<PAGE>
EXHIBIT 2.1
CONFIDENTIAL TREATMENT REQUESTED
--------------------
STOCK PURCHASE AGREEMENT
--------------------
AMONG
FAIRLANE CREDIT LLC
FORD MOTOR CREDIT COMPANY
TRIAD ACQUISITION CORP.
AND
TRIAD HOLDINGS, INC.
DATED AS OF DECEMBER 23, 2004
CONFIDENTIAL PORTIONS OF THIS EXHIBIT MARKED WITH A TRIPLE
ASTERISK ("***") HAVE BEEN OMITTED FROM THIS EXHIBIT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IN
ACCORDANCE WITH RULE 406 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.01. Certain Defined
Terms.....................................................................................
1
1.02.
Definitions...............................................................................................
8
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.01. Purchase and Sale of the
Shares...........................................................................
10
2.02. Purchase
Price............................................................................................
10
2.03. Payments on the Closing
Date..............................................................................
11
2.04. Closing;
Payments.........................................................................................
11
2.05. Closing Date Debt
Amount..................................................................................
11
2.06. Preparation of Closing Date
Balance
Sheet.................................................................
12
2.07. Adjustment
Amount.........................................................................................
13
2.08. Change of Control
Premium.................................................................................
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PARENT
3.01. Organization, Authority and
Qualification of the Seller and the
Parent.................................... 14
3.02. Organization, Authority and
Qualification of the
Company..................................................
15
3.03.
Subsidiaries..............................................................................................
15
3.04.
Capitalization............................................................................................
15
3.05. No
Conflict...............................................................................................
16
3.06. Consents and
Approvals....................................................................................
16
3.07.
Taxes.....................................................................................................
16
3.08. Employee
Matters..........................................................................................
17
3.09. Financial
Statements......................................................................................
18
3.10. Undisclosed
Liabilities...................................................................................
18
3.11. Absence of Certain Changes or
Events......................................................................
18
3.12.
Litigation................................................................................................
19
3.13. Compliance with Laws;
Permits.............................................................................
19
3.14. Contracts; No
Defaults....................................................................................
20
3.15.
Brokers...................................................................................................
21
3.16. Securitization
Transactions...............................................................................
21
3.17. Real
Property.............................................................................................
22
3.18. Intellectual
Property.....................................................................................
23
3.19.
Insurance.................................................................................................
24
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3.20. Transactions with Certain
Affiliates......................................................................
24
3.21. Electronic
Files..........................................................................................
25
3.22. Disclaimer of Other
Representations and
Warranties........................................................
25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND HOLDINGS
4.01. Organization and Authority of the
Purchaser and
Holdings..................................................
25
4.02. No
Conflict...............................................................................................
26
4.03. Consents and
Approvals....................................................................................
26
4.04.
Litigation................................................................................................
26
4.05.
Brokers...................................................................................................
26
4.06. Acquisition of Shares for
Investment......................................................................
26
4.07. Investigation by Purchaser;
Seller's and Parent's
Liability...............................................
27
4.08.
Financing.................................................................................................
28
ARTICLE V
PRE-CLOSING COVENANTS
5.01. Operation of the
Business.................................................................................
28
5.02. Access to Information;
Confidentiality....................................................................
31
5.03. Notices and
Consents......................................................................................
32
5.04. Termination;
Assignment...................................................................................
32
5.05. Notice of
Developments....................................................................................
32
5.06.
Financing.................................................................................................
32
5.07. Certain Bank
Accounts.....................................................................................
34
5.08.
Exclusivity...............................................................................................
34
5.09. Hedge
Agreement...........................................................................................
34
ARTICLE VI
POST CLOSING COVENANTS
6.01. Further
Action............................................................................................
34
6.02. Intellectual
Property.....................................................................................
34
6.03. Access to
Records.........................................................................................
34
6.04. Non-Solicitation of the
Purchaser's
Employees.............................................................
35
6.05. Confidentiality/ Seller and
Parent........................................................................
35
6.06. Confidentiality/
Purchaser................................................................................
35
6.07. Participation
Agreement...................................................................................
36
ARTICLE VII
TAX MATTERS
7.01. Allocation of Straddle of
Non-Periodic
Taxes..............................................................
36
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7.02. Payment of
Taxes..........................................................................................
36
7.03. Transfer
Taxes............................................................................................
37
7.04. Filing of Tax
Returns.....................................................................................
37
7.05. Tax Refunds, Overpayments or
Credits......................................................................
38
7.06. Post-Closing
Actions......................................................................................
38
7.07.
Cooperation...............................................................................................
38
7.08. Section 338(h)(10)
Elections..............................................................................
39
7.09. Tax
Indemnity.............................................................................................
40
7.10. Tax
Contests..............................................................................................
41
7.11. Sales and Use
Tax.........................................................................................
42
ARTICLE VIII
INDEMNIFICATION
8.01.
Survival..................................................................................................
43
8.02. Indemnification by the Seller and
the
Parent..............................................................
44
8.03. Indemnification by the Purchaser
and
Holdings.............................................................
45
8.04. Limits on
Indemnification.................................................................................
46
8.05. Tax Treatment/ Insurance
Claims...........................................................................
48
8.06. Third Party
Claims........................................................................................
48
8.07. Exclusive
Remedy..........................................................................................
49
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE PARENT
9.01. Representations, Warranties and
Covenants.................................................................
50
9.02. No Proceeding or
Litigation...............................................................................
50
9.03. Purchaser's Note; HFI Loan and
Security
Agreement.........................................................
50
9.04. Participation
Agreement...................................................................................
50
9.05.
Deliverables..............................................................................................
51
9.06. Consents and
Approvals....................................................................................
51
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE PURCHASER AND HOLDINGS
10.01. Representations, Warranties and
Covenants................................................................
51
10.02. No Proceeding or
Litigation..............................................................................
51
10.03.
Financing................................................................................................
51
10.04. HFI Loan and Security
Agreement..........................................................................
51
10.05. Participation
Agreement..................................................................................
51
10.06. Consents and
Approvals...................................................................................
52
10.07.
Deliverables.............................................................................................
52
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ARTICLE XI
CLOSING DELIVERIES
11.01. Closing Deliveries of the
Seller.........................................................................
52
11.02. Closing Deliveries of the
Purchaser......................................................................
52
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.01.
Termination..............................................................................................
53
12.02. Effect of
Termination....................................................................................
54
ARTICLE XIII
GENERAL PROVISIONS
13.01.
Expenses..................................................................................................
54
13.02.
Headings..................................................................................................
54
13.03.
Construction..............................................................................................
54
13.04.
Notices...................................................................................................
55
13.05. Public
Announcements......................................................................................
56
13.06.
Severability..............................................................................................
57
13.07. Disclosure
Schedule.......................................................................................
57
13.08. Entire
Agreement..........................................................................................
57
13.09.
Assignment................................................................................................
57
13.10.
Amendment.................................................................................................
57
13.11.
Waiver....................................................................................................
57
13.12. No Third Party
Beneficiaries..............................................................................
57
13.13.
Arbitration...............................................................................................
58
13.14. Governing
Law.............................................................................................
58
13.15.
Counterparts..............................................................................................
59
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DISCLOSURE SCHEDULE
The Disclosure Schedule shall include the following Sections:
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3.03 Subsidiaries
3.06 Consents and Approvals
3.07 Taxes
3.08 Employee Matters
3.10 Undisclosed Liabilities
3.11 Absence of Certain Changes
or Events
3.12 Litigation
3.13 Compliance with Laws;
Permits
3.14 Contracts; No Defaults
3.16 Securitization
Transactions
3.17 Real Property
3.18 Intellectual Property
3.19 Insurance
3.20 Transactions with Certain
Affiliates
3.21 Electronic Files
4.03 Consents and Approvals
4.04 Litigation
4.07 Investigation by Purchaser;
Seller's and Parent's Liability
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EXHIBITS
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Exhibit A
Company's Accounting Principles and Agreed Upon Procedures
Exhibit B
Purchaser's Note
Exhibit C
HFI Loan and Security Agreement
Exhibit D
Intentionally Omitted
Exhibit E
June 30th Balance Sheet
Exhibit F Instrument of
Accession to Stock Purchase Agreement
Exhibit G
Participation Agreement
Exhibit H
Summary of Hedge Agreement
Exhibit I
Section 338(h)(10) Elections
Exhibit J
Consents and Approvals
Exhibit K
Guaranty
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v
<PAGE>
STOCK
PURCHASE AGREEMENT (this "Agreement"), dated as of December 23,
2004, by and among FAIRLANE CREDIT LLC, a
Delaware limited liability company
(the "Seller"), FORD MOTOR CREDIT COMPANY,
a Delaware corporation ("Parent"),
TRIAD ACQUISITION CORP., a Delaware
corporation (the "Purchaser") and TRIAD
HOLDINGS, INC., a Delaware corporation
("Holdings").
WHEREAS,
the Seller owns all the issued and outstanding shares (the
"Shares") of common stock, no par value
(the "Common Stock"), of TRIAD FINANCIAL
CORPORATION, a California corporation (the
"Company");
WHEREAS,
the Seller is a wholly-owned subsidiary of Parent;
WHEREAS,
the Purchaser is a wholly-owned subsidiary of Holdings;
WHEREAS,
the Company and its Subsidiaries are engaged in the business of
purchasing retail installment sales
contracts from automobile dealers and other
third-party lenders, originating motor
vehicle loans directly to consumers,
purchasing motor vehicle loans from third
party lenders and servicing such
installment sales contracts and loans (the
"Business"); and
WHEREAS,
the Seller wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Seller, the
Shares, upon the terms and subject to
the conditions set forth herein;
NOW,
THEREFORE, in consideration of the promises and the mutual
agreements
and covenants hereinafter set forth, and
intending to be legally bound, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01.
Certain Defined Terms. For purposes of this Agreement:
"Action"
means any administrative, regulatory or judicial claim, action,
suit, arbitration, petition, appeal,
demand, lien, notice of noncompliance or
violation, investigation, proceeding,
consent orders or consent agreements,
inquiry, proceeding or investigation by or
before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person
that directly, or indirectly through one or
more intermediaries, controls, is
controlled by, or is under common control
with, such specified Person. For the
purpose hereof, the terms "control" or
"controlled by" shall mean the possession
of the power to direct, or cause the
direction of, management and policies of
the Company by contract or voting of
securities or ownership interest.
"Agreed
Upon Procedures" means the accounting procedures mutually
agreed
upon by the parties expressly set forth on
Exhibit A and described in reasonable
detail therein.
<PAGE>
"Applicable Rate" means *** with respect to any Prepayment of a
component
of the Final Cash Consideration and the
Equity Adjustment and *** with respect
to any Prepayment relating to the
Intercompany Debt, the Initial Debt Adjustment
and the Second Debt Adjustment.
"Beneficial Owner" means beneficial owner as defined in Rule 13d-3
under
the Exchange Act.
"Benefit
Plan" means each "employee benefit plan," as defined in Section
3(3) of ERISA and each profit-sharing,
bonus, stock option, stock purchase,
stock ownership, pension, retirement,
severance, deferred compensation, excess
benefit, supplemental unemployment,
post-retirement medical or life insurance,
welfare or incentive plan, or sick leave,
long-term disability, medical,
hospitalization, life insurance, other
insurance plan, or other employee benefit
plan, program, arrangement or agreement,
whether written or unwritten, qualified
or non-qualified, funded or unfunded,
maintained or contributed to by Seller or
the Company or any of their affiliates for
the benefit of officers, directors,
employees or independent contractors of the
Company or its Subsidiaries,
including but not limited to any individual
contract, offer letter or agreement
with or addressed to any officer, director,
employee or independent contractor
of the Company or its Subsidiaries pursuant
to which any Person has any actual
or contingent liability or obligation to
provide compensation and/or benefits in
consideration for past, present or future
services.
"Business
Day" means any day that is not a Saturday, a Sunday or other
day
on which the banks in New York, NY are
authorized by Law or executive order to
be closed.
"Change of
Control" shall mean, with respect to the Company after the
Closing Date, (a) the sale or other
disposition, or the approval by either the
stockholders or the board of directors of
the Company of a sale or other
disposition, of all or substantially all of
the assets of the Company in the
aggregate, whether pursuant to a single
transaction or pursuant to a series of
transactions, other than through the sale
of securitized assets in the ordinary
course of the Company's business; (b) any
Person other than the Purchaser or the
Controlling Shareholders or any Control
Affiliate, in the aggregate, becomes or
agrees to become the Beneficial Owner,
directly or indirectly, of securities of
the Company or the surviving entity
representing twenty-five percent (25%) or
more of the then issued and outstanding
equity and equity-equivalent securities
of the Company or the surviving entity,
other than any transaction that (i) is
neither required to be disclosed by any Law
nor permitted by its terms to be
publicly announced or otherwise disclosed
(other than pursuant to customary
disclosure exceptions relating to
non-public disclosures required by law) by any
of the parties thereto (and does not
otherwise constitute a Change of Control
under clause (c) of this definition) nor
(ii) results in any Person becoming the
Beneficial Owner of fifty percent (50%) or
more of the then issued and
outstanding equity and equity-equivalent
securities of the ultimate parent
entity of the Company or the surviving
entity; or (c) a merger or consolidation
of the Company with or into any other
entity, or a merger of any other entity
into the Company, or the approval by either
the stockholders or the board of
directors of the Company of any such merger
or consolidation, as a result of
which the Purchaser, the Controlling
Shareholders or any Control Affiliate, in
the aggregate, ceases to be the Beneficial
Owner, directly or indirectly, of
securities of the Company or the surviving
entity representing more than fifty
percent (50%) of the then issued and
outstanding equity and equity-equivalent
securities of the Company or the surviving
entity.
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"Change of
Control Date" means such time as the transaction underlying the
Change of Control has been consummated.
"Change of
Control Purchase Price" shall mean (a) the total pre-tax fair
market value (as of the Change of Control
Date) of all consideration (including
cash, securities, property, and any other
form of consideration) paid or
payable, or otherwise to be distributed,
directly or indirectly, to the
Purchaser, or the Controlling Shareholders
or an Affiliate thereof in connection
with such Change of Control, in exchange
for their shares of the Company (or any
successor thereto) or, the implied
valuation of such shares in connection with
any primary share offering which
constitutes a Change of Control, plus (b) the
cumulative amount of any distribution to
any of such Persons in excess of net
income from Closing to such Change of
Control Date plus (c) the amount by which
the Final Cash Consideration exceeded the
Purchaser's cash equity investment in
the Company or Holdings as of the Closing
Date.
"Code"
means the Internal Revenue Code of 1986, as amended.
"Company's
Accounting Principles" means the accounting principles of the
Company expressly set forth in Exhibit A
and described in reasonable detail
therein.
"Company
Loan" means each currently outstanding motor vehicle loan or
motor vehicle installment sales contract
owned or managed by the Company or any
Subsidiary (including any outstanding loans
sold or pledged in a Securitization
Transaction).
"Control
Affiliate" means (i) any Person, of which the Purchaser or any
of
the Controlling Shareholders is the
Beneficial Owner, directly or indirectly, of
fifty percent (50%) or more of the then
issued and outstanding equity and
equity-equivalent securities; and (ii) any
Person, which is the Beneficial
Owner, directly or indirectly, of fifty
percent (50%) or more of the then issued
and outstanding equity and
equity-equivalent securities of a Controlling
Shareholder; and (iii) any Person the
issued and outstanding equity and
equity-equivalent securities of which are
Beneficially Owned, directly or
indirectly, fifty percent (50%) or more by
any Person owning securities of a
Controlling Shareholder and which meets the
qualifications in the foregoing
clause (ii); and (iv) any investment fund
the general partner or manager of
which is a Controlling Shareholder or is a
Control Affiliate under any of
clauses (i) - (iii) above.
"Controlled Group Liabilities" means any liabilities attributable
to the
compensation, benefit, welfare and other
comparable plans or arrangements of the
Seller or its Affiliates (or any of their
respective predecessors or successors)
or any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA to
which the Seller or any of its Affiliates
(or any of their respective
predecessors or successors, but not
including the Company and its Subsidiaries)
are or were obligated to contribute, (i)
under Title IV of ERISA, (ii) under
Section 302 of ERISA, (iii) under Sections
412 and 4971 of the Code, (iv) as a
result of a failure to comply with the
continuation coverage requirements of
Section 601 et seq. of ERISA and Section
4980B of the Code, and (v) under
corresponding or similar provisions of
foreign laws or regulations.
"Controlling Shareholders" means the Goldman Sachs Investor
Group,
Hunter's Glen/Ford, Ltd. and GTCR Golder
Rauner II, LLC.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto, dated
as of the date hereof, delivered by the
Seller and the Parent or the Purchaser
and Holdings, as the case
<PAGE>
may be, to the other party pursuant to this
Agreement prior to the execution
hereof, as such Disclosure Schedule may be
modified pursuant to Section 5.05(b)
hereof.
"Encumbrance" means any security interest, pledge,
hypothecation,
mortgage, deed of trust, lien (including
environmental and Tax liens),
assignment, charge or deposit arrangement,
defect in title, violation, lease,
license, encumbrance, servient easement,
adverse claim, reversion, reverter,
preference, priority or other security
interest or preferential arrangement of
any kind or nature whatsoever (including
those created by, arising under or
evidenced by any conditional sale or other
title retention agreement),
restrictive covenant, the interest of a
lessor under a capital lease (meaning
any leasing or similar arrangement which is
classified as a capital lease in the
Financial Statements in accordance with
GAAP), any financing lease bearing
substantially the same economic effect as
any of the foregoing, any contingent
or other agreement to provide any of the
foregoing, and any other condition or
restriction of any kind, including any
restriction on the use, voting, transfer,
receipt of income or any other exercise of
any attributes of ownership.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.
"GAAP"
means generally accepted accounting principles for financial
reporting in the United States.
"Goldman
Sachs Investor Group" means GS Capital Partners 2000, L.P., GS
Capital Partners 2000 Employee Fund, L.P.,
GS Capital Partners 2000 Offshore,
L.P., Goldman Sachs Direct Investment Fund
2000, L.P., GS Capital Partners 2000
GmbH & Co. BETEILIGUNGS KG and MTGLQ
Investors, L.P.
"Governmental Authority" means any federal, national,
supranational,
state, provincial, local, or similar
government, governmental, regulatory or
administrative authority, agency or
commission or any court, tribunal, or
judicial or arbitral body (except an
arbitral body established pursuant to
Section 13.13) of competent
jurisdiction.
"Governmental Authorizations" shall mean any material consent,
license,
registration, filing, approval, franchise,
concession or permit issued, granted,
given or otherwise made available by or
under the authority of any Governmental
Authority or pursuant to any legal
requirement, in each case for the ownership
or operation of the Business.
"HFI Receivables"
means motor vehicle retail installment sales contracts
and loans identified on Section 3.21 of the
Disclosure Schedule attached hereto
as an electronic compact disk file titled
June302004HFS.xls.
"HFI
Receivables Balance" means the outstanding principal balance of
the
HFI Receivables (which shall not include
any reserves) as disclosed on the
Preliminary Balance Sheet.
"Income
Tax" means any federal, state, local, or foreign income or
franchise tax measured by or imposed on net
income, including any interest,
penalty, or addition thereto, whether
disputed or not.
<PAGE>
"Income
Tax Return" means any return declaration, report, claim for
refund, or information return or statement
relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Parties" means the Seller Indemnified Parties and
the
Purchaser Indemnified Parties, or either
the Seller Indemnified Parties or the
Purchaser Indemnified Parties pursuant to
Section 8.06.
"Indemnifying Parties" means the Seller Indemnifying Parties and
the
Purchaser Indemnifying Parties, or either
the Seller Indemnifying Parties or the
Purchaser Indemnifying Parties pursuant to
Section 8.06.
"Independent Accountant" means an internationally recognized
certified
public accounting firm mutually agreed upon
by the parties, excluding their
respective regular outside accounting
firms.
"Insurer"
shall mean Ambac Assurance Corporation and/or MBIA Insurance
Corporation.
"Intercompany Debt" means an amount equal to the outstanding
indebtedness
from the Company and payable to the Seller
or any of the Seller's Affiliates
(including any amounts due from the Company
to the Seller or any of its
Affiliates for intercompany charges, other
than amounts covered by the
definition of Net Deferred Tax Liability),
any accrued but unpaid interest
thereon, and any other amounts payable with
respect to such indebtedness.
"IRS"
means the Internal Revenue Service.
"Knowledge" of the Seller and/or the Company means the actual
knowledge,
after due inquiry, of the following
individuals: Malcolm Sutherland and John
Noone.
"Law"
means any federal, national, supranational, state, provincial,
local
or similar statute, law, ordinance,
regulation, rule, code, order, requirement
or rule of law (including common law) or
any order, writ, judgment, injunction,
decree, stipulation, determination or award
entered by or with any Governmental
Authority, including, without limitation,
(i) the rules, regulations and
requirements of any agency with
jurisdiction over the Business, (ii) any
applicable laws or ordinances, and any
regulations or orders issued thereunder,
governing or pertaining to unlawful
discrimination in lending (including without
limitation, equal credit opportunity,
retail installment sales, and fair credit
reporting), truth-in-lending, consumer
credit (including without limitation the
Federal Consumer Credit Protection Act, the
Federal Truth-in-Lending Act and
Regulation Z thereunder, and the Federal
Equal Credit Opportunity Act and
Regulation B thereunder) and the privacy
regulations of the Federal Trade
Commission; (iii) all applicable usury and
interest limitations laws; (iv) the
Gramm-Leach-Bliley Act and (v) all
applicable laws pertaining to the
documentation, underwriting, origination,
purchase, assumption, modification,
sale, pooling and servicing of any Company
Loans by the Company and its
Subsidiaries.
"Liabilities" means any and all debts, liabilities and
obligations,
whether accrued or fixed, absolute or
contingent, known or unknown, matured or
unmatured or determined or determinable,
including those arising under any Law
or Action and those arising under any
<PAGE>
contract, agreement, arrangement,
commitment or undertaking provided, however,
Liabilities shall not include any
consequential, special, indirect or punitive
damages except as provided in Section 8.04
(f)(iv).
"Material
Adverse Effect" means any change in, or effect on, the Company
that is, or would be reasonably expected to
be, materially adverse to the
business, properties, assets, liabilities,
results of operations or financial
condition of the Company and its
Subsidiaries taken as a whole; provided that
none of the following will constitute or be
taken into account in determining
whether there has been a Material Adverse
Effect: (a) any adverse change, event,
development, or effect, to the extent
arising from (i) general business or
economic conditions affecting the industry
in which Company operates, including
such conditions affecting the Business,
(ii) general national or international
political or social conditions, including
the engagement by the United States in
hostilities, whether or not pursuant to the
declaration of a national emergency
or war, or the occurrence of any military
or terrorist attack upon the United
States, or any of its territories,
possessions, or diplomatic or consular
offices or upon any military installation,
equipment or personnel of the United
States, (iii) financial, banking, or
securities markets (including any
disruption thereof and any decline in the
price of any security or any market
index or general changes in interest rates
and any implications thereof), (iv)
changes in GAAP taking effect after the
date hereof, (v) changes in Law taking
effect after the date hereof (vi) changes
in the interpretation or enforcement
of Law by any Governmental Authority
generally applicable to similarly situated
companies or (vii) the taking of any action
expressly required to be taken by
this Agreement and the other agreements
contemplated hereby.
"Net
Deferred Tax Liability" means the deferred Income Tax liability
less
deferred Income Tax assets less amounts due
from Parent or Affiliates of the
Parent for Income Taxes plus amounts due to
Parent or Affiliates of the Parent
for Income Taxes plus any Income Tax
payable less any Income Tax receivable, in
each case, as reflected in the Preliminary
Balance Sheet or the Closing Date
Balance Sheet, as the case may be. For the
avoidance of doubt the Net Deferred
Tax Liability is prior to giving effect to
any of the Transactions contemplated
by this Agreement except as set forth in
the Agreed Upon Procedures.
"Net
Worth" means the amount of the Company's assets minus Company's
liabilities as reflected in the Preliminary
Balance Sheet or the Closing Date
Balance Sheet, as the case may be.
"Non-Income Tax" means any Tax other than an Income Tax or sales
and use
Tax.
"Non-Income Tax Return" means any return declaration, report, claim
for
refund, or information return or statement
relating to Non-Income Taxes,
including any schedule or attachment
thereto.
"Operational Meetings" means meetings, either in person, telephonic
or
otherwise, attended by senior management of
the Company and representatives of
the Seller to be held in accordance with a
schedule to be agreed upon by the
parties, at which time any actions
contemplated by Section 5.01 hereof will be
discussed and if any affirmative action is
to be taken thereon, authorized.
<PAGE>
"Person"
means any individual, partnership, firm, corporation, limited
liability company, association, trust,
unincorporated organization or other
entity, as well as any syndicate or group
that would be deemed to be a person
under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
"Post-Closing Period" means any taxable year or period that begins
after
the Closing Date and, with respect to any
taxable year or period beginning on or
before and ending after the Closing Date,
the portion of such taxable year or
period beginning after the Closing
Date.
"Pre-Closing Period" means any taxable year or period that ends on
or
before the Closing Date and, with respect
to any taxable year or period
beginning on or before and ending after the
Closing Date, the portion of such
taxable year or period ending on and
including the Closing Date.
"Preliminary Balance Sheet" means the consolidated balance sheet of
the
Company prepared by the Seller as of the
month-end prior to the Closing Date in
accordance with the Agreed Upon Procedures,
to be delivered by the Seller to the
Purchaser at least ten (10) days prior to
the Closing Date.
"Property
Taxes" means real, personal and intangible ad valorem property
taxes.
"Securities Act" means the Securities Act of 1933, as amended.
"Straddle
Period" means any taxable year of the Company that begins on or
before and ends after the Closing Date.
"Subsidiaries" means any and all corporations, partnerships,
limited
liability companies, joint ventures,
associations and other entities controlled
by the Company directly or indirectly
through one or more intermediaries. For
the purpose hereof, the term "controlled
by" shall mean the possession of the
power to direct, or cause the direction of,
management and policies of the
Subsidiary by contract or voting of
securities or ownership interest.
"Tax" or
"Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind
(together with any and all interest,
penalties, additions to tax and additional
amounts imposed with respect thereto)
imposed by any Governmental Authority,
including Income Tax and other taxes and
charges on or regarding franchises,
windfall or other profits, escheat, gross
receipts, property, sales, use, capital
stock, payroll, employment, social
security, workers' compensation,
unemployment compensation, or net worth; taxes
or other charges in the nature of excise,
withholding, ad valorem, stamp,
transfer, value added, or gains taxes;
license, registration and documentation
fees; and customs' duties, tariffs, and
similar charges.
"Tax
Claim" means any claim with respect to Taxes made by any taxing
authority that, if pursued successfully,
would reasonably be expected to serve
as the basis for a claim for
indemnification under Article VII.
"Tax
Returns" means any return, declaration, report, election, claim
for
refund or information return or other
statement or form relating to, filed or
required to be filed with any Governmental
Authority, including any schedule or
attachment thereto, and including any
amendment thereof.
<PAGE>
"Transactions" means collectively, the transactions effectuated by
this
Agreement, the Participation Agreement, the
HFI Loan and Security Agreement and
the Hedge Agreement.
1.02.
Definitions. The following terms have the meanings set forth in
the
Sections set forth below:
<TABLE>
<CAPTION>
Definition
Location
----------
------------
<S>
<C>
"Actual
Value".................................... 2.06(e)(iii)
"Adjustment
Amount"............................... 2.07
"Agreement"....................................... Preamble
"Arbitration
Notice".............................. 13.13
"Audited Financial
Statements..................... 3.09(a)
"Basket
Amount"................................... 8.04(b)
"Business"........................................ Recitals
"Challenge"....................................... 7.08(d)
"Change of Control
Premium"....................... 2.08
"Closing"......................................... 2.04(a)
"Closing
Date".................................... 2.04(a)
"Closing Date Balance
Sheet"...................... 2.06(b)
"Closing Date Debt
Amount"........................ 2.05
"Closing Date Goodwill
Amount".................... 2.08
"Commitment
Letters".............................. 4.08
"Common
Stock".................................... Recitals
"Company"......................................... Recitals
"Company Insurance
Policies"...................... 3.19(a)
"Company
Management".............................. 8.03(c)
"Consents and
Approvals".......................... 3.06
"Copyrights"...................................... 3.18(a)
"Core
Covenants".................................. 8.01(c)(ii)
"Discount"........................................ 2.02(a)
"Draft Closing Date Balance
Sheet"................ 2.06(a)
"Draft Pages"
5.06(c))
"Equity
Adjustment"............................... 2.07(a)
"ERISA"........................................... 3.08(a)
"Expiring
Representations"........................ 8.02(a)
"Final
Allocation"................................ 7.08(a)
"Final Cash
Consideration"........................ 2.02(a)
"Final Debt
Amount"............................... 2.02(b)
"Financial
Statements"............................ 3.09(a)
"Hedge
Agreement"................................. 5.09
"HFI Loan and Security
Agreement"................. 2.02(c)
"High
Value"...................................... 2.06(e)(ii)
"Highly Confident
Letter"......................... 4.08
"Holdings"........................................ Preamble
"Income Tax
Proceeding"........................... 7.10(b)
"Initial Cash
Consideration"...................... 2.03(a)
"Initial Debt
Adjustment"......................... 2.05
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Definition
Location
----------
----------
<S>
<C>
"Initial Debt
Amount"............................. 2.03(b)
"Interim Financial
Statements".................... 3.09(a)
"Investment Company
Act".......................... 3.16(b)
"June 30th Balance
Sheet"......................... 3.09(a)
"Lender
Group".................................... 4.08
"Losses".......................................... 8.02
"Low
Value"....................................... 2.06(e)(i)
"Marketing
Materials"............................. 8.03(c)
"Marks"........................................... 3.18(a)
"Material
Contracts".............................. 3.14(b)
"Maximum Indemnification
Amount".................. 8.04(c)
"Minimum Indemnification Amount"
8.04(a)
"Multiple Employer Plan"
3.08(a)
"Neutral
Arbitrator".............................. 13.13
"Offering
Circular"............................... 8.03(c)
"Oral
Statements"................................. 8.03(c)
"Parent".......................................... Preamble
"Parent
Guarantees"............................... 5.04
"Participation
Agreement"......................... 6.07
"Patents"......................................... 3.18(a)
"Pension
Plan".................................... 3.08(a)
"Post-Closing Sales and Use Tax
Issues"........... 7.11(c)
"Pre-Closing Sales and Use Tax
Issues"............ 7.11(a)
"Prepayments"..................................... 2.06(c)
"Proposed
Allocation"............................. 7.08(a)
"Proposed
Determination".......................... 7.08(a)
"Purchase
Price".................................. 2.02(e)
"Purchaser"....................................... Preamble
"Purchaser Indemnified
Parties.................... 8.02
"Purchaser Indemnifying
Parties................... 8.03
"Purchaser
Information"".......................... 6.05
"Purchaser
Observers"............................. 5.02(b)
"Purchaser
Parties"............................... 5.02(c)
"Purchaser's Rule 144A
Offering".................. 5.06(b)
"Purchaser's
Note"................................ 2.02(c)
"Purchaser Straddle
Returns"...................... 7.04(a)
"Purchaser Straddle
Statement".................... 7.04(a)
"Real
Property"................................... 3.17
"Receiving
Party"................................. 13.13
"Representatives"................................. 5.02(a)
"Return Threshold
Amount"......................... 2.08
"Road
Shows"...................................... 5.06(b)
"Road Show
Date".................................. 5.05(b)
"Sales and Use Tax
Issues"........................ 7.11
"Second Debt
Adjustment".......................... 2.07(a)
"Securitization
Entity"........................... 3.16(b)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Definition
Location
----------
--------
<S>
<C>
"Securitization
Instruments"...................... 3.16(a)
"Securitization
Issuer"........................... 3.16(b)
"Securitization
Servicer"......................... 3.16(a)
"Securitization
Transaction"...................... 3.16(a)
"Section 338
Elections"........................... 7.08(b)
"Seller".......................................... Preamble
"Seller Indemnified
Parties"...................... 8.03
"Seller Indemnifying
Parties"..................... 8.02
"Seller
Information".............................. 6.06
"Seller
Parties".................................. 4.07(b)
"Seller Straddle
Returns"......................... 7.04(b)
"Seller Straddle
Statement"....................... 7.04(b)
"Shares".......................................... Recitals
"Straddle Period Sales and Use Tax
Issues"........ 7.11(b)
"Technology
Contracts"............................ 3.18(a)
"Third Party Claim"
.............................. 8.06(a)
"Trade
Secrets"................................... 3.18(a)
"Transfer
Taxes".................................. 7.03
"Underwriter"..................................... 4.08
"Updated
Letter".................................. 5.06(a)
</TABLE>
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.01.
Purchase and Sale of the Shares. Upon the terms and subject to
the
conditions of this Agreement, at the
Closing, the Seller shall sell, assign,
transfer, convey and deliver to the
Purchaser, free and clear of all
Encumbrances, the Shares of the Company and
the Purchaser shall purchase the
Shares of the Company.
2.02.
Purchase Price. In consideration for the Shares, and in
accordance
with the procedures set forth in Sections
2.03 through 2.08 hereof, the
Purchaser agrees to the following:
(a) to pay
to the Seller an amount equal to: *** (for purposes of the
calculations in Sections 2.02(a), 2.03(a)
and 2.08, Net Deferred Tax Liability
shall be a positive number if a net
liability on the Preliminary or Closing Date
Balance Sheet, as applicable, and a
negative number if a net asset on the
Preliminary or Closing Date Balance Sheet,
as applicable);
(b) to
cause the Company to repay to the Seller or the Seller's
Affiliates
the Intercompany Debt as reflected on the
Closing Date Balance Sheet, less the
amount of the Purchaser's Note (the "Final
Debt Amount");
(c) to
cause the Company to execute on the Closing Date (i) the
promissory
note payable to the Parent or the Parent's
assignee in the form attached hereto
as Exhibit B
<PAGE>
("Purchaser's Note") in the stated
principal amount equal to ***, and (ii) the
loan agreement attached hereto as Exhibit C
(the "HFI Loan and Security
Agreement"); and
(d) to pay
or to cause to be paid to the Seller or the Seller's Affiliates
the Change of Control Premium (as defined
in Section 2.08), if any.
(e)
Payments pursuant to Sections 2.02(a), (b), (c) and (d) constitute
the
"Purchase Price." At the Closing Date, the
Seller and the Purchaser agree to
treat the fair market value of the
Purchaser's Note as equal to the face amount
of such note for all Income Tax
purposes.
2.03.
Payments on the Closing Date.
(a) The
Purchaser shall pay the Seller at Closing an amount equal to:
***;
and
(b) The
Purchaser shall cause the Company at Closing to repay the
Seller
or the Seller's Affiliates the amount of
the Intercompany Debt as of the date
that is five (5) Business Days before the
Closing Date in accordance with a
calculation to be provided by the Seller to
the Purchaser at least three (3)
Business Days prior to the Closing Date
less the amount of the Purchaser's Note
(the "Initial Debt Amount").
2.04.
Closing; Payments.
(a)
Subject to the terms and conditions of this Agreement, the sale
and
purchase of the Shares contemplated by this
Agreement shall take place at a
closing (the "Closing") to be held at the
offices of Kirkland & Ellis LLP, 200
East Randolph Drive, Chicago, Illinois
60601, at 8:00 A.M. Central Standard Time
on the later of February 28, 2005 or the
last Business Day of the month during
which all conditions to the obligations of
the parties set forth in Articles IX
and X have been satisfied or waived or at
such other place or at such other time
or on such other date as the Seller and the
Purchaser may mutually agree upon in
writing (the "Closing Date").
(b) All
payments required to be made under this Agreement by any party
shall be made by wire transfer in
immediately available federal funds. If
payments are to be made to the Seller, the
Purchaser shall include the Seller's
ABA Routing Number in the wiring
instructions. If payments are to be made to the
Purchaser, the Seller shall include the
Purchaser's ABA Routing Number in the
wiring instructions. Each of the parties
shall provide to the other party its
ABA Routing Number no less than two (2)
Business Days prior to the Closing.
2.05.
Closing Date Debt Amount. Within five (5) Business Days of the
Closing Date the Seller and the Purchaser
shall determine the amount of the
Intercompany Debt as of the Closing Date,
less the amount of the Purchaser's
Note (the "Closing Date Debt Amount"). To
the extent the Closing Date Debt
Amount exceeds the Initial Debt Amount, the
Purchaser shall pay or cause the
Company to pay the excess to the Seller
within (2) Business Days of the
determination of such amount. To the extent
the Closing Date Debt Amount is less
than the Initial Debt Amount, the Seller
shall repay the deficit to the
Purchaser within two (2) Business Days of
the determination of such amount. In
the case of either adjustment (the "Initial
Debt Adjustment"), there shall be
added to such amount interest thereon at
the Applicable Rate from the Closing
Date until the date of such payment.
<PAGE>
2.06.
Preparation of Closing Date Balance Sheet.
(a) Within
forty-five (45) days after the Closing Date, the Purchaser will
deliver to the Seller a draft consolidated
balance sheet (the "Draft Closing
Date Balance Sheet") for the Company as of
the close of business on the Closing
Date (determined on a pro forma basis as
though the parties had not consummated
the Transactions) and prepared in
accordance with the Agreed Upon Procedures.
(b) If,
within forty-five (45) days following its receipt of the Draft
Closing Date Balance Sheet, the Seller does
not dispute the Draft Closing Date
Balance Sheet, such balance sheet shall be
deemed to be the consolidated balance
sheet of the Company on the Closing Date
(the "Closing Date Balance Sheet").
(c) If the
Seller has any objections to the Draft Closing Date Balance
Sheet, it will deliver a detailed statement
in writing describing its objections
to the Purchaser within forty-five (45)
days after receiving the Draft Closing
Date Balance Sheet. Purchaser and Seller
will use commercially reasonable
efforts to resolve any such objections
themselves. If Purchaser and Seller
achieve a final resolution of the Seller's
objections to the Draft Closing Date
Balance Sheet within thirty (30) days after
the Purchaser's receipt of the
Seller's written statement of such
objections, such resolution shall be set
forth in writing and such Draft Closing
Date Balance Sheet, together with any
revisions thereto agreed upon by and
between the Purchaser and the Seller
pursuant to this Section 2.06(c), shall be
deemed to be the Closing Date Balance
Sheet. The Purchaser and the Seller shall
be entitled to prepay any amounts not
in dispute or as to which the parties
achieve final resolution (such amounts
actually paid "Prepayments") plus interest
at the Applicable Rate between the
Closing Date and the date of such
Prepayment. Any party making a Prepayment
shall provide two (2) Business Days
advanced written notice thereof to the other
party.
(d) If the
Purchaser and the Seller do not achieve a final resolution of
the Seller's objections to the Draft
Closing Date Balance Sheet within thirty
(30) days after the Purchaser's receipt of
the Seller's written statement of
such objections, the parties will jointly
engage an Independent Accountant to
resolve any disputes remaining between the
parties. The Purchaser and the Seller
shall instruct the Independent Accountant
to deliver its written determination
to the Purchaser and the Seller no later
than the thirtieth (30th) day after
such dispute was referred to it. The
Independent Accountant shall act to
determine, based solely on the provisions
of this Section 2.06, related
definitions contained herein and the
presentations by the Seller and the
Purchaser, and not by independent review,
only those issues still in dispute and
only as to whether such amounts (i) were
arrived at in conformity with the
Agreed Upon Procedures, (ii) were arrived
at in conformity with the terms of
this Agreement or (iii) contain arithmetic
error. The determination of the
Independent Accountant (i) will be set
forth in writing, (ii) for any item in
dispute shall not be in excess of, nor less
than, the greatest or lowest value,
respectively, claimed by either party for
that particular item, (iii) will state
that the Draft Closing Date Balance Sheet
has been prepared in accordance with
the Agreed Upon Procedures and in
conformity with this Agreement and (iv) will
be conclusive and binding upon the parties.
The Purchaser will revise the Draft
Closing Date Balance Sheet to reflect the
resolution of any objections thereto
pursuant to this Section 2.06(d), whereupon
such Draft Closing Date Balance
Sheet, together with any revisions thereto
pursuant to this Section 2.06(d),
shall be deemed to be the Closing Date
Balance Sheet.
<PAGE>
(e) In the
event the parties submit any unresolved objections to the
Independent Accountant for resolution as
provided in Section 2.06(d) above, the
Independent Accountant shall resolve each
of such objections in favor of either
the Purchaser or the Seller, and the
Purchaser and Seller will share
responsibility for the fees and expenses of
the Independent Accountant as
follows:
(i) if the Independent Accountant resolves all the remaining
objections in favor of the Purchaser (the
"Low Value"), the Seller will be
responsible for all of the fees and
expenses of the Independent Accountant;
(ii) if the Independent Accountant resolves all the remaining
objections in favor of the Seller (the
"High Value"), the Purchaser will be
responsible for all of the fees and
expenses of the Independent Accountant; and
(iii) if the Independent Accountant resolves some of the
remaining
objections in favor of the Purchaser and
the rest of the remaining objections in
favor of the Seller (the "Actual Value"),
the Seller will be responsible for
that fraction of the fees and expenses of
the Independent Accountant equal to
(x) the difference between the High Value
and the Actual Value over (y) the
difference between the High Value and the
Low Value, and the Purchaser will be
responsible for the remainder of the fees
and expenses.
(f) The
Purchaser will make the work papers and back-up materials and
all
other data used in preparing the Draft
Closing Date Balance Sheet, and the
books, records and financial statements of
the Company and its Subsidiaries,
available to Seller and its accountants and
other representatives during normal
business hours upon reasonable notice at
any time during (i) the preparation by
Purchaser of the Draft Closing Date Balance
Sheet, (ii) the review by the Seller
of the Draft Closing Date Balance Sheet and
(iii) the resolution by the parties
of any objections thereto. Similarly, the
Seller will make the work papers and
back-up materials and all other data used
in connection with its objections to
the Draft Closing Date Balance Sheet
available to Purchaser and its accountants
and other representatives during normal
business hours upon reasonable notice at
any time during (i) the review by the
Purchaser of the written objection to the
Draft Closing Date Balance Sheet and (ii)
the resolution by the parties of such
objection.
2.07.
Adjustment Amount. The "Adjustment Amount" shall be calculated
and
paid as follows:
(a) The
Adjustment Amount will be equal to (i) the Final Cash
Consideration less the Initial Cash
Consideration adjusted up or down (as the
context requires) to reflect any Prepayment
of a component of the Final Cash
Consideration (the "Equity Adjustment")
plus (ii) the Final Debt Amount less the
Closing Date Debt Amount adjusted up or
down (as the context requires) to
reflect any Prepayment of a component of
the Final Debt Amount (the "Second Debt
Adjustment").
(b) If the
Adjustment Amount is a positive number, then the Purchaser will
pay to the Seller, within three (3)
Business Days after the date of the final
determination of the Closing Date Balance
Sheet, an amount equal to such excess
plus interest thereon at the Applicable
Rate for each of the Equity Adjustment
and Second Debt Adjustment, respectively,
from the Closing Date until the date
of such payment.
<PAGE>
(c) If the
Adjustment Amount is a negative number, then the Seller will
pay to the Purchaser, within three (3)
Business Days after the date of the final
determination of the Closing Date Balance
Sheet, an amount equal to such deficit
plus interest thereon at the Applicable
Rate related to each of the Equity
Adjustment and Second Debt Adjustment,
respectively, from the Closing Date until
the date of such payment.
2.08.
Change of Control Premium. If a Change of Control occurs during
the
twelve (12) month period after the Closing
Date, each of the Purchaser and
Holdings, as the case may be, will or will
cause the Company or the surviving
entity to pay the Change of Control Premium
to the Seller within forty-five (45)
days following the Change of Control Date.
The "Change of Control Premium" shall
be determined as follows: (i) if the Change
of Control Purchase Price is less
than or equal to an amount equal to the
Final Cash Consideration plus ***
annualized pre-tax return thereon through
the Change of Control Date (the
"Return Threshold Amount"), then the Change
of Control Premium shall equal ***;
(ii) if the Change of Control Purchase
Price is greater than the Return
Threshold Amount, but less than or equal to
the sum of (A) the Return Threshold
Amount and (B) the Closing Date Goodwill
Amount (as defined below), then the
Change of Control Premium shall equal the
Change of Control Purchase Price less
the Return Threshold Amount; and (iii) if
the Change of Control Purchase Price
is greater than the sum of the Return
Threshold Amount and the Closing Date
Goodwill Amount, the Change of Control
Premium shall equal the sum of the
Closing Date Goodwill Amount and *** of the
excess of the Change of Control
Purchase Price over the sum of (A) the
Return Threshold Amount and (B) the
Closing Date Goodwill Amount. The "Closing
Date Goodwill Amount" shall mean the
amount (if positive) equal to (i) the Net
Worth as reflected on the Closing Date
Balance Sheet, plus (ii) the Net Deferred
Tax Liability as reflected on the
Closing Date Balance Sheet, minus (iii) the
Final Cash Consideration, minus (iv)
***.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND PARENT
As an inducement to the Purchaser and Holdings to enter into
this
Agreement, the Seller, and solely where
expressly so stated, the Parent, hereby
represent and warrant to the Purchaser
(except as set forth in a correspondingly
enumerated section of the Disclosure
Schedule) as follows:
3.01.
Organization, Authority and Qualification of the Seller and the
Parent. The Seller is a limited liability
company duly organized, validly
existing and in good standing under the
laws of the jurisdiction of its
organization and has all necessary
corporate power and authority to enter into
this Agreement, to carry out its
obligations hereunder and to consummate the
Transactions. Parent is a corporation duly
organized, validly existing and in
good standing under the laws of the
jurisdiction of its organization and has all
necessary corporate power and authority to
enter into this Agreement, to carry
out its obligations hereunder and to
consummate the Transactions. The Seller is
a wholly-owned subsidiary of the Parent.
The execution and delivery of this
Agreement by the Seller and the Parent, the
performance by the Seller and the
Parent of their respective obligations
hereunder, and the consummation by the
Seller and the Parent of the Transactions
have been duly authorized by all
requisite action on the part of each of the
Seller and the Parent and, to the
extent necessary or appropriate, by their
respective boards
<PAGE>
and shareholders or members, as the case
may be. This Agreement has been duly
executed and delivered by the Seller and
the Parent, and (assuming due
authorization, execution and delivery by
the Purchaser) this Agreement
constitutes a legal, valid and binding
obligation of both the Seller and the
Parent, enforceable against the Seller and
the Parent in accordance with its
terms, except as the enforceability thereof
may be limited by applicable
bankruptcy, insolvency, reorganization,
moratorium or other similar laws
affecting creditors' rights generally, and
general equitable principles. The
Seller has the authority to transfer and
convey valid and legal title of the
Shares to the Purchaser.
3.02.
Organization, Authority and Qualification of the Company. The
Company is a corporation duly organized,
validly existing and in good standing
under the laws of the jurisdiction of its
incorporation and has all necessary
corporate power and authority to carry on
the Business as it has been and is
currently being conducted. The Company is
duly qualified to do business as a
foreign corporation and is in good standing
under the laws of each jurisdiction
where such qualification is required,
except where the lack of such
qualification would not have a Material
Adverse Effect. True and correct copies
of the certificate of incorporation and
bylaws of the Company, each as in effect
on the date hereof, have been made
available to the Purchaser.
3.03.
Subsidiaries. Section 3.03(a) of the Disclosure Schedule sets
forth
a true and complete list, containing the
name, jurisdiction of organization and
capitalization of each Subsidiary of the
Company and the jurisdictions in which
each Subsidiary is qualified to do business
as a foreign corporation. All of the
issued and outstanding shares of capital
stock or membership interests of each
Subsidiary of the Company have been duly
authorized and are validly issued,
fully paid, and nonassessable. The Company
holds of record and owns beneficially
and free and clear of all Encumbrances all
of the outstanding shares or
membership interests of each Subsidiary of
the Company and there are no
outstanding options, rights or contracts of
any kind relating to the issuance,
sale or transfer of any capital stock or
other equity securities of any
Subsidiary of the Company. Except as set
forth in Section 3.03(b) of the
Disclosure Schedule, the Company does not
own, directly or indirectly, any
capital stock or other equity securities of
any Person that is not a Subsidiary
of the Company, other than publicly traded
securities constituting less than
five percent of the outstanding equity of
the issuing entity.
3.04.
Capitalization. The authorized capital stock of the Company
consists
of 9,069 shares of Common Stock and no
shares of preferred stock. As of the date
hereof, 9,069 shares of Common Stock are
issued and outstanding, all of which
are validly issued, fully paid and
nonassessable. There are no outstanding
contractual obligations of the Company
relating to the issuance, sale, purchase,
redemption or transfer of any equity
securities of the Company, or to make any
investment (in the form of a loan, capital
contribution or otherwise) in, any
other Person. The Shares constitute all of
the issued and outstanding capital
stock of the Company and are owned of
record and beneficially by the Seller free
and clear of all Encumbrances and there are
no outstanding options, rights or
contracts of any kind relating to the
issuance, sale or transfer of any capital
stock of the Company. Upon consummation of
the Transactions and registration of
the Shares in the name of the Purchaser in
the stock records of the Company, the
Purchaser will own all the issued and
outstanding capital stock of the Company
free and clear of all Encumbrances. Upon
consummation of the Transactions, the
Shares will be fully paid and
nonassessable.
<PAGE>
3.05. No
Conflict. Neither the execution and the delivery of this
Agreement nor the consummation of the
Transactions will (a) violate or conflict
with any Law applicable to the Parent, the
Seller, the Company or any of its
Subsidiaries, assuming that all Consents
and Approvals have been obtained,
except where such violation or conflict
would not reasonably be expected to have
a Material Adverse Effect, (b) conflict
with or result in the breach of any
provision of the organizational documents
of the Parent, the Seller, the Company
or any of its Subsidiaries, or (c) assuming
that all Consents and Approvals have
been obtained, result in the creation or
imposition of any Encumbrance upon or
with respect to any of the assets owned or
used by the Company or any of its
Subsidiaries or the Shares.
3.06.
Consents and Approvals. All material consents, approvals,
ratifications, waivers, Governmental
Authorizations and other authorizations
required to be obtained by each of the
Parent, the Seller, the Company and its
Subsidiaries for the execution, delivery
and performance by the Seller of the
Transactions are set forth in Section 3.06
of the Disclosure Schedule
(collectively, "Consents and
Approvals").
3.07.
Taxes. Except as set forth in Section 3.07 of the Disclosure
Schedule:
(a) All
material Tax Returns that were required to be filed by, or with
respect to, the Company and its
Subsidiaries have, in accordance with applicable
law, been timely filed (taking into account
extensions), and all such Tax
Returns are true, correct and complete in
all material respects. All material
Taxes due and owing by or with respect to
the Company and its Subsidiaries
(whether or not shown on any Tax Return)
have been paid.
(b)
Neither the Company nor any of its Subsidiaries is doing business
in
or maintains a taxable presence in a
jurisdiction in which it does not file Tax
Returns, and no Tax Claim has been made in
writing by any taxing authority in
such a jurisdiction that any of the Company
or its Subsidiaries is or may be
subject to taxation by that
jurisdiction.
(c) There
is no action, suit, proceeding, claim for refund,
investigation,
assessment, adjustment, audit or claim now
proposed or pending against or with
respect to the Company or any of its
Subsidiaries in respect of any Tax.
(d)
Neither the Company nor any of its Subsidiaries has waived any
statute
of limitations in respect of Taxes or
agreed to any extension of time with
respect to a Tax assessment or deficiency.
There are no outstanding powers of
attorney enabling any party to represent
the Company or any Subsidiary with
respect to Tax matters.
(e) There
are no liens for Taxes (other than Taxes not yet due) upon the
assets of the Company or any of its
Subsidiaries.
(f) Each
of the Company and its Subsidiaries (i) has been a member of
Ford
Motor Company's affiliated group for
purposes of filing a consolidated federal
Tax Return since the taxable year ended
December 31, 1999, and (ii) has never
been a member of any other affiliated,
consolidated, combined or unitary group.
(g) Seller
is not subject to withholding under Section 1445 of the Code
with respect to any of the
Transactions.
<PAGE>
(h)
Neither the Company nor any Subsidiary will be required to include
any
material item of income in, or exclude a
material item of deduction from,
taxable income for any taxable period (or
portion thereof) ending after the
Closing Date as a result of any (i) change
in method of accounting for a taxable
period ending on or prior to the Closing
Date under Section 481(c) of the Code
(or any corresponding or similar provision
under state, local or foreign Income
Tax law), (ii) written and legally binding
agreement with a taxing authority
relating to Taxes, (iii) installment sale
or open transaction disposition or
intercompany transaction made on or prior
to the Closing Date, (iv) prepaid
amount received on or prior to the Closing
Date, or (v) deferred intercompany
gain or excess loss account described in
Treasury regulations promulgated under
Section 1502 of the Code (or any
corresponding or similar provision under state,
local or foreign Income Tax law).
(i) There
are no unpaid deficiencies asserted or assessments made by any
Governmental Authority against the Company
or any of its Subsidiaries with
respect to Taxes.
(j)
Neither the Company nor any Subsidiary is (i) a party to any
written
or unwritten Tax allocation or Tax sharing
agreement, arrangement, understanding
or contract or (ii) liable for the Taxes of
any Person other than the Company
and its Subsidiaries.
(k) The
Company and each of its Subsidiaries have withheld and paid all
material Taxes required to have been
withheld and paid in connection with any
amounts paid or owing to any employee,
independent contractor, creditor,
stockholder or other third party.
(l)
***
3.08.
Employee Matters.
(a)
Section 3.08(a) of the Disclosure Schedule contains a complete
and
accurate list of all Benefit Plans, copies
of which have been made available to
the Purchaser. Other than the Benefit Plans
listed on Section 3.08(a) of the
Disclosure Schedule, neither the Company
nor any Subsidiary currently maintains,
contributes to, or has any liability under,
any Benefit Plan. Each Benefit Plan
which is an "employee pension benefit plan"
within the meaning of Section 3(2)
of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") (a
"Pension Plan"), and which is intended to
be qualified under Section 401(a) of
the Code, is subject to a current favorable
tax-determination letter from the
IRS, and no events have occurred that could
adversely affect in any material
respect the qualified status of any Pension
Plan. No Benefit Plan (i) is subject
to Title IV of ERISA, (ii) is a
"multiemployer plan" as defined under Section
3(37) of ERISA, and/or (iii) except as
required by statute or as set forth on
Schedule 3.08(a), provides for life,
health, medical or other welfare benefits
to former employees or beneficiaries or
dependents thereof and/or (iv) is a plan
that has two or more contributing sponsors
at least two of whom are not under
common control, within the meaning of
Section 4063 of ERISA (a "Multiple
Employer Plan"). Neither the execution and
delivery of this Agreement nor the
consummation of the Transactions will (x)
result in, cause the accelerated
vesting, funding or delivery of, or
increase the amount or value of, any payment
or benefit to any officer, director,
employee or independent contractor of the
Company or any of the Subsidiaries, or (y)
result in any limitation on the right
of any Person to amend, merge or terminate
any Benefit Plan or related trust.
Without limiting the generality of the
foregoing, no amount paid or payable
(whether in cash, in property, or in the
form of benefits) in connection with
the Transactions will
<PAGE>
be an "excess parachute payment" within the
meaning of Section 280G of the Code.
The Company has provided to the Purchaser
prior to the date hereof materially
accurate information identifying all
current officers, employees and independent
contractors of the Company and its
Subsidiaries by name and years of service.
(b) There
is not presently pending or existing with respect to the
Company
or its Subsidiaries (i) any strike,
slowdown, picketing or work stoppage or (ii)
any application for certification of a
collective bargaining agent or similar
entity or individual. None of the Seller,
the Company or any of the Subsidiaries
is a party, or otherwise subject to, any
collective bargaining agreement with
any labor union or association representing
employees of the Company or any
Subsidiary.
3.09.
Financial Statements.
(a) The
Seller has made available to the Purchaser (i) the audited
consolidated balance sheets and the related
audited consolidated statements of
income and cash flows of the Company
(including the related notes and schedules
thereto) at and for the fiscal years ended
as of December 31, 2002 and December
31, 2003 (the "Audited Financial
Statements") and (ii) the unaudited
consolidated balance sheet of the Company
at June 30, 2004 attached hereto as
Exhibit E (the "June 30th Balance Sheet")
and the related unaudited consolidated
statement of income for the period ended
June 30, 2004 (the "Interim Financial
Statements," and together with the Audited
Financial Statements, the "Financial
Statements").
(b) The
Audited Financial Statements have been prepared in accordance
with
GAAP and consistent with past practice and
present fairly, in all material
respects, the consolidated financial
condition, results of operations, changes
in shareholders' equity and cash flows of
the Company, in each case, as of the
dates thereof or for the periods covered
thereby.
(c) The
Interim Financial Statements have been prepared in accordance
with
Company's Accounting Principles, and
present fairly in all material respects
(subject to normal year-end adjustments and
the absence of footnotes), the
consolidated financial condition and
results of operations of the Company, in
each case, as of the dates thereof or for
the periods covered thereby.
3.10.
Undisclosed Liabilities. Except as set forth in Section 3.10 of
the
Disclosure Schedule, neither the Company
nor any of its Subsidiaries has any
Liabilities except (i) Liabilities
reflected in the June 30th Balance Sheet,
(ii) Liabilities that, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse Effect,
and (iii) Liabilities incurred after
the date of the Interim Financial
Statements in the ordinary course of business
and consistent with past practice that,
individually or in the aggregate, would
not reasonably be expected to have a
Material Adverse Effect. At the Closing,
the Company and its Subsidiaries will have
possession of all of their respective
books and records, including sales and use
Tax Returns.
3.11.
Absence of Certain Changes or Events. Since June 30, 2004, except
as
set forth in Section 3.11 of the Disclosure
Schedule or as contemplated by this
Agreement, to the Knowledge of the Seller,
(i) the Company and its Subsidiaries
have operated the Business in all material
respects only in the ordinary course
of business consistent with past practice,
(ii) there
<PAGE>
has not occurred any event, development or
change which, individually or in the
aggregate, has had or would be reasonably
expected to have a Material Adverse
Effect and (iii) none of the Seller, the
Company or any of its Subsidiaries has
taken any action or failed to take any
action that would have been prohibited in
any material respect under Section 5.01
hereof had such action or failure to act
occurred or failed to occur after the date
hereof.
3.12.
Litigation. Except as set forth in Section 3.12(a) of the
Disclosure
Schedule, and except for litigation of the
Company against customers in the
ordinary course of business, there are no
material written claims, lawsuits,
litigation, actions, arbitrations,
administrative or other proceedings or
investigations, claim letters or charges
pending before a court of competent
jurisdiction or, to the Knowledge of the
Seller or the Company, threatened in
writing against the Company or any of its
Subsidiaries. Except as set forth in
Section 3.12(b) of the Disclosure Schedule,
there are no material unsatisfied
judgments or outstanding orders,
injunctions, decrees, stipulations or awards
rendered by a Governmental Authority
against the Company or any of its
Subsidiaries or any of their respective
properties or businesses. Neither the
Seller, nor the Company and its
Subsidiaries, is subject to any judgment,
decree, injunction or orders of any court
or Governmental Authority, which would
reasonably be expected to materially impact
the ability of the Seller or Parent
to perform its obligations hereunder and to
consummate the Transactions or the
ability of the Company and its Subsidiaries
to continue to operate the Business
as it is being conducted as of the date
hereof.
3.13.
Compliance with Laws; Permits. Except as set forth in Section
3.13
of the Disclosure Schedule, (A) each of the
Company and its Subsidiaries (i)
conducts, and during the past twenty-four
(24) months has conducted, the
Business in all material respects in
accordance with all applicable Laws; (ii)
holds, owns or possesses all Governmental
Authorizations necessary for the
ownership of the property and assets and
the conduct of the Business as the same
has been conducted during the past
twenty-four (24) months and is currently
conducted, and all such Governmental
Authorizations are in full force and
effect; and (iii) is in compliance in all
material respects with its respective
obligations under such Governmental
Authorizations; and (B) except for matters
that would not reasonably be expected to
have, individually or in the aggregate,
a Material Adverse Effect, during the past
twenty-four (24) months, none of such
Governmental Authorizations has been
challenged in writing or revoked, no
written statement of an active violation or
intention to suspend, challenge,
revoke or fail to renew any such
Governmental Authorizations has been received
by the Company or any Subsidiary during the
past twenty-four (24) months, and to
the Knowledge of Seller, no event has
occurred during the past twenty-four (24)
months that would reasonably be expected to
constitute or result in a violation
of a Governmental Authorization or the
revocation, suspension, modification or
nonrenewal of any Governmental
Authorization. The Company has made available to
the Purchaser true and complete copies of
all of Governmental Authorizations
used by or in connection with the ownership
or operation of the Company and its
Subsidiaries.
<PAGE>
3.14.
Contracts; No Defaults.
(a) Except
as set forth in Section 3.14(a) of the Disclosure Schedule,
neither the Company nor any Subsidiary is a
party to, beneficiary of, or
otherwise entitled to or bound by (as
applicable):
(i) any note, mortgage, indenture or other written obligation
or
agreement or other instrument for or
relating to indebtedness for money borrowed
(including capitalized lease obligations),
or any written guarantee, pledge,
surety or indemnification by the Company or
any Subsidiary of third-party
obligations, in each case, excluding
Securitization Instruments, and for an
amount in excess of Five Hundred Thousand
US Dollars ($500,000) or pursuant to
which any material Encumbrances are or were
created or imposed on the Company or
any Subsidiary or on any of their
respective property or assets;
(ii) any lease of personal property with annual lease payments
of
more than Five Hundred Thousand US Dollars
($500,000) or a total remaining
obligation of more than One Million Five
Hundred Thousand US Dollars
($1,500,000);
(iii) any joint venture or partnership agreement;
(iv) any non-competition, non-solicitation or exclusive dealing
agreements or other agreements or
arrangements that restrict or limit or purport
to restrict or limit in any material
respect the ability of the Company or any
of its Subsidiaries, or any officer,
employee or independent contractor of the
Company or any of its Subsidiaries, to
solicit customers, potential employees or
the manner in which, or the localities in
which, all or any portion of the
Business is or may be conducted;
(v) other than dealer agreements, repossession agent agreements
and
auction house agreements in the ordinary
course of business consistent with past
practice, any agreement or understanding
with a value, or calling for payments
to be made or received by the Company or
any of its Subsidiaries, of more than
Five Hundred Thousand US Dollars ($500,000)
within any twelve month period;
(vi) any material agreement or understanding containing a "change
of
control" or anti-assignment provision that
would be triggered by the
Transactions;
(vii) other than auction house agreements in the ordinary course
of
business consistent with past practice, any
agreement or understanding providing
for the acquisition or disposition after
the date of this Agreement of any of
the assets of the Business contemplating an
exchange of value in excess of Five
Hundred Thousand US Dollars ($500,000);
and
(viii) any other agreement or understanding that is material to
the
ownership or operation of the Business.
(b) All of
the agreements, arrangements, understandings and other items
responsive to Section 3.08 and Section
3.14(a) are at times referred to herein
as "Material Contracts." Each Material
Contract is a legal, valid and binding
obligation of, and enforceable against, the
Company and/or one of its
Subsidiaries and, to the Knowledge of the
Seller and the Company, the other
parties thereto, and is in full force and
effect and enforceable in accordance
with its
<PAGE>
terms, except as the enforceability thereof
may be limited by applicable
bankruptcy, insolvency, reorganization,
moratorium or other similar laws
affecting creditors' rights generally, and
general equitable principles, and
except for such failures to be in force and
effect and enforceable as would not,
individually or in the aggregate,
reasonably be expected to result in a Material
Adverse Effect. True and complete copies of
all Material Contracts have been
previously made available to the Purchaser.
Except as set forth in Section
3.14(b) of the Disclosure Schedule, to the
Knowledge of the Seller and the
Company, there is no default or breach or
written claim of default or breach by
any party under, or dispute in writing
regarding the material terms of, any such
Material Contract, and no event has
occurred which with the passage of time or
the giving of notice or both would
constitute a default or breach by any party
under any such Material Contract or would
permit termination, modification or
acceleration of any such Material Contract
or constitute a similar event
permitting the termination of the Company's
or any Subsidiary's rights under any
such Material Contract except for such
events, breaches or defaults, as would
not, individually or in the aggregate, be
reasonably expected to have a Material
Adverse Effect.
3.15.
Brokers. Except for Credit Suisse First Boston (the fees and
expenses of which are solely and
exclusively the obligation of the Seller or the
Parent) and Sekits Capital Inc. and
Strategic Transaction Advisors, LLC (the
fees and expenses of which are solely and
exclusively the obligation of one or
more of the Controlling Shareholders), no
broker, finder or investment banker is
entitled to any brokerage, finder's or
other fee or commission in connection
with the Transactions based upon
arrangements made by or on behalf of the
Parent, the Seller, the Company or any of
its Subsidiaries.
3.16.
Securitization Transactions.
(a)
Section 3.16 (a) of the Disclosure Schedule contains a list of
all
outstanding transactions under which the
Company Loans have been sold or pledged
in a securitization in which securities
backed by such Company Loans were sold
as a public or private placement under the
Securities Act (each, a
"Securitization Transaction"). The Company
or a Subsidiary, as the servicer (for
purposes of this Agreement, the
"Securitization Servicer") of each
Securitization Transaction, is in
compliance in all material respects with all
agreements to which it is bound under such
Securitization Transaction
(collectively referred to as the
"Securitization Instruments"). The Seller has
made available to the Purchaser true and
complete copies of all Securitization
Instruments to which the Company or any of
its Subsidiaries is a party as of the
date hereof. Each Securitization Issuer and
Securitization Servicer, and to the
Knowledge of the Seller and the Company,
each securitization trustee, has
performed in all material respects all of
its respective obligations under the
Securitization Instruments, and there is no
pending or, to the Knowledge of the
Seller and the Company, threatened,
cancellation of any Servicing Agreement, and
neither the Company nor any of its
Subsidiaries has received any notice to the
effect that any party to any Servicing
Agreement intends to cease doing business
with the Company or any Subsidiary.
(b)
Neither the Company nor any Subsidiary or other Affiliate or any
of
them which is the issuer or depositor in
any Securitization Transaction (a
"Securitization Issuer"), and no
Securitization Servicer has taken any action
which would cause any trust, corporation,
partnership or other entity
("Securitization Entity") to be registered
as an investment company pursuant to
the Investment Company Act of 1940, as
amended (the "Investment Company Act"),
<PAGE>
or which would cause any Securitization
Entity to be "controlled by" an
investment company within the meaning of
the Investment Company Act.
(c) Each
Securitization Issuer and Securitization Servicer has made all
filings required to be made by or under the
Exchange Act. There is no pending
or, to the Knowledge of the Seller and the
Company, threatened, claim that any
private placement memorandum or other
offering document, or any amendments or
supplements thereto contained, as of the
date on which it was issued by a
Securitization Entity in any Securitization
Transaction, any untrue statement of
a material fact or omitted to state any
material fact required to be stated
therein or necessary to make the statements
therein, in light of the
circumstances under which they were made,
not misleading. No securities were
issued or sold by the Company or any
Subsidiary in violation of Section 5 of the
Securities Act in any Securitization
Transaction.
(d) No
Securitization Issuer or Securitization Servicer and, to the
Knowledge of the Seller, no entity serving
as trustee for any Securitization has
taken any action which would adversely
affect the characterization or tax
treatment for federal, state or local
income or franchise tax purposes of any
Securitization Entity or any securities
issued in a Securitization Transaction,
and all required federal, state and local
tax and information returns relating
to any Securitization Transaction have been
properly filed.
(e) Since
December 31, 2001, no rating agency has downgraded, or given
the
Company any indication that it is
considering a downgrading of any securities
issued in any Securitization
Transaction.
(f) To the
Knowledge of the Company, and except as would not, individually
or in the aggregate, reasonably be expected
to result in a Material Adverse
