EXHIBIT 10.10
STOCK PURCHASE AGREEMENT
BY AND AMONG
DOLLAR FINANCIAL GROUP, INC.,
as Purchaser,
MANOR INVESTMENT CO., INC.
AND
LYNN D. CONLEY and PAUL W. CONLEY,
Individually and as Trustees of the Manor Investment
Company, Inc. Profit Sharing Plan & Trust,
as Shareholders
Dated as of October 22, 1996
TABLE OF CONTENTS
Section Page
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ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares . . . . . . . . . . . . . 2
1.2 Assets . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Redemption of Shares . . . . . . . . . . . . . . . . 3
1.4 Working Capital Calculation . . . . . . . . . . . . . 4
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Amount of Purchase Price . . . . . . . . . . . . . . 5
2.2 Payment of Purchase Price . . . . . . . . . . . . . . 5
2.3 Certification of Amount of Cash on Hand . . . . . . . 6
2.4 Lease Consent Escrow . . . . . . . . . . . . . . . . 7
ARTICLE III
CLOSING AND TERMINATION
3.1 Closing Date . . . . . . . . . . . . . . . . . . . . 7
3.2 Termination of Agreement . . . . . . . . . . . . . . 8
3.3 Procedure Upon Termination . . . . . . . . . . . . . 8
3.4 Effect of Termination . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
4.1 Organization and Good Standing . . . . . . . . . . . 9
4.2 Authorization of Agreement . . . . . . . . . . . . . 9
4.3 Capitalization . . . . . . . . . . . . . . . . . . . 10
4.4 Subsidiaries and Other Interests . . . . . . . . . . 10
4.5 Corporate Records . . . . . . . . . . . . . . . . . . 10
4.6 Conflicts; Consents of Third Parties . . . . . . . . 10
4.7 Ownership . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Financial Statements . . . . . . . . . . . . . . . . 11
4.9 No Undisclosed Liabilities . . . . . . . . . . . . . 11
4.10 Absence of Certain Developments . . . . . . . . . . . 12
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 14
4.12 Real Property . . . . . . . . . . . . . . . . . . . . 15
4.13 Tangible Personal Property . . . . . . . . . . . . . 17
4.14 Intangible Property . . . . . . . . . . . . . . . . . 18
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4.15 Material Contracts. . . . . . . . . . . . . . . . . . 18
4.16 Employee Benefits . . . . . . . . . . . . . . . . . . 19
4.17 Labor . . . . . . . . . . . . . . . . . . . . . . . . 20
4.18 Litigation . . . . . . . . . . . . . . . . . . . . . 20
4.19 Compliance with Laws . . . . . . . . . . . . . . . . 21
4.20 Environmental Matters . . . . . . . . . . . . . . . . 21
4.21 Insurance . . . . . . . . . . . . . . . . . . . . . . 22
4.22 Payables . . . . . . . . . . . . . . . . . . . . . . 22
4.23 Related Party Transactions . . . . . . . . . . . . . 22
4.24 ADA Matters . . . . . . . . . . . . . . . . . . . . . 23
4.25 Banks . . . . . . . . . . . . . . . . . . . . . . . . 23
4.26 No Misrepresentation . . . . . . . . . . . . . . . . 23
4.27 Financial Advisors . . . . . . . . . . . . . . . . . 23
4.28 The Company s Solvency and Obligations . . . . . . . 23
4.29 Name . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization and Good Standing . . . . . . . . . . . 24
5.2 Authorization of Agreement . . . . . . . . . . . . . 24
5.3 Conflicts: Consents of Third Parties . . . . . . . . 25
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . 25
5.5 Financial Advisors . . . . . . . . . . . . . . . . . 25
5.6 Purchaser s Solvency and Obligations . . . . . . . . 26
5.7 Purchaser s Group Medical Plans . . . . . . . . . . . 26
ARTICLE VI
COVENANTS
6.1 Effect of Investigation . . . . . . . . . . . . . . . 27
6.2 Conduct of the Business Pending Closing . . . . . . . 27
6.3 Consents . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Consents to Real Property Leases . . . . . . . . . . 29
6.5 No Solicitation . . . . . . . . . . . . . . . . . . . 29
6.6 Preservation of Records . . . . . . . . . . . . . . . 29
6.7 Publicity . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Use of Name . . . . . . . . . . . . . . . . . . . . . 30
6.9 Environmental Matters . . . . . . . . . . . . . . . . 30
6.10 Noncompetition Agreements . . . . . . . . . . . . . . 31
6.11 Repayment of Loans; Turn Over of Funds . . . . . . . 31
6.12 Employee Benefits and Employment . . . . . . . . . . 32
6.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser . . 35
7.2 Conditions Precedent to Obligations of the
Shareholders . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 Documents to be Delivered by the Shareholders . . . . 38
8.2 Documents to be Delivered by the Purchaser . . . . . 39
ARTICLE IX
INDEMNIFICATION
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . 40
9.2 General Indemnification . . . . . . . . . . . . . . . 40
9.3 Limitations on Indemnification for Breaches of
Representations and Warranties . . . . . . . . . . 42
9.4 Indemnification Procedures . . . . . . . . . . . . . . 43
9.5 Tax Matters . . . . . . . . . . . . . . . . . . . . . 45
9.6 Employee Benefits and Labor Indemnity . . . . . . . . 45
9.7 Treatment of Payment . . . . . . . . . . . . . . . . 46
9.8 Waiver of Subrogation and Other Rights . . . . . . . 46
ARTICLE X
MISCELLANEOUS
10.1 Certain Definitions . . . . . . . . . . . . . . . . . 46
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . 51
10.3 Specific Performance . . . . . . . . . . . . . . . . 51
10.4 Further Assurances . . . . . . . . . . . . . . . . . 52
10.5 Arbitration . . . . . . . . . . . . . . . . . . . . . 52
10.6 Entire Agreement; Amendments and Waivers . . . . . . 52
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . 53
10.8 Table of Contents and Headings . . . . . . . . . . . 53
10.9 Notices . . . . . . . . . . . . . . . . . . . . . . . 53
10.10 Severability . . . . . . . . . . . . . . . . . . . . 54
10.11 Binding Effect: Assignment . . . . . . . . . . . . . 54
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . 55
Schedules and Exhibits
Schedule I - List of Stores
Schedule 1.3 - Excluded Assets
Schedule 1.4(b) - Agreed Prepaid Expenses
Schedule 2.2(b) - Food Stamp Contracts
Schedule 4.4 - Subsidiaries and Other Interests
Schedule 4.6 - Conflicts
Schedule 4.9 - Undisclosed Liabilities
Schedule 4.10 - Certain Developments
Schedule 4.12(a)(1) - List of Company Properties
Schedule 4.12(a)(2) - Compliance Exceptions
Schedule 4.12(a)(3) - Property Contracts
Schedule 4.13 - Personal Property Leases
Schedule 4.14 - Intangibles
Schedule 4.15 - Material Contracts
Schedule 4.16(a) - Employee Benefits
Schedule 4.18 - Litigation
Schedule 4.19 - License Revocation Proceedings
Schedule 4.20 - Environmental
Schedule 4.21 - Insurance
Schedule 4.23 - Related Party Transactions
Schedule 4.25 - Bank Accounts
Schedule 4.27 - Financial Advisors
Schedule 5.3 - Conflicts/Consents
Schedule 6.13 - Allocation of Purchase Price
Exhibit A - Form of Noncompetition Agreement
Exhibit B - Form of Legal Opinion (Seller)
Exhibit C - Form of Legal Opinion (Buyer)
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT, dated as of October 22, 1996 (the
"Agreement"), by and among Dollar Financial Group, Inc., a New York
corporation ("Purchaser"), Manor Investment Co., Inc., a California
corporation doing business as "C&C Check Cashing" (the "Company"), and Lynn
D. Conley and Paul W. Conley, individually and as Trustees under the Manor
Investment Company, Inc. Profit Sharing Plan & Trust (each, a "Shareholder"
and together, the "Shareholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company presently owns and operates those
twenty-three (23) check cashing stores located in the State of California
as listed on Schedule I (collectively, the "Stores");
WHEREAS, the Shareholders individually own an aggregate of three
hundred twenty (320) shares of the Common Stock, par value One Hundred
Dollars ($100.00) per share ("Common Stock"), of the Company, and in their
capacity as trustees six thousand nine hundred twenty (6,920) shares of the
preferred stock, par value One Hundred Dollars ($100.00) per share
("Preferred Stock"), of the Company, which constitute all of the issued and
outstanding capital stock of the Company and which shares of Common Stock
and Preferred Stock owned by the Shareholders are hereinafter referred to
as the "Shares";
WHEREAS, the Shareholders desire to sell fifty (50) shares of
Common Stock to the Company, and the Company desires to redeem such shares
(the "Redeemed Shares") immediately prior to the Closing described herein;
WHEREAS, Purchaser desires to purchase from the Shareholders and
Shareholders desire to sell to Purchaser the Preferred Stock and the
balance of the Common Stock (collectively, the "Purchased Shares") for the
purchase price and upon the terms and conditions hereinafter set forth;
WHEREAS, Purchaser desires that, effective upon the Closing Date,
each of the Shareholders will agree not to compete with the Company,
Purchaser or any of its affiliates pursuant to a Noncompetition Agreement
to be entered into on the Closing Date in the form set forth on Exhibit A
hereto; and
WHEREAS, certain terms used in this Agreement are defined in
Section 10.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares. Upon the terms and
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subject to the conditions contained herein, on the Closing Date (i) the
Shareholders shall sell, assign, transfer, convey and deliver to the
Purchaser good and marketable title, free and clear of all Liens, and (ii)
the Purchaser shall purchase from the Shareholders, the Purchased Shares.
In addition, each of the Shareholders agrees to provide, or cause
to be provided, to Purchaser and the Company access to all documents and/or
information as may be reasonably necessary to enable Purchaser to see to
the efficient and proper conduct and administration of the assets owned by
the Company (the "Assets") from and after the Closing Date, including,
without limitation, all historical files, Tax Returns, records and
personnel data.
1.2 Assets. Without limiting the foregoing, the Company
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agrees that, at the time of Closing, all of the properties, business,
rights, good-will and assets of the Company (including all properties,
business, rights, good-will and assets used or useable in the operation of
the Stores), other than the Excluded Assets, including, but not limited to,
the following, shall be owned by the Company, free and clear of all Liens,
except for the Permitted Exceptions:
(a) Licenses and Authorizations. All authorizations,
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approvals, orders, licenses, franchises, certificates and permits
(collectively, "Licenses") of and from all Governmental Bodies necessary to
own or lease the properties and assets used or useable in the operation of
the Company, together with any renewals, extensions or modifications
thereof and additions thereto and other pending applications or
applications filed with any Governmental Body.
(b) Personal Property, etc. All tangible and
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intangible personal property, equipment, machinery, furniture, fixtures,
tools, computer hardware, supplies and other assets, wherever located, used
or useable in the operation of the Company.
(c) Real Property. The interest of the Company in and
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to all leased real property, buildings and structures, leasehold
improvements, fixtures and appurtenances used or useable in the operation
of the Company (including all Company Properties) and the Company s
interests and rights arising under all agreements, rights and appurtenances
relating thereto (including all Real Property Leases) and any renewals,
extensions, amendments or modifications thereof.
(d) Leases and Agreements. The rights of the Company
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arising under all contracts and agreements to which it is a party,
including any renewals, extensions, amendments or modifications thereof
other than contracts and agreements which will, in accordance with this
Agreement, terminate before Closing.
(e) Intellectual Property, etc. All copyrights,
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trademarks, service marks, trade secret rights, computer programs and
software, permits, licenses or other similar rights used or useable in the
operation of the Stores, including, specifically, the trade names
enumerated on Schedule 4.14 hereof, as well as all other copyrights,
trademarks, service marks, trade secret rights, computer programs and
software (including without limitation all point-of-sale ("POS") software
developed and/or owned by the Company), permits, licenses or other similar
rights utilized in the operation of the Company.
(f) Books and Records. All books, records and files
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pertaining to the business conducted by the Company for all periods ending
on or before the Closing Date, including the Company s minute books and
stock register.
(g) Prepaid Expenses. Security deposits and other
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prepaid expenses of the Company relating to the operation or ownership of
the Company, including, but not limited to, Taxes, rent, licenses, postage
and any other prepaid assets or deposits relating to the operation or
ownership of the Stores.
(h) Customer Lists. Customer lists, vendor lists and
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other intangible assets of the Company.
(i) Cash on Hand. All Cash on Hand.
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1.3 Redemption of Shares.
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(a) Immediately prior to the Closing, the holders of the
Common Stock shall surrender to the Company for redemption fifty (50)
issued and outstanding shares of Common Stock (the
"Redeemed Shares"), free and clear of all Liens, so that after such
redemption, the two hundred seventy (270) shares of Common Stock of the
Company sold to the Purchaser shall constitute all of the then outstanding
Common Stock of the Company.
(b) In exchange for the shares redeemed under Paragraph (a)
immediately above, immediately prior to the Closing the company shall
distribute to the holders of the Common Stock the assets described in
Schedule 1.3 hereof (the "Excluded Assets").
(c) Solely as an accommodation to the Shareholders,
Purchaser shall, during the one hundred fifty (150) day period following
the Closing Date, collect the pawn loans, manage the pawn collateral and
market the related inventory included in the Excluded Assets. Purchaser
will remit to the Shareholders any amounts so collected (net of expenses,
including reasonable attorneys fees); provided that (i) the Shareholders
shall promptly pay the Purchaser
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(or Purchaser may retain from such proceeds) an amount equal to ten percent
(10%) of all amounts collected, (ii) Purchaser shall not be obligated to
institute litigation or any proceedings to collect such amounts and (iii)
the Shareholders shall reimburse Purchaser immediately upon demand for any
and all expenses of Purchaser (including, without limitation, reasonable
attorneys fees and expenses) to the extent Purchaser shall not therefore
have reimbursed itself out of amounts collected by Purchaser as described
above. Purchaser shall have no affirmative duty to collect any such loans
or market any such items of personal property
1.4 Working Capital Calculation.
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(a) On or prior to the Closing Date, the Shareholders shall
prepare and deliver to Purchaser an estimate of the Company s working
capital as of the end on the calendar month prior to the Closing Date, to
be derived from the financial information set forth on the balance sheet
prepared by the Company for the end of such month, substantially in the
form of Exhibit 1.4(a) hereto (the "Estimated Working Capital").
(b) Within fifteen (15) days after the Closing Date, the
Shareholders shall prepare and deliver to Purchaser a definitive
calculation of the working capital of the Company as of the Closing Date
substantially in the form of Exhibit 1.4(b) hereto (the "Actual Working
Capital"). To the extent that the Actual Working Capital exceeds the
Estimated Working Capital, Purchaser shall promptly pay such additional
amount to the Shareholders, which amount shall be an adjustment to the
Purchase
Price. To the extent that the Estimated Working Capital exceeds the Actual
Working Capital, the Shareholders shall be jointly and severally liable to
promptly pay such additional amount to Purchaser, which amount shall be an
adjustment to the Purchase Price. In the event that either party gives the
other written notice that a dispute exists with respect to the calculation
of Estimated Working Capital or Actual Working Capital, and such dispute is
not resolved within twenty (20) days after the other party receives a copy
of such notice of dispute, either party may submit such dispute to
arbitration in the San Francisco, California metropolitan area for final
resolution in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The determination of such
arbitrators shall be final and binding upon the parties hereto, and the
fees of such arbitrators in connection with the determination shall be paid
by the party against whom the award was made, or if a compromise was made,
shared equally.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Amount of Purchase Price. The purchase price for the
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Purchased Shares (the "Purchase Price") shall be an amount equal to the sum
of (i) Four Million Three Hundred Thousand Dollars ($4,300,000) plus (ii)
the Actual Working Capital minus (iii) the Working Capital Adjustment.
2.2 Payment of Purchase Price. The Purchaser shall pay the
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Purchase Price as follows:
(a) On the Closing Date, the Purchaser shall pay to Lynn D.
Conley and Paul W. Conley, as Trustees of the Manor Investment Company
Profit Sharing Plan & Trust (the "Trustees") an amount of Six Hundred
Ninety Two Thousand Dollars ($692,000) and to Lynn D. Conley and Paul W.
Conley (the "Common Shareholders") an amount equal to the difference
between the Closing Payment and Six Hundred Ninety Two Thousand Dollars
($692,000). All such payments of cash shall be made by certified or bank
cashier s check in New York Clearing House Funds, payable to the order of
the Trustees or the Common Shareholders (or, at the Shareholders option, by
wire transfer of immediately available funds into an account or accounts
designated by the Shareholders).
(b) Purchaser shall pay to the Shareholders an amount
of Three Hundred Thousand Dollars ($300,000), in three (3)
equal annual installments of One Hundred Thousand Dollars ($100,000) each
(each, an "Annual Payment"), on December 15 of each year commencing
December 15, 1997, by certified or bank cashier s check in New York
Clearing House Funds, payable to the order of the Common Shareholders (or,
at the Common Shareholders option, by wire transfer of immediately
available funds into an account designated by the Common Shareholders);
provided that if the gross amount of all fees
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paid to the Company (the "Food Stamp Fees") under the food stamp contracts
listed on Schedule 2.2(b) hereof or subsequent contracts with the counties
listed on Schedule 2.2(b) (the "Food Stamp Contracts") does not exceed One
Million Dollars ($1,000,000) (the "Food Stamp Target") for a Target Period
(as defined below), the Annual Payment with respect to such Target Period
shall be reduced by a percentage equal to the percentage of the Food Stamp
Target represented by the difference between the Food Stamp Target and the
amount of Food Stamp Fees earned during such Target Period from such Food
Stamp Contracts; provided, further, that if a Food Stamp Contract
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or Contracts should be terminated as a result of a rebidding process or as
a result of a default in the performance thereunder by Purchaser, the Food
Stamp Target shall be reduced by the monthly average amount of Food Stamp
Fees earned from such terminated Food Stamp Contract or Contracts during
the last 12 full calendar months of operation thereunder, (x) for the
Target Period in which any such Food Stamp Contract is terminated,
multiplied by the number of full calendar months remaining in such Target
Period and (y) for each subsequent Target Period, multiplied by 12;
provided, further, that if
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a Food Stamp Contract or Contracts should be terminated as a result of a
decision by a contracting agency (an "Agency Decision") to (i) eliminate
food stamp benefits; (ii) elect to distribute food stamp benefits on an
"in-house" basis; or (iii) alter the manner in which food stamps are
distributed as to eliminate check cashing stores such as the Stores as a
viable distribution alternative, the Food Stamp Target shall not be reduced
as a result of such termination resulting from any Agency Decision.
For purposes of this Section 2.2(b), a "Target Period" shall be
the twelve (12) month period commencing on the first day of the month
following the Closing Date and ending on the first anniversary of the first
day of the month following the Closing Date, and each of the two successive
twelve (12) month periods commencing on the first and second anniversaries
of the first day of the month following the Closing Date, respectively, and
ending on the next anniversary thereof.
2.3 Certification of Amount of Cash on Hand. On the
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Closing Date, the Company shall (i) determine the amount of
(x)foreign cash in the Stores, and (y) U.S. cash in the Stores as of the
opening of business on the Closing Date at each of the Stores, (ii) in
cooperation with the Purchaser, calculate the value of the foreign cash in
the stores in U.S. currency based upon the spot price as published in The
Wall Street Journal on such date or, if not published on such date, on the
next preceding date on which it was published. The Company shall determine
the U.S. cash in the stores and foreign cash in the stores by having two
employees at each Store count all U.S. cash in the stores and foreign cash
in the stores as of the opening of business at such Store on the Closing
Date and transmit such total to an officer of the Company. Such officer
will tally all such amounts and deliver the statement referred to in clause
(ii) above.
2.4 Lease Consent Escrow. Notwithstanding the provisions
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of Sections 2.2(a), in the event that on the Closing Date the condition set
forth in Section 7.1(j) and the Minimum Lease Condition shall not have been
satisfied, and notwithstanding such circumstance Purchaser shall elect to
proceed with the Closing, the Purchaser may place into escrow (with an
escrow agent and pursuant to a written escrow agreement containing terms
and provisions reasonably satisfactory to the parties and their respective
counsel) an amount of Two Hundred Thousand Dollars ($200,000) (the "Lease
Escrow Funds") and pay to the Common Shareholders at the Closing an amount
equal to the Closing Payment minus Eight Hundred Ninety-Two Thousand
Dollars ($892,000). The Lease Escrow Funds shall be released to the Common
Shareholders upon the satisfaction of the Minimum Lease Condition;
provided, that if on January 1, 1997, the Minimum Lease Condition shall not
have been satisfied, the Lease Escrow Funds shall immediately be returned
to Purchaser, the Shareholders shall have no further right to the Lease
Escrow Funds and the Purchase Price shall be reduced accordingly.
ARTICLE III
CLOSING AND TERMINATION
3.1 Closing Date. Subject to the satisfaction of the
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conditions set forth in Sections 7.1 and 7.2 hereof (or the waiver thereof
by the party entitled to waive that condition), the closing of the sale and
purchase of the Purchased Shares provided for in Section 1.1 hereof (the
"Closing") shall take place at 10:00 A.M. at the offices of Wolf, Block,
Schorr and Solis-Cohen (or at such other place as the parties may designate
in writing) on November 21, 1996 or on such other date and at
such other place as the Shareholders and Purchaser may jointly
designate in writing. The date on which the Closing shall be held is
referred to in this Agreement as the "Closing Date."
3.2 Termination of Agreement. This Agreement may be
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terminated prior to the Closing as follows:
(a) At the election of either the Shareholders or Purchaser
on or after November 30, 1996, if the Closing shall not have occurred by
the close of business on such date, provided that the terminating party is
not in breach of this Agreement or otherwise in default of any of its
obligations hereunder;
(b) by mutual written consent of the Shareholders and
Purchaser; or
(c) by the Shareholders or Purchaser if there shall be in
effect a final nonappealable Order of a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby.
3.3 Procedure Upon Termination. In the event of
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termination of this Agreement pursuant to Section 3.2 hereof, written
notice thereof shall forthwith be given by the terminating party to the
other party or parties, and this Agreement shall terminate, and the
purchase of the Shares hereunder shall be abandoned, without further action
by the Purchaser or the Shareholders. If this Agreement is terminated as
provided herein, each party shall redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the
party furnishing the same and shall keep confidential and not use any of
the information contained in such documents, work papers and other
materials.
3.4 Effect of Termination. In the event that this
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Agreement is validly terminated as provided herein, then the parties shall
be relieved of their duties and obligations arising under this Agreement
after the date of such termination and such termination shall be without
liability to the Purchaser, the Company or any Shareholder; provided,
however, that (a) nothing in this Section 3.4
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shall relieve any party hereto of any liability for a breach of this
Agreement and (b) if the Purchaser terminates this Agreement because the
condition in Section 7.1(o) shall not have been satisfied, then Purchaser
shall immediately reimburse Shareholders for all reasonable fees of
attorneys, accountants, plan administrators and other advisors incurred by
the Shareholders, the Company or any Employee Benefit Plan in connection
with the negotiation, drafting or anticipated closing of the transactions
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders hereby jointly and severally represent and
warrant to Purchaser as follows:
4.1 Organization and Good Standing. The Company is a
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corporation duly organized, validly existing and in good standing under the
laws of California and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted. The Company does business in no other jurisdiction.
4.2 Authorization of Agreement. The Company and each other
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party hereto (other than Purchaser) has all requisite power, authority and
legal capacity to execute and deliver this Agreement, the Noncompetition
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by such Person in
connection with the consummation of the transactions contemplated by this
Agreement (collectively, the "the Company Documents"), and to consummate
the transactions contemplated hereby and thereby. This Agreement and each
of the Company Documents have been duly and validly executed and delivered
by the Company and each other party thereto (other than Purchaser) and
(assuming the due authorization, execution and delivery by Purchaser if a
party thereto) this Agreement and each of the Company Documents constitute
the legal, valid and binding obligations of the Company and each other
party thereto (other than Purchaser), enforceable against such Person in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.3 Capitalization.
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(a) The authorized capital stock of the Company consists of
ten thousand (10,000) shares of Common Stock, and ten thousand (10,000)
shares of Preferred Stock. There are three hundred twenty (320) shares of
Common Stock issued and outstanding and six thousand nine hundred twenty
(6,920) shares of Preferred Stock issued and outstanding. All of the issued
and outstanding shares of Common Stock are owned, beneficially and of
record, by Lynn D. Conley and Paul W. Conley (the "Common Shareholders")
individually. All of the issued and outstanding shares of Preferred Stock
are owned, of record, by Lynn D. Conley and Paul W. Conley, as Trustees of
the Manor Investment Company, Inc. Profit Sharing Plan & Trust (the
"Preferred Shareholders").
4.4 Subsidiaries and Other Interests. Except as set forth
--------------------------------
on Schedule 4.4, the Company does not have any Subsidiaries and does not
own any equity interests in any Person.
4.5 Corporate Records. The Company has delivered to the
-----------------
Purchaser true, correct and complete copies of the articles of
incorporation (certified by the Secretary of State of California) and
by-laws (certified by the secretary, assistant secretary or other
appropriate officer) of the Company.
4.6 Conflicts; Consents of Third Parties.
------------------------------------
(a) None of the execution and delivery by the Company or the
Shareholder of this Agreement and the Company Documents, the consummation
by each of the Company and the Shareholder of the transactions contemplated
hereby and thereby, or compliance by the Company or the Shareholder with
any of the provisions hereof or thereof will, except as set forth on
Schedule 4.6, (i) conflict with, or result in the breach of, any provision
of the articles of incorporation or by-laws of the Company; (ii) conflict
with, violate, result in the breach or termination of, constitute a default
under, or give rise to any right of acceleration under, any note, bond,
mortgage, deed of trust, indenture, license, lease, agreement or other
instrument or obligation to which the Company or the Shareholder is a party
or by which any of them or any of their respective properties or assets is
bound; (iii) violate any material statute, rule, regulation, judgment or
Order of any Governmental Body by which the Company or the Shareholder is
bound; or (iv) result in the creation of any Lien upon the properties or
assets of the Company or the Shareholder.
(b) Except as set forth on Schedule 4.6, no material
consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with or notification to, any Person or Governmental
Body is required on the part of the Company or the Shareholder in
connection with the execution and delivery of this Agreement or the Company
Documents, or the compliance by the Company or the Shareholder, as the case
may be, with any of the provisions hereof or thereof.
4.7 Ownership. The Company is the owner of all the Assets,
---------
free and clear of any and all Liens (other than Permitted Exceptions).
4.8 Financial Statements. The Company has delivered to the
--------------------
Purchaser copies of (i) the reviewed balance sheets of the Company as of
June 30, 1993, 1994 and 1995 and the related reviewed statements of income
and of cash flows of the Company for the years then ended and (ii) the
audited consolidated balance sheet of the Company as of June 30, 1996 and
the related audited statements of income and cash flows of the Company for
the period then ended (such audited and reviewed statements, including the
related notes and schedules thereto, are referred to herein as the
"Financial Statements"). Each of the Financial Statements is complete and
correct in all material respects, has been prepared in accordance with GAAP
(subject to normal year-end adjustments in the case of the unaudited
statements) and in conformity with the practices consistently applied by
the Company without modification of the accounting principles used in the
preparation thereof, and presents fairly in accordance with GAAP the
financial position, results of operations and cash flows of the Company as
at the dates and for the periods indicated.
For the purposes hereof, the audited balance sheet of the Company
as of June 30, 1996 is referred to as the "Balance Sheet" and June 30, 1996
is referred to as the "Balance Sheet Date".
4.9 No Undisclosed Liabilities. Except as set forth on
--------------------------
Schedule 4.9, the Company has no indebtedness, obligations or liabilities
of any kind (whether absolute, contingent or otherwise, and whether due or
to become due) which are not reflected on the Balance Sheet other than such
indebtedness, obligations or liabilities (i) as were incurred in the
ordinary and usual course of business consistent with its past practices
since the Balance Sheet Date, (ii) existing pursuant to any contract or
agreement disclosed on Schedules 4.12(a)(1), 4.12(a)(3), 4.13 or 4.15 (or
any contract or agreement not required to be disclosed thereon because such
contract or
agreement was not of the type required to be disclosed thereon) or (iii)
which will be repaid or discharged prior to the Closing.
4.10 Absence of Certain Developments. Except as expressly
-------------------------------
required by this Agreement or as set forth on Schedule 4.10, since the
Balance Sheet Date:
(i) there has not been any Material Adverse Change nor,
to the Knowledge of the Company, has there occurred any event which is
reasonably likely to result in a Material Adverse Change;
(ii) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and
assets of the Company having a replacement cost of more than Ten Thousand
Dollars ($10,000) for any single loss or Twenty-Five Thousand Dollars
($25,000) for all such losses;
(iii) there has not been any declaration, setting aside
or payment of any dividend or other distribution in respect of any shares
of capital stock of the Company or any repurchase, redemption or other
acquisition by the Company of any outstanding shares of capital stock or
other securities of, or other ownership interest in, the Company;
(iv) the Company has not awarded or paid any bonuses to
employees of the Company with respect to the fiscal year ended June 30,
1996, or entered into any employment, deferred compensation, severance or
similar agreement (nor amended any such agreement) or agreed to increase
the compensation payable or to become payable by it to any of the Company s
directors, officers, employees, agents or representatives or increased or
agreed to increase the coverage or benefits available under any severance
pay, termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such directors, officers, employees,
agents or representatives (other than normal increases in the ordinary
course of business consistent with past practice and that in the aggregate
have not resulted in a material increase in the benefits or compensation
expense of the Company, including coverage or contributions required or
permitted under the terms of any Employee Benefit Plan or required under
any applicable law, rule or regulation);
(v) there has not been any change by the Company
in accounting or Tax reporting principles, methods or policies;
(vi) the Company has not entered into any transaction or
Contract or conducted its business other than in the ordinary course
consistent with past practice;
(vii) the Company has not failed to promptly pay and
discharge current liabilities except where disputed in good faith by
appropriate proceedings;
(viii) other than in the ordinary course consistent with
past practice, the Company has not made any loans, advances or capital
contributions to, or investments in, any Person, or paid any fees or
expenses to any Affiliate of the Company;
(ix) the Company has not mortgaged, pledged or subjected
to any Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets, except
for assets acquired or sold, assigned, transferred, conveyed, leased or
otherwise disposed of in the ordinary course of business consistent with
past practice;
(x) the Company has not discharged or satisfied any
Lien, or paid any obligation or liability (fixed or contingent), except in
the ordinary course of business consistent with past practice and which, in
the aggregate, would not be material to the Company or which is permitted
or required under the terms of any Employee Benefit Plan or required under
any applicable law, rule, or regulation and which in the aggregate would
not be material to the Company;
(xi) the Company has not canceled or compromised any
debt or claim or amended, canceled, terminated, relinquished, waived or
released any Contract or right except in the ordinary course of business
consistent with past practice and which, in the aggregate, would not be
material to the Company;
(xii) the Company has not made or committed to make any
capital expenditures or capital additions or betterments in excess of Ten
Thousand Dollars ($10,000) individually or Twenty-Five Thousand
Dollars ($25,000) in the aggregate;
(xiii) the Company has not entered into any
transaction, arrangement or agreement with any of its Affiliates;
(xiv) the Company has not instituted or settled any
material Legal Proceeding; and
(xv) the Company has not agreed to do anything set
forth in this Section 4.10.
4.11 Taxes.
-----
(a) All Tax Returns required to be filed by or with respect
to the Company or its assets have been properly prepared and duly and
timely filed with the appropriate taxing authorities in all jurisdictions
in which such Tax Returns are required to be filed, and all such Tax
Returns are true, complete and correct in all material respects. The
Company has duly and timely paid all Taxes that are due, or claimed or
asserted by any taxing authority to be due, from or with respect to it for
periods covered by such Tax Returns. With respect to any period for which
Tax Returns have not yet been filed, or for which Taxes are not due or
owing, the Company has made sufficient current accruals for such Taxes in
its Financial Statements as of June 30, 1996.
(b) The Company has duly and timely withheld from employee
salaries, wages and other compensation and has paid over to the appropriate
taxing authorities all amounts required to be so withheld and paid over for
all periods under all applicable laws.
(c) There are no outstanding agreements, waivers or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due
from or with respect to the Company for any taxable period.
(d) All deficiencies asserted or assessments made as a
result of any examinations by the Internal Revenue Service or any other
taxing authority of the Tax Returns of or covering or including the Company
have been fully paid, and there are no other audits or investigations by
any taxing authority in progress, nor has the Company received any notice
from any taxing authority that it intends to conduct such an audit or
investigation.
(e) Neither of the Shareholders is a foreign person
within the meaning of Section 1445 of the Code.
(f) No claim has been made by a taxing authority in a
jurisdiction where the Company does not file Tax Returns
such that it is or may be subject to taxation by that jurisdiction.
(g) No property owned on the Closing Date by the Company
will be required to be treated as being (i) owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment
of the Tax Reform Act of 1986 or (ii) tax-exempt use property within the
meaning of Section 168(h)(1) of the Code.
(h) No property owned on the Closing Date by the Company is
subject to a Section 467 rental agreement.
(i) The Company is not a party to any tax sharing or similar
agreement or arrangement (whether or not written) pursuant to which it will
have any obligation to make any payments after the Closing.
(j) The performance of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional
or subsequent event) result in any payment that would constitute an "excess
parachute payment" within the meaning of Section 280G of the Code.
(k) There are no liens with respect to Taxes upon any of the
assets of the Company, other than Permitted Exceptions.
(l) The Company has never been a member of an affiliated
group of corporations filing a consolidated, combined or unitary Tax
Return.
4.12 Real Property.
-------------
(a) Schedule 4.12(a)(1) sets forth a complete list of all
real property and interests in real property leased by the Company
(individually, a "Real Property Lease" and the real properties specified in
such leases being referred to herein individually as a "Company Property"
and collectively as the "Company Properties") as lessee or lessor. The
Company Property constitutes all interests in real property currently used
or currently held for use in connection with the business of the Stores and
which are necessary for the continued operation of the business of the
Stores as the business is currently conducted. Except as set forth on
Schedule 4.12(a)(2), to the best of the Company s and/or the Shareholder s
knowledge, the premises leased pursuant to the Real Property Leases comply
with all building,
fire, zoning and other ordinances and regulations applicable thereto. The
Company has paid all rent, additional rent and/or other charges reserved
and payable under each of the Real Property Leases to the extent so payable
as of the date hereof. The Company has a valid and enforceable leasehold
interest under each of the Real Property Leases, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity); the Company has
not caused an event of default or received any written notice of any
default or event that with notice or lapse of time, or both, would
constitute a default by the Company under any of the Real Property Leases;
and none of the landlords in respect of the Real Property Leases has caused
an event of default that with notice or lapse of time, or both, would
constitute a default by any one of such landlords under any of the Real
Property Leases. Except as set forth on Schedule 4.12(a)(3), there is no
management agreement, equipment lease, service contract or other contract
or agreement to which the Company is a party affecting any Company Property
(collectively, "Property Contracts") which (i) was not made in the ordinary
course of business, (ii) is not terminable upon 30 days prior notice by the
Company without payment of a premium or penalty or (iii) requires payments
in excess of an amount that, if added to the monthly payment obligations of
all other Property Contracts in respect of such Company Property, would
cause the aggregate amount of all monthly payment obligations in respect of
all Property Contracts for such Company Property to exceed $1,000 with
respect to a Real Property Lease. The Company has delivered to the
Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications or supplements, if any,
thereto. The Company presently owns and operates the Stores, which includes
the check cashing stores at the locations set forth on Schedule 4.12(a)(1).
(b) The Company has all certificates of occupancy and
Permits of any Governmental Body necessary or useful for the current use
and operation of each Company Property, and the Company has fully complied
with all material conditions of the Permits applicable to them. No default
or violation, or event that with the lapse of time or giving of notice or
both would become a default or violation, has occurred in the due
observance of any Permit.
(c) There does not exist any actual or, to the best
Knowledge of the Company and/or the Shareholders, threatened or
contemplated condemnation or eminent domain proceedings that
affect any Company Property or any part thereof and the Company has not
received any notice, oral or written, of the intention of any Governmental
Body or other Person to take or use all or any part thereof.
(d) The Company has not received any written notice from any
insurance company that has issued a policy with respect to any Company
Property requiring performance of any structural or other repairs or
alterations to such Company Property.
(e) The Company does not own or hold, and is not obligated
under or a party to, any option, right of first refusal or other Contract
right to purchase, acquire, sell, assign or dispose of any real estate or
any portion thereof or interest therein.
(f) The Company does not own or hold in fee any real
property with respect to the Stores.
4.13 Tangible Personal Property.
--------------------------
(a) Schedule 4.13 sets forth all leases of personal property
("Personal Property Leases") relating to personal property used in the
business of the Company or to which the Company is a party or by which the
properties or assets of the Company is bound. The Company has delivered or
otherwise made available to the Purchaser true, correct and complete copies
of the Personal Property Leases, together with all amendments,
modifications or supplements thereto.
(b) The Company has a valid leasehold interest under each of
the Personal Property Leases under which it is a lessee, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
default under any Personal Property Lease by the Company, or, to the best
Knowledge of the Company and/or the Shareholder, by any other party
thereto, and no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default thereunder.
(c) The Company has good and marketable title to all of the
items of tangible personal property reflected on its Balance Sheet (except
as sold or disposed of subsequent to the date thereof in the ordinary
course of business consistent with
past practice), free and clear of any and all Liens, other than the
Permitted Exceptions.
4.14 Intangible Property. Schedule 4.14 contains a
-------------------
complete and correct list of each patent, trademark, trade name, service
mark and copyright owned or used by the Company as well as all
registrations thereof and pending applications therefor, and each license
or other agreement relating thereto. Except as set forth on Schedule 4.14,
each of the foregoing is owned by the party shown on such Schedule as
owning the same, free and clear of all Liens and is in good standing and
not the subject of any challenge. There have been no claims made and the
Company has not received any notice or otherwise knows or has reason to
believe that any of the foregoing is invalid or conflicts with the asserted
rights of others. The Company possesses all patents, patent licenses, trade
names, trademarks, service marks, brand marks, brand names, copyrights,
know-how, formulae and other proprietary and trade rights necessary for the
conduct of its business as now conducted, not subject to any restrictions
and without any known conflict with the rights of others and the Company
has not forfeited or otherwise relinquished any such patent, patent
license, trade name, trademark, service mark, brand mark, brand name,
copyright, know-how, formulae or other proprietary right necessary for the
conduct of its business as conducted on the date hereof. The Company is not
under any obligation to pay any royalties or similar payments in connection
with any license to any Affiliate of the Company.
4.15 Material Contracts. Schedule 4.15 sets forth each of
------------------
the following Contracts to which the Company is a party or by which it is
bound (collectively, the "Material Contracts"): (i) Contracts with the
Shareholder (or any Affiliates of the Shareholder) or any current or former
officer or director of the Company; (ii) Contracts with any labor union or
association representing any employee of the Company; (iii) Contracts
pursuant to which any Person is required to purchase or sell a stated
portion of its requirements or output from or to another Person; (iv)
Contracts for the sale of any of the assets of the Company other than in
the ordinary course of business or for the grant to any Person of any
preferential rights to purchase any of its assets; (v) partnership or joint
venture agreements; (vi) Contracts containing covenants of the Company or
any of its Affiliates not to compete in any line of business or with any
Person in any geographical area or covenants of any other Person not to
compete with the Company in any line of business or in any geographical
area; (vii) Contracts relating to the acquisition by the Company of any
operating business or the capital stock of any other Person: (viii)
Contracts relating to the borrowing of
money; or (ix) any other Contracts, other than Real Property Leases or
personal property leases, which involve the expenditure of more than
$15,000 in the aggregate or $5,000 annually or require performance by any
party more than one year from the date hereof. There have been made
available to the Purchaser true and complete copies of each of the Material
Contracts. Except as set forth on Schedule 4.15, each of the Material
Contracts and other agreements is in full force and effect and is the
legal, valid and binding obligation of each party thereto, enforceable
against such party in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as set
forth on Schedule 4.15, the Company is not in default in any material
respect under any Material Contracts, nor, to the Knowledge of the Company
or the Shareholders, is any other party to any Material Contract in default
thereunder in any material respect.
4.16 Employee Benefits. Schedule 4.16(a) sets forth a
-----------------
complete and correct list of all "employee benefit plans" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other severance pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, stock purchase
arrangements or policies, life insurance, scholarship or other employee
benefit plan, program or arrangement maintained by the Company or to which
the Company has any liability (contingent or otherwise) with respect to
employees, officers, directors or shareholders of the Company ("Employee
Benefit Plans"). None of the Employee Benefit Plans constitutes (i) a
multiple employer plan as defined in Section 4063 and 4064 of ERISA
("Multiple Employer Plans"), (ii) a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) ("Multiemployer Plans"), (iii) a "benefit
plan", within the meaning of Section 5000(b)(l) of the Code providing
continuing benefits after the termination of employment (other than as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and at
the former employee s or his beneficiary s sole expense), (iv) a defined
benefit plan that is subject to Title IV of ERISA or (v) a plan or
arrangement which provides continuing medical, life insurance or other
welfare benefits after termination of employment other than as required by
Section 4980B of the Code. A complete and accurate copy of each Employee
Benefit Plan has been provided to Purchaser. All contributions to the
Employee Benefit Plans and 412 Plans that may have been required to be made
under such plans and, when applicable,
Section 302 of ERISA and Section 412 of the Code, have been timely made.
4.17 Labor.
-----
(a) The Company is not party to any labor or collective
bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the Company.
(b) No employees of the Company are represented by any labor
organization. No labor organization or group of employees of the Company
has made a pending demand for recognition, and there are no representation
proceedings or petitions seeking a representation proceeding presently
pending or, to the best Knowledge of the Company or the Shareholders,
threatened to be brought or filed, with the National Labor Relations Board
or other labor relations tribunal. There is no organizing activity
involving the Company pending or, to the best Knowledge of the Company or
the Shareholders, threatened by any labor organization or group of
employees of the Company.
(c) There are no (i) strikes, work stoppages, slowdowns,
lockouts or arbitrations or (ii) material grievances or other labor
disputes pending or, to the best Knowledge of the Company or the
Shareholders, threatened against or involving the Company. There are no
unfair labor practice charges, material grievances or material complaints
pending or, to the best Knowledge of the Company or the Shareholders,
threatened by or on behalf of any employee or group of employees of the
Company.
4.18 Litigation. Except as set forth in Schedule 4.18,
----------
there is no suit, action, proceeding, investigation, claim or order pending
or, to the Knowledge of the Company or the Shareholders, overtly threatened
against the Company (or to the Knowledge of the Company or the
Shareholders, pending or threatened, against any of the officers, directors
or key employees of the Company with respect to their business activities
on behalf of the Company), or to which the Company is otherwise a party,
before any court, or before any governmental department, commission, board,
agency, or instrumentality; nor, to the Knowledge of the Company or the
Shareholder, is there any reasonable basis for any such action, proceeding,
or investigation. The Company is not subject to any judgment, Order or
decree of any court or Governmental Body and the Company is not engaged in
any legal action to recover monies due it or for damages sustained by it.
4.19 Compliance with Laws. Except as set forth on Schedule
--------------------
4.19, the Company possesses all Licenses of and from all Governmental
Bodies necessary to own or lease its respective properties and assets and
to conduct the business in which it is engaged. Except as set forth on
Schedule 4.19, no proceeding has been threatened or commenced which seeks
to, or could reasonably be anticipated to, cause the suspension,
modification, revocation or withdrawal of any License. The Company is
currently, and at all times has been, in material compliance with all Laws
applicable to it including, without limitation, all applicable banking
Laws. To the knowledge of the Shareholders, neither the Company nor any of
its directors, officers, employees or representatives has offered,
proposed, promised or made any illegal payment to officers, employees or
representatives of any Governmental Body, or engaged in any illegal
reciprocal practices or made any illegal payment or given any other illegal
consideration to any third party.
4.20 Environmental Matters. Except as set forth on
---------------------
Schedule 4.20 hereto:
(a) the operations of the Company, to the Knowledge of the
Company and/or the Shareholders, are and have been in substantial
compliance with all applicable Environmental Laws and all permits, licenses
or other authorizations issued pursuant to applicable Environmental Laws
("Environmental Permits");
(b) the Company has obtained all Environmental Permits
necessary to operate its business and is in substantial compliance
with such Environmental Permits;
(c) the Company is not the subject of any outstanding
written order, agreement or Contract with any Governmental Body or Person
respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any
Release or threatened Release of a Hazardous Material;
(d) the Company has not received any written communication
alleging that the Company or the operations thereof may be in violation of
any Environmental Law or any Environmental Permit, or may have any
liability under any Environmental Law;
(e) to the Knowledge of the Company and/or the Shareholders,
no unpermitted or unlawful Release of any Hazardous Materials has occurred
at any of the Company Properties or off-site so as to adversely affect the
Company Properties;
(f) there are no legal or administrative proceedings pending
or, to the Knowledge of the Company or the Shareholders, threatened against
the Company alleging the violation of or seeking to impose liability
pursuant to Environmental Laws;
(g) to the Knowledge of the Company or the Shareholders,
there are no investigations of the business, operations or currently or
previously owned, operated or leased property of the Company pending or
threatened which could lead to the imposition of any liability pursuant to
Environmental Laws;
(h) to the Knowledge of the Company, there are not located
at any of the Company Properties any (i) underground storage tanks, (ii)
asbestos-containing material or (iii) equipment containing polychlorinated
biphenyls in quantities requiring record keeping pursuant to the Toxic
Substances Control Act; and
(i) the Company has provided to the Purchaser copies of all
environmentally related audits, studies, reports, analyses and results of
investigations in its or the Shareholder s possession, custody or control
that have been performed with respect to the currently or previously owned,
leased or operated properties of the Company.
4.21 Insurance. Schedule 4.21 sets forth a complete and
---------
accurate list of all policies of insurance of any kind or nature covering
the Company or any of its employees, properties or assets, including,
without limitation, policies of life, disability, fire, theft, workers
compensation, employee fidelity and other casualty and liability insurance.
All such policies are in full force and effect and the Company is not in
default of any provision thereof.
4.22 Payables. All accounts payable of the Company
--------
reflected in its Balance Sheet or arising after the date thereof are the
result of bona fide transactions in the ordinary course of business and
have been paid or are not delinquent.
4.23 Related Party Transactions. Except as set forth on
--------------------------
Schedule 4.23, the Company has not borrowed any moneys from and has no
outstanding indebtedness or other similar obligations to the Shareholder or
any of its Affiliates. Except as set forth in Schedule 4.23, none of the
Company, or any of its officers, employees or Affiliates (i) owns any
direct or indirect interest of any kind in, or controls or is a director,
officer, employee or partner of, or consultant to, or lender to or borrower
from or
has the right to participate in the profits of, any Person which is (A) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of the
Company, (B) engaged in a business related to the business of the Company
or (C) a participant in any transaction to which the Company is a party or
(ii) is a party to any Contract or transaction with the Company. Since the
Balance Sheet Date, the Company has not entered into any transactions with
any Affiliate.
4.24 ADA Matters. Neither the Company nor any Shareholder
-----------
has received any written notification regarding any real property which is
the subject of any of the Real Property Leases which would require that the
lessee under any such Real Property Lease make any additions, renovations
or improvements to such property pursuant to the terms of the Americans
With Disabilities Act ("ADA") or otherwise.
4.25 Banks. Schedule 4.25 contains a complete and correct
-----
list of the names and locations of all banks in which the Company has
accounts or safe deposit boxes and the names of all persons authorized to
draw thereon or to have access thereto. Except as set forth on Schedule
4.25, no person holds a power of attorney to act on behalf of the Company.
4.26 No Misrepresentation. No representation or warranty
--------------------
of the Company or the Shareholder contained in this Agreement or in any
schedule hereto or in any certificate or other agreement or instrument
furnished by the Company or the Shareholder to the Purchaser pursuant to
the terms hereof contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein
or therein not misleading.
4.27 Financial Advisors. Except as set forth on Schedule
------------------
4.27, no Person has acted, directly or indirectly, as a broker, finder or
financial advisor for the Company or the Shareholder in connection with the
transactions contemplated by this Agreement and no Person is entitled to
any fee or commission or like payment in respect thereof.
4.28 The Company s Solvency and Obligations. The
--------------------------------------
obligations incurred by the Company pursuant to this Agreement or in
connection with the sale of the Stores will not render the Company
insolvent within the meaning of the United States Bankruptcy Code, other
applicable federal law or applicable state law, including, without
limitation, the laws of the States of California or New York. Every
obligation incurred by the Company pursuant to this Agreement or in
connection with the sale of the
assets sold by it hereunder has been incurred for fair consideration. The
Company acknowledges the receipt of reasonably equivalent value in
connection with the sale of the Assets. The Company does not intend or
believe that it will incur debts beyond its ability to pay as they mature
in connection with the obligations incurred pursuant to this Agreement or
in connection with the sale of the Assets. The Company has no actual intent
to hinder, delay or defraud either present or future creditors by incurring
obligations pursuant to this Agreement or in connection with the sale of
the Assets. The property remaining in the Company s possession after the
sale of the Assets does not constitute unreasonably small capital for the
Company. Upon and after the Closing, the Company shall have sufficient
capital to carry on the business and the transactions in which it intends
to engage, and is now, and shall be after Closing, solvent and able to pay
its debts as they mature.
4.29 Name. "C&C," "C&C Check Cashing" and "Cash King" are
----
the only names used by the Company in the operation of the Stores.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Shareholders
that:
5.1 Organization and Good Standing. The Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of California.
5.2 Authorization of Agreement. The Purchaser has full
--------------------------
corporate power and authority to execute and deliver this Agreement and
each other agreement, document, instrument or certificate contemplated by
this Agreement or to be executed by the Purchaser in connection with the
consummation of the transactions contemplated hereby and thereby (the
"Purchaser Documents"), and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by the
Purchaser of this Agreement and each Purchaser Document have been duly
authored by all necessary corporate action on behalf of the Purchaser. This
Agreement and each Purchaser Document has been duly executed and delivered
by the Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement and each
Purchaser Document when so executed and delivered constitute the legal,
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
5.3 Conflicts: Consents of Third Parties.
------------------------------------
(a) Except as set forth on Schedule 5.3 hereto, none of the
execution and delivery by the Purchaser of this Agreement and of the
Purchaser Documents, the consummation by the Purchaser of the transactions
contemplated hereby and thereby or compliance by the Purchaser with any of
the provisions hereof or thereof will (i) conflict with, or result in the
breach of, any provision of the certificate of incorporation or by-laws of
the Purchaser, (ii) conflict with, violate, result in the breach or
termination of, constitute a default under, or give rise to any right of
acceleration under, any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which the Purchaser is a party or by
which the Purchaser or its properties or assets is bound or (iii) violate
any statute, rule, regulation, judgment or Order of any Governmental Body
by which the Purchaser is bound, except, in the case of clauses (ii) and
(iii), for such violations, breaches or defaults as would not, individually
or in the aggregate, have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated hereby and thereby.
(b) Except as set forth on Schedule 5.3, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with,
or notification to, any Person or Governmental Body is required on the part
of the Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents or the compliance by Purchaser with
any of the provisions hereof or thereof.
5.4 Litigation. There are no Legal Proceedings pending
----------
or, to the best knowledge of the Purchaser, threatened that are reasonably
likely to prohibit or restrain the ability of the Purchaser to enter into
this Agreement or consummate the transactions contemplated hereby.
5.5 Financial Advisors. No Person has acted, directly or
------------------
indirectly, as a broker, finder or financial advisor for the
Purchaser in connection with the transactions contemplated by this
Agreement and no person is entitled to any fee or commission or like
payment in respect thereof other than Beau Jeffries, and Purchaser shall be
liable for whatever fees shall be payable to him in connection with this
Agreement.
5.6 Purchaser s Solvency and Obligations. The obligations
------------------------------------
incurred by Purchaser pursuant to this Agreement or in connection with the
purchase of the Stores will not render Purchaser insolvent within the
meaning of the United States Bankruptcy Code, other applicable federal law
or applicable state law, including, without limitation, the laws of the
States of California or New York. Every obligation incurred by Purchaser
pursuant to this Agreement or in connection with the purchase of the Assets
purchased hereunder has been incurred for fair consideration. Purchaser
acknowledges the receipt of reasonably equivalent value in connection with
the purchase of the Assets. Purchaser does not intend or believe that it
will incur debts beyond its ability to pay as they mature in connection
with the obligations incurred pursuant to this Agreement or in connection
with the purchase of the Assets. Purchaser has no actual intent to hinder,
delay or defraud either present or future creditors by incurring
obligations pursuant to this Agreement or in connection with the purchase
of the Assets. The property remaining in Purchaser s possession after the
purchase of the Assets does not constitute unreasonably small capital for
Purchaser. Upon and after the closing, Purchaser shall have sufficient
capital to carry on the business and the transactions in which it intends
to engage, and is now, and shall be after closing, solvent and able to pay
it debts as they mature.
5.7 Purchaser s Group Medical Plans. The Purchaser s
-------------------------------
applicable group medical plans will not exclude coverage of any employees
of the Company who (i) participate in the Company s group medical plan,
(ii) receive and accept an offer of employment from Purchaser, and (iii)
properly enroll in Purchaser s applicable group medical plans during an
open enrollment period established by the Purchaser following the Closing
Date on the basis of any preexisting medical conditions of any such
employee (other than exclusions provided under the Company s group medical
plan).
ARTICLE VI
COVENANTS
6.1 Effect of Investigation. Each of the Company and the
-----------------------
Shareholders agrees that no investigation by the Purchaser prior to or
after the date of this Agreement shall diminish or obviate any of the
representations, warranties, covenants or agreements of the Company or the
Shareholders contained in this Agreement or the Company Documents.
6.2 Conduct of the Business Pending Closing. Between the
---------------------------------------
date hereof and the Closing hereunder the Company shall, and the
Shareholders shall cause the Company to:
(a) except as otherwise permitted by this Agreement, not
take or suffer or permit any action which would render materially untrue
any of the representations or warranties of the Shareholders and the
Company herein contained, and not omit to take any action, the omission of
which would render materially untrue any such representation or warranty;
(b) except as permitted by this Agreement, conduct its
business in a good and diligent manner in the ordinary and usual course
(except the Company may stop offering Pay Day Loans and/or Consumer Loans);
(c) not enter into any contract, agreement, commitment or
arrangement with any party, other than contracts for the provision of
services and contracts for the purchase of materials and supplies in the
ordinary and usual course of business, and except as may be required to
comply with the terms hereof, not amend, modify or terminate any Real
Property Lease, Personal Property Lease or Material Contract without the
prior written consent of the Purchaser;
(d) use their best efforts to preserve the Company s
business organization intact, except as may be required to comply with the
terms hereof, to keep available the services of its employees, and to
preserve its relationships with customers, suppliers and others with whom
it deals;
(e) not reveal, orally or in writing, to any party, other
than the Purchaser and the Purchaser s authorized agents, any of the
business procedures and practices, intellectual property or trade secrets
followed or utilized by the Company in the conduct of its business;
(f) maintain in full force and effect all of the insurance
policies listed on Schedule 4.21 and make no change in any insurance
coverage without the prior written consent of the Purchaser;
(g) keep the premises occupied by the Company and all of the
Company s equipment and other tangible personal property in good order and
repair and perform all necessary repairs and maintenance;
(h) continue to maintain all of the Company s usual business
books and records in accordance with its past practices and not change its
method of accounting;
(i) not issue any capital stock or any option, warrant
or right relating thereto;
(j) not waive any right or cancel any claim;
(k) except as disclosed on Schedule 4.10, not increase the
compensation or rate of compensation payable to any of the Company s
employees without the prior written consent of the Purchaser;
(l) maintain the Company s corporate existence and not
merge or consolidate the Company with any other entity;
(m) except as may be required to comply with the terms
hereof, comply with all provisions of all Real Property Leases, Personal
Property Leases and Material Contracts and all applicable laws, rules and
regulations;
(n) except as described on Schedule 4.10, not make any
capital expenditure;
(o) not amend its articles of incorporation or bylaws;
(p) not agree to do anything prohibited by this
Section 6.2; and
(q) not make any material Tax election or settle or
compromise any Tax liability for an amount materially in excess of the
liability therefor that is reflected in the Financial Statements.
6.3 Consents. The Shareholders and the Company shall use
--------
their best efforts, and the Purchaser shall cooperate with
the Shareholders and the Company to obtain at the earliest practicable date
all consents, waivers, approvals, Orders, Permits and authorizations of any
Person or Governmental Body required to be obtained by the Company to
consummate the transactions contemplated by this Agreement, including,
without limitation, the consents, waivers, approvals, Orders, Permits and
authorizations of any Person or Governmental Body referred to in Section
4.6(b) hereof.
6.4 Consents to Real Property Leases. The Company, the
--------------------------------
Shareholders and Purchaser will jointly cooperate and use commercially
reasonable efforts to obtain all consents and estoppels from landlords and
lessors which are required to be obtained to consummate the transactions
contemplated by this Agreement pursuant to the terms of any of the Real
Property Leases.
6.5 No Solicitation. Neither the Shareholders nor the
---------------
Company will, nor will they cause or permit the Company or the Company s
directors, officers, employees, representatives or agents (collectively,
the "Representatives") to, directly or indirectly, (i) discuss, negotiate,
undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any
transaction involving a merger, consolidation, business combination,
purchase or disposition of any capital stock or other equity interest in,
or material assets of, the Company other than the transactions set forth in
this Agreement (an "Acquisition Transaction"), (ii) facilitate, encourage,
solicit or initiate discussions, negotiations or submissions of proposals
or offers in respect of an Acquisition Transaction, (iii) furnish or cause
to be furnished, to any Person, any information concerning the business,
operations, properties or assets of the Company in connection with an
Acquisition Transaction, or (iv) otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any other Person to do or seek any of the foregoing. The Shareholders and
the Company will inform the Purchaser in writing immediately following the
receipt by any Shareholder, the Company or any Representative of any
proposal or inquiry in respect of any Acquisition Transaction.
6.6 Preservation of Records. Subject to Section 6.13(b)
-----------------------
hereof (relating to the preservation of Tax records), the Shareholders and
the Purchaser agree that each of them shall preserve and keep the records
held by them relating to the business of the Company for a period of five
years from the Closing Date and shall make such records and personnel
available
to the other as may be reasonably required by such party in connection
with, among other things, any insurance claims by, legal proceedings
against or governmental investigations of the Shareholders or the Purchaser
or any of their respective Affiliates or in order to enable the
Shareholders or the Purchaser to comply with their respective obligations
under this Agreement and each other agreement, document or instrument
contemplated hereby. In the event either the Shareholders or the Purchaser
wishes to destroy such records after that time but prior to December 31,
2006, such party shall first give ninety (90) days prior written notice to
the other and such other party shall have the right at its option and
expense, upon prior written notice given to such party within that ninety
(90) day period, to take possession of the records within one hundred and
eighty (180) days after the date of such notice.
6.7 Publicity. Neither the Company, the Shareholders, nor
---------
Purchaser shall issue any press release or public announcement concerning
this Agreement or the transactions contemplated hereby without obtaining
the prior written approval of the other parties hereto, which approval will
not be unreasonably withheld or delayed, unless, in the sole judgment of
Purchaser, disclosure is otherwise required by applicable Law, provided
that, to the extent required by
--------
applicable law or the rules and regulations of the Securities and Exchange
Commission, the party intending to make such release shall use its best
efforts consistent with such applicable law to consult with the other
parties with respect to the text thereof.
6.8 Use of Name. The Shareholders hereby agree that upon
-----------
the consummation of the transactions contemplated hereby, the Purchaser
shall have the sole right (vis-a-vis the Company, the Shareholders and any
of their respective Affiliates) to the use of the names "C&C," "C&C Check
Cashing" and "Cash King," and the Shareholders shall not, and shall not
cause or permit any Affiliate to, use such names or any variation or
simulation thereof in any business or manner, either involving check
cashing or otherwise; provided, that a
--------
partnership owned by the Company and Paul W. Conley and one of his
Affiliates shall be entitled to use the name "Cash King" only at the one
store operated by such partnership. The Shareholders and the Affiliates
shall assign to Purchaser, cancel or relinquish any fictitious name
registration held by them concerning the names "C&C," "C&C Check Cashing"
and "Cash King" or any derivation thereof.
6.9 Environmental Matters. The Company shall identify the
---------------------
Environmental Permits required by Purchaser to operate the business of
the Company and shall promptly file all materials
required under Environmental Laws (including, without limitation, foreign
or state property transfer laws such as the Industrial Site Recovery Act)
and all requests required for the issuance, transfer or reissuance to
Purchaser of Permits necessary to conduct the Company s business prior to
the Closing Date.
6.10 Noncompetition Agreements. Each of the Shareholders
-------------------------
hereby agrees that, at the Closing, each of them shall execute and deliver
to Purchaser the Noncompetition Agreement substantially in the form of
Exhibit A hereto.
6.11 Repayment of Loans; Turn Over of Funds.
--------------------------------------
(a) On or prior to the Closing Date, all loans or other
advances from the Company to the Shareholders or any of their Affiliates,
including any accrued and unpaid interest thereon, shall be repaid in full
and all loans or other advances from the Shareholders or any of their
Affiliates to the Company, including any accrued interest thereon, shall be
paid in full (collectively, the "Affiliate Loans").
(b) On or prior to the Closing Date, the Shareholders shall
cause the obligations owed to Union Bank of California pursuant to the
Credit Agreement described in Schedule 4.6 to be repaid and discharged in
full.
(c) On or prior to the Closing Date, the Shareholders shall
cause the Company to transfer to the Shareholders all right, title and
interest in and to the Excluded Assets in connection with the redemption of
the Redeemed Shares.
(d) All amounts which are paid in respect of the Excluded
Assets and are received by the Company following the Closing shall be
received by it as agent, in trust for and on behalf of the Common
Shareholders. All amounts which are received by any of the Shareholders
following the Closing relating to the operations or business of the Company
(other than those amounts received by any of them in respect of the
Excluded Assets) shall be received by them as agent, in trust for and on
behalf of the Company. Purchaser shall cause the Company to, and the
Shareholders shall, pay promptly all such amounts to the Person that is
entitled to such amounts and shall provide to such Person information as to
the nature, source and classification of such payments, including any
invoice relating thereto.
6.12 Employee Benefits and Employment.
--------------------------------
(a) The Sellers shall, no later than the Closing Date,
assume and maintain sponsorship of and full responsibility for each of the
Employee Benefit Plans, including all liabilities that arise under Part 6
of Title I of ERISA or Section 4980B of the Code as a result of or
following the consummation of the transactions contemplated by this
Agreement, and to the extent necessary shall cause the Company to terminate
or otherwise cease its sponsorship of the Employee Benefit Plans.
(b) Sellers shall deliver to Purchaser at least five (5)
Business Days prior to the Closing Date a complete and correct list of all
employees of the Company (the "Employees") setting forth their names,
employment position, salary or hourly wage rate, location as of October 31,
1996 and separately identifying those Employees who were actively employed
on such date ("Active Employees") and those Employees who were not actively
employed on such date (i.e., were absent due to disability, sickness or
leave of absence) (the "Inactive Employees").
6.13 Tax Matters.
------------
(a) Preparation of Tax Returns; Payment of Taxes.
--------------------------------------------
(i) The Shareholders and Purchaser will, to the extent
permitted by applicable law, elect with the relevant taxing authority to
close the taxable period of the Company on the Closing Date. In any case
where applicable law does not permit the Company to close its taxable year
on the Closing Date, then Taxes, if any, attributable to the taxable period
of the Company beginning before and ending after the Closing Date shall be
allocated (a) to the Shareholders for the period up to and including the
Closing Date, and (b) to the Purchaser for the period subsequent to the
Closing Date. For purposes of this Section 6.13(a), Taxes for the period up
to and including the Closing Date and for the period subsequent to the
Closing Date shall be determined on the basis of an interim closing of the
books as of the Closing Date or, to the extent not susceptible to such
allocation, by apportionment on the basis of elapsed days.
(ii) The Shareholders shall be responsible jointly and
severally for filing or causing to be filed all Tax Returns required to be
filed by or on behalf of the Company and/or its operations and assets with
respect to periods ending on or before the Closing Date (taking into
account applicable extensions) and shall pay or cause to be paid any Taxes
shown to
be due thereon. The Shareholders shall file all such Tax Returns in a
manner consistent with past practices and, upon Purchaser s request, shall
provide copies of such Tax Returns to Purchaser for Purchaser s review and
comment at least twenty (20) Business Days prior to filing. Purchaser shall
be responsible for filing or causing to be filed all Tax Returns required
to be filed by or on behalf of the Company and/or its operations and assets
with respect to periods which include any day after the Closing Date
(taking into account applicable extensions) and shall pay or cause to be
paid any Taxes shown to be due thereon subject to the amount of any Taxes
that are the responsibility of the Shareholders pursuant to Section
6.13(a)(iii).
(iii) With respect to any Tax Return of the Company
required to be filed by Purchaser for a taxable period of the Company
beginning before and ending on or after the Closing Date, Purchaser shall
provide the Shareholders with a statement setting forth the amount of Tax
shown on such Tax Return for which the Shareholders are responsible
pursuant to Section 6.13(a)(i) (the "Statement") at least twenty (20)
Business Days prior to the due date for filing of such Tax Return
(including extensions). Not later than five (5) Business Days before the
due date for payment of Taxes with respect to such Tax Return, the
Shareholders shall pay to Purchaser an amount equal to the Taxes shown on
the Statement as being the responsibility of the Shareholders pursuant to
Section 6.13(a)(i) hereof; provided, however, that if Purchaser and the
Shareholders disagree with respect to any item on any such Tax Return, such
disagreement shall be conclusively resolved by an independent certified
public accountant agreed upon by the Shareholders and the Purchaser or
designated in accordance with the Commercial Rules of the American
Arbitration Association. No payment pursuant to this Section 6.13(a)(iii)
shall excuse the Shareholders from their indemnification obligations
pursuant to Section 9.5 hereof should the amount of Taxes as ultimately
determined (on audit or otherwise), for the periods covered by such Tax
Returns and which are the responsibility of the Shareholders, exceed the
amount of the Shareholders payment under this Section 6.13(a)(iii).
(iv) Except for an amended federal income Tax Return for
the year ended June 30, 1996, the Shareholders may not file any amended Tax
Returns or refund claims in respect of any taxable period of the Company
ending on or prior to the Closing Date without the prior written consent of
Purchaser.
(b) Cooperation with Respect to Tax Returns.
---------------------------------------
Purchaser and the Shareholders agree to furnish or cause to be
furnished to each other, and each at their own expense, as
promptly as practicable, such information (including access to books and
records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided, relating to the Company as is reasonably necessary for
the filing of any Tax Return, for the preparation for any audit, and for
the prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes. Purchaser and the
Shareholders shall retain all information, records or documents in their
possession relating to the Company that might be relevant to computations
or payments required after the Closing Date with respect to Tax matters
relating to any taxable period ending on, prior to or including the Closing
Date until the expiration of the relevant statute of limitations or
extensions thereof or, if a proceeding has been instituted for which the
information, records or documents is required, until there is a final
determination with respect to such proceeding.
(c) Tax Audits.
----------
(i) Purchaser shall promptly notify the Shareholders
upon receipt by Purchaser of written notice of any Tax audits of or
proposed assessments against the Company for taxable periods ending on or
prior to the Closing Date; provided, however,
-------- -------
that the failure of Purchaser to give the Shareholders prompt notice as
required herein shall not relieve the Shareholders of any of their
obligations to pay such Taxes except and to the extent that Shareholders
are actually and materially prejudiced thereby. The Shareholders shall have
the right to represent the Company s interests in any such Tax audit or
administrative or court proceeding and to employ counsel of its choice;
provided, that (i) the Shareholders
--------
shall keep the Purchaser apprised of the status of any Tax audits or
administrative or court proceedings and the Purchaser shall have the right
to consult with the Shareholders and their counsel, at the Purchaser s cost
and expense, in connection therewith and (ii) in the event that a
settlement or compromise thereof would obligate either the Company or the
Purchaser to make any monetary payment or would otherwise adversely effect
either the Company, the Purchaser or any of their Affiliates, the
Shareholders may not agree to such settlement or compromise without the
prior consent of the Purchaser, which consent will not be unreasonably
withheld or delayed.
(ii) The Shareholders shall promptly notify Purchaser
upon receipt by any of the Shareholders of written notice of any Tax audit
or proposed assessment or other proposed change or adjustment which may
affect either the Company or its
Tax attributes. The Shareholders shall keep Purchaser duly informed of the
progress thereof and, if the results of such Tax audit or proceeding may
have an adverse effect on either the Company, Purchaser or any of their
Affiliates for any taxable period, including or ending after the Closing
Date, then the Shareholders may not agree to a settlement or compromise
thereof without Purchaser s consent, which consent will not be unreasonably
withheld or delayed.
(d) Transfer Taxes. The Shareholders shall be liable
--------------
for and shall pay all sales, use, stamp, documentary, filing recording,
transfer or similar fees or taxes or governmental charges (including,
without limitation, FAA, ICC, DOT, real estate or motor vehicle
registration, title recording or filing fees and other amounts payable in
respect of transfer filings) as levied by any taxing authority or
governmental agency in connection with the transactions contemplated by
this Agreement (other than taxes measured by or with respect to income
imposed on Purchaser or its Affiliates). The Shareholders hereby agree to
file all necessary documents (including, but not limited to, all Tax
Returns) with respect to all such amounts in a timely manner.
(e) Allocation of Purchase Price. Attached hereto as
----------------------------
Schedule 6.13 is an allocation of the Purchase Price among the Purchased
Shares and the Noncompetition Agreement which has been prepared in
accordance with Section 1060 of the Code.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The
------------------------------------------------
obligation of the Purchaser to consummate the transactions contemplated by
this Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be
waived by the Purchaser in whole or in part):
(a) all representations and warranties of the
Shareholders contained herein shall be true and correct as of the date
hereof;
(b) all representations and warranties of the Shareholders
contained herein qualified as to materiality shall be true and correct, and
the representations and warranties of the Shareholders contained herein not
qualified as to materiality
shall be true and correct in all material respects, at and as of the
Closing Date with the same effect as though those representations and
warranties had been made again at and as of that time;
(c) the Shareholders and the Company shall have performed
and complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Closing Date:
(d) Purchaser shall have been furnished with a certificate
(dated the Closing Date and in form and substance reasonably satisfactory
to Purchaser) executed by the Shareholders certifying as to the fulfillment
of the conditions specified in Sections 7.1(a) , 7.1(b) and 7.1(c) hereof;
(e) the Shareholders shall have obtained all consents and
waivers referred to in Section 4.6 hereof, in a form reasonably
satisfactory to Purchaser, with respect to the transactions contemplated by
this Agreement and the Company Documents; provided,
--------
however, that with respect to the Real Property Leases, this
-------
condition shall be satisfied if the Minimum Lease Condition is
satisfied;
(f) there shall not have been or occurred any Material
Adverse Change since June 30, 1996 which is not described on Schedule 4.10;
(g) no Legal Proceedings shall have been instituted or
threatened or claim or demand made against the Company, the Shareholders or
the Purchaser seeking to restrain or prohibit or to obtain substantial
damages with respect to the consummation of the transactions contemplated
hereby, and there shall not be in effect any Order by a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;
(h) each of the Shareholders shall have provided the
Purchaser with an affidavit of non-foreign status that complies with
Section 1445 of the Code (a "FIRPTA Affidavit");
(i) the Shareholders shall have furnished, or caused to be
furnished, to Purchaser, in form and substance satisfactory to Purchaser,
such certificates and other evidence as Purchaser may have reasonably
requested as to the satisfaction of the conditions contained in this
Section and as to such other
matters relating to the representations, warranties, covenants and
undertakings in this Agreement as Purchaser may reasonably request;
(j) the Shareholders shall have obtained consents from the
landlords and lessors under each Real Property Lease, to the extent consent
is required under such Real Property Lease with respect to the transaction
contemplated by this Agreement; provided, however,
-------- -------
that this condition shall be deemed satisfied if the Minimum Lease
Condition is satisfied;
(k) the Real Property Lease at the Company s Laloma Store
No. 51 in Modesto, California shall have been amended on terms reasonably
satisfactory to Purchaser to provided for termination at the Company s
election on ninety (90) days written notice in the event that the Food
Stamp Contract pursuant to which such store distributes benefits is or
shall be terminated;
(l) all Affiliate Loans shall have been repaid to or
by the Company on or prior to the Closing Date;
(m) the Company shall have repaid all obligations with
respect to long-term indebtedness and any obligations to banks and other
financial institutions;
(n) Purchaser shall have received duly executed copies
of each of the documents enumerated in Section 8.1; and
(o) Purchaser shall have received financing on terms
acceptable to Purchaser in its sole discretion.
7.2 Conditions Precedent to Obligations of the
------------------------------------------
Shareholders. The obligations of the Shareholders to consummate the
------------
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions (any
or all of which may be waived by the Shareholders in whole or in part to
the extent permitted by applicable law):
(a) all representations and warranties of Purchaser
contained herein shall be true and correct as of the date hereof;
(b) all representations and warranties of Purchaser
contained herein qualified as to materiality shall be true and correct, and
all representations and warranties of the Purchaser contained herein not
qualified as to materiality shall
be true and correct in all material respects, at and as of the Closing Date
with the same effect as though those representations and warranties had
been made again at and as of that date;
(c) Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser on or prior to the
Closing Date:
(d) payment of the amounts specified in Section 2.2;
(e) the Shareholders shall have been furnished with a
certificate (dated the Closing Date and in form and substance reasonably
satisfactory to the Shareholders) executed by the president or a vice
president of the Purchaser certifying as to the fulfillment of the
conditions specified in Sections 7.2(a), 7.2(b) and 7.2(c);
(f) no Legal Proceedings shall have been instituted or
threatened or claim or demand made against the Company, the Shareholders or
Purchaser seeking to restrain or to prohibit or to obtain substantial
damages with respect to the consummation of the transactions contemplated
hereby, and there shall not be in effect any Order by a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby; and
(g) the Shareholders shall have received duly executed
copies of each of the documents enumerated in Section 8.2; and
(h) the redemption of the Redeemed Shares shall have
occurred.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 Documents to be Delivered by the Shareholders. At the
---------------------------------------------
Closing, the Shareholders) shall deliver, or cause to be delivered, to
Purchaser the following:
(a) the opinion of Carr, McClellan, Ingersoll,
Thompson & Horn Professional Corporation, counsel to the Company
and the Shareholders, in substantially the form of Exhibit B hereto;
(b) copies of all consents referred to in Section
7.1(e) hereof;
(c) a Noncompetition Agreement in the form of Exhibit
A attached hereto, duly executed by each Shareholder;
(d) a duly executed FIRPTA Affidavit for each
Shareholder;
(e) a certificate of good standing with respect to
Seller issued by the Secretary of State of California;
(f) evidence of the redemption of the Redeemed Shares;
(g) certificates representing the Purchased Shares, duly
endorsed for transfer or accompanied by stock powers or assignments
separate from such certificates executed by the Shareholders;
(h) the stock ledger, minute book and corporate seal
of the Company;
(i) written resignations of the officers and directors
of the Company;
(j) the certificate referenced in Section 7.1(d)
hereof; and
(k) such other documents as the Purchaser shall
reasonably request.
8.2 Documents to be Delivered by the Purchaser. At the
------------------------------------------
Closing, the Purchaser shall deliver to the Shareholders the following:
(a) evidence of the payments required to be made
pursuant to Section 2.2 hereof;
(b) the opinion of Wolf, Block, Schorr and Solis-
Cohen, counsel to Purchaser, in substantially the form of Exhibit C
hereto;
(c) the certificate referred to in Section 7.2(e)
hereof; and
(d) such other documents as the Shareholders shall
reasonably request.
ARTICLE IX
INDEMNIFICATION
9.1 Survival. The representations and warranties of the
--------
Shareholders and Purchaser shall remain operative and in full force and
effect for a period of two (2) years after the Closing Date, regardless of
any investigation or statement as to the results thereof made by or on
behalf of any party hereto; provided, however, that (i)
-------- -------
the representations and warranties contained in Sections 4.9, 4.17, 4.19,
4.20 and 4.24, as well as the indemnities contained in Sections 9.2(a)(iii)
and 9.2(a)(iv) (solely to the extent such representations and warranties or
indemnities relate to a violation of any Environmental Law, ADA or OSHA)
shall remain operative and in full force and effect for a period of four
years after the Closing Date, and (ii) the representations and warranties
contained in Sections 4.2, 4.4, 4.7, 4.11 and 4.16 shall remain operative
and in full force and effect until the expiration of sixty (60) days after
the applicable statutes of limitation with respect to the matters referred
to therein; and provided, further, that any claim based upon a fraudulent
-------- -------
or intentional misrepresentation shall survive indefinitely.
Notwithstanding anything to the contrary herein, any representation or
warranty which is the subject of a claim or dispute which is asserted in
writing prior to the expiration of the applicable period set forth above
shall survive with respect to such claim or dispute until the final
resolution and satisfaction thereof.
9.2 General Indemnification.
-----------------------
(a) The Shareholders hereby jointly and severally agree to
indemnify and hold harmless Purchaser and its Affiliates and their
respective directors, officers, employees, agents, successors and assigns
(collectively, the "Purchaser Indemnified Parties") from and against and in
respect of any and all Losses resulting from, arising out of, based on or
relating to:
(i) the failure of any representation or warranty of
the Shareholders set forth in this Agreement, any Company Document or any
certificate or instrument delivered by or on behalf of Seller or the
Shareholders pursuant to this Agreement to be true and correct in all
respects both on the date hereof and on and as of the Closing Date;
(ii) the breach of any covenant or other agreement on
the part of the Company (with respect to its obligations prior to the
Closing) or the Shareholders under this Agreement or any Seller Document;
(iii) any Excluded Liabilities;
(iv) (A) any Release of Hazardous Materials in, on, at
or from the Company Properties which first occurred, or resulted from
operations occurring, as of or prior to the Closing but only to the extent
that any such Release was not the result of or exacerbated by the negligent
acts or omissions of Purchaser, its agents, employees, contractors,
tenants, Affiliates, assigns or invitees; (B) any tort liability to third
parties, including, without limitation, liability resulting from exposure
to Hazardous Materials, to the extent that such liability is the result of
any Release at the Company Properties which first occurred at the Company
Properties as of or prior to the Closing but only to the extent that any
such tort liability is not the result of or exacerbated by the negligent
act or omissions of the Purchaser, its agents, employees, contractors,
tenants, Affiliates, assigns or invitees; (C) notification or designation
under any Environmental Law as a potentially responsible party for offsite
disposal of Hazardous Materials by Seller which disposal occurred as of or
prior to the Closing, or the listing of any asset of the Company on the
CERCLA National Priorities List or any similar list under any Environmental
Law as a result of disposal of Hazardous Materials by the Company as of or
prior to the Closing; or (D) any violation of Environmental Laws, in effect
at the time of the violation, that first occurred or resulted from
operations by the Company or at Company Properties occurring as of or prior
to the Closing Date; or
(v) the Excluded Assets or the ownership, operation,
lease or use thereof, or any action taken with respect thereto, by the
Company, the Shareholders or any other Person.
(b) Purchaser hereby agrees to indemnify and hold harmless
the Shareholders and their Affiliates, and their respective directors,
officers, employees, agents, successors and assigns from and against and in
respect of any and all Losses resulting from, arising out of, based on or
relating to:
(i) the failure of any representation or warranty of
Purchaser set forth in this Agreement or any Purchaser Document or any
certificate and instrument delivered by or on behalf of the Purchaser
pursuant to this Agreement, to be
true and correct in all respects both on the date hereof and on and as
of the Closing Date;
(ii) the breach of any covenant or other agreement
on the part of Purchaser under this Agreement or any Purchaser
Document; or
(iii) any acts, omissions, occurrences, events or
obligations of the Company, arising after the Closing Date, whether in
contract or in tort (including obligations accruing after the Closing Date
based upon agreements entered into prior to the Closing Date), unless (x)
any Losses resulting from, arising out of, based on or relating to any of
the foregoing arise, result, are based on or relate to a breach (or any
circumstance or event constituting a breach) of any representation,
warranty or covenant of the Company or the Shareholders under this
Agreement or any Company Document or (y) such act, omission, occurrence,
event or obligation for any losses relating thereof is of the type or kind
described in Section 9.2(a) hereof.
9.3 Limitations on Indemnification for Breaches of
----------------------------------------------
Representations and Warranties.
------------------------------
(a) Subject to Section 9.5 and Section 9.6 hereof, none of
the indemnifying parties shall have any liability under Section 9.2(a)(i)
or 9.2(b)(i) hereof unless and until the aggregate amount of Losses subject
to indemnification thereunder exceeds $50,000 and, in such event, the
indemnifying party shall be required to pay the entire amount of such
Losses in excess of $50,000; provided that
--------
the indemnifying party shall be required to pay the entire amount of any
Losses incurred as a result of a breach of any representation or warranty
contained in Sections 4.2, 4.4 or 4.7.
(b) The aggregate liability of all indemnifying parties
pursuant to Section 9.2(a)(i), 9.2(a)(iii) (as such liability relates to
any Environmental Law, ADA or OSHA), 9.2(a)(iv) (as such liability relates
to any Environmental Law, ADA or OSHA) or 9.2(b)(i) hereof, other than
liability for Losses resulting from, arising out of, based on or relating
to a breach of any representation or warranty contained in Section 4.2,
4.4, 4.7 or 4.11, shall not exceed $4,500,000 in the aggregate; provided
that with respect to (i) in the
--------
case of Section 9.2(a)(i) or 9.2(b)(i), liability for Losses resulting
from, arising out of, based on or relating to any breach of Sections 4.9,
4.19, 4.20 or 4.24, or (ii) in the case of Section 9.2(a)(iii) or
9.2(a)(iv), liability for Losses resulting from,
arising out of, based on or relating to any Environmental Law, ADA or OSHA,
the $4,500,000 limitation shall only apply to breaches of such
representations or warranties or breaches or violations of such Laws of
which neither Seller nor the Shareholder had knowledge as of the Closing
Date. The aggregate liability of all indemnifying parties pursuant to
Section 9.2(a)(i), 9.2(a)(iii), 9.2(a)(iv) or 9.2(b)(i) hereof for any
Losses resulting from, arising out of, based on or relating to any breach
of any representation or warranty in Section 4.2, 4.4, 4.7 or 4.11 shall
not exceed the Purchase Price.
9.4 Indemnification Procedures. For the purposes of
--------------------------
administering the indemnification provisions of Section 9.2, the
following procedures shall apply:
(a) If an indemnified party shall receive notice of any
action or proceeding by a third party which the indemnified party asserts
is indemnifiable under Section 9.2 (a "Claim"), the indemnified party shall
notify the indemnifying party (the "Indemnitor") of such Claim in writing
promptly following the receipt of notice by such indemnifying party of the
commencement of such Claim. The failure to give notice as required by this
Section 9.4 in a timely fashion shall not result in a waiver of any right
to indemnification hereunder except to the extent that the Indemnitor is
actually prejudiced thereby.
(b) Except as provided in subsection (c) hereof, the
Indemnitor shall be entitled to assume the defense or settlement of any
Claim of the type referred to in clause (a) hereof (with counsel reasonably
satisfactory to the indemnified parties) if the Indemnitor shall provide
the indemnified parties a written acknowledgment of its liability to
indemnify such indemnified parties against all Losses resulting from,
relating to, based on or arising out of such Claim. If the Indemnitor
assumes any such defense or settlement, it shall pursue such defense or
settlement in good faith. If the Indemnitor fails to elect in writing,
within 10 days after the notification referred to above, to assume the
defense of any Claim as provided above, the indemnified party may engage
counsel to defend, settle or otherwise dispose of such Claim, which counsel
shall be reasonably satisfactory to the Indemnitor; provided, however, that
the
-------- -------
indemnified party shall not settle or compromise any such Claim without the
consent of the Indemnitor (which consent will not be unreasonably withheld
or delayed).
(c) Notwithstanding anything to the contrary contained
herein, the Purchaser shall have the sole right, with counsel reasonably
satisfactory to the Indemnitor, to defend any
Claim which constitutes a Non-Assumable Claim and no other Party hereto
shall be entitled to assume the defense thereof or settle such
Non-Assumable Claim as to the Purchaser; provided, however, that (i)
-------- -------
the indemnified party shall not settle or compromise any such Non-Assumable
Claim without the consent of the Indemnitor (which consent will not be
unreasonably withheld or delayed), (ii) the Purchaser shall keep the
Indemnitor apprised as to the status of any pending Non-Assumable Claim,
and the Indemnitor shall have the right to attend any settlement
conferences at its own cost and expense, and (iii) the Indemnitor (and its
counsel) shall be entitled to participate, at the cost and expense of the
Indemnitor, in any such action or proceeding or in any negotiations or
proceedings to settle or otherwise eliminate any Non-Assumable Claim for
which indemnification is being sought. A "Non-Assumable Claim" means any
claim, action or proceeding (i) arising out of or in connection with, or
relating to, any violation or asserted violation of any Law, rule,
regulation, Order, judgment or decree, (ii) in which a Governmental Body or
a quasi-governmental entity is an adverse party in interest, or (iii)
seeking injunctive relief, other than (solely in the case of (i) and (ii)
above) claims related to environmental matters arising pursuant to Sections
4.20 and 9.2(a)(iv); provided, however, that a claim, action or proceeding
-------- -------
referred to in clause (i), (ii) or (iii) of this sentence shall only
constitute a "Non-Assumable Claim" if Purchaser determines in good faith
that such claim, action or proceeding, if adversely determined, could have
a material adverse impact on the assets, liabilities, business or
operations of Purchaser or any of its Affiliates.
(d) In cases where the Indemnitor has elected to assume the
defense or settlement with respect to a Claim as provided above, the
Indemnitor shall be entitled to assume such defense or settlement, provided
that: (i) the indemnified party (and its counsel)
--------
shall be entitled to continue to participate at its own cost in any such
action or proceeding or in any negotiations or proceedings to settle or
otherwise eliminate any claim for which indemnification is being sought;
(ii) the Indemnitor shall not be entitled to settle or compromise any such
claim without the consent or agreement of the indemnified party (such
consent not to be unreasonably withheld or delayed); and (iii) after
written notice by the Indemnitor to the indemnified party of its election
to assume control of the defense of any Claim, the Indemnitor shall not be
liable to such indemnified party hereunder for any attorneys fees and
disbursements subsequently incurred by such indemnified party in connection
therewith.
(e) In the event that a claim or demand for indemnification
may be made by Purchaser under more than one provision of this Article IX,
Purchaser shall have the option to elect the provision of this Article IX
under which it chooses to make such claim or demand for indemnification.
9.5 Tax Matters.
-----------
(a) The Shareholders hereby jointly and severally agree to
indemnify and hold harmless the Purchaser Indemnified Parties from and
against any and all Losses resulting from, arising out of, based on or
relating to:
(i) any breach of any representation, warranty or
covenant contained in Sections 4.11 or 6.13 hereof;
(ii) any Taxes for which the Company is liable pursuant
to subsection 6.13(a) hereof and any and all Taxes with respect to all
taxable periods (or portions thereof) of the Company ending on or prior to
the Closing and, to the extent provided in Section 6.13(a) hereof, all
taxable periods that include and end after the Closing Date; and
(iii) any Taxes asserted against Purchaser or any of its
Affiliates as a result of transferee liability at law or equity arising out
of the transactions contemplated hereby.
(b) Any claim for indemnity made under this Section 9.5 may
be made at any time prior to sixty (60) days following the expiration of
the applicable Tax statute of limitations with respect to the relevant
taxable period (including extensions).
9.6 Employee Benefits and Labor Indemnity. The
-------------------------------------
Shareholders hereby agree to jointly and severally indemnify and hold
harmless the Purchaser Indemnified Parties from and against any and all
Losses (i) arising out of or based upon or with respect to any Employee
Benefit Plan and 412 Plan, including, but not limited to, any obligations
arising under Part 6 of Title I of ERISA or Section 4980B of the Code, or
(ii) arising out of or based upon or with respect to the employment or
termination of employment of any Person prior to or on the Closing Date
with the Company including, without limitation, any claim with respect to,
relating to, arising out of or in connection with discrimination by Seller
or wrongful discharge (including constructive discharge).
9.7 Treatment of Payment. Seller and Purchaser agree to
--------------------
treat any indemnity payment made pursuant to Sections 9.2, 9.5 or 9.6 of
this Agreement as an adjustment to the Purchase Price for federal, state,
local and foreign income tax purposes.
9.8 Waiver of Subrogation and Other Rights. Each
--------------------------------------
Shareholder hereby agrees that if, following the Closing, any payment is
made or required to be made by it pursuant to the terms of this Agreement
or the Company Documents (including, without limitation, this Article IX),
none of the Shareholders shall have any rights against the Company, whether
by reason of subrogation or otherwise, in respect of any such payments, and
none of the Shareholders shall take any action against the Company with
respect thereto. Any such rights which any Shareholder may, by operation of
law or otherwise, have against the Company shall, effective at the time of
the Closing, be deemed to be hereby expressly and knowingly waived.
ARTICLE X
MISCELLANEOUS
10.1 Certain Definitions.
-------------------
For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 10.1:
"Affiliate" means, with respect to any Person, any other
---------
Person controlling, controlled by or under common control with such Person.
"Assets" shall have the meaning ascribed to such term in
------
Section 1.1 hereof.
"Balance Sheet" shall have the meaning ascribed to such term
-------------
in Section 4.8 hereof.
"Balance Sheet Date" shall have the meaning ascribed to such
------------------
term in Section 4.8 hereof.
"Business Day" means any day of the year on which national
------------
banking institutions in New York are open to the public for conducting
business and are not required or authorized to close.
"Cash on Hand" shall mean all cash physically located in any
------------
of the Stores at the opening of business on the Closing
Date and all funds held in bank accounts and other accounts of the Company
at the opening of business on the Closing Date.
"Closing" shall have the meaning ascribed to such term in
-------
Section 3.1 hereof.
"Closing Date" shall have the meaning ascribed to such term
------------
in Section 3.1 hereof.
"Closing Payment" shall be an amount equal to (i) Four
---------------
Million Dollars ($4,000,000) plus (ii) the Estimated Working Capital minus
(iii) the Working Capital Adjustment.
"Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
"Company" shall have the meaning ascribed to such term in
-------
the preamble hereto.
"Company Documents" shall have the meaning ascribed to such
-----------------
term in Section 4.2 hereof.
"Company Property" shall have the meaning ascribed to such
----------------
term in Section 4.12(a) hereof.
"Contract" means any contract, agreement, indenture, note,
--------
bond, loan, instrument, lease, commitment or other arrangement or
agreement.
"Employee Benefit Plans" shall have the meaning ascribed to
----------------------
such term in Section 4.16(a) hereof.
"Environmental Law" means any foreign, federal, state or
-----------------
local law, statute, regulation, code, ordinance, rule of common law or
other requirement in any way relating to the protection of human
health and safety or the environment as now or hereafter in effect
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.),
-- ---
the Hazardous Materials Transportation Act (49 U.S.C. App. ss. 1801 et
--
seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901
----
et seq.), the Clean Water Act (33 U.S.C. ss. 1251 et seq.), the Clean
-- --- -- ---
Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act
-- ----
(15 U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide, and
-- ---
Rodenticide Act (7 U.S.C. ss. 136 et seq.), and OSHA, as such laws have
-- ---
been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous foreign, state or local laws.
"Environmental Permits" shall have the meaning ascribed to
---------------------
such term in Section 4.20(a) hereof.
"ERISA" shall have the meaning ascribed to such term in
-----
Section 4.16 hereof.
"ERISA Affiliate" means any trade or business (whether or
---------------
not incorporated) under common control with the Company, and which,
together with the Company, are treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
"Excluded Assets" shall have the meaning ascribed to such
---------------
term in Section 1.3 hereof.
"Financial Statements" shall have the meaning ascribed to
--------------------
such term in Section 4.8 hereof.
"FIRPTA Affidavit" shall have the meaning ascribed to such
----------------
term in Section 7.1(d) hereof.
"412 Plan" means any pension plan (as defined in Section
--------
3(2) of ERISA) which the Company or any ERISA Affiliate sponsors or
maintains and is covered under Section 412 of the Code or Section 302 of
ERISA.
"GAAP" means United States generally accepted accounting
----
principles as of the date hereof.
"Governmental Body" means any government or governmental or
-----------------
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority
thereof, or any court or arbitrator (public or private).
"Hazardous Material" means any substance, material or waste
------------------
which is regulated by the United States or any state or local governmental
authority including, without limitation, petroleum and its by-products,
asbestos, and any material or substance which is defined as a "hazardous
waste," "hazardous substance," "hazardous material," "restricted hazardous
waste," "industrial waste, solid waste," "contaminant," "pollutant," "toxic
waste" or "toxic substance" under any provision of Environmental Law.
"Knowledge" shall mean, with respect to the Company, the
---------
knowledge of either of Lynn D. Conley or Paul W. Conley.
"Law" means any federal, state, local or foreign law
---
(including common law), statute, code, ordinance, rule, regulation or other
requirement.
"Legal Proceeding" means any judicial, administrative or
----------------
arbitral actions, suits, proceedings (public or private), claims or
governmental proceedings.
"Licenses" shall have the meaning ascribed to such term in
--------
Section 1.2(a) hereof.
"Lien" means any lien, pledge, mortgage, deed of trust,
----
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement or encumbrance.
"Losses" means any and all losses, liabilities (accrued,
------
absolute, contingent or otherwise), suits, proceedings, judgments, awards,
demands, settlements, fines, assessments, damages, interest and penalties,
and costs and expenses (including without limitation reasonable attorneys
fees and litigation expenses).
"Material Adverse Change" means any material adverse change
-----------------------
in the business, properties, results of operations, prospects or condition
(financial or otherwise) of either the Company or the Stores.
"Material Contracts" shall have the meaning ascribed to such
------------------
term in Section 4.15 hereof.
"Minimum Lease Condition" means that the Shareholders shall
-----------------------
have obtained consents from the landlords and lessors with respect to at
least 18 Real Property Leases. For purposes of this definition, (i) if the
Shareholders and Purchaser agree that a lessor s consent to the
transactions contemplated by this Agreement is not required consent shall
be deemed to have been obtained and (ii), if a Real Property Lease is
month-to-month, a written consent by a landlord or lessor to the Company s
continued occupancy on substantially the same terms or the execution of a
lease for such Premises by the Company, shall constitute consent with
respect to such Real Property Lease.
"Noncompetition Agreement" shall mean either an agreement in
------------------------
the form attached hereto as Exhibit A among the Company, the
Shareholders and Purchaser.
"Order" means any order, injunction, judgment, decree,
-----
ruling, writ, assessment or arbitration award.
"OSHA" means the Occupational Safety and Health Act of 1970,
----
as amended, and any other Federal, state or local statute, law, ordinance,
code, rule or regulation or judicial or administrative order or decree
regulating, relating to or imposing liability or standards of conduct
concerning employee safety and/or health, as now or at any time hereafter
in effect.
"Permits" means any approvals, authorizations, consents,
-------
Licenses, permits or certificates.
"Permitted Exceptions" means (i) statutory liens for current
--------------------
taxes, assessments or other governmental charges not yet delinquent or the
amount or validity of which is being contested in good faith by appropriate
proceedings, provided an appropriate reserve is established therefor; (ii)
mechanics , carriers , workers , repairers and similar Liens arising or
incurred in the ordinary course of business that are not material to the
business, operations and financial condition of the property so encumbered
or the Company; (iii) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that such
regulations
--------
have not been violated; and (iv) such other imperfections in title,
charges, easements, restrictions and encumbrances which do not materially
detract from the value of or materially interfere with the present use of
any Company Property subject thereto or affected thereby.
"Person" means any individual, corporation, partnership,
------
firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Personal Property Lease" shall have the meaning ascribed to
-----------------------
such term in Section 4.13(a) hereof.
"Property Contracts" shall have the meaning ascribed to such
------------------
term in Section 4.12(a) hereof.
"Purchase Price" shall have the meaning ascribed to such
--------------
term in Section 2.1 hereof.
"Purchaser Documents" shall have the meaning ascribed to
-------------------
such term in Section 5.2 hereof.
"Purchaser Indemnified Parties" shall have the meaning
-----------------------------
ascribed to such term in Section 9.2(a) hereof.
"Real Property Lease" shall have the meaning ascribed to
-------------------
such term in Section 4.12(a) hereof.
"Release" means any release, spill, emission, leaking,
-------
pumping, pouring, dumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment.
"Subsidiary" of a Person means any other Person of which a
----------
majority of the outstanding voting securities or other voting equity
interests are owned, directly or indirectly, by such Person.
"Taxes" means all taxes, charges, fees, levies, imposts,
-----
duties, and other assessments, including but not limited to any income,
alternative minimum or add-on tax, estimated, gross income, gross receipts,
sales, use, transfer, gains, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, recording, real property, personal property,
Federal highway use, commercial rent, environmental, windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, penalties, or
additions to tax, and any interest or penalties imposed with respect to the
filing, obligation to file or failure to file any Tax Return.
"Tax Return" means any return, declaration, report, claim
----------
for refund, information return, statement, or other similar document
relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"WARN" shall have the meaning ascribed to such term in
----
Section 6.8(c) hereof.
"Working Capital Adjustment" shall mean an amount of Five
--------------------------
Hundred Thousand Dollars ($500,000).
10.2 Expenses. Except as otherwise provided in this
--------
Agreement, the Shareholders and Purchaser shall each bear their own
expenses incurred in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument contemplated by
this Agreement and the consummation of the transactions contemplated hereby
and thereby.
10.3 Specific Performance. The Company and the
--------------------
Shareholders each acknowledge and agree that the breach of this
Agreement would cause irreparable damage to the Purchaser and that
Purchaser will not have an adequate remedy at law. Therefore, the
obligations of the Company and the Shareholders under this Agreement,
including, without limitation, the Shareholders obligation to sell the
Shares to Purchaser, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith.
Such remedies shall, however, be cumulative and not exclusive and shall be
in addition to any other remedies which any party may have under this
Agreement or otherwise.
10.4 Further Assurances. Each of the Company, the
------------------
Shareholders and the Purchaser agrees to execute and deliver such other
documents or agreements and to take such other action as may be reasonably
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.
10.5 Arbitration. Any controversy arising under, out of,
-----------
in connection with, or relating to, this Agreement, and any amendment
hereof, or the breach hereof, shall be determined and settled by
arbitration in San Francisco, California, in accordance with the rules of
the American Arbitration Association. Any award rendered therein shall
specify the findings of fact of the arbitrator or arbitrators and the
reasons for such award, with reference to and reliance on relevant law. Any
such award shall be final and binding on each and all of the parties
thereto and their personal representatives, and judgment may be entered
thereon in any court having jurisdiction thereof and the fees of such
arbitrators (and, other than with respect to disputes under Section 1.4
hereof, reasonable attorneys fees) in connection with the determination
shall be paid by the party against whom the award was made, or if a
compromise was made, shared equally.
10.6 Entire Agreement; Amendments and Waivers. This
----------------------------------------
Agreement (including the schedules and exhibits hereto), the Company
Documents and the Purchaser Documents represent the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and can be amended, supplemented or changed, and any provision
hereof or thereof can be waived, only by written instrument making specific
reference to this Agreement or specific the Company Document or Purchaser
Document signed by the party against whom enforcement of any such
amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation
by or on behalf of any party, shall
be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any Party hereto of a breach of any
provision of this Agreement or specific Company Document or Purchaser
Document shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of such right, power or remedy by such
party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
10.7 Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of California
without giving effect to principles of conflicts of law.
10.8 Table of Contents and Headings. The table of contents
------------------------------
and section headings of this Agreement are for reference purposes only and
are to be given no effect in the construction or interpretation of this
Agreement.
10.9 Notices. All notices and other communications under
-------
this Agreement shall be in writing and shall be deemed given when delivered
personally, sent by nationally recognized overnight courier or mailed by
certified mail, return receipt requested, to the parties (and shall also be
transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified
by notice given to the other party pursuant to this provision):
If to Purchaser:
c/o Dollar Financial Group, Inc.
Daylesford Plaza, Suite 210
1436 Lancaster Avenue
Berwyn, Pennsylvania 19312
Attention: Donald F. Gayhardt, Executive Vice
President
Telephone No.: (610) 296-3400
Telecopy No.: (610) 296-7844
with a copy to:
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor, Packard Building
Fifteenth & Chestnut Streets
Philadelphia, Pennsylvania 19102
Attention: Mark L. Alderman, Esquire
Telephone No.: (215) 977-2000
Telecopy No.: (215) 977-2334
If to the Company or the Shareholders:
Mr. Lynn D. Conley
9801 Woodward Lake Drive
Oakdale, CA 95361
Telephone No.: (209) 848-3733
and
Mr. Paul W. Conley
3600 Regency Park Drive
Modesto, CA 95356
Telephone No.: (209) 522-3749
Telecopy No.: (209) 522-8279
with a copy to:
Edward J. Willig, Esquire
Carr, McClellan, Ingersoll, Thompson
& Horn Professional Corporation
216 Park Road
Burlingame, CA 94010
Telephone No.: (415) 342-9600
Telecopy No.: (415) 342-7865
10.10 Severability. If any provision of this Agreement is
------------
invalid or unenforceable, the balance of this Agreement shall remain
in effect.
10.11 Binding Effect: Assignment. This Agreement, the
--------------------------
Company Documents and the Purchaser Documents shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement, any of the Company Documents
or any of the Purchaser Documents shall create or be deemed to create any
third party beneficiary rights in any person or entity not a party to this
Agreement, any of the Company Documents or any of the Purchaser Documents
except as provided below.
No assignment of this Agreement, any of the
Company Documents or any of the Purchaser Documents or of any rights or
obligations hereunder or thereunder may be made by any party hereto or
thereto without the prior written consent of the other parties hereto or
thereto, as the case may be, and any attempted assignment without the
required consents shall be void; provided, however, that
-------- -------
the Purchaser may assign this Agreement and any of the Company Documents or
the Purchaser Documents and any or all rights hereunder or thereunder
(including, without limitation, the Purchaser s rights to purchase the
Assets and the Purchaser s rights to seek indemnification hereunder) (i) to
any Affiliate of the Purchaser or (ii) after the Closing, to any purchaser
or transferee of any of the Assets transferred to Purchaser hereunder or
thereunder. No such assignment shall relieve Purchaser of its obligations
or duties under this Agreement. Upon any such permitted assignment, the
references in this Agreement or any of the Company Documents or the
Purchaser Documents to the Purchaser shall also apply to any such assignee
unless the context otherwise requires.
10.12 Counterparts. This Agreement may be executed by the
------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as
of the date first written above.
DOLLAR FINANCIAL GROUP, INC.
By: /s/ Peter Sokolowski
-------------------------------
Name: Peter Sololowski
Title: Vice President
MANOR INVESTMENT CO., INC.
By: /s/ Lynn D. Conley
--------------------------------
Name: Lynn D. Conley
Title: Chairman and
Chief Executive
Officer
/s/ Lynn D. Conley
-----------------------------------
LYNN D. CONLEY, individually and as
Trustee of the Manor Investment
Company, Inc. Profit-Sharing Plan &
Trust
/s/ Paul W. Conley
-----------------------------------
PAUL W. CONLEY, individually and as
Trustee of the Manor Investment
Company, Inc. Profit-Sharing Plan &
Trust
NYFS06...:\47\41847\0008\1710\FRMD186V.050
EXHIBIT A
NON-COMPETITION AGREEMENT
-------------------------
This NON-COMPETITION AGREEMENT is entered into on this ____ day
of __________, 1996 between MANOR INVESTMENT CO., INC., a California
corporation (the Company ), LYNN D. CONLEY and PAUL W. CONLEY (the
Shareholders ), who collectively own all of the issued and outstanding
shares of Common Stock of the Company, and DOLLAR FINANCIAL GROUP, INC., a
New York corporation (the "Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Shareholders and Purchaser are parties to a Stock
Purchase Agreement (the "Stock Purchase Agreement") dated October 22, 1996,
pursuant to which Stock Purchase Agreement the Purchaser will acquire all
of the issued and outstanding capital stock of the Company (the Stock ).
All capitalized terms not otherwise defined herein shall have the meaning
set forth in the Stock Purchase Agreement; and
WHEREAS, as a material and significant inducement to the
Purchaser to enter into and consummate the transactions contemplated by the
Stock Purchase Agreement and in order to protect the Purchaser's investment
in the Stock, the Shareholders have agreed not to compete with the
Purchaser in the territory and for the time period specified below.
NOW, THEREFORE, for the consideration set forth in the Stock
Purchase Agreement, and in consideration of the mutual covenants and
agreements contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. For a period of five (5) years after the Closing Date (the
"Restricted Period"), neither of the Shareholders shall directly or
indirectly (i) engage in (as principal, shareholder, partner, director,
officer, agent, employee, consultant or otherwise) or be financially
interested in any business operating within the Counties of Alameda,
Fresno,
Sacramento, San Francisco, San Joaquin and Stanislaus, California within a
10-mile radius of any municipality in which a Store is located (the
"Restricted Area"), which is involved in business activities which are the
same as, similar to or in competition with business activities carried on
by the Company, or being definitely planned by the Company, on the Closing
Date; provided, however, nothing contained in this Section 1 shall prevent
(A) either Shareholder from holding for investment no more than one percent
(1%) of any class of equity securities of a company whose securities are
publicly traded on a national securities exchange or in a national market
system or (B) Paul W. Conley from owning an interest in Cash King, a
general partnership, so long as the Company or its successor in interest
has a food stamp distribution contract with Stanislaus County and Cash King
does business solely at its current location; or (ii) induce or attempt to
influence any employee, customer, independent contractor or supplier of the
Company to terminate employment or any other relationship with the
Purchaser, on account of either of the Shareholders or for any person,
firm, corporation or organization.
2. Neither Shareholder shall at any time knowingly take any
action or make any statement the effect of which would be, directly or
indirectly, to impair the good will associated with the Company or the good
will of Purchaser, or the business reputation or good name associated with
the Company or the business reputation or good name of Purchaser, or be
otherwise detrimental to the interests associated with the Company or the
interests of Purchaser, including any action or statement intended,
directly or indirectly, to benefit a competitor of the business associated
with the Company or of Purchaser.
3. Each Shareholder acknowledges that the restrictions contained
in Sections 1 and 2 above, in view of the business associated with the
Company and in which each of Purchaser and the Company is engaged, are
reasonable and necessary in order to protect the Purchaser's legitimate
interests and that any violation thereof would result in irreparable injury
to the Purchaser. The Shareholders therefore acknowledge that in the event
of any violation thereof, Purchaser shall be authorized and entitled to
obtain, from any court of competent jurisdiction, preliminary and permanent
injunctive relief as well as an equitable accounting of all profits and
benefits arising out of such violation, which rights and remedies shall be
cumulative and in addition to any other rights or remedies to which the
Purchaser may be entitled at law or in equity.
4. In the event that there should be a violation of the
restrictions contained in Sections 1 or 2 above, the duration of such
restrictions shall be extended for a period of time equal to the period of
time during which such breach or breaches shall occur.
5. In the event that any of the territorial or temporal
limitations set forth herein are deemed to be unreasonable by a court of
competent jurisdiction or any other proceeding, the parties hereto agree to
reduce either said territorial or temporal restriction to limits that such
court or such authority in such other proceeding shall deem reasonable.
6. The existence of any claim or cause of action by any
Shareholder against the Purchaser, whether predicated on this Agreement,
the Stock Purchase Agreement or any of the provisions contained herein or
therein, shall not constitute a defense to the enforcement by Purchaser of
the foregoing restrictions, but shall be litigated separately.
7. All notices, requests, demands and other communications
hereunder shall be delivered at the addresses under and pursuant to the
provisions of Section 10.9 of the Stock Purchase Agreement.
8. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors and assigns.
9. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement (including, without limitation,
provisions concerning limitations of actions), shall be governed by and
construed in accordance with the laws of the State of California.
10. This Agreement may be executed in counterparts, any of which
shall be deemed to be an original as against a party whose signature
appears thereon, and all of which shall together constitute one and the
same instrument.
11. Neither the failure nor any delay on the part of any party to
exercise any right, remedy, power or privilege ("Right") under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any Right preclude any other or further exercise of the
same or of any other Right, nor shall any waiver of any Right with respect
to any occurrence be construed as a waiver of such Right with respect to
any other occurrence.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
MANOR INVESTMENT CO., INC.
By:
-------------------------------------
Name:
Title:
SHAREHOLDERS
----------------------------------------
Lynn D. Conley
----------------------------------------
Paul W. Conley
DOLLAR FINANCIAL GROUP, INC.
By:
-------------------------------------
Name:
Title:
NYFS06...:\47\41847\0008\1710\AGRD186S.570
EXHIBIT B
[FORM OF LEGAL OPINION (SELLER)]
[DATE]
Ladies and Gentlemen:
We have acted as counsel to Manor Investment Co., Inc., a
California corporation (the "Company"), and Lynn D. Conley and Paul W.
Conley, individually and as Trustees of the Manor Investment Company, Inc.
Profit Sharing Plan & Trust (collectively, the "Shareholders"), in
connection with the transactions contemplated by that certain Stock
Purchase Agreement (the "Purchase Agreement") dated as of October 23, 1996
by and among Monetary Management of California, Inc. (the "Purchaser"), the
Company and the Shareholders. Capitalized terms used herein, except as
otherwise defined, have the respective meanings set forth in the Purchase
Agreement. This opinion is rendered pursuant to Section 8.1(a) of the
Purchase Agreement.
In connection with the rendering of the opinions set forth
herein, we have reviewed the Purchase Agreement and the Non-Competition
Agreement among the Company, the Shareholders and the Purchaser dated
November __, 1996 (together with the Purchase Agreement, the "Agreements");
and such corporate records, certificates of officers, certificates of
public officials, and other documents and instruments and such questions of
law as we have considered necessary or appropriate to require as a basis
for the opinions expressed herein.
As to questions of fact material to such opinions, we have, where
relevant facts were not independently established, relied upon a
Certificate or Certificates of Lynn D. Conley and/or Paul W. Conley. We
have no reason to believe that such reliance is unwarranted.
We have assumed that the signatures and seals on all documents
examined by us, but not executed in our presence, are genuine, that each
person signing is of legal age and is legally competent, that all documents
submitted to us as originals are authentic, and that all documents
submitted to us as copies conform with the originals and that such
originals are authentic, which assumptions we have not independently
verified. We have assumed that the Purchase Agreement and any other
documents required to be executed by any party, other than the Shareholders
and the Company, have been duly executed and delivered by that party or
parties pursuant to due authorization, that each such
other party had the necessary legal capacity or power to enter into the
Purchase Agreement or such other document or documents, and that the
Purchase Agreement and such other document or documents are enforceable
against each such other party, as applicable.
Whenever a statement herein is qualified by the phrase "to the
best of our knowledge" or a similar phrase, the qualification is intended
to indicate that, during the course of our examination of any documents,
certificates and instruments in the course of this transaction, no
information that would give current actual knowledge of the inaccuracy of
such statement has come to the attention of those attorneys in this firm
who have made such examination. However, we have not undertaken any
investigation to determine the accuracy of such statement, and any limited
inquiry undertaken by us during the preparation of this opinion letter
should not be regarded as such an investigation. No inference as to our
knowledge of any matters bearing on the accuracy of any such statement
should be drawn from the fact of our representation of the Company and the
Shareholders.
Based upon and subject to the foregoing and subject to the
qualifications and assumptions herein stated, it is our opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of California and has the corporate
power and corporate authority to execute and deliver and to perform its
obligations under the Agreements.
2. Each of the Agreements has been duly authorized,
executed and delivered by the Company and the Shareholders.
3. Each of the Agreements is the valid and binding obligation of
the Company and the Shareholders, as applicable, enforceable against the
Company and the Shareholders, as applicable, in accordance with its terms.
4. Neither the execution of and delivery by the Company and the
Shareholders of the Agreements nor the consummation and performance by the
Company and the Shareholders of any of the transactions contemplated
thereby (a) requires the consent or approval of, the giving of notice to,
or the registration with, or the taking of any other action with respect
to, any governmental authority or agency of the State of California or the
Federal government except those already obtained or (b) to the best of our
knowledge, violates any law,
governmental rule or regulation of the State of California or the Federal
government or any Governmental subdivision thereof, or (c) violates the
articles of incorporation or the Bylaws of the Company.
5. To the best of our knowledge, no suit, action or other
proceeding against the Company or the Shareholders is pending before any
court or governmental agency which seeks to restrain or prohibit, or to
obtain damages or other relief in connection with, the Agreements or the
consummation of the transactions contemplated thereby, nor, to the best of
our knowledge, is any such suit, action or other proceeding threatened.
6. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. The Shares are not subject to any preemptive rights provided
for in the articles of incorporation of the Company, or to the best of our
knowledge, in any other agreement, document or instrument. To the best of
our knowledge, there is no outstanding option, warrant or other right
regarding the issuance of, or any commitment, plan or arrangement to issue,
any shares of capital stock of the Company or any security convertible into
or exchangeable for capital stock of the Company. The Shareholders are the
record and, to our knowledge, beneficial owners of all of the outstanding
capital stock of the Company except as otherwise specified in Schedule ___
to the Purchase Agreement and except for any community property interest of
________. The Shares constitute all of the issued and outstanding capital
stock of the Company.
The opinions set forth above are subject to the following
qualifications: (i) the enforceability of the obligations of the Company
and the Shareholders under the Agreements is subject to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws
now or hereafter in effect relating to creditors' rights; (ii) the
enforceability of the obligations of the Company and the Shareholders under
the Agreements may be limited by applicable equitable principles,
regardless of whether considered in a proceeding in equity or at law; (iii)
the availability of equitable remedies, including without limitation
specific performance and injunctive relief, is subject to the discretion of
the court before which any proceeding therefor may be brought; (iv) no
opinion is expressed as to the enforceability of provisions requiring
indemnification for liabilities under the securities laws; (v) the opinion
given in section 4(b) above means that the matters discussed therein, at or
before the closing of the transaction, neither are
prohibited by, nor subject the Company or the Shareholders to a fine,
penalty or similar sanction that would be materially adverse to the Company
or the Shareholders under any federal or State of California statute or
regulation that a general business lawyer in California exercising
customary professional diligence would reasonably recognize to be directly
applicable to any of the Company or the Shareholders, or the transaction,
or both; (vi) no opinion is expressed concerning ERISA or any state or
federal antitrust, blue sky, securities, environmental, labor, health, or
safety laws, rules or regulations, and (vii) no opinion is expressed as to
the enforceability of any provisions relating to noncompetition.
All opinions expressed herein are subject, as applicable, to the
duties of each party to act in accordance with the covenants of good faith
and fair dealing implied in every agreement under California law.
We understand that we have no obligation to update this opinion
to reflect any facts or circumstances occurring after the date hereof.
We are admitted to the Bar of the State of California and express
no opinion as to the laws of any other state. We are opining herein as to
the effect on the subject transaction only of the laws of the State of
California, and the federal laws of the United States of America, and we
assume no responsibility as to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction. Further, we do not express
any opinion whatsoever herein with respect to choice of law or conflicts of
law, and none of the opinions stated above shall be deemed to include or
refer to choice of law or conflicts of law.
This opinion is furnished by us at your request for your sole
benefit, and no other person or entity shall be entitled to rely on this
opinion without our express written consent. This opinion shall not be
published or reproduced in any manner or distributed or circulated to any
person or entity without our express written consent. Our opinion is
limited to the matters stated herein, and no opinion is implied or may be
inferred beyond the matters expressly stated herein.
Very truly yours,
NYFS06...:\47\41847\0008\6678\EXH1067X.310
EXHIBIT C
[FORM OF LEGAL OPINION (PURCHASER)]
[DATE]
Ladies and Gentlemen:
We have acted as counsel to Dollar Financial Group, Inc., a New York
corporation ("Purchaser"), in connection with the transactions contemplated
by that certain Stock Purchase Agreement (the "Purchase Agreement") dated
as of October 22, 1996 by and among Purchaser, Manor Investment Co., Inc.
("Manor"), and Lynn D. Conley and Paul W. Conley, the Shareholders of
Manor. Capitalized terms used herein, except as otherwise defined, have the
respective meanings set forth in the Purchase Agreement.
In connection with our opinion herein, we have examined executed
copies of the Purchase Agreement and the other agreements delivered at
Closing, (together, the "Agreements") and certain other documents relating
to the transaction. We have relied upon the representations and warranties
contained in each such document and upon originals or copies, certified or
otherwise identified to our satisfaction, of such other documents and
statements of officials of Purchaser as we have deemed relevant to the
rendering of this opinion, including, without limitation, a certificate of
incorporation certified by the New York Secretary of State, the By-Laws of
Purchaser certified by its secretary, and certain resolutions of the Board
of Directors and shareholders of Purchaser. As to all matters of fact
covered by such documents, we have relied, without independent
investigation or verification, on such documents. In such examination we
have assumed the genuineness of all signatures (other than that of
Purchaser) and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted
to us as copies.
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreements by each of the
parties thereto (other than by Purchaser).
Whenever a statement herein is qualified by the phrase "to the best of
our knowledge" or a similar phrase, the qualification is intended to
indicate that, during the course of our examination of any documents,
certificates and instruments in the course of this transaction, no
information that would give current actual knowledge of the inaccuracy of
such statement has come to the attention of those attorneys in this firm
who have made such examination. However, we have not undertaken any
investigation to determine the accuracy of such statement, and any limited
inquiry undertaken by us during the preparation of this opinion letter
should not be regarded as such an investigation. No inference as to our
knowledge of any matters bearing on the accuracy of any such statement
should be drawn from the fact of our representation of Purchaser.
Based upon and subject to the foregoing and subject to the
qualifications set forth below, it is our opinion that:
1. Purchaser is a corporation duly organized and validly existing under
the laws of the State of New York and has the corporate power and authority
to execute and deliver and to perform its obligations under the Agreements.
2. Each of the Agreements has been duly authorized, executed
and delivered by Purchaser, as applicable.
3. Each of the Agreements has been duly authorized by all necessary
corporate action on the part of Purchaser, as appropriate, and is the valid
and binding obligation of Purchaser, as applicable, enforceable in
accordance with its terms, except that (a) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereinafter in effect relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
4. Neither the execution of and delivery by Purchaser of the Agreements
nor the consummation and performance by Purchaser of any of the
transactions contemplated thereby (a) requires the consent or approval of,
the giving of notice to, or the registration with, or the taking of any
other action with respect to, any governmental authority or agency of the
State of New York or the Federal government except those already obtained;
(b) violates any law, governmental rule or regulation of the State of New
York or the Federal government or any governmental
subdivision thereof; or (c) violates the Articles of Incorporation or
the By-Laws of Purchaser.
5. To the best of our knowledge, no suit, action or other proceeding
against Purchaser is pending before any court or governmental agency which
seeks to restrain or prohibit, or to obtain damages or other relief in
connection with, the Agreements or the consummation of the transactions
contemplated thereby, nor, to the best of our knowledge, is any such suit,
action or other proceeding threatened.
The opinions expressed above are limited to the Federal Laws of the
United States and the law of the State of Pennsylvania. We have not made
any review of the laws of any state other than Pennsylvania. In rendering
our opinion regarding qualification to do business in or good standing in
the State of New York, we have relied solely on certificates issued by
state officials as noted above. Accordingly, we express no opinion as to
matters governed by the laws of any other state or jurisdiction.
This opinion is furnished by us at your request for your sole benefit,
and no other person or entity shall be entitled to rely on this opinion
without our express written consent. This opinion shall not be published or
reproduced in any manner or distributed or circulated to any person or
entity without our express written consent. Our opinion is limited to the
matters started herein, and no opinion is implied or may be inferred beyond
the matters expressly stated herein.
Very truly yours,
NYFS06...:\47\41847\0008\1710\FRMD186V.000