Exhibit 2.6
ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (as amended or supplemented from time to
time, this “ Agreement ”) is dated as of
October 11, 2007 (the “ Effective Date
”), by and among CCS Financial Services, Inc., a Florida
corporation (the “ Selling Entity ”);
Allen Eager, the Allen Eager Revocable Trust, Paul P. Hauser, Barry
E. Hershman, and the Barry E. Hershman Revocable Trust,
(collectively, the “ Selling Shareholders
”, and together with the Selling Entity, the “
Sellers ”); and Check Mart of Florida, Inc., a
Delaware corporation (the “ Buyer
”). The Sellers and Buyer are collectively referred to herein
as the “ Parties ”.
BACKGROUND
The
Selling Entity is engaged in the business of owning and operating
various businesses that provide deferred presentment services,
check cashing services, payment instrument issuance, funds
transmission services, stored-value card sales, and various other
related services and products (each, a “
Business , ” and collectively, the
“ Businesses ”). The Businesses are
operated from and located at the branch stores set forth on
Schedule 1.1(a) attached to this Agreement
(collectively, the “ Branches , ”
and each individually, a “ Branch ”). The
Buyer desires to purchase from the Selling Entity, and the Selling
Entity desires to sell to the Buyer, substantially all of the
assets used by the Selling Entity in the conduct of the Businesses,
all in accordance with the terms and subject to the conditions
contained in this Agreement. Capitalized terms used and not
otherwise defined in this Agreement shall have the respective
meanings set forth in Section 22 of this Agreement.
IN
CONSIDERATION of the foregoing and the mutual promises contained in
this Agreement, the Parties, intending to be legally bound, hereby
agree to the following:
1.
Sale and Purchase of Assets .
1.1
Purchased Assets . In accordance with the terms and subject
to the conditions set forth in this Agreement, the Sellers hereby
sell to the Buyer, and the Buyer hereby purchases from the Sellers,
free and clear of any Liabilities, security interests, mortgages,
liens, encumbrances, rights of others and any other burdens and
restrictions whatsoever (“ Adverse Claims
”) other than the Assumed Liabilities and Permitted Liens,
all right, title and interest in and to all assets used or held for
use in the conduct of the Sellers’ Businesses, including but
not limited to the following listed assets (collectively, the
“ Purchased Assets ”):
(a) the
right to collect all amounts under and exercise all rights under,
including the right to receive all past due payments from past or
present customers outstanding as of the opening of business on the
Closing Date and identified with respect to each Branch on
Schedule 1.1(a) under, (i) all Deferred
Presentment Agreements (including those set forth on Schedule
1.1(a)(i) to be delivered at Closing), including the right to
receive all past due payments from past or present customers and
any other rights of Seller under such agreements, and (ii) all
checks deposited by the Sellers prior to the Closing and returned
unpaid and all claims of Seller with respect thereto, including
those set forth on Schedule 1.1(a)(ii) to be delivered
at Closing (the “ Returned Checks ”, and
together with the Deferred Presentment
Agreements, the “ Receivables ”) as
identified with respect to each Branch on
Schedule 1.1(a) ; provided, however, that the
Receivables shall not include the claims against customers for
Returned Checks listed on Schedule 1.2(c) (provided
that Schedule 1.2(c) shall be updated by the Selling
Entity on the Closing Date to include any Returned Checks for which
legal claims against customers for Returned Checks were filed after
the Effective Date and before the Closing Date).
(b) all
interests of the Sellers in the unexpired leases on real property
(collectively the “ Unexpired Leases ”)
relating to the Branches and the office location set forth on
Schedule 1.1(b) ;
(c) all
interests of the Sellers in the Contracts identified on
Schedule 1.1(c) (the “ Assumed
Contracts ”);
(d) all
inventories owned by the Sellers of goods and other goods and
products held for sale (collectively, the “
Inventory ”);
(e) all
supplies, equipment, machinery, removable leasehold improvements,
office furniture, computing and telecommunications and other
equipment, spare parts, supplies, fixtures and all other items of
tangible personal property, identified with respect to each Branch
and listed on Schedule 1.1(e) ;
(f) all
rights of the Sellers to all trademarks, service marks, trade
names, trade dress, fictitious names, internet domain names,
uniform resource locators (URLs), and any other names and locators
used in or incidental to the conduct of the Sellers’
Businesses, including those associated with “The Check
Cashing Store”, “CCS Payment Store” and any
related names and derivations thereof, and the interest, whether
owned or licensed and whether registered or unregistered and
whether or not currently in use, together with all registrations,
applications and renewals for any of the foregoing, as set forth on
Schedule 1.1(f) (which shall include the dates of first
use) and including the Names (as defined in
Section 12.3 ) (collectively, the “
Trademarks ”); provided, however, that CCS Real
Estate Investments, LLC, a Florida limited liability company, will
not be required to change its legal name so long as it
doesn’t use such name in retail or consumer markets or
businesses.
(g) all
copyrights and copyrightable works and any other works of
authorship, whether statutory or common law, registered or
unregistered, together with all registrations, applications and
renewals for any of the foregoing, and all moral rights thereto
under the laws of any jurisdiction, as set forth on
Schedule 1.1(g) (collectively, the “
Copyrights ”);
(h) all
computer software and software license rights owned by the Sellers,
including data, databases and documentation, Internet websites and
the content thereof as set forth on Schedule 1.1(h)
(collectively, the “ Software ” and,
collectively with the Trademarks and the Copyrights,
the “ Trade Rights ”);
(i) the
Businesses as a going concern and all of the Sellers’
goodwill associated therewith;
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(j) all
Permits and all Licenses to operate the Businesses, as identified
on Schedule 1.1(j), to the extent transferable;
(k) except
for the Sellers’ corporate or other legal entities,
franchises or corporate seals, charter documents, operating
agreements, minute books, stock books, tax returns, and other
records having to do with the corporate or other legal entity
organization and/or capitalization of the Sellers, all records,
documents, lists, electronic records (including all point-of-sale
data systems), and files relating to any of the Purchased Assets,
the Assumed Liabilities, and the Businesses, including but not
limited to price lists, lists of accounts, customers (including
contact information and deferred presentment and payment history),
suppliers and personnel, all product, business and marketing plans
and data, historical sales data and all books, ledgers, files and
business records (including all financial records and books of
account) of or relating to any of the Purchased Assets, the Assumed
Liabilities, and the Businesses in any of the foregoing cases,
whether in electronic form or otherwise (collectively, the “
Books and Records ”), provided that the
“Books and Records” shall not include the human
resource records of any Selling Entity employee that will not
become a Hired Employee;
(l) all
telephone and facsimile numbers relating to the Businesses (to the
extent that, with the Sellers’ full cooperation and
assistance, such numbers are transferable), including all
advertising associated thereto as identified with respect to each
Branch and listed on Schedule 1.1(l) ;
(m) all
Restrictive Covenants, all Adverse Claims on the assets of others
relating to the Businesses or the Purchased Assets, all catalogues,
brochures, art work, photographs, advertising and marketing
materials, procedures and operating manuals, underwriting standards
and guidelines, and forms pertaining to the Businesses;
(n) all
claims, leasehold and all other deposits, prepayments (except those
relating to Retained Liabilities), refunds (except tax refunds) and
other amounts prepaid by the Sellers arising out of any of the
assets described in Sections 1.1(a) through Section
1.1(m) above and identified on Schedule 1.1(n)
(collectively, the “ Prepaid Items
”);
(o) Subject
to Section 2.1, all cash on hand of the Branches at the
opening of business on the Closing Date (“ Cash on
Hand ”);
(p) all
other assets and property owned by the Sellers and located within
the walls of any of the Sellers’ Branches on the Closing
Date, plus outdoor signage; and
(q) except
where prohibited by law, all rights, causes of action, and claims
against third parties including all warranties, guarantees,
sureties, indemnities and similar rights in favor of the Sellers
arising out of or with respect to any of the assets described in
Sections 1.1(a) through Section 1.1(p) .
1.2
Excluded Assets . The Purchased Assets sold and acquired
hereunder shall not include any of the following (collectively, the
“ Excluded Assets ”):
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(a) the
Selling Entity’s cash, cash equivalents, securities and all
bank accounts and corresponding checks, but only to the extent not
included in Cash on Hand;
(b) the
Selling Entity’s minute books and other similar corporate
records; and
(c) all
assets listed on Schedule 1.2(c) .
1.3
Certain Transitional Matters .
(a) Notwithstanding
anything to the contrary contained in this Agreement, any Bill of
Sale, or any Assignment and Assumption Agreement, to the extent
that the sale or delegation by the Sellers, or the purchase or
assumption by the Buyer, of any of the Purchased Assets or any of
the Assumed Liabilities requires any Consent or Regulatory
Approval, this Agreement, the applicable Bill of Sale and the
applicable Assignment and Assumption Agreement shall constitute the
Sellers’ agreement to sell and delegate, and the
Buyer’s agreement to purchase and assume, such Purchased
Assets and Assumed Liabilities as promptly as practicable following
the obtainment of any necessary Consent or Regulatory Approval;
provided , that from and after the Closing Date until the
date on which such Consent or Regulatory Approval is obtained, the
Sellers shall make available to the Buyer the economic and
practical benefits of such Purchased Assets and Assumed Liabilities
for no additional consideration. If and to the extent that the
Sellers are making available to the Buyer the economic and
practical benefits of such Purchased Assets, the risk of loss for
such Purchased Assets shall rest with the Buyer. Nothing contained
in this Section 1.3 is intended to impair, reduce or
otherwise modify any representation, warranty and covenant
contained in this Agreement, including those relating to any of the
Purchased Assets or to any of the Assumed Liabilities.
(b) In
the event that Sellers have failed to obtain Estoppel and Consent
Certificates in a form reasonably acceptable to Buyer for any one
or more Branches (each, a “ Restricted Branch
”), and in the event that (i) all other conditions set
forth in Article 9 hereof have been satisfied or waived by
Buyer and (ii) Estoppel and Consent Certificates have been
obtained for at least ninety percent (90%) of all Branches (which
must include the Branches listed on Schedule 1.3) ,
then the failure to obtain the Estoppel and Consent Certificates
for the Restricted Branches shall not by itself constitute a
failure of Buyer’s or Sellers’ closing conditions set
forth in Articles 9 or 10 hereunder; provided, however, that
(x) Buyer and the Selling Entity shall at the Closing enter
into a License Agreement in substantially the form attached to
Exhibit F hereto with respect to the Restricted
Branches (the “ License Agreement ”), and
(y) a portion of the Cash Consideration equal to $500,000 for
each Restricted Branch (the “ Branch Holdback
”) shall be paid to the Escrow Agent to be held and disbursed
upon the terms set forth in a Supplemental Escrow Agreement in
substantially the form attached as Exhibit G hereto
(the “ Supplemental Escrow Agreement
”).
(i) Subject
to the terms of the Supplemental Escrow Agreement, on or before the
date that is one hundred eighty (180) days after the Closing
(the “ Determination Date ”), if the
Buyer receives an Estoppel and Consent Certificate for any
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Restricted Branch, the Branch Holdback for such Restricted Branch
(together with any earnings on such amount) shall be paid by the
Escrow Agent to the Selling Entity within three (3) business
days of Buyer’s receipt of such Estoppel and Consent
Certificate, and the Selling Entity shall thereafter deliver any
assignment document reasonably requested by Buyer to evidence the
assignment to Buyer of the Unexpired Lease for such Restricted
Branch. If on the Determination Date there are any Restricted
Branches for which Buyer has not received an Estoppel and Consent
Certificate (such Branches being referred to as “
Remaining Branches ”), Buyer will deliver to
the Selling Entity, within three (3) business days after
Determination Date, a written notice that states for each Remaining
Branch whether Buyer desires to continue to own and operate the
Remaining Branch or to terminate its ownership and operation of
such Remaining Branch (a “ Determination Notice
”).
(ii) With
respect to any Remaining Branch that Buyer has determined to
continue to own and operate (an “ Assumed
Branch ”), the Branch Holdback for such Remaining
Branch (together with any earnings on such amount) shall be
delivered by the Escrow Agent to the Selling Entity simultaneous
with the delivery of the Determination Notice. Subject to the first
two sentences of Section 1.3(a) , Buyer shall be deemed to
have assumed all executory obligations arising on and after the
Closing Date under the Unexpired Lease for any Assumed Branch, and
such obligations shall be deemed to be Assumed Liabilities for
purposes of this Agreement, and the risk of failure to obtain the
Estoppel and Consent Certificate shall be borne by Buyer, with
Buyer receiving credit for any payments made under the License
Agreement. With respect to any Remaining Branch that Buyer has
determined not continue owning and operating (a “
Terminated Branch ”), the Branch Holdback
(together with any earnings on such amount) for such Remaining
Branch shall be delivered to Buyer. Additionally,
Section 4.4(b) of this Agreement shall apply to the
operation of any Assumed Branch by Buyer from and after the Closing
Date.
(iii)
With respect to any Terminated Branch, Buyer shall be deemed not to
assume the Unexpired Lease with respect thereto (regardless of
whether an Estoppel and Consent Certificate is thereafter received)
and all obligations under and liabilities related to such Unexpired
Lease, whether they arise before or after the Closing, shall be
deemed an Excluded Liability for purposes of this Agreement, and
the Buyer’s only obligation with respect to the Terminated
Branch shall be Buyer’s obligations to the Selling Entity
under the License Agreement. Additionally, within fifteen (15)
calendar days after the delivery of the Determination Notice
indicating that a Remaining Branch shall be deemed a Terminated
Branch, Buyer shall (i) cease operations at the Terminated
Branch, (ii) remove any and all improvements from the
Terminated Branch made by Buyer after the Closing Date at
Buyer’s sole cost and expense, (iii) deliver all keys
for the Terminated Branches to the Selling Entity, and
(iv) execute such documents as may be reasonably requested by
the Selling Entity to evidence and/or confirm the termination of
the right by Buyer to occupy the premises of the Terminated Branch.
Only with respect to up to four (4) Terminated Branches, in
the event that on or before the third (3 rd ) anniversary
of the Closing Date, if Buyer opens for business any branch
location that is located within a radius of three (3) miles of
the Terminated Branch and engages in the same or substantially same
business as the Terminated Branch at such location (a “
Replacement Branch ”), then the Buyer shall,
within three (3) business days of the date on which the
Replacement Branch opens for business to the general public, pay to
Selling Entity an amount equal to the Branch Holdback for such
Terminated Branch less the actual costs and direct
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expenses
incurred by Buyer in developing, constructing, building out, and
opening such Replacement Branch, excluding any allocation of
corporate overhead or management fees (or similar expenses) payable
to any Affiliate of Buyer. Sellers acknowledge that the provisions
of Section 2.6(b) of this Agreement shall restrict
Sellers from operating a Competing Business at any Terminated
Branch or from selling any assets relating to the Terminated Branch
to any other person or entity owning or operating a Competing
Business.
2.
Consideration and Payment; Allocation .
2.1
Payment of Purchase Price for Purchased Assets . The
purchase price to be paid to the Sellers by the Buyer for the
Purchased Assets will be the sum of (a) One Hundred One
Million Dollars ($101,000,000.00) (the “ Cash
Amount ”), plus or minus (b) the
amount, if any, by which Cash on Hand is greater or less than,
respectively, One Million Five Hundred Thousand Dollars
($1,500,000.00) (the “ Cash Target ”),
plus (c) the amount of any security deposits relating
to the Purchased Assets, including those made in connection with
real estate leases, utilities and any other purchased or leased
equipment and identified on Schedule 2.1 (collectively,
the “ Deposits ”) (such sum of the Cash
Payment, the Cash Target and the Deposits collectively referred to
herein as the “ Cash Consideration ”). In
addition to the Cash Consideration, the Buyer will assume, from and
after the Closing, the Assumed Liabilities as more particularly set
forth in Section 4.1 .
2.2
Payment of Consideration .
2.2.1
At the Closing, the Buyer shall pay the Cash Consideration reduced
by the Escrow Amount as set forth in Section 13.8 to
the Sellers in cash by federal or other wire transfer to the
accounts previously designated by the Sellers jointly in
writing.
2.2.2
The Buyer shall at Closing pay the Escrow Amount to the Escrow
Agent, to be administered in accordance with
Section 13.8 and the Escrow Agreement.
2.2.3
If the amount of Cash on Hand is not capable of being verified as
of the opening of business on the Closing Date, such amount will be
estimated for purposes of calculating the Cash Consideration,
subject to verification within forty-eight (48) hours
following the Closing Date, such verification to be agreed by the
Parties in good faith. If the actual amount of Cash on Hand, as
verified, is less than the amount estimated for purposes of the
Closing (a “ Cash Deficiency ”), the
Sellers will immediately wire the amount of the Cash Deficiency to
the Buyer’s designated account, and if the amount of the Cash
on Hand is greater than the amount estimated for purposes of the
Closing (a “ Cash Surplus ”), the Buyer
will immediately wire the amount of such Cash Surplus to an account
designated by the Selling Entity.
2.3
Apportionment . Notwithstanding Section 2.1 , to
the extent that the Sellers made any payment(s) on account of
rents, real estate taxes, personal property taxes, water, utilities
and other operating expenses of any of the Businesses that are
attributable, in whole or in part, to the period on or after the
Closing Date, the Buyer shall, within ten (10) business days
after receipt of the Sellers’ statement therefor by the
Buyer, pay to the Selling Entity an amount equal to the payment(s)
made on account of such items which are attributable
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to the
period of time on or after the Closing Date (collectively, the
“ Buyer’s Apportionment ”). To the
extent that the Buyer shall make any payment(s) on account of any
rents, real estate taxes, personal property taxes, water, utilities
and other operating expenses of any of the Businesses that are
attributable, in whole or in part, to a period which includes a
period of time prior to the Closing Date, the Sellers shall, within
ten (10) business days after receipt of the Buyer’s
statement therefor by the Selling Entity, pay to the Buyer an
amount equal to the payment(s) made on account of such items which
are attributable to the period of time prior to the Closing Date.
If the Sellers fail to make such payment within the required ten
(10) business days as required herein, the Buyer may claim
such unpaid amount against the Escrow Amount.
2.4
Satisfaction of Buyer’s Obligations . Upon the
Buyer’s payment of the Cash Consideration and the
Buyer’s Apportionment, the Buyer shall be deemed to have
satisfied their obligations to make payments pursuant to this
Agreement other than (a) the obligation of the Buyer to
indemnify the Seller Indemnified Parties pursuant to
Section 13.3 and (b) the Buyer’s assumption
of the Assumed Liabilities pursuant to Section 4.1
.
2.5
Tax Allocation . The Cash Consideration shall be allocated
among the Purchased Assets as provided on Schedule 2.5
, which shall be prepared by the Selling Entity and delivered to
Buyer no later than fourteen (14) days after the Effective
Date. The allocation set forth on Schedule 2.5 shall be
reasonably acceptable to Buyer. The allocation of the Cash
Consideration among the Purchased Assets provided on
Schedule 2.5 is intended to comply with
Section 1060 of the Internal Revenue Code of 1986 and the
rules and regulations thereunder, all as amended (the “
Code ”). In furtherance thereof, the Selling
Entity will also no later than fourteen (14) days after the
Effective Date complete and provide to Buyer a true and complete
copy of, United States Internal Revenue Service Form 8594, in
a manner consistent with Schedule 2.5 . The Buyer, the
Sellers and their Affiliates shall report, act and file Tax Returns
(including, but not limited to, Internal Revenue Service
Form 8594) in all respects and for all purposes consistent
with the allocations set forth on Schedule 2.5 and such
Form 8594. The Sellers and the Buyer shall not (unless
compelled by any governmental or regulatory authority or required
by applicable Requirement of Law) take any position (whether in an
audit, any Tax Return or otherwise) which is inconsistent with the
allocations set forth on Schedule 2.5 and such
Form 8594.
2.6
Restrictive Covenants .
(a)
Acknowledgment . Each of the Sellers (the “
Restricted Persons ”) has special knowledge of
the Sellers, the Businesses, and the Businesses’ methods of
operations and relationships with customers and suppliers. The
following covenants constitute material conditions to the
transactions contemplated by this Agreement.
(b)
Non-competition by Restricted Persons . For a period
commencing on the Closing Date and ending immediately and without
further action by any party hereto, on the fifth (5th) annual
anniversary of the Closing Date, (the “ Restricted
Period ”), no Restricted Person shall, in any
location in any state in the United States or any province in
Canada, directly or indirectly (including indirectly through any
Affiliate of a Restricted Person) conduct or engage in a
Competitive Business or directly or indirectly own, manage,
operate, control, finance or participate in the ownership,
management, operation, control or financing of,
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or be
connected as an agent, representative, consultant, employee,
investor, owner, partner, manager, joint venturer, distributor or
otherwise with, or permit their names to be used by, any Person
engaged in any Competitive Business, except as set forth on
Schedule 5.3(c) ; provided , however ,
that each of the Restricted Persons may own, directly or
indirectly, solely as an investment, not more than five percent
(5%) of any class of securities of any Person registered pursuant
to the Securities Exchange Act of 1934, as amended, even if such
Person engages in a Competitive Business. Notwithstanding anything
to the contrary herein, the Restricted Period with respect to the
Restricted Person shall be extended beyond the fifth (5th)
anniversary of the Closing Date for a period of time equal to that
period of time, if any, during which such Restricted Person engaged
in a breach of any provision of this Section 2.6
.
(c)
Confidential Information; Personal Relationships . At all
times during the Restricted Period, except as required (i) by
applicable law or by legal or regulatory process, or (ii) in
communicating with their legal, financial and tax or accounting
professionals, the Restricted Persons shall keep secret and retain
in strictest confidence, and shall not use for their respective
benefit or others, or disclose to others, any confidential matters
relating to any Business, including, without limitation,
information regarding the intellectual property, trade secrets,
product information, customer lists, details of contracts, pricing
policies, price lists, trade promotion and discount schedules,
operational methods, employee lists and evaluations, marketing
plans or strategies, and business acquisition plans of the
Businesses, other than such information that (i) is or becomes
generally available to the public other than as a result of a
breach of this Agreement by any of them; (ii) which is
compelled as a matter of Law to be disclosed; provided ,
however , that if any Restricted Person receives notice that
he or she may be required or ordered to disclose any such
information, he or she shall give the Buyer prior written notice to
allow Buyer to contest such requirement or order and cooperate with
the Buyer (at Buyer’s expense) in seeking a protective order
or other remedy to limit the disclosure of such information;
(iii) which may be published or otherwise made available to
the public by Buyer or any of its Affiliates; or (iv) which is
independently developed by a Restricted Person without reference to
Confidential Information.
(d)
Employees . During the Restricted Period, none of the
Restricted Persons shall, on their behalf or on behalf of any other
Person, directly or indirectly, as an agent, representative,
consultant, investor, owner, partner, manager, joint venturer,
distributor or otherwise, solicit the employment of, offer
employment to, or hire or attempt to hire (whether as an employee,
consultant or otherwise), any Person who provided services (as an
employee or consultant) to any Business within the prior twelve
(12) month period, or encourage any such Person to leave the
employment of any Business after the Closing Date; provided
, that the restrictions in this Section 2.6(d) shall
not be applicable to the actual or attempted solicitation or hiring
of (i) any Person whose employment is terminated by the Buyer
after the Closing Date, (ii) any employee of Seller who does
not become a Hired Employee at the time of Closing, or
(iii) any Person listed on Schedule 2.6(d) .
(e)
Non-disruption . During the Restricted Period, none of the
Restricted Persons shall, on their behalf or on behalf of any other
Person, directly or indirectly, as an agent, representative,
consultant, investor, owner, partner, manager, joint venturer,
distributor or otherwise, interfere with, disrupt or attempt to
disrupt any past, present or prospective relationship, contractual
or otherwise, between any Business on the one hand, and
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any of
its respective customers, prospective customers, suppliers, sales
representatives, distributors, employees or consultants, on the
other hand.
(f)
Negative Publicity . During the Restricted Period, none of
the Restricted Persons shall make statements or any other
expressions on television, radio, the internet or other media or to
any third party, including, without limitation, in communications
with any customers, suppliers, sales representatives or
distributors, which are in any way disparaging or materially
harmful to any Business, the Buyer or any of its Affiliates or the
products and services of any Business, the Buyer or any of its
Affiliates, except as required by Law. Additionally, during the
Restrictive Period, none of the Buyer or any of its Affiliates
shall make statements or any other expressions on television,
radio, the internet or other media or to any third party, including
without limitation in communications with any customers, suppliers,
sales representatives or distributors which are in any way
disparaging or materially harmful to the Restricted Persons or any
of their respective family members or Affiliates, except as
required by Law.
(g)
Rights and Remedies Upon Breach . If any Restricted Person
(or the Buyer with respect to subsection (f) above) breaches,
or threatens to commit a breach of, any of the provisions of this
Section 2.6 (the “ Restrictive
Covenants ”), then each of the Buyer and its
Affiliates shall have the right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent
jurisdiction, without the posting of a bond in excess of $5,000, it
being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Buyer
or its Affiliates and that money damages would not provide an
adequate remedy to the Buyer and its Affiliates, which right and
remedy is in addition to, and not in lieu of, any other rights and
remedies available to the Buyer and its Affiliates under law or in
equity.
(h)
Severability of Covenants . Each Restricted Person
acknowledges and agrees that the Restrictive Covenants are
reasonable, necessary and valid in duration and geographical scope
and in all other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not
be affected thereby and shall be given full effect without regard
to the invalid portions.
(i)
Blue-Penciling . If any court determines that any of the
Restrictive Covenants, or any part thereof, are unenforceable
because of the duration or geographical scope of such provisions,
such court shall reduce the duration or scope of such provision, as
the case may be, to the minimum extent necessary such that, in its
reduced form, such provision shall then be enforceable.
3.
Closing .
3.1
Closing Date; Location . Unless this Agreement shall have
been terminated and the transactions contemplated hereby shall have
been abandoned in accordance with Article 14 , and
provided that the conditions to the Closing set forth in
Article 9 and Article 10 are satisfied or
waived, the consummation of the transactions contemplated hereby
(the “ Closing ”) shall take place at the
offices of Tobin & Reyes, P.A. 5355 Town Center Road,
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Suite 204, Boca Raton, Florida 33486, at 10:00 a.m.,
local time, on the second (2 nd ) business day
after the satisfaction or waiver of the conditions to the Closing
set forth in Article 9 and Article 10 or such
other place, date and time as the Parties shall agree. The date of
the Closing is referred to as the “ Closing
Date .” If the Closing occurs, then the Closing shall
be deemed to be effective as of 12:01 a.m., Eastern Time on
the Closing Date.
3.2
Sellers’ Deliveries . At the Closing, the Sellers
shall deliver to the Buyer the documents and items described in
Section 11.1 .
3.3
Buyer’s Deliveries . At the Closing, the Buyer shall
deliver to the Sellers the documents and items described in
Section 11.2 .
4.
Assumed Liabilities; Retained Liabilities; Certain Employee
Matters .
4.1
Assumed Liabilities . At the Closing, the Buyer is assuming
only those executory obligations arising on the Closing Date and
after the Closing under each of the Assumed Contracts and the
Unexpired Leases, except for the Retained Liabilities
(collectively, the “ Assumed Liabilities
”).
4.2
Retained Liabilities . Subject to Section 2.3 of this
Agreement, the Buyer shall not, by virtue of their acquisition of
the Purchased Assets or otherwise, assume or become responsible for
any Liabilities of the Sellers or any Affiliate of the Sellers, or
any of the Businesses, of any kind and nature that are not
expressly included within the definition of Assumed Liabilities
(collectively, the “ Retained Liabilities
”), including but not limited to the following (but subject
to Section 2.3 of this Agreement):
(a) Liabilities
for accounts payable, or trade indebtedness, indebtedness to banks
and other financial institutions (including the Wachovia Loan), or
to shareholders, members or Affiliates;
(b) Liabilities
in respect of any employee for any wages, salary, vacation pay,
sick leave pay or pay for time not worked, back pay, severance or
termination pay or other compensation, Taxes or arising in
connection with or related to any Employee Benefit Plan, if any,
including, pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“ COBRA
”). The Sellers shall be responsible for providing notices
and continuation coverage as required by COBRA to all employees and
other individuals who provide services to the Sellers in connection
with the Businesses, their eligible dependents and all other
qualified beneficiaries, who have or had a COBRA qualifying event
prior to the Closing Date or in connection with the transactions
contemplated by this Agreement;
(c) Liabilities
relating to Taxes;
(d) except
to the extent arising from or relating to any actions or conditions
which first occur or exist on or after the Closing Date with
respect to the Buyer’s operation of the Branches, all
Liabilities of the Sellers relating to any condition with respect
to contamination of air, soil, surface or ground waters, and all
other environmental media at any real property ever owned, leased
or operated by any of the Sellers, including any of the
Branches;
10
(e) Liabilities
relating to personal injury or property damage arising prior to the
Closing Date or relating to goods and services sold prior to the
Closing Date and alleged by third parties to be defective,
including but not limited to all tort claims and claims seeking
special or consequential damages attributable to allegedly
defective goods, materials or services supplied by the
Sellers;
(f) Liabilities
relating to any of the matters identified on either of
Schedule 5.14 or Schedule 5.15 ;
(g) Liabilities
and executory obligations resulting from, arising out of, relating
to, or caused by any breach of any Assumed Contract or Unexpired
Lease occurring before the Closing Date;
(h) Liabilities
and executory obligations resulting from, arising out of, relating
to, or caused by any breach of warranty, infringement or violation
of applicable Requirement of Law occurring before the Closing
Date;
(i) Liabilities
and executory obligations resulting from, arising out of, relating
to, or caused by any event or condition occurring or existing on or
before the Closing Date which through the passage of time or the
giving of notice or both would constitute a breach or default by
the Sellers under any Assumed Contract or Unexpired Lease;
(j) any
other Liabilities of the Sellers or Liabilities arising out of the
operations of the Businesses or the Purchased Assets before the
Closing Date by the Sellers, including for any civil or criminal
damages or penalties (including punitive and exemplary damages
allowed by law and interest), imposed on or sought to be imposed on
the Sellers or the Buyer or any of the officers, directors, members
or stockholders of the Buyer, on account of any tortious,
fraudulent, criminal or other act of the Sellers or any of their
respective officers, directors, members or stockholders; and
(k) All
common area maintenance and other adjustments under the Assumed
Leases for the period prior to the Closing Date.
Without
limitation to the foregoing, the intent and objective of the
Sellers and the Buyer are that, except for the Assumed Liabilities,
the Buyer shall not assume, and no transferee or successor
liability of any kind and nature shall attach to the Buyer
pertaining to, any of the Retained Liabilities, if any, all of
which Retained Liabilities shall be the sole responsibility of and
paid by the Sellers.
4.3
Certain Employee Matters .
(a)
The Buyer reserves the right, in its sole discretion, to make
offers of employment to the employees of the Sellers who provide
services for and on behalf of the Sellers’ Businesses at each
Branch, all of which employees are listed on
Schedule 4.3 (collectively, the “
Employees ”) as of and conditioned upon the
occurrence of the Closing. The Buyer and the Sellers hereby
acknowledge that any such offers of employment to the Employees
shall be made on an at-will basis at substantially the same rate of
compensation (exclusive of benefits) as is set forth on
Schedule 4.3 . Schedule 4.3 accurately sets
forth, by Branch with
11
respect
to each Employee of the Sellers at such Branch (including any
Employee who is on a leave of absence or on temporary layoff status
subject to recall): (a) the name of such Employee and the date
as of which such Employee was originally hired by the Sellers;
(b) such Employee’s title and compensation structure
(i.e., whether such employee receives compensation as a salaried or
hourly employee); (c) such Employee’s annualized
compensation if salaried or hourly rate if any hourly employee as
of the date of this Agreement, including base salary or hourly
rate, vacation and/or paid time off, accrual amounts as of
September 1, 2007, and any other compensation forms; and
(d) any governmental authorization or Permit that is held by
such Employee and that is used in connection with the Businesses.
Additionally, Schedule 4.3 includes a description of
the Selling Entity’s bonus program for its employees. Nothing
contained in this Agreement shall create any contract of employment
or a promise of continued employment with the Buyer for any
specified period, and no third party beneficiary rights are
provided to any Employee pursuant to this Agreement. Accordingly,
the Buyer and the Sellers acknowledge that all offers of employment
made by the Buyer and the actual employment of any Employee shall,
at all times, be subject to the Buyer’s right, in its sole
discretion, to establish and modify, from time to time, the terms
and conditions of the Employee’s employment and to terminate
such employment at any time. Except as the Buyer may otherwise
expressly agree in writing, any Employee hired by the Buyer (a
“ Hired Employee ”) shall be treated as a
new, at-will employee of the Buyer.
(b) Hired
Employees shall be employed by the Buyer solely in accordance with
the Buyer’s hiring and other employment policies and
procedures, which may differ from the Selling Entity’s
employment policies and procedures. Notwithstanding the foregoing,
the Buyer shall have sole and absolute responsibility for any
financial or other commitments that the Buyer may have to any of
the Hired Employees, including any and all claims or obligations
arising under any and all employment policies and procedures of the
Buyer, under any employee benefit plan of the Buyer, or under any
local, state, or federal law, rule, or regulation regarding
termination of employment for any employment loss which occurs on
or after the hiring of any Hired Employee by the Buyer. The Buyer
shall be liable to each Hired Employee for all wages, severance
benefits, unpaid vacation pay, unpaid sick and holiday pay, and
other obligations of any kind whatsoever arising on and after the
hiring of such Hired Employee by the Buyer. The Buyer is
responsible for resolving any conflicts, errors or discrepancies
with regard to a Hired Employee involving the Buyer’s
employee policies and procedures with respect to the period of time
on and after a Hired Employee is hired by the Buyer.
(c) Buyer
shall extend service credit to each employee of Selling Entity with
respect to the Business conducted at the Branches who is hired by
Buyer on the Closing Date (each, a “ Hired
Employee ”) for the full period of time each such
Hired Employee worked for Selling Entity before the Closing Date.
Nevertheless, although Buyer will base paid vacation time due each
Hired Employee upon the period of time the Hired Employee has
worked both for the Selling Entity before the Closing Date and for
Buyer on and after the Closing Date, each Hired Employee must work
for Buyer for six (6) full months before the Hired Employee is
eligible for any paid vacation (in accordance with Buyers’
normal vacation policy).
(d)
Hired Employees shall be employed by Buyer solely in accordance
with Buyer’s hiring and other employment policies and
procedures, which may differ
12
from
Seller’s employment policies and procedures. Notwithstanding
the foregoing, Buyer shall have sole and absolute responsibility
for any financial or other commitments that Buyer may have to any
of the Hired Employees, including any and all claims or obligations
arising under any and all employment policies and procedures of
Buyer, under any employee benefit plan of Buyer, or under any
local, state, or federal law, rule, or regulation regarding
termination of employment for any employment loss which occurs on
or after the hiring of any Hired Employee by Buyer. Buyer shall be
liable to each Hired Employee for all wages, severance benefits,
unpaid vacation pay, unpaid sick and holiday pay, and other
obligations of any kind whatsoever that accrue with respect to
periods after the hiring of such Hired Employee by Buyer, and
Selling Entity will pay to Hired Employees, as promptly after the
Closing as practicable, all wages, severance benefits, unpaid
vacation pay, unpaid sick and holiday pay, and other obligations of
any kind whatsoever that accrue with respect to periods before the
hiring of such Hired Employee by Buyer . Buyer is responsible for
resolving any conflicts, errors or discrepancies with regard to a
Hired Employee involving Buyer’s employee policies and
procedures with respect to the period of time on and after a Hired
Employee is hired by Buyer.
(e) The
Sellers and the Buyer each acknowledge and agree that no covered
plant closing or mass layoff (as such terms are defined in the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. §
2101 et. seq. ) will occur with respect to the Branches up
to and including the Closing Date, that the transactions
contemplated by this Agreement shall not result in a covered plant
closing or mass layoff, and that the Buyer does not intend to
implement any such covered plant closing or mass layoff with
respect to the Branches after the Closing.
(f) The
Sellers agree that they shall continue to perform, at the
Sellers’ expense, any post-termination obligations to the
terminated Employees and their eligible dependents, including,
without limitation, continuation of health insurance coverage under
any applicable group health plan(s) pursuant to COBRA and the
administration of any COBRA benefits or provision of notices
related thereto for COBRA-qualified beneficiaries who had a COBRA
qualifying event before the Closing Date and those who elect COBRA
benefits following their termination in connection with the
transactions contemplated by this Agreement.
13
4.4
Operation of Businesses after Closing . Buyer agrees that
Buyer shall be solely responsible for, and Sellers shall have no
responsibility for, the following liabilities relating to the
Businesses as conducted by Buyer on and after the Closing Date,
except to the extent that such liabilities constitute Retained
Liabilities: (a) all United States federal, state and local
income tax liabilities based on the income of Buyer as a result of
the Buyer’s operation of the Businesses, Purchased Assets,
and /or the Branches on and after the Closing Date; (b) all
liabilities arising out of Buyer’s conduct of the Businesses
on and after the Closing Date, including, without limitation, all
trade payables first arising or accruing on and after the Closing
Date, but excluding Retained Liabilities and any Liabilities
attributable to the Excluded Assets; (c) liabilities and
obligations under the Assumed Liabilities first arising or accruing
on and after the Closing Date; and (d) all obligations for
salary and benefits due to employees of Buyer, including, without
limitation, any Hired Employees, first arising or accruing on and
after the Closing Date for services provided on and after the
Closing Date.
5.
Representations and Warranties of the Sellers . The Sellers
hereby jointly and severally represent and warrant to the Buyer as
of the Effective Date as follows:
5.1
Organization and Standing of the Selling Entity .
(a) The
Selling Entity (i) is a corporation duly organized, validly
existing and in active status under the laws of the State of
Florida, (ii) is duly qualified and authorized to do business
in each jurisdiction where it conducts business, owns property or
has employees, except where failure to do so would not have a
Material Adverse Effect on the Selling Entity, the Purchased Assets
or the Businesses, (iii) has the applicable corporate power
and is entitled to carry on the Businesses as now conducted by the
Sellers, and (iv) is authorized to enter into and perform this
Agreement and the Transaction Documents entered into or to be
entered into and performed by the Sellers.
(b) True
and complete copies of the Selling Entity’s articles of
incorporation and bylaws are attached to this Agreement as
Schedule 5.1(b) .
(c) Each
Selling Shareholder that is not a corporation, limited liability
company, trust or partnership is a competent adult.
5.2
Authorization; Enforceability .
(a) This
Agreement, the Transaction Documents delivered or to be delivered
by the Sellers to the Buyer and the transactions contemplated by
this Agreement have been duly authorized by all applicable
corporate action required to be taken on the part of the Selling
Entity, except as may be limited by (i) bankruptcy, insolvency
or other similar laws affecting creditors’ rights generally,
and (ii) equitable principles of general applicability..
(b) Each
of the Sellers has full capacity, power and authority to execute
and deliver this Agreement and the Transaction Documents.
(c)
This Agreement and each of the Transaction Documents entered into
or to be entered into and performed by the Sellers are and shall be
legal, valid and
14
binding
obligations of the Sellers, enforceable against each of the
Sellers, as applicable, in accordance with their respective
terms.
5.3
Ownership; Subsidiaries and Affiliates.
(a) Except
as set forth on Schedule 5.3(a) , no person or entity
owns record, beneficial or equitable ownership of the Selling
Entity.
(b) Except
as set forth on Schedule 5.3(b) , the Selling Entity
does not own, directly or indirectly, any debt, equity or other
ownership or financial interest in any other entity. No shares or
other ownership or other interests, either of record, beneficially
or equitably, in any entity are included in the Purchased
Assets.
(c) Except
as set forth on Schedule 5.3(c) , the Sellers and/or
their Affiliates do not operate at any location other than the
Branches any business that is similar to the Businesses that are
operated at any of the Branches.
5.4
Noncontravention of Contemplated Transactions; Consents and
Government Approvals .
(a) Except
as set forth on Schedule 5.4(a) , the execution,
delivery and performance of this Agreement and the Transaction
Documents delivered or to be delivered pursuant to this Agreement
by the Sellers, as applicable, and the consummation thereof do not
and will not (i) violate any Requirements of Law applicable to the
Sellers or any Order to which the Sellers are subject or by which
any of their respective properties are bound, (ii) conflict
with, or result in the breach of, or constitute (or with or without
the passage of time or the giving of notice or both could
reasonably be expected to constitute) a default under any Permit,
License, Unexpired Lease or material Contract of the Sellers
related to any Business, (iii) result in the creation of any
Adverse Claim upon any of the Businesses, any of the Purchased
Assets, or any of the Assumed Liabilities, or (iv) violate the
Selling Entity’s articles of incorporation, bylaws or any
other agreement to which the Sellers are subject or by which any
their properties are bound.
(b) Except
for applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “ HSR
Act ”) and except as set forth on
Schedule 5.4(b) , no Consent or Regulatory Approval
(excluding required Licenses and Permits of the Buyer) is required
for the Sellers to enter into and perform this Agreement or any of
the Transaction Documents to be executed by the Sellers, or in
connection with the Sellers’ consummation of the transactions
contemplated by this Agreement.
5.5
Financial Matters . Attached to this Agreement as
Schedule 5.5 are the following financial statements of
the Selling Entity (collectively, the “ Financial
Statements ”): (a) audited balance sheets and
the statements of income as of and for each of the twelve (12)
months ended December 31, 2006 and 2005 (the “
Year-End Financial Statements ”); and
(b) the unaudited balance sheets and statements of income as
of and for the eight (8) months ended August 31, 2007
(referred to herein as the “ Most Recent Financial
Statements ”). The Year-End Financial Statements have
been prepared in accordance with generally accepted accounting
principles in the United States (“ GAAP
”) consistently applied
15
through
the periods involved and fairly present, in all material respects,
the financial condition and results of operations of the Selling
Entity as of and for the periods ended the date thereof. The Most
Recent Financial Statements have been prepared on a cash basis of
accounting consistently applied through the periods involved and
fairly present, in all material respects, the financial condition
and results of operations of the Selling Entity as of and for the
periods ended the date thereof. The Financial Statements were
prepared from, and properly reflect, the books and records of the
Selling Entity, all of which books and records accurately and
fairly reflect, in all material respects and in reasonable scope
and detail, the revenues and expenses, assets and liabilities of
the Selling Entity and such other information as is contained
therein.
5.6
Undisclosed Liabilities and Obligations . Except as set
forth on Schedule 5.6 , the Selling Entity has no
Liabilities except to the extent reflected or reserved against in
the Most Recent Financial Statements or incurred in the ordinary
course of business consistent with past practice since the date of
the Most Recent Financial Statements.
5.7
No Changes . Except as set forth on Schedule 5.7
, since December 31, 2006:
(a) the
Sellers have operated the Businesses in the ordinary course in a
manner consistent with past practices and paid and discharged, in
accordance with past practice but not less than on a timely basis,
all of the Selling Entity’s payables and other
Liabilities;
(b) there
has not been any development, event, change, circumstance or
condition, whether considered alone or together any other one or
more developments, changes, circumstances or conditions, that has
had, or could have, a Material Adverse Effect upon any of
(A) the Purchased Assets, (B) the nature and amount of
the Assumed Liabilities, (C) the ability of the Sellers to
satisfy and discharge fully the Retained Liabilities, (D) the
business, prospects, operations, results of operations, liabilities
or condition (financial or otherwise) of the Selling Entity, and
(E) the ability of the Sellers to consummate the
Transactions;
(c) there
has not been any material loss, damage or destruction, whether
covered by insurance or not, relating to or affecting the
Businesses or the Purchased Assets;
(d) there
has not been any increase in the compensation, salaries,
commissions or wages payable or to become payable to any employees
or agents of the Businesses, including any bonus or other employee
benefit granted, made or accrued in respect of such employees or
agents, or any increase in the number of such employees or agents
(including any such increase or change pursuant to any Employee
Benefit Plan, employment agreement or other commitment), except
those granted, made or accrued in the ordinary course of business
consistent with past practice;
(e)
there has not been any labor dispute or disturbance relating to or
affecting the Businesses, other than routine individual grievances
that are not material to the
16
conduct,
financial condition, Purchased Assets, Liabilities, Business,
prospects or operations of the Businesses;
(f) there
has not been any increase in the Sellers’ investment in or
receivable from any Affiliate of the Selling Entity;
(g) there
has not been any indebtedness for borrowed money incurred, assumed
or guaranteed by the Selling Entity, except in the ordinary course
of business consistent with historical levels and past
practice;
(h) there
has not been any Lien made on any assets of the Businesses other
than Permitted Liens;
(i) there
has not been any entering into, amendment or early termination of
any Contract relating to employment to which the Selling Entity is
a party, or any entering into, amendment or early termination of
any material Contract to which the Selling Entity is a party, or
any release or waiver of any material claims or rights under any
Contract to which the Selling Entity is a party, other than in the
ordinary course of business;
(j) there
has not been any loan or advance made by the Selling Entity to any
person or entity, other than advances made in the ordinary course
of the Businesses or to the Selling Entity’s employees in the
ordinary course of business in accordance with past practice;
(k) there
has not been any grant of credit by the Selling Entity to any
customer (including any distributor) on terms or in amounts more
favorable than those that have been extended to such customer in
the past, any other change in the terms of any credit heretofore
extended by the Selling Entity or any other change of the Selling
Entity’s policies or practices with respect to the granting
of credit;
(l) there
has not been any discharge, satisfaction or agreement to satisfy or
discharge any Liability of the Selling Entity, other than the
discharge or satisfaction in the ordinary course of business of
current Liabilities reflected on the face of the Most Recent
Financial Statements and current Liabilities incurred since the
date of the Most Recent Financial Statements in the ordinary course
of business;
(m) there
has not been any deferral, extension or failure to pay any of the
Liabilities of the Selling Entity as when the same become due or
any allowance of the level of the Liabilities of the Selling Entity
to increase in any material respect or any prepayment of any of the
Liabilities of the Selling Entity;
(n) the
Sellers have not made any change to the financial or Tax accounting
methods, principles or practices used by the Selling Entity, except
to the extent required by GAAP;
(o) the
Sellers have not sold, leased, exchanged, transferred or otherwise
disposed or, or agreed to sell, lease, exchange, transfer or
otherwise dispose of, any assets of the Selling Entity with an
individual fair money value of $100,000 or more, in each
17
case, or
$250,000 in the aggregate which is not reflected in the Most Recent
Financial Statements; and
(p) the
Sellers have not entered into any Contract or written commitment to
do any of the foregoing.
5.8
Title to Properties .
(a) Except
for (i) the properties and assets which are leased or licensed
by the Sellers and identified with respect to each Branch on
Schedule 1.1(b) ; (ii) the items of Software
licensed to the Sellers and identified as such on
Schedule 1.1(h) ; and (iii) the Leased Real
Property on which each Branch and the corporate office is located,
the Selling Entity has good and marketable title to all the
Purchased Assets being sold by the Sellers to the Buyer, free and
clear of all Adverse Claims, except the Permitted Liens. The
Selling Entity has a valid and enforceable license, lease and right
to use all assets included within the Purchased Assets which are
either licensed or leased by the Selling Entity, and the Selling
Entity enjoys peaceful and undisturbed possession thereunder.
(b) Except
as otherwise identified on Schedule 5.8 , all of the
Purchased Assets being sold by the Sellers to the Buyer are located
at the Sellers’ Branches or corporate offices, and the
Purchased Assets constitute all of the assets, tangible and
intangible, and include all of the leases, licenses and other
agreements necessary to operate the business of the Selling Entity
as presently conducted at each of the Sellers’ Branches.
Except as otherwise expressly contemplated by the first sentence of
this Section 5.8 , no person or entity (including any
Affiliate of the Sellers) owns or has any right or interest in any
of the Purchased Assets used in connection with any of the
Businesses.
5.9
Real Estate .
(a) The
Sellers do not own any real property used in the Business. The only
real property used by the Selling Entity are the Branches and the
corporate office, each of which is leased pursuant to the leases
identified on Schedule 1.1(b) (collectively, the
“ Leased Real Property ” or the “
Real Property ”).
(b) To
the Sellers’ Knowledge, none of the Unexpired Leases and no
extract or memorandum therefor has been recorded or filed with any
recording or filing office of any jurisdiction by the Sellers and
by the landlord thereunder.
(c) To
Seller’s Knowledge (provided that this knowledge qualifier
shall not apply in the case of improvements made by a Seller), all
buildings, structures, fixtures and improvements, and all
mechanical and operating systems comprising a part of the Real
Property are structurally sound, in compliance with all material
Requirements of Law and restrictive covenants, easements and any
similar instruments and agreements pertaining thereto and in good
condition, ordinary wear and tear excepted, and are sufficient to
carry on the Businesses as conducted thereon. The Sellers are not
aware of any uncured deficiencies by any landlord for any of the
Branches and the Sellers have given the landlords all notices
required to be given under the Assumed Leases.
18
(d) All
utilities and services currently provided to the Branches,
including alarm services, if any, are adequate for use in the
Businesses as currently conducted thereon.
(e) The
use and operation of the Branches are in conformance with all
applicable Requirements of Law, Orders and Permits, except where
failure to conform with applicable Requirements of Law, Orders and
permits would not have a Material Adverse Effect on the Purchased
Assets or Businesses. All utility charges previously due prior to
the Effective Date and payable with respect to each Branch have
been fully paid.
(f) To
Sellers’ Knowledge, there are currently no restrictions on
entrance to or exit from any of the Branches to adjacent public
streets and highways and, to the Sellers’ Knowledge, no
conditions exist that will result in the termination of the present
access to and from any of the Branches to existing public streets
and highways.
(g) To
Sellers’ Knowledge, there are no proposed reassessments
(other than regular periodic reassessments required by statute) of
any of the Real Property by any Governmental or Regulatory
Authority and there are no contingencies existing under which any
assessment for real estate taxes may be retroactively filed against
the Real Property.
(h) The
Sellers have never received written notice of default in the
performance, observance or fulfillment of any material obligation,
covenant or condition contained in any Lease, easement, restrictive
covenant or any similar instrument or agreement affecting any of
the Real Property, which have not been cured or otherwise resolved
to the reasonable satisfaction of the applicable landlord,
landowner or governmental authority.
(i) To
the Sellers’ Knowledge, there are no condemnation,
appropriation or other proceedings involving any taking of any of
the Branches pending or threatened.
(j) The
Sellers have provided or caused to be provided to the Buyer true
and complete copies of each Unexpired Lease.
(k) Except
as set forth on Schedule 5.9 , no work has been
performed on or materials supplied to the Real Property within any
applicable statutory period which will give rise to
mechanics’ or materialmen’s liens.
(l) Except
as set forth on Schedule 5.9 , no notices to
governmental agencies, Permits, licenses, approvals, taxes or fees
(other than recording fees) are required to be filed, secured or
paid for respecting either (i) the transfer of the leases of
the Leased Real Property from the Sellers to the Buyer (other than
landlord consents to assignment) as set forth in this Agreement or
(ii) the entering of the Sellers and the Buyer into the Lease
Agreements.
(m) To
the Sellers’ Knowledge, there have been no occurrences or
actions at any of the Leased Real Property during the respective
lease terms for such Leased
19
Real
Property that would form the basis for any claims, actions or legal
proceedings by the respective landlords or any other third
parties.
5.10
Condition of Purchased Assets . The Purchased Assets are
currently being used to carry on the Business as currently
conducted and are in good condition and repair, ordinary wear and
tear and obsolescence excepted. The operation and the use of the
Purchased Assets are in conformance with all applicable
Requirements of Law, Orders and Permits, except where failure to do
so would not have a Material Adverse Effect on the Purchased Assets
or the Businesses.
5.11
Environmental . To the Knowledge of Sellers, there have
occurred no events, conditions, circumstances, activities,
practices, incidents, or actions that may give rise to any common
law or statutory liability, or otherwise form the basis for any
Legal Proceeding (as defined in Section 5.14 ), Order,
remedial or responsive action, or study or investigation involving
or relating to the Sellers or any Branch, based upon or related to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment of any
pollutants, contaminants, chemicals or hazardous substances.
5.12
Contracts and Commitments . Schedule 1.1(c)
lists all Assumed Contracts other than the Unexpired Leases. True
and complete copies of all written Contracts so listed have been
delivered to the Buyer. In addition, Schedule 5.12
contains a true and complete description by the Sellers of all of
the material terms of all oral Contracts, if any, included on
Schedule 1.1(c) . The Sellers are not and, to the
Sellers’ Knowledge, all other parties to any Unexpired Lease
or Assumed Contract are not in breach of, or default under, any
provision thereof, and no event has occurred which with or without
the passage of time or the giving of notice or both would
constitute a breach or default thereunder with respect to the
Sellers and, to the Sellers’ Knowledge, with respect to such
other parties to such Assumed Contracts and Unexpired Leases. No
party to any Unexpired Lease or Assumed Contract has provided the
Sellers with notice of such party’s intention to terminate or
withdraw its participation in any Unexpired Lease or Assumed
Contract. All copies of each written Assumed Contract delivered to
the Buyer and the descriptions of each oral Contract contained in
Schedule 1.1(c) contain and describe the entire
agreement between the parties to such Contract as to the subject
matter of such Contract, and there have been no waivers,
forbearances or modifications of any kind whatsoever to the express
terms set forth in such written Contract or as described with
respect to such oral Contract.
5.13
Patents, Trademarks, Copyrights and Domains . The Sellers do
not own any patents or any patent applications. Schedules 1.1(f)
and 1.1(g) contain complete and correct lists of all
Copyrights, Trademarks and Domains owned or used by the Sellers in
the conduct of the Businesses. Schedule 1.1(h) contains
a complete and correct list of all Software used in the operations
of the Businesses. Except as set forth on Schedule 5.13
, the Sellers have no obligation to make any payments by way of
royalties, fees, or otherwise to any owner or licensor of, or other
claimant to, any Copyright, Trademark or Domain on account of the
Sellers’ conduct of the Businesses. To the Sellers’
Knowledge, the Sellers are not infringing or misappropriating, and
the Sellers have not infringed upon or misappropriated, the rights
of any other person or entity in connection with the operation of
the Businesses.
20
5.14
Pending Litigation, Proceedings or Investigations . Except
as set forth on Schedule 5.14 , there is no suit,
action, asserted claim, arbitration, grievance, litigation,
administrative or other proceeding (a “ Legal
Proceeding ”) pending or, to the Sellers’
Knowledge, threatened, against or related to the Selling Entity,
the Businesses, the Assumed Liabilities or the Purchased Assets or
which could adversely affect or restrict the ability of the Sellers
to consummate fully the transactions contemplated by this
Agreement. Schedule 5.14 also contains a true and complete
list of all Orders to which the Sellers or, to the extent relating
to the Sellers or the Businesses, are subject or by which any of
their respective properties are bound.
5.15
Absence of Restrictions; Compliance with Laws; Permits .
Except as set forth on Schedule 5.15 , the Sellers are
not subject to any Assumed Contract or Unexpired Lease that has the
effect of limiting the Sellers’ right to engage or compete
with any person or entity in any business. The Sellers have
operated the Businesses in compliance with all Requirements of Law
(including, without limitation, Chapter 560, Florida Statutes)
and are not in violation of, or in default under, any Requirement
of Law applicable to the Sellers or any Order issued or pending
against the Sellers or by which the Sellers or any of their
respective properties are bound. The Sellers have obtained or filed
all Permits and Licenses that are required for the operation of the
Businesses and the Branches. Schedule 1.1(j) contains a
complete and accurate list, by Branch, of all of the Sellers’
Permits and Licenses. All such Permits and Licenses were made in
accordance with applicable Requirements of Law when obtained or
filed. Except as set forth on Schedule 5.15 , no
deficiencies have been asserted by any Governmental or Regulatory
Authority with respect to any Permit or License or applicable
Requirements of Law that has not been finally resolved. All Permits
and Licenses are valid and in full force and no revocation,
cancellation, or withdrawal thereof has been effected or
threatened, and the Businesses have at all times been operated in
compliance with such Permits or Licenses.
5.16
Deferred Presentment Agreements to Customers .
(a)
Schedule 1.1(a)(i) will, as of the Closing Date,
contain a complete and accurate listing of each Deferred
Presentment Agreement outstanding as of the Closing Date within
each Branch, indicating the due date of the Deferred Presentment
Agreement and whether any Deferred Presentment Agreement is in
default.
(b) There
has been no fraud, dishonesty or misrepresentation on the part of
the Sellers, and the Sellers have no knowledge that they have
entered into any Deferred Presentment Agreements in which there was
fraud, dishonesty or misrepresentation on the part of any
Customer.
(c) No
Deferred Presentment Agreement is subject to any legally
enforceable right of rescission, set-off, counterclaim or defense,
including the defense of usury, nor will the operation of any of
the terms of any Deferred Presentment Agreement, or the exercise of
any right thereunder, render such Deferred Presentment Agreement
unenforceable, in whole or in part, or subject such Deferred
Presentment Agreement to any legally enforceable right of
rescission, set-off, counterclaim or defense, including the defense
of usury and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto.
21
(d) All
Requirements of Law including usury, truth in lending, consumer
credit protection, equal credit opportunity or disclosure laws
applicable to the origination and servicing and collection of each
Deferred Presentment Agreement have been complied with in all
material respects.
(e) The
Sellers have no knowledge that (i) any Deferred Presentment
Agreement is not genuine or not a legal, valid and binding
obligation of the Customer thereof, nor that (ii) any Deferred
Presentment Agreement is unenforceable in accordance with its
terms.
(f) The
Sellers have no knowledge that (i) any of its Customers lacked
legal capacity to enter into a Deferred Presentment Agreement,
(ii) any Deferred Presentment Agreement was not duly and
properly executed by the Customer or (iii) any proceeds of any
Deferred Presentment Agreement were not duly disbursed.
(g) All
parties which have had any interest in any Deferred Presentment
Agreement, whether as assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) in compliance with any and all applicable “doing
business” and licensing Requirements of Law.
(h) The
Sellers have not waived any default, breach, violation or event of
acceleration under any Deferred Presentment Agreement.
Schedule 5.16(h) sets forth a complete and accurate
list of all Deferred Presentment Agreements that are in default as
of the Closing Date (with the schedule to be provided as of the
Closing Date).
(i) The
number of Customers of the Selling Entity that filed for protection
under a bankruptcy proceeding following the origination of a
currently outstanding Deferred Presentment Agreement is not
materially and disproportionately larger than the number of
Customers of Selling Entity that have historically filed for
bankruptcy protection prior to the date of this Agreement following
the execution of a Deferred Presentment Agreement by such
Customers.
(j) No
Deferred Presentment Agreement is secured by any collateral.
(k) Each
Customer has received all disclosures required by all applicable
Requirements of Law with respect to deferred presentment
transactions of the same type as the Deferred Presentment Agreement
made to such Customer and any rescission materials required by all
applicable Requirements of Law.
(l) The
Selling Entity is the sole owner and holder of the Deferred
Presentment Agreements originated by the Selling Entity. No
Deferred Presentment Agreement has been assigned or pledged by the
Selling Entity (excluding liens filed by Wachovia Bank National
Association in connection with the Selling Entity’s line of
credit with such lienholder, all of which liens shall be terminated
as of Closing), and the Selling Entity has good and marketable
title thereto, free and clear of all Adverse Claims, except for
Permitted Liens. The Sellers have full right to transfer and sell
each Deferred Presentment Agreement to the Buyer, free and clear of
Adverse Claims, except for Permitted Liens, and have full right
and
22
authority, subject to no interest or participation in, or agreement
with any other person or entity to sell or otherwise transfer such
Deferred Presentment Agreement. The sale of each Deferred
Presentment Agreement as and in the manner contemplated by this
Agreement is sufficient to fully transfer to the Buyer all right,
title and interest of the Selling Entity thereto as
noteholder.
(m) Each
Deferred Presentment Agreement was underwritten in accordance with
the Sellers’ processes, procedures and guidelines for the
making of such Deferred Presentment Agreements in effect at the
time of origination, and supported by appropriate documentation
contained in the file for such Deferred Presentment Agreement. With
respect to each Deferred Presentment Agreement, the Sellers
maintain a file which contains the original Deferred Presentment
Agreement and evidence, in accordance with applicable Requirements
of Law, of all disclosures to, and acknowledgments by, the borrower
with respect to the terms and conditions of such Deferred
Presentment Agreement.
(n) No
Customer has notified the Sellers, and no relief has been requested
or allowed to any Customer, under the Servicemen’s Civil
Relief Act, except as set forth on Schedule 5.16(n)
.
5.17
Solvency . On and as of the date of this Agreement, and
after giving effect to the Closing and the other Transactions, the
Sellers are not, nor will be, insolvent as defined in, or otherwise
in a condition which could render any transfer or conveyance made
by the Sellers avoidable or fraudulent pursuant to, any Requirement
of Law pertaining to bankruptcy, insolvency or creditors’
rights generally or relating to fraudulent conveyances, fraudulent
transfers or preferences. The Sellers are receiving reasonably
equivalent value and consideration from the Buyer for the Purchased
Assets being sold by the Sellers and are not selling such Purchased
Assets to the Buyer with the intent to hinder, delay or defraud any
of their creditors.
5.18
No Brokers . The Sellers have not engaged any person or
entity as a broker, finder or intermediary for or on account of any
of the Transactions.
5.19
Receivables . Other than the Deferred Presentment Agreements
and Returned Checks, the Sellers have no Receivables.
5.20
Tax Matters . The Selling Entity has duly and timely filed
all Tax Returns required to be filed by it. The Sellers have
provided the Buyer with true and complete copies of all federal and
state income Tax Returns for the Selling Entity for the tax years
ended December 31, 2006, 2005 and 2004. Each Tax Return filed by
the Selling Entity was true and complete in all material respects
when filed. The Selling Entity has fully paid all Taxes that were
due and payable, or asserted or claimed to be due and payable by
any federal, state or local tax authority from the Selling Entity
for the period covered by the applicable Tax Returns or any
statement or other document issued by any such tax authority. The
Sellers have not received any outstanding and unresolved notices
from the IRS or any other governmental or regulatory authority of
any proposed examination or of any proposed change in reported
information relating to the Selling Entity except as set forth on
Schedule 5.20 . There are no Adverse Claims of any kind
for Taxes upon any of the Purchased Assets other than for those
Adverse Claims for Taxes not yet due and payable. The Selling
Entity has complied with all applicable
23
Requirements of Law relating to the payment and withholding of
Taxes (including withholding Taxes pursuant to Sections 1441
and 1442 of the Code). All monies that the Selling Entity is
required by applicable Requirement of Law to collect or withhold
from the employees of the Selling Entity for income Taxes, social
security and other payroll Taxes, or from independent contractors,
shareholders or other third parties, have, within the time and
manner presented by applicable Requirement of Law, been collected
or withheld, and paid to the respective governmental or regulatory
authority.
5.21
Officers and Directors . Except as set forth on
Schedule 5.21 attached to this Agreement, none of the
officers, directors or shareholders of the Selling Entity has,
within the past five (5) years:
(a) been
convicted of, or pled guilty or no contest to, any crime (other
than traffic offenses and other minor offenses);
(b) been
named as a subject of any criminal Legal Proceeding (other than for
traffic offenses and other minor offenses);
(c) been
the subject of any Order or sanction relating to an alleged
violation of, or otherwise found by any governmental or regulatory
authority to have violated: (i) any Requirement of Law
relating to consumer lending, (ii) any Requirement of Law
respecting financial institutions, insurance companies, or
fiduciary duties owed to any person or entity, (iii) any
Requirement of Law prohibiting fraud (including mail fraud or wire
fraud); or
(d) been
the subject of any Order enjoining or otherwise prohibiting him or
her from engaging in any type of business activity.
During
the past five (5) years, (i) no petition under the
Federal bankruptcy laws or any state insolvency or similar law has
been filed by or against, and (ii) no receiver, conservator,
fiscal agent or similar officer has been appointed for, the Selling
Entity, the officers, directors, or shareholders of the Selling
Entity or any partnership in which any of the foregoing individuals
was a general partner or any entity of which any of the foregoing
individuals was a director or an executive officer or had a
position having similar powers and authority at or within two
(2) years of the date of such filing or appointment.
5.22
Additional Employee Matters . The information contained in
Section 4.3 is true and complete in all material
respects. Each Employee’s employment by the Sellers is
“at-will.” The Sellers have no obligation to pay any
Employee any severance or similar payments. No Seller is a party to
or bound by any collective bargaining agreement and no collective
bargaining agreement covering the Sellers’ employees is
currently being negotiated. To the Sellers’ Knowledge, there
are no threatened or contemplated attempts to organize for
collective bargaining purposes any of the Sellers’ employees.
There is no, and since January 1, 2002, there has been no,
work stoppage, strike, slowdown, picketing or other labor
disturbance or controversy by or with respect to the Sellers’
employees or former employees. In addition, except as set forth on
Schedule 5.22 , no dispute with or claim against the
Sellers relating to any labor or employment matter including
employment practices, discrimination, terms and conditions of
employment, or wages and hours is outstanding or, to the
Sellers’
24
Knowledge, is threatened. There is no claim or petition pending
before, and at no time since January 1, 2005, has there been,
any claim or petition made to, any governmental or regulatory
authority including the National Labor Relations Board or the Equal
Employment Opportunity Commission against the Sellers with respect
to any labor or employment matter, except as set forth on
Schedule 5.22 .
5.23
Employee Benefit Plans .
(a) No
action or failure to take an action by the Sellers, any Affiliate
of the Sellers (including Affiliates by reason of
Sections 414(b), 414(c) or 414(m) of the Code (“
ERISA Affiliates ”)), or any other person, and
no facts or circumstances exist that, could directly or indirectly
subject the Buyer or any of its Affiliates (or any of their
employees or directors) to any Liability of any nature with respect
to any pension, profit-sharing, welfare, hospitalization,
insurance, bonus, incentive, perquisite, paid time off, severance,
employment or other benefit plan, policy, practice or agreement
which is now, or has been at any time, sponsored, maintained,
contributed to, or required to be contributed to by the Sellers or
any of their ERISA Affiliates, to which the Sellers or any of their
ERISA Affiliates are a party, or with respect to which the Sellers
or any of their ERISA Affiliates has or could have any Liability of
any nature (each such plan, policy, practice or agreement is
referred to herein as a “ Benefit Plan
”).
(b) The
only Benefit Plan sponsored or maintained by the Sellers that is
subject to ERISA is CCS Financial Services, Inc. 401(k) Profit
Sharing Plan. A true and complete copy of such Benefit Plan has
been provided to the Buyer. Neither the Sellers nor any ERISA
Affiliate has ever sponsored, maintained, contributed to or had any
obligation to contribute to any Benefit Plan subject to
Section 412 of the Code, or Title IV of ERISA, or intended to
be qualified under Section 401(a) of the Code. No Employee is
employed outside the United States, and no Benefit Plan is subject
to the laws of any foreign jurisdiction.
(c) Except
as set forth on Schedule 5.23(c)(1) , there are no
current or former employees of the Selling Entity who are on leave
of absence under either of the Uniformed Services Employment or
Reemployment Rights Act or the Family Medical Leave Act.
Schedule 5.23(c)(2) reflects: (i) each individual
who has elected or has a right to elect continuation coverage under
any Employee Benefit Plan pursuant to COBRA (29 U.S.C.
§§1161 to 1169), as amended; and (ii) the date and
type of each such individual’s qualifying event (as defined
in 29 U.S.C. §1163).
(d) Excluding
(i) death benefits or retirement benefits under any Employee
Benefit Plan that is qualified under Section 401(a) of the Code and
(ii) benefits, the full cost of which is borne by the current
or former employee (or his beneficiary), no Employee Benefit Plan
provides benefits, including death or medical benefits (whether or
not insured), with respect to current or former employees after
retirement or other termination of service.
5.24
Accuracy and Completeness of Information . All written
information furnished to the Buyer by the Sellers that is set forth
in this Agreement or in any schedule to this Agreement (“
Written Information ”) is, and if furnished
after the date of this
25
Agreement, will be, true and correct in all material respects and
does not, and if furnished after the date of this Agreement, shall
not, contain any untrue statement of material fact or fail to state
any material fact necessary to make such Written Information, in
the context and under the circumstances in which it is made, not
misleading.
5.25
FIRTPA . No Seller is a “foreign person,”
“foreign corporation” or “foreign
partnership” within the meaning of Section 1445 of the
Code and the regulations thereunder.
5.26
Insurance . Set forth in Schedule 5.26 is a
complete and accurate list and description of all policies of fire,
liability, product liability, workers compensation, health and
other forms of insurance presently in effect with respect to the
Businesses, the Purchased Assets and the Real Property (each a
“ Policy ” and collectively, the “
Policies ”), true and correct copies of which
have heretofore been delivered to the Buyer.
Schedule 5.26 includes, without limitation, the
carrier, the description of coverage, the limits of coverage,
retention or deductible amounts, amount of annual premiums, date of
expiration and the date through which premiums have been paid with
respect to each such Policy, and any pending claims in excess of
$50,000. All such Policies are valid, outstanding and enforceable
policies and provide insurance coverage for the Real Property, the
Purchased Assets and operations of the Selling Entity.
Schedule 5.26 indicates each Policy as to which
(a) the coverage limit has been reached or (b) the total
incurred losses to date equal 75% or more of the coverage limit. No
notice of cancellation, termination or refusal to renew has been
received with respect to any such Policy, and no Seller has
knowledge of any act or omission of the Selling Entity which could
reasonably be expected to result in cancellation of any such Policy
prior to its scheduled expiration date. The Selling Entity has not
been refused any insurance with respect to any aspect of the
operations of the Businesses nor has its coverage been limited by
any insurance carrier to which it has applied for insurance or with
which it has carried insurance during the last three years. The
Selling Entity has duly and timely made all claims it has been
entitled to make under each Policy of insurance, except for claims
that have otherwise been resolved or as to which the Selling Entity
is making good faith commercially reasonable efforts to resolve.
Since January 1, 2005, all products liability and general
liability Policies maintained by or for the benefit of the Selling
Entity have been “occurrence” Policies and not
“claims made” Policies. There is no claim by the
Selling Entity pending under any such Policies as to which coverage
has been questioned, denied or disputed by the underwriters of such
Policies, and no Seller knows of any basis for denial of any claim
under any such Policy. No Seller has received any written notice
from or on behalf of any insurance carrier issuing any such Policy
that insurance rates therefor will hereafter be substantially
increased (except to the extent that insurance rates may be
increased for all similarly situated risks) or that there will
hereafter be a cancellation or an increase in a deductible (or an
increase in premiums in order to maintain an existing deductible)
or nonrenewal of any such Policy. Such Policies are sufficient in
all material respects for compliance by the Selling Entity with all
Requirements of Law and with the requirements of all material
Contracts to which the Selling Entity is a party.
5.27
Affiliates’ Relationships to Selling Entity .
26
(a)
Contracts With Affiliates . All leases, contracts,
agreements or other arrangements between the Selling Entity and any
of its Affiliates are described on Schedule 5.27(a) .
(b)
No Adverse Interests . No Affiliate has any direct or
indirect interest in (i) any entity which does business with
the Selling Entity or is competitive with the Businesses, or (ii)
any property, asset or right which is used by the Selling Entity in
the conduct of the Businesses.
(c)
Obligations . All obligations of any Affiliate of the
Selling Entity to the Selling Entity, and all obligations of the
Selling Entity to any Affiliate of the Selling Entity, are listed
on Schedule 5.27(c) .
6.
Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Sellers as follows:
6.1
Organization and Standing of Buyer. The Buyer (i) is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and (ii) has the authority
to engage in the Businesses.
6.2
Authorization . The execution, delivery and performance by
the Buyer of this Agreement, the Transaction Documents to be
entered into and performed by the Buyer and the Transactions have
been duly authorized by all necessary organizational action on the
part of the Buyer. This Agreement and each of the Transaction
Documents entered into by the Buyer or to be entered into or
performed by the Buyer have been duly entered into by the Buyer and
constitute the legal, valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their terms,
except as may be limited by (i) bankruptcy, insolvency or
other similar laws affecting creditors’ rights generally and
(ii) equitable principles of general applicability.
6.3
Noncontravention of Contemplated Transactions; Consents and
Government Approvals . The execution, delivery and performance
of this Agreement and the Transaction Documents delivered or to be
delivered pursuant to this Agreement by the Buyer and the
consummation thereof do not and will not: (i) violate any
Requirements of Law applicable to the Buyer or any Order to which
the Buyer is subject or by which the Buyer’s properties are
bound; or (ii) conflict with, or result in the breach of, or
constitute (or with or without the passage of time or the giving of
notice or both might constitute) a default under any material
contract of the Buyer, or (iii) violate the Buyer’s
certificate of incorporation or bylaws. Except for applicable
requirements of the HSR Act and as set forth on
Schedule 6.3 , no Consent or Regulatory Approval is
required for the Buyer’s entering into and performance of
this Agreement or any of the Transaction Documents to be executed
by the Buyer or in connection with the Buyer’s consummation
of the transactions contemplated by this Agreement.
6.4
Authority; Finances . The Buyer has full authority to act
for itself, and the Buyer is financially capable of consummating
each obligation of the Buyer under the Transaction Documents.
27
6.5
No Brokers . The Buyer has not engaged any person or entity
as a broker, finder, or intermediate for or on account of any of
the Transactions.
7.
Transfer Taxes and Fees . The Sellers shall pay all
transfer, documentary, sales, use, stamp, registration and other
Taxes and fees, if any, which may be payable with respect to the
Transactions and will file all Tax Returns and documentation
related thereto. If required by applicable law, the Buyer will join
in the execution of any such Tax Return and other documentation.
Additionally, Buyer shall reimburse Sellers up to $25,000 in
out-of-pocket costs actually incurred by Sellers and paid to
landlords under Unexpired Leases in order to obtain Consent and
Estoppel Certificates from such landlords with respect to the
Unexpired Leases. Buyer will be responsible for all costs and
expenses incurred by Buyer in connection with obtaining any
required licenses necessary to own and operate the Businesses from
and after Closing, including without limitation any occupational
licenses from local governments and any licenses required from the
Florida Office of Financial Regulation.
8.
Covenants Prior to the Closing .
8.1
Pre-Closing Access to Information . From the date hereof
until the Closing, except as prohibited by applicable Law, the
Sellers shall, and shall cause all of the Selling Entity’s
officers, employees, agents, independent accountants and advisors
to, furnish to the Buyer and its representatives, at reasonable
times and places, (a) such access to the Branches as the Buyer
may from time to time reasonably request, (b) such access to
the assets, books and records of the Sellers as the Buyer may from
time to time reasonably request and (c) such access to
financial and operating data and other information relating to the
Sellers as the Buyer may from time to time reasonably request,
including access to the work papers of the Sellers’
independent auditors (with the consent of such auditors, which the
Sellers obtained prior to the date hereof); provided , that
any such access shall be limited to normal business hours upon the
reasonable prior written request of the Buyer and shall not be
conducted in a manner to interfere with the Selling Entity’s
operations. The Buyer shall be entitled to inspect, examine, audit
and photocopy all of such documents. In addition, during such
period, with the prior consent of the Selling Entity in each
instance (which consent shall not be unreasonably withheld or
delayed), the Buyer and its representatives shall have access to
suppliers, customers, officers, employees and agents of the Sellers
and others having business dealings with the Sellers for the
purpose of performing the Buyer’s due diligence
investigation.
8.2
Conduct of Business Pending the Closing . From the date
hereof until the Closing, except as required or contemplated by the
express terms of this Agreement and except for any actions taken by
the Sellers of the type set forth in Schedule 8.2 or
otherwise consented to by the Buyer in writing:
(a)
No Changes . The Sellers will carry on the Businesses in the
same manner as heretofore and will not make or institute any
material changes in the methods of purchase, sale, management,
accounting or operation. Subject to applicable Law, the Sellers
will use reasonable efforts to keep the Buyer informed as to the
operations and activities of the Sellers and consult with
representatives of the Buyer on important matters relating to or
affecting the Sellers’ Businesses, assets or
Liabilities.
28
(b)
Maintain Organization . The Sellers will take such action as
is reasonably necessary to maintain, preserve, renew and keep in
favor and effect the existence, rights, qualifications, licenses,
permits, consents, authorizations, and regulations of the Sellers.
The Sellers will use their best efforts to preserve the Businesses
intact, to keep available to the Buyer their current employees and
to preserve for the Buyer their current relationships with
suppliers, customers, officers, employees and agents of the Sellers
and others having business dealings with the Sellers.
(c)
No Breach . The Sellers will not do or omit any act that
(i) may cause a breach of any Contract or result in Liability
of the Sellers that in either case is material to the Sellers,
(ii) may breach any representation or warranty made by the
Sellers in this Agreement or (iii) would have required
disclosure in Schedule 5.7 had it occurred after the
date set forth in Section 5.7 and prior to the date
hereof.
(d)
No Material Contracts . Subject to applicable Law, the
Sellers will not enter into Contracts of any type, except for
Contracts that satisfy each of the following criteria: (i)
Contracts (including lease renewals) that are in the ordinary
course of business and consistent with past practice; and
(ii) Contracts that would not require disclosure in any
schedule attached to this Agreement had they been in existence on
the date hereof. Subject to applicable Law, the Sellers will not
amend in any material respect or terminate Contracts of any type,
or waive any material rights thereunder, other than in the ordinary
course of business.
(e)
No Corporate Changes . No Seller will amend its charter,
bylaws or similar organizational documents or make any changes in
its authorized or issued capital stock. The Sellers will not issue
any additional capital stock or enter into any Contract to issue
any additional capital stock.
(f)
No Capital Expenditures . The Sellers will not make any
capital expenditure, nor commit to make any capital expenditure, in
excess of One Hundred Fifty Thousand Dollars ($150,000) (or its
foreign currency equivalent as of the date hereof), except pursuant
to a Contract disclosed in Schedules 1.1(c) or 5.12
.
(g)
Maintenance of Insurance . The Sellers will maintain each
insurance policy in effect as of the date of this Agreement.
(h)
Maintenance of Property . The Sellers will use, operate,
maintain and repair all of their assets in a normal business manner
consistent with past practices. The Sellers will not sell, lease,
grant or otherwise transfer or dispose of any of their assets,
except for the sale of inventory items in the ordinary course of
business.
(i)
Interim Financials . The Sellers will provide the Buyer with
such interim monthly financial statements of the Selling Entity and
other management reports as the Sellers have prepared and used in
the ordinary course of managing the Businesses and measuring and
reporting its operating results, as and when they are available.
Such financial statements shall be prepared in accordance with the
representations for the Most Recent Financial Statements set forth
in Section 5.5 .
29
(j)
No Negotiations . No Seller will directly or indirectly
(through a representative or otherwise) solicit or furnish any
information to, commence or conduct presently ongoing negotiations
with or enter into any Contract with any person or entity other
than the Buyer relating to the sale or other disposition of all or
any material portion of the assets of the Sellers or of all or any
portion of the capital stock of the Sellers, in each case, whether
directly or indirectly, or by merger, sale of stock,
reorganization, recapitalization or otherwise (an “
Acquisition Proposal ”), and the Sellers will
immediately provide the Buyer written notice of any such
Acquisition Proposal and the terms thereof.
(k)
Trade Rights . The Sellers will not negotiate or enter into
any license of any Trade Right that is used in the operations of
any Business, whether as licensor or as licensee, but the Sellers
will make all filings and payments, and complete all other action,
necessary after the date hereof and prior to the Closing to obtain
and perfect the Sellers’ rights in and to all Trade Rights
that are used in the operations of the Businesses (but only to the
extent that Selling Entity has already commenced efforts prior to
the Effective Date to obtain and perfect such rights).
(l)
Tax Elections . The Sellers will not make any elections with
respect to Taxes or any changes in the current elections made with
respect to Taxes.
(m)
Location of Inventory . The Sellers will not process, use or
store any inventory at any location other than the Branches or the
Selling Entity’s corporate office.
(n)
No Transfer of Shares . No Selling Shareholder will transfer
or attempt to transfer any capital stock in the Selling Entity; the
Selling Entity will refuse to accept any certificates for any
capital stock to be transferred or otherwise allow any such
transfer to occur upon its books; and the Selling Entity will not
transfer or attempt to transfer any of the capital stock of the
Selling Entity.
8.3
Further Actions . Subject t
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