3(i)(ix) of the Target
Disclosure Schedule, none of the Target and its Subsidiaries has canceled,
compromised, waived, or released any right or claim either involving more than
$10,000, or outside the Ordinary Course of Business;
(x) none of the Target and its Subsidiaries has granted any
license or sublicense of any rights under or with respect to any Intellectual
Property either in writing or outside the Ordinary Course of Business;
(xi) there has been no change made or authorized in the
charter or bylaws of any of the Target and its Subsidiaries;
(xii) none of the Target and its Subsidiaries has issued,
sold, or otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock (other than as provided for in
this Agreement);
(xiii) none of the Target and its Subsidiaries has declared,
set aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) none of the Target and its Subsidiaries has experienced
any damage, destruction, or loss (whether or not covered by insurance) to its
property;
(xv) none of the Target and its Subsidiaries has made any loan
to, or entered into any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xvi) none of the Target and its Subsidiaries has entered into
any employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) except as set forth in Section 3(i)(xvii) of the Target
Disclosure Schedule, none of the Target and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xviii) none of the Target and its Subsidiaries has adopted,
amended, modified or terminated any bonus, profit-sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
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(xix) none of the Target and its Subsidiaries has made any
other change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xx) none of the Target and its Subsidiaries has made or
pledged to make any charitable or other capital contribution outside the
Ordinary Course of Business;
(xxi) except as set forth in Section 3(i)(viii) of the Target
Disclosure Schedule, there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving any of the Target and its Subsidiaries; and
(xxii) none of the Target and its Subsidiaries has committed
to do any of the foregoing.
(j) Undisclosed Liabilities. None of the Target and its
Subsidiaries has any Liability, except for (i) Liabilities set forth in the Most
Recent Financial Statements, and (ii) Liabilities which have arisen after the
Most Recent Fiscal Year End in the Ordinary Course of Business, all of which are
reflected in the books and records of Target.
(k) Legal Compliance. To the Knowledge of the officers and
directors of the Target Stockholder and the Target, each of the Target and its
Subsidiaries has complied with all applicable laws of federal, state, local, and
foreign governments, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
(l) Tax Matters.
(i) The Target Stockholder has filed all consolidated federal
Tax Returns with respect to the Target and its Subsidiaries that it was required
to file. Each of the Target and its Subsidiaries has filed all other Tax Returns
that it was required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes due and payable by any of the Target and its
Subsidiaries or by the Target Stockholder with respect to the Target and its
Subsidiaries have been paid. None of the Target and its Subsidiaries currently
is the beneficiary of any extension of time within which to file any Tax Return,
other than the customary six-month extension with respect to the 1999 tax year.
To the Knowledge of the officers and directors of the Target and the Target
Stockholder, no claim has ever been made by an authority in a jurisdiction where
any of the Target and its Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Security Interests
on any of the assets of any of the Target and its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
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(ii) Each of the Target and its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) None of the Target and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(iv) The unpaid Taxes of the Target and its Subsidiaries (A)
did not, as of the Most Recent Fiscal Year End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth in the Most Recent
Financial Statements; and (B) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Target and its Subsidiaries in filing their Tax Returns.
(m) Owned Real Property. Neither the Target nor any of its
Subsidiaries owns any real property.
(n) Leased Real Property. Section 3(n) of the Target Disclosure
Schedule lists and describes briefly all real property leased to any of the
Target and its Subsidiaries. The Target has delivered to the Buyer correct and
complete copies of the leases listed in Section 3(n) of the Target Disclosure
Schedule (as amended to date). With respect to each lease listed in Section 3(n)
of the Target Disclosure Schedule:
(i) the lease is legal, valid, binding, enforceable, and in
full force and effect;
(ii) to the Knowledge of the officers and directors of the
Target Stockholder and the Target, (i) no party to the lease is in breach or
default; and (ii) no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iii) no party to the lease has repudiated any provision
thereof;
(iv) except as set forth in Section 3(n) of the Target
Disclosure Schedule, there are no material disputes or oral agreements in effect
as to the lease;
(v) none of the Target and its Subsidiaries has assigned,
subleased, transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold;
(vi) all facilities leased thereunder have received all
material approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations; and
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(vii) all facilities leased thereunder are supplied with
utilities and other services necessary for the operation thereof.
(o) Intellectual Property. The Target and its Subsidiaries own or
have the right to use pursuant to license, sublicense, agreement, or permission
all Intellectual Property necessary for the operation of the businesses of the
Target and its Subsidiaries as presently conducted.
(i) To the Knowledge of the directors and officers of the
Target and the Target Stockholder,
(A) none of the Target and its Subsidiaries has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties,
(B) none of the Target and its Subsidiaries has ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that any of the Target and its Subsidiaries must license or refrain from using
any Intellectual Property rights of any third party), and
(C) no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of any of the Target and its Subsidiaries.
(ii) Section 3(o)(ii) of the Target Disclosure Schedule
identifies each patent or registration which has been issued to any of the
Target and its Subsidiaries with respect to any of its Intellectual Property,
identifies each pending patent application or application for registration which
any of the Target and its Subsidiaries has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other written
permission which any of the Target and its Subsidiaries has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). The Target has delivered to the Buyer correct and complete copies
of all such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). Section 3(o)(ii) of the Target Disclosure
Schedule also identifies each trade name or unregistered trademark used by any
of the Target and its Subsidiaries in connection with any of its businesses.
With respect to each item of Intellectual Property required to be identified in
Section 3(o)(ii) of the Target Disclosure Schedule:
(A) the Target and its Subsidiaries possess all
right, title, and interest in and to the item, free and clear of any Security
Interest, license, or other restriction, except for security interests securing
the FINOVA Debt, which is to be repaid by the Buyer as a portion of the Merger
Consideration;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of the directors and officers of the
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Target and the Target Stockholder, is threatened which challenges the legality,
validity, enforceability, use, or ownership of the item; and
(D) none of the Target and its Subsidiaries has ever
agreed to indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iii) None of the Target or its Subsidiaries uses any
Intellectual Property that any third party owns pursuant to license, sublicense,
agreement, or permission other than licenses implied by the sale of goods.
(p) Tangible Assets. The Target and its Subsidiaries own or lease
all machinery, equipment, and other tangible assets necessary for the conduct of
their businesses as presently conducted. Each such tangible asset is free from
material defects, has been maintained in accordance with normal industry
practice, and is in good operating condition and repair (subject to normal wear,
tear and obsolescence).
(q) Inventory. The inventory of the Target and its Subsidiaries
consists of supplies and purchased parts, all of which is merchantable and fit
for the purpose for which it was procured, subject only to the reserve for the
inventory write-down for inventory which is slow-moving, obsolete, damaged, or
defective as set forth in the Most Recent Financial Statements as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Target and its Subsidiaries.
(r) Contracts. Section 3(r) of the Target Disclosure Schedule lists
the following contracts and other agreements to which any of the Target and its
Subsidiaries is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a material
loss to any of the Target and its Subsidiaries, involve consideration in excess
of $10,000 or which was entered into outside the Ordinary Course of Business;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $10,000 or
under which it has imposed a Security Interest on any of its assets, tangible or
intangible, other than agreements or guaranties relating to the FINOVA Debt,
which is to be repaid by the Buyer as a portion of the Merger Consideration;
(v) any agreement concerning confidentiality or
noncompetition;
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(vi) any agreement with any of the Target Stockholder and its
affiliates (other than the Target and its Subsidiaries) other than agreements or
guaranties relating to the FINOVA Debt, which is to be repaid by the Buyer as a
portion of the Merger Consideration;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $10,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of any of the
Target and its Subsidiaries; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
The Target has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 3(r) of the Target Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each oral agreement referred to in Section 3(r) of the Target Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B) the agreement
will continue to be legal, valid, binding, enforceable, and in full force and
effect as of the Closing Date on identical terms upon the consummation of the
transactions contemplated hereby; (C) to the Knowledge of the officers and
directors of the Target Stockholder and the Target, no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(s) Notes and Accounts Receivable. All notes and accounts
receivable of the Target and its Subsidiaries are reflected properly on their
books and records; are valid receivables subject to no defenses, setoffs or
counterclaims; and are current and will be collected in accordance with their
terms at their recorded amounts, except to the extent of any reserve for bad
debts set forth in the Most Recent Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Target and its Subsidiaries.
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(t) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of the Target and its Subsidiaries other than those
given to freight forwarders in connection with the importation of goods, if any.
(u) Insurance. Section 3(u) of the Target Disclosure Schedule sets
forth the following information with respect to each insurance policy to which
any of the Target and its Subsidiaries is a party, a named insured, or otherwise
the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured; and
(iii) the policy number and the period of coverage.
(v) Litigation. Section 3(v) of the Target Disclosure Schedule sets
forth each instance in which any of the Target and its Subsidiaries (i) is
subject to any outstanding injunction, judgment, order, decree, or ruling; or
(ii) is a party or, to the Knowledge of the officers and directors of the Target
Stockholder and the Target, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 3(v) of the Target Disclosure
Schedule could result in any adverse change in the business, financial
condition, operations, results of operations, or future prospects of any of the
Target and its Subsidiaries.
(w) Product Warranty. Each product sold by any of the Target and
its Subsidiaries has been sold pursuant to the warranty of the manufacturer of
the product. Section 3(w) of the Target Disclosure Schedule includes copies of
the standard terms and conditions of sale or lease for each of the Target and
its Subsidiaries. None of the Target and its Subsidiaries has any Liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) for replacement or repair thereof or other damages in
connection therewith, subject only to any reserve for product warranty claims
set forth on the face of the Most Recent Financial Statements (rather than in
any notes thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Target and its
Subsidiaries. No product manufactured, sold, leased, or delivered by any of the
Target and its Subsidiaries is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease.
(x) Product Liability. To the Knowledge of the officers and
directors of the Target Stockholder and the Target, none of the Target and its
Subsidiaries has any Liability arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product sold by
Target or its Subsidiaries.
(y) Employees.
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(i) None of the Target and its Subsidiaries is a party to or
bound by any collective bargaining agreement, nor has any of them experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. None of the Target and its Subsidiaries has committed any
unfair labor practice. None of the officers and directors of the Target
Stockholder and the Target has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of any of the Target and its Subsidiaries.
(ii) The Target and its Subsidiaries are in full compliance
with all applicable laws, rules, regulations, standards and contracts relating
to employment, including those relating to wages, hours, working conditions,
hiring, promotion, occupational health and safety (including those dealing with
employee handling or use of or exposure to hazardous or toxic substances and the
training of employees with respect to such substances), and the payment and
withholding of taxes and other similar obligations, and the Target and its
Subsidiaries have not received any notice of any violation of any such rules,
law, regulation, standard or contract. The Target and its Subsidiaries are in
full compliance with all applicable affirmative action and equal employment
opportunity obligations arising under any state or federal law, regulation,
executive order or ordinance, or any contract or subcontract with any
governmental entity or other person. The Target and its Subsidiaries have
withheld from the wages and salaries of their respective employees as is
required by law and are not liable for any arrears or wages or any tax or
penalty in connection therewith.
(iii) Except as set forth in Section 3(y)(iii) of the Target
Disclosure Schedule, there is no employment-related claim, cause of action,
grievance, judgment or other adverse charge or decision of any kind (including
any in the nature of employment discrimination of any type, breach of contract,
wrongful discharge, retaliation, health, safety or right-to-know violations,
child labor violations, or non-payment of wages, benefits or wage supplements),
under any law, rule, regulation, standard, collective bargaining agreement or
other contract, pending against any of the Target and its Subsidiaries or any of
their respective officer, employees or agents and, to the Knowledge of the
officers and directors of the Target and Target Stockholder, there is no basis
for any such claim, cause or action, grievance, judgment or other adverse charge
or decision.
(iv) To the Knowledge of the officers and directors of the
Target and the Target Stockholder, no current or former employee of the Target
and its Subsidiaries has any claim against the Target and its Subsidiaries or
any of their respective officers, employees or agents under any law, rule,
regulation, standard or contract on account of or for overtime pay (other than
overtime pay for the current payroll period), wages or salary for any period
other than the current payroll period, vacation, holiday or other time off or
pay in lieu thereof (other than time off or pay in lieu thereof earned in
respect of the current year), or any violation of any law, rule, regulation,
standard or contract relating to the payment of wages, fringe benefits, wage
supplements or hours of work.
(v) Except as set forth in Section 3(y)(v) of the Target
Disclosure Schedule, none of the Target, its Subsidiaries, the Buyer and the
Transitory Subsidiary is, or, as a result of the consummation of the
transactions contemplated by this Agreement, will be, liable for severance pay
or any other payment of monies to any employee of the Target or its Subsidiaries
as
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the result of the execution of this Agreement or the parties' performance of its
terms, or for any other reason in any way related to the consummation of the
transactions contemplated hereby, including any change of ownership or any
change in the employing entity.
(vi) The Target and its Subsidiaries are in full compliance
with all employment-related notice, reporting and filing requirements and
obligations, including those under the Immigration Reform and Control Act
(IRCA), and the Worker Adjustment and Retraining Notification Act (WARN plant
closing and mass layoff notification).
(z) Employee Benefits.
(i) Section 3(z) of the Target Disclosure Schedule lists each
Employee Benefit Plan that any of the Target and its Subsidiaries maintains or
to which any of the Target and its Subsidiaries contributes or has any
obligation to contribute.
(ii) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(iii) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been timely filed and distributed appropriately with respect
to each such Employee Benefit Plan. The requirements of COBRA have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(iv) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit Plan and
all contributions for any period ending on or before the Closing Date which are
not yet due have been paid to each such Employee Pension Benefit Plan or accrued
in accordance with the past custom and practice of the Target and its
Subsidiaries. All premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(v) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan" under Code
Sec. 401(a) and has received a favorable determination letter from the Internal
Revenue Service that it is a "qualified plan".
(vi) None of the Target and its Subsidiaries contributes to
any Multiemployer Plan or has any Liability (including withdrawal Liability)
under any Multiemployer Plan.
(vii) The Target has delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
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(aa) Guaranties. Except for certain guarantees by Target of G&O
Sales Company obligations set forth in Section 3(aa) of the Target Disclosure
Schedule and except as will be discharged at the Closing, none of the Target or
its Subsidiaries is a guarantor or otherwise is liable for any Liability or
obligation (including indebtedness) of any other Person.
(bb) Environment, Health, and Safety.
(i) To the Knowledge of the officers and directors of Target
Stockholder and the Target, each of the Target, its Subsidiaries, and their
respective predecessors has complied and is in compliance with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of
the Target and its Subsidiaries has obtained and complied in all material
respects with, and is in compliance with, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of its
business; a list of all such permits, licenses and other authorizations is set
forth in Section 3(bb)(ii) of the Target Disclosure Schedule.
(iii) Neither the Target, its Subsidiaries, nor to the
Knowledge of the officers and directors of the Target and the Target
Stockholder, their respective predecessors, has received any written or oral
notice, report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any Liabilities or potential
Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to any
of them or its facilities arising under Environmental, Health, and Safety
Requirements.
(iv) To the Knowledge of the officers and directors of the
Target Stockholder and the Target, except as described in (A) the Phase I
Environmental Site Assessment Report dated August 1994 prepared by ENSR
Consulting and Engineering for Target Stockholder and (B) the Phase I
Environmental Site Assessment Report dated February 29, 1996 prepared by GZA Geo
Environmental, Inc. for the Target Stockholder, copies of which were delivered
to Buyer, none of the following exists at any property or facility operated by
the Target or its Subsidiaries: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) To the Knowledge of the officers and directors of the
Target Stockholder and the Target, none of the Target, its Subsidiaries, or
their respective predecessors has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
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1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA")
or any other Environmental, Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(vii) Neither the Target, its Subsidiaries, nor any of their
respective predecessors has, either expressly or by operation of law, assumed or
undertaken any liability, including without limitation any obligation for
corrective or remedial action, of any other Person relating to Environmental,
Health, and Safety Requirements.
(viii) No facts, events or conditions relating to the past or
present facilities, or properties occupied by the Target or its Subsidiaries or
operations of the Target, its Subsidiaries, or, to the Knowledge of the officers
and directors of the Target and the Target Stockholder, any of their respective
predecessors or Affiliates and occurring on or before the Closing Date, will
prevent, hinder or limit continued compliance with Environmental, Health, and
Safety Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements, or give
rise to any other Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
(cc) Certain Business Relationships With the Target and Its
Subsidiaries. The Target Stockholder does not own any asset, tangible or
intangible, which is used in the business of any of the Target and its
Subsidiaries.
(dd) Suppliers and Customers. The Target's major suppliers are
Buyer, Modine Manufacturing Company ("Modine"), Go\▇▇▇ Industries, CSF and
Spectra Premium Industries. Except as otherwise disclosed in Section 3(dd) of
the Target Disclosure Schedule:
(i) the Buyer, the Target and the Target Stockholder have
received a copy of Modine's Proposed 2000 Program for Target, as set forth in a
letter dated May 24, 2000 from Modine to the Target (the "Modine Proposal"). The
Modine Proposal sets forth the proposed terms on which Modine will sell
inventory to the Target. To the knowledge of the Target and the Target
Stockholder, Modine has not changed any of terms set forth in the Modine
proposal or otherwise amended or modified the Modine Proposal;
(ii) except for Buyer, since the Most Recent Fiscal Year End,
no supplier including, without limitation, Modine, or customer of Target or its
Subsidiaries has cancelled or otherwise terminated, or made any written or oral
threat to the Target or its Subsidiaries or Target Stockholder to cancel or
otherwise terminate, for any reason, including the contemplated consummation of
the Merger, its relationship with Target or its Subsidiaries, or has decreased
materially its services or products supplied to the Target or its Subsidiaries
in the case of any such
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supplier, or its usage of the services or products of the Target or its
Subsidiaries, in the case of any such customer; and
(iii) neither the Target nor the Target Stockholder has any
knowledge that any such supplier or customer intends to cancel or otherwise
terminate its relationship with the Target or its Subsidiaries or to decrease
materially its services or products supplied to the Target or its Subsidiaries,
or its usage of the services or products of the Target or its Subsidiaries, as
the case may be.
(ee) Disclosure. The representations and warranties contained in
this Section 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE TARGET STOCKHOLDER, BUYER AND
THE TRANSITORY SUBSIDIARY.
(a) Representations and Warranties of the Target Stockholder. The
Target Stockholder represents and warrants to the Buyer and the Transitory
Subsidiary that the statements contained in this Section 4(a) are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4(a)) with
respect to itself.
(i) Organization of Target Stockholder. The Target Stockholder
is duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Target Stockholder has
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Target Stockholder and the consummation of the transactions contemplated
hereby have all been, or will be by Closing, duly and validly authorized by all
necessary corporate action. This Agreement constitutes the valid and legally
binding obligation of the Target Stockholder, enforceable in accordance with its
terms and conditions except as enforceability may be limited by any bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or hereafter
in effect relating to creditors' rights generally. The Target Stockholder need
not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Target Stockholder is subject or any
provision of its charter or bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or
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other arrangement to which the Target Stockholder is a party or by which it is
bound or to which any of its assets is subject other than with respect to
certain agreements evidencing the FINOVA Debt, which is to be repaid by the
Buyer as a portion of the Merger Consideration.
(iv) Brokers' Fees. The Target Stockholder has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
(b) Representations and Warranties of the Buyer and Transitory
Subsidiary. Each of the Buyer and the Transitory Subsidiary represents and
warrants to the Target and the Target Stockholder that the statements contained
in this Section 4(b) are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Section 4(b)), except as set forth in the Buyer Disclosure
Schedule. The Buyer Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Section
4(b).
(i) Organization. Each of the Buyer and the Transitory
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. Each of the Buyer and the
Transitory Subsidiary has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by each of
the Buyer and the Transitory Subsidiary, and their consummation of the
transactions contemplated hereby, have all been duly and validly authorized by
all necessary corporate action. This Agreement constitutes the valid and legally
binding obligation of each of the Buyer and the Transitory Subsidiary,
enforceable in accordance with its terms and conditions except as enforceability
may be limited by any bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect relating to creditors' rights
generally.
(iii) Noncontravention. To the Knowledge of any director or
officer of the Buyer and the Transitory Subsidiary, neither the execution and
the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which either the Buyer or
the Transitory Subsidiary is subject or any provision of the charter or bylaws
of either the Buyer or the Transitory Subsidiary; or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument or
other arrangement to which either the Buyer or the Transitory Subsidiary is a
party or by which it is bound or to which any of its assets is subject, except
where the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not have a material
adverse effect on the ability of the Parties to consummate the transactions
contemplated by this Agreement and except where appropriate waivers or consents
have been obtained. To the Knowledge of any director or officer of the Buyer and
the Transitory Subsidiary, and other than in connection with the provisions
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of the Business Corporation Law of the Sate of New York and applicable state
securities laws, neither the Buyer nor the Transitory Subsidiary needs to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(iv) Brokers' Fees. Neither the Buyer nor the Transitory
Subsidiary has any Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which any of the Target and its Subsidiaries could become liable
or obligated.
5. COVENANTS. The Parties agree as follows with respect to the period
from and after the execution of this Agreement:
(a) General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 6, below).
(b) Notices and Consents. The Target and/or Target Stockholder, as
applicable, will give any notices (and will cause each of its Subsidiaries to
give any notices) to third parties, and will use commercially reasonable efforts
to obtain (and will cause each of its Subsidiaries to use commercially
reasonable efforts to obtain) any third-party consents, that the Buyer
reasonably may request in connection with the matters referred to in Sections
3(d) and 4(a)(iii), above.
(c) Regulatory Matters and Approvals. Each of the Parties will (and
the Target will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use commercially reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Sections 3(d) and 4(a)(iii),
above.
(d) Operation of Business. During the Pre-Closing Period, neither
the Target Stockholder nor the Buyer will cause or permit any of the Target and
its Subsidiaries to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business or commit to any of the
foregoing, except as authorized by the Pre-Closing Board in accordance with
Section 2(f). Without limiting the generality of the foregoing, except as
authorized by the Pre-Closing Board in accordance with Section 2(f), neither the
Target Stockholder nor the Buyer will cause or permit any of the Target and its
Subsidiaries to (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock, (ii) prepay any indebtedness, (iii) take any
action or engage in any conduct that could impair or adversely affect the
Target's relationships with any of its customers or suppliers, or (iv) otherwise
engage in any practice, take any action, or enter into any transaction of the
sort described in Section 3(i) above.
(e) Preservation of Business. Each Party will cause each of the
Target and its Subsidiaries to keep its business and properties substantially
intact, including its present operations,
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physical facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
(f) Full Access. The Target will (and will cause each of its
Subsidiaries to) permit representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Target and its Subsidiaries, to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to each of the Target and its Subsidiaries. Each of
the Buyer and the Transitory Subsidiary will treat and hold as such any
Confidential Information it receives from any of the Target and its Subsidiaries
in the course of the reviews contemplated by this Section 5(f); will not use any
of the Confidential Information except in connection with this Agreement, and,
if this Agreement is terminated for any reason whatsoever, agrees to return to
the Target all tangible embodiments (and all copies) thereof which are in its
possession.
(g) Notice of Developments. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in Sections 3 and 4, above. No
disclosure by any Party pursuant to this Section 5(g), however, shall be deemed
to amend or supplement its respective disclosure schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(h) Insurance and Indemnification. The Buyer will not take any
action to alter or impair any exculpatory or indemnification provisions now
existing in the certificate of incorporation or bylaws of the Target for the
benefit of any individual who served as a director or officer of the Target at
any time prior to the Closing Date.
(i) Exclusivity. Between the date of this Agreement and the earlier
of Closing or termination of this Agreement as provided herein, the Target
Stockholder will not (and the Target Stockholder will not cause or permit any of
the Target and its Subsidiaries to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of any of the Target and its Subsidiaries (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Target Stockholder
will not vote its Target Shares in favor of any such acquisition structured as a
merger, consolidation, or share exchange. The Target Stockholder will notify the
Buyer immediately if any Person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
(j) Further Assurances. The parties agree to execute and deliver,
or to cause to be executed and delivered, such further instruments or documents
or take such other action as may be reasonably necessary or convenient to carry
out the transactions contemplated hereby.
(k) Insurance Policies. To the extent any insurance policies or
insurance products in any Employee Benefit Plan were obtained by or through
Target Stockholder for the benefit and at the cost and expense of the Target
and/or its Subsidiaries, including without limitation, property and casualty
insurance, group life or disability insurance and workers'
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compensation insurance, any premium refunds, credits, rebates or audit
adjustments (collectively, "Premium Refunds") shall be and remain the property
of the Target and/or its Subsidiaries and the Target Stockholder agrees to make
application promptly after the Closing for any such Premium Refunds with the
insurance carrier and to pay or cause such Premium Refunds to be paid to the
Buyer on behalf of the Target and/or its Subsidiaries promptly upon receipt or
issuance. Target Stockholder shall provide copies of all applications for
Premium Refunds to the Buyer. The parties agree to cooperate in the preparation
or processing of such application and cancellation of such insurance policies or
products. This covenant shall survive the Closing.
(l) Confidentiality. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective affiliates, employees, agents and representatives (a "Receiving
Party") shall disclose to any third party this Agreement, the subject matter or
terms hereof or any confidential information or other proprietary knowledge
concerning the business or affairs of any other party hereto (a "Disclosing
Party") which it may have acquired from the Disclosing Party in the course of
pursuing the transactions contemplated by this Agreement or any of the documents
executed in connection therewith without the prior consent of the Disclosing
Party; provided, that any information that is known to the Receiving Party prior
to disclosure by the Disclosing Party or which otherwise is or becomes publicly
available, without breach of this provision, or which has been obtained from a
third party without a breach of such third party's duties, shall not be deemed
confidential information. The obligations of the parties under this Section
shall survive the Closing or the termination of this Agreement.
(m) Covenant Not to Compete. In order to assure that Buyer will
realize the benefits of the Merger, Target Stockholder agrees for itself and any
of its Subsidiaries that for a period of five (5) years from and after the
Closing Date, Target Stockholder and its Subsidiaries will not engage, directly
or indirectly, in any business that the Target or any of its Subsidiaries
conducts as of the Closing Date in any geographic area in which Target or any of
its Subsidiaries conducts that business as of the Closing Date. Target
Stockholder agrees and acknowledges that the restrictions contained in this
Section 5(m) are reasonable in scope and duration and are necessary to protect
Buyer and the Target after the Closing Date. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 5(m)
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, and
this Agreement shall be enforceable as so modified. The Parties agree and
acknowledge that the breach of this Section 5(m) will cause irreparable damage
to Buyer and upon any breach or threatened breach of this Section 5(m), Buyer
shall be entitled to injunctive relief, specific performance or other equitable
relief; provided, however, that the foregoing remedies shall in no way limit any
other remedies which Buyer may have (including, without limitation, the right to
such monetary damages). Target Stockholder shall be liable for and pay to Buyer
any and all costs and expenses, including reasonable attorneys' fees, incurred
by Buyer in successfully enforcing the provisions of this Section 5(m).
(o) Release of Liability. On or before the Closing Date, the Target
and the Target Stockholder shall cause the Target to be released from, and the
Target Stockholder will indemnify the Buyer pursuant to Section 8(a) for, any
and all liabilities (i) due directly from the
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Target to the Target Stockholder or its Affiliates, (ii) due or which may become
due from the Target to any third party including, without limitation, FINOVA,
with respect to obligations of the Target Stockholder or its Affiliates which
have been guaranteed by the Target, or (iii) relating to loans due from the
Target or the Target Stockholder to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇. On or
before the Closing, the Target and the Target Stockholder will obtain from any
third party lenders and vendors including, without limitation, FINOVA, releases
of the Target from any guarantees of indebtedness made by the Target on behalf
of the Target Stockholder or its Affiliates. The Target hereby releases the
Target Stockholder from any and all liability for any amounts due and owing as
of the Closing from the Target Stockholder to the Target; provided, however,
that this release is not intended to, and shall not, release the Target
Stockholder from, any of its obligations under this Agreement.
(p) Employee Benefit Plans. If any Employee Benefit Plan which is
an Employee Pension Benefit Plan fails to meet the requirements of a "qualified
plan" under Code Sec. 401(a) or has not received a favorable determination
letter from the Internal Revenue Service that it is a "qualified plan", the
Target Stockholder, at the Target Stockholder's expense, agrees to take all
steps reasonably necessary, both prior to or after the Closing, to correct any
defects as may be necessary for such Employee Benefit Plan to meet the
requirements for a "qualified plan" or, at the election of Buyer, to terminate
such Employee Benefit Plan effective prior to the Closing.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Buyer and the Transitory
Subsidiary. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the
approval of the Target Stockholder's board of directors;
(ii) the representations and warranties set forth in Sections
3 and 4(a), above, shall be true and correct in all material respects at and as
of the Closing Date, except for any non-conformity resulting from matters
authorized by the Pre-Closing Board during the Pre-Closing Period, as provided
in Section 2(f);
(iii) the Target and the Target Stockholder shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the Buyer to own the
capital stock of the Surviving Corporation and to control the Surviving
Corporation and its Subsidiaries, or (D) affect adversely the right of any of
the Surviving Corporation and its Subsidiaries to own its assets and to operate
its businesses (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
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(v) there shall have been no material adverse change in the
business, financial condition, assets, operations, results of operations, or
future prospects of any of the Target and its Subsidiaries, except for changes
resulting from matters authorized by the Pre-Closing Board during the
Pre-Closing Period, as provided in Section 2(f);
(vi) each of the Target and Target Stockholder shall have
delivered to the Buyer and the Transitory Subsidiary a certificate, in form and
substance reasonably acceptable to the Buyer and the Transitory Subsidiary and
their counsel, to the effect that each of the conditions specified above in
Section 6(a)(i)-(v) is satisfied in all respects;
(vii) the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Sections 3(d) and 4(a)(iii) and (b)(iv), above;
(viii) the Buyer and the Transitory Subsidiary shall have
received from counsel to the Target and the Target Stockholder an opinion in
form and substance reasonably acceptable to the Buyer and the Transitory
Subsidiary and their counsel, addressed to the Buyer and the Transitory
Subsidiary, and dated as of the Closing Date;
(ix) the Buyer and the Transitory Subsidiary shall have
received the resignations, effective as of the Closing, of each director and
officer of the Target and the Target's Subsidiaries other than any
representatives of Buyer serving on the Pre-Closing Board and those whom the
Buyer shall have specified in writing at least 5 business days prior to the
Closing;
(x) the Buyer and the Transitory Subsidiary shall have
received good standing certificates, franchise tax reports and Uniform
Commercial Code, federal and state tax lien, judgment and bankruptcy searches
dated not more than five (5) business days before the Closing Date with respect
to the Target Stockholder and the Target and its Subsidiaries from each
jurisdiction in which incorporated or qualified to transact business and all of
the same being reasonably acceptable to the Buyer;
(xi) the Target or Target Stockholder shall have used
commercially reasonable efforts to obtain estoppel certificates and landlord
waivers from each lessor of real property occupied by the Target and its
Subsidiaries in form and substance reasonably acceptable to the Buyer, its
lender and their respective counsel;
(xii) all actions to be taken by the Target and Target
Stockholder in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to the Buyer and the Transitory Subsidiary.
(xiii) the Buyer shall have obtained financing, on terms
acceptable to Buyer, sufficient to enable the Buyer to pay the Merger
Consideration; provided, however, that if the principal balance of the FINOVA
Debt is reduced, in the ordinary course of business, to
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$100,000 or less during the Pre-Closing Period, and remains at $100,000 or less
as of the Closing Date, then this condition shall be deemed satisfied by Buyer;
(xiv) the Buyer, Target and Modine shall have agreed on (1)
the terms of repayment of amounts past due to Modine from Target as of the
Closing Date, which terms shall be reasonably acceptable to the Buyer, shall not
require the payment of more than $250,000 during the thirty (30) day period
beginning on the Closing Date, and shall provide for the forgiveness by Modine
of $200,000 of the amount due from the Target to Modine, exclusive of service
charges; and (2) a marketing plan for Modine products and credit terms for
future purchases by Target from Modine, which terms shall be reasonably
acceptable to the Buyer; and
(xv) the balance, including principal and accrued interest,
outstanding as of the Closing Date with respect to the FINOVA Debt shall be less
than or equal to $1,425,000 (unless otherwise authorized in writing by the
Pre-Closing Board), and the Buyer and FINOVA shall have agreed on the terms of
repayment of the FINOVA Debt, and FINOVA shall have agreed to (1) release the
Target from all liability for other amounts due from the Target Stockholder or
its Affiliates to FINOVA, and (2) terminate all of its security interests in the
assets of the Target and release all other collateral relating to the Target,
including any shares of the Target which have been pledged to FINOVA by the
Target Stockholder, upon payment in full of the FINOVA Debt.
The Buyer and the Transitory Subsidiary may waive any condition
specified in this Section 6(a) if they execute a writing so stating at or prior
to the Closing.
(b) Conditions to Obligation of the Target and the Target
Stockholder. The obligation of each of the Target and the Target Stockholder to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
4(b), above, shall be true and correct in all material respects at and as of the
Closing Date;
(ii) each of the Buyer and the Transitory Subsidiary shall
have performed and complied with all of its covenants hereunder in all material
respects through the Closing;
(iii) no action, suit, or proceeding (other than any action,
whether voluntary or involuntary, against the Target or the Target Stockholder
under the Bankruptcy Code) shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation.
(iv) each of the Buyer and the Transitory Subsidiary shall
have delivered to the Target and the Target Stockholder a certificate, in form
and substance reasonably acceptable to the Target, the Target Stockholder and
their counsel, to the effect that each of the conditions specified above in
Section 6(b)(i)-(iii) is satisfied in all respects;
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(v) this Agreement and the Merger shall have received the
approval of the Target Stockholder's board of directors;
(vi) the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
Sections 3(d) and 4(a)(iii) and (b)(iv), above;
(vii) the Target and the Target Stockholder shall have
received from counsel to the Buyer and the Transitory Subsidiary an opinion in
form and substance reasonably acceptable to the Target, the Target Stockholder
and their counsel, addressed to the Target and the Target Stockholder, and dated
as of the Closing Date; and
(viii) all actions to be taken by the Buyer and the Transitory
Subsidiary in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to the Target.
The Target and the Target Stockholder may waive any condition
specified in this Section 6(b) if it executes a writing so stating at or prior
to the Closing.
7. TERMINATION.
(a) Termination of this Agreement. Any of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after stockholder approval) as provided below:
(i) The Parties may terminate this Agreement by written
consent executed by all of them at any time prior to the Closing Date.
(ii) The Buyer and the Transitory Subsidiary may terminate
this Agreement by giving written notice to the Target at any time prior to the
Closing Date (A) in the event the Target has breached any representation,
warranty, or covenant contained in this Agreement in any material respect; the
Buyer or the Transitory Subsidiary has notified the Target of the breach; and
the breach has continued without cure for a period of 30 days after the notice
of breach has been given to the Target; or (B) if the Closing shall not have
occurred within one hundred twenty (120) days following the date of this
Agreement by reason of the failure of any condition precedent under Section 6(a)
hereof (unless the failure results primarily from the Buyer or the Transitory
Subsidiary breaching any representation, warranty, or covenant contained in this
Agreement).
(iii) The Target may terminate this Agreement by giving
written notice to the Buyer and the Transitory Subsidiary at any time prior to
the Closing Date (A) in the event the Buyer or the Transitory Subsidiary has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect; the Target has notified the Buyer and the
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Transitory Subsidiary of the breach; and the breach has continued without cure
for a period of 30 days after the notice of breach; or (B) if the Closing shall
not have occurred within one hundred twenty (120) days following the date of
this Agreement by reason of the failure of any condition precedent under Section
6(b) hereof (unless the failure results primarily from the Target or Target
Stockholder breaching any representation, warranty, or covenant contained in
this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a), above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any Liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5(f), above, shall survive
any such termination.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Indemnification Provisions for Benefit of the Buyer.
(i) In the event either of the Target or Target Stockholder
breaches (or in the event any third party alleges facts that, if true, would
mean either of the Target or Target Stockholder has breached) any of its
representations, warranties, and covenants contained herein, and, provided that
the Buyer makes a written claim for indemnification against the Target
Stockholder pursuant to Section 10(h) below within the applicable survival
period, then the Target Stockholder agrees to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of the applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or the alleged breach); provided, however, that the Target
Stockholder shall not have any obligation to indemnify the Buyer from and
against any Adverse Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach) of any representation
or warranty of the Target or Target Stockholder contained in Section 3 and
Section 4(a) above until the Buyer has suffered Adverse Consequences by reason
of all such breaches (or alleged breaches) in excess of a $15,000 aggregate
threshold (at which point the Target Stockholder will be obligated to indemnify
the Buyer from and against all such Adverse Consequences only in excess of such
aggregate threshold).
(ii) The Target Stockholder agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences the Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any
Liability of any of the Target and its Subsidiaries (x) for any Taxes of the
Target and its Subsidiaries with respect to any Tax year or portion thereof
ending on or before the Closing Date (or for any Tax year beginning before and
ending after the Closing Date to the extent allocable (determined in a manner
consistent with Section 9(c)) to the portion of such period beginning before and
ending on the Closing Date), to the extent such Taxes are not reflected in the
reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the face of the Most Recent Financial Statements (rather than in any notes
thereto), and (y) for the unpaid Taxes of any Person (other than any of the
Target and its Subsidiaries) under Reg. Section 1.1502-6 (or any
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similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(iii) Target and Target Stockholder also expressly agree to
indemnify Buyer against any and all liability relating to the Oakhurst Plan.
Buyer may make a written claim for such indemnification against Target
Stockholder pursuant to Section 10(h) below at any time, subject, however, to
Section 10(a), below.
(b) Indemnification Provisions for Benefit of the Target
Stockholder. In the event the Buyer breaches (or in the event any third party
alleges facts that, if true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained herein, and, provided that
the Target Stockholder makes a written claim for indemnification against the
Buyer pursuant to Section 10(h) below within the applicable survival period,
then the Buyer agrees to indemnify the Target Stockholder from and against the
entirety of any Adverse Consequences the Target Stockholder may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences the Target Stockholder may suffer after the end of the applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach); provided, however, that the
Buyer shall not have any obligation to indemnify the Target Stockholder from and
against any Adverse Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach) of any representation
or warranty of the Buyer contained in Section 4(b) above until the Target
Stockholder has suffered Adverse Consequences by reason of all such breaches (or
alleged breaches) in excess of a $15,000 aggregate threshold (at which point the
Buyer will be obligated to indemnify the Target Stockholder from and against all
such Adverse Consequences only in excess of such aggregate threshold).
(c) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within fifteen (15) days after
the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money
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damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8(c)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified 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 Indemnifying Party (not to be withheld unreasonably), and (C) 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, conditioned or delayed
unreasonably).
(iv) In the event any of the conditions in Section 8(c)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying Parties will
remain responsible for any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 8.
(d) Determination of Adverse Consequences. All indemnification
payments under this Section 8 shall be deemed adjustments to the Purchase Price.
(e) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy (including without limitation any such remedy
arising under Environmental, Health, and Safety Requirements) any Party may have
with respect to the transactions contemplated by this Agreement.
9. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Buyer and Target Stockholder for certain tax matters
following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. The Target
Stockholder shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns, and pay all taxes due with respect thereto, for the Target and
its Subsidiaries for all periods ending on or prior to the Closing Date.
(b) Tax Periods Ending After the Closing Date. Buyer shall prepare
or cause to be prepared and file or cause to be filed any Tax Returns of the
Target and its Subsidiaries, and pay all taxes with respect thereto, for Tax
periods which begin after the Closing Date.
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(c) Cooperation on Tax Matters.
(i) Buyer, the Target and its Subsidiaries and Target
Stockholder shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns pursuant to this
Section and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The Target and its Subsidiaries and Target
Stockholder agree (1) to retain all books and records with respect to Tax
matters pertinent to the Target and its Subsidiaries relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Target Stockholder, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (2) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
the Target and its Subsidiaries or Target Stockholder, as the case may be, shall
allow the other party to take possession of such books and records.
(ii) Buyer and Target Stockholder further agree, upon request,
to use commercially reasonable efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be necessary
to mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).
(iii) Buyer and Target Stockholder further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
(d) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving the Target and its Subsidiaries shall be
terminated as of the Closing Date and, after the Closing Date, the Target and
its Subsidiaries shall not be bound thereby or have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any similar tax
imposed in other states or subdivisions), shall be paid by Target Stockholder
when due, and Target Stockholder will, at its own expense, file all necessary
Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, Buyer will, and will cause its affiliates to, join
in the execution of any such Tax Returns and other documentation.
10. MISCELLANEOUS.
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(a) Survival. All of the representations and warranties of each of
the Parties hereto contained in this Agreement shall survive the Closing (even
if the damaged Party knew or had reason to know of any misrepresentation or
breach of warranty at the time of the Closing) and shall continue in full force
and effect for a period of 3 years thereafter (subject to any applicable
statutes of limitations) with the exception of the representations and
warranties of Target and Target Stockholder contained in Sections 3(l), (z) and
(bb) of this Agreement, which shall continue in full force and effect without
limitation as to time.
(b) Press Releases and Public Announcements. The parties shall
consult with each other on the form and substance of a press release to be
issued promptly after the execution and delivery of this Agreement, it being
understood that the Target Stockholder as a publicly traded company will have an
obligation to do so. Nothing however herein shall prevent a party from making
any such press release that it in good faith believes is required by law or good
corporate governance.
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that the
provisions in Section 5(h), above, concerning insurance and indemnification are
intended for the benefit of the individuals specified therein and their
respective legal representatives.
(d) Entire Agreement. This Agreement (including the schedules and
exhibits referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein 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.
(f) 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.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, claims, demands or other communications
required or permitted under this Agreement shall be in writing and shall be
deemed given to a Party when either
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sent (i) by hand delivery to such Party against a written receipt therefor; or
(ii) by a nationally-recognized delivery service with instructions to provide
next-business-day delivery and proof of delivery to such Party -
If to the Target and/or Oakhurst Company, Inc.
Target Stockholder at: c/o Mezzanine Management
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman and CEO
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Buyer and/or A.C.F. Imports, Inc.
Transitory Subsidiary at: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other Persons or addresses as may be designated in
writing by the Party to receive such notice, claim, demand or other
communication. Any notice shall be deemed delivered when received by the Party
to which it is addressed, as evidenced by a receipt signed by a representative
of such Party, or by the receipt of the courier service.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
(j) Amendments and Waivers. The Parties may amend any provision of
this Agreement at any time prior to the Closing Date with the prior
authorization of their respective boards of directors. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by all of the Parties. No waiver by any Party 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.
(k) 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
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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.
(l) Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including but not limited to any enumerated items.
(n) Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[the remainder of this page has been left blank intentionally]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
A.C.F. IMPORTS, INC. ▇▇▇▇▇▇▇'▇ FLEET SERVICE CO., INC.
By: By:
--------------------------------- -------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
A.C.F. ACQUISITION, INC. OAKHURST COMPANY, INC.
By: By:
--------------------------------- -------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President Maarten ▇. ▇▇▇▇▇▇▇, President
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