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EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
dated as of
June 12, 1996
by and between
ASSOCIATES COMMERCIAL CORPORATION
and
USL CAPITAL CORPORATION
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
1.1 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Specific Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES . . . . . . . . . . . 12
2.1 Purchase and Sale of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Assumption of Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Purchase Price and Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 Amount Payable at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5 Procedure to Reconcile Change in Net Assets Sold . . . . . . . . . . . . . . . . . . . . . . . 13
2.6 Final Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
CLOSING . . . . . . . . . . . . . . . 17
3.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Items to be Delivered at the Closing By Seller . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Items to be Delivered at the Closing by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Removal of Books and Records; No Access to Seller's Premises . . . . . . . . . . . . . . . . . 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . 19
4.1 Organization and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Authorization; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.12 Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.13 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.14 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.15 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.16 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.17 Consumer Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.18 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.19 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.20 No Labor Disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.21 No Collective Bargaining Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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4.22 Bonus and Similar Plans or Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.23 Effect of Sale Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.24 Managed Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . 26
5.1 Organization and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Authorization; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.4 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5 WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Disclaimer of Certain Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 28
5.7 Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
INTERIM COVENANTS . . . . . . . . . . . . . 28
6.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Permits and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Government Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Bulk Transfer Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS . . . . . . . . . 31
7.1 Seller's Post-Closing Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Insurance; Indemnity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.5 Apportionment; Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.6 Use of Excluded Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.7 Liens on Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.8 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.9 Executive, Management and Sales Car Lease Programs . . . . . . . . . . . . . . . . . . . . . . . 39
7.10 Litigation Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII
GENERAL CONDITIONS OF PURCHASE . . . . . . . . . 40
8.1 No Orders; Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.3 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . 41
9.1 Representations and Warranties and Covenants of Seller . . . . . . . . . . . . . . . . . . . . 41
9.2 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.4 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . 42
10.1 Representations and Warranties and Covenants of Buyer . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XI
TERMINATION OF OBLIGATIONS; SURVIVAL . . . . . . . . . 42
11.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.3 Survival of Representations and Warranties and Covenants . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XII
INDEMNIFICATION . . . . . . . . . . . . . . 44
12.1 Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.2 Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.3 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.4 Mitigation; Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.5 Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XIII
TAX MATTERS . . . . . . . . . . . . . . . 47
13.1 Allocation of Tax Liabilities; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.2 Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.3 Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.4 Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.5 Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.6 Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.8 Transfer, Use and Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XIV
PUBLICITY/CONFIDENTIALITY . . . . . . . . . . . . 51
14.1 Publicity and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XV
GENERAL . . . . . . . . . . . . . . . . 52
15.1 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
15.2 Exhibits and Schedules; Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
15.3 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
15.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.8 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.9 Performance by Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
15.12 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
15.13 Representation By Counsel; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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15.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
15.15 Dispute Resolution; Agreement to Arbitrate . . . . . . . . . . . . . . . . . . . . . . . . . . 56
15.16 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXHIBITS
A Initial Statement of Net Assets Sold
B Bill of Sale and Assignment
C Services Agreement
D Lease Assignment and Assumption Agreement
E Trademark Assignment and Assumption
Agreement
F Assumption Agreement
G Executive, Management and Sales Car Lease
Programs
H Limited Power of Attorney
I Ford Guaranty
J Associates Corporation of North America Guaranty
K USFLI Assumption Agreement
SCHEDULES
Disclosure Schedule
1.2(a) Assumed Contracts (Other Than Fleet Services Contracts and Facility Leases)
1.2(b) Certain Matters Relating to USFLI
1.2(c) Employees
1.2(d) Facility Leases
1.2(e) Fleet Services Transactions
1.2(f) Incentive Compensation Plans
1.2(g) Intangible Property
1.2(h) Furniture, Fixtures and Equipment
1.2(i) Severance Plans
1.2(j) Vehicles
2.3(a) Base Cash Portion
4.1 Directors and Executive Officers of
USFLI
4.3(b) List of Fleet Services Form Contracts
4.5 Seller Approvals and Permits
4.7 Insurance
4.9 Customers with Hazardous Materials Addenda
4.13 Permits
4.19 Litigation
5.2 Buyer Approvals and Permits
6.2 Approved Transactions
7.2 Continuing Insurance
7.3(h) Vested Retiree Medical Benefits
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of June 12, 1996 by and
between ASSOCIATES COMMERCIAL CORPORATION, a Delaware corporation ("Buyer") and
USL CAPITAL CORPORATION, a Delaware corporation ("Seller").
W I T N E S S E T H
WHEREAS, Seller desires to sell substantially all of the assets
of Seller's fleet services division to Buyer, and Buyer desires to purchase
such assets and assume certain related liabilities, all on the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein and intending to be legally bound, Buyer and Seller
do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General Provisions. For all purposes of this Agreement,
except as otherwise expressly provided:
(a) the terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as the
singular;
(b) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions and to "Exhibits" and "Schedules" are to the
designated Articles, Sections and other subdivisions of the body of this
Agreement and to the exhibits and schedules to this Agreement;
(c) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms; and
(d) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
1.2 Specific Provisions. As used in this Agreement the
following definitions shall apply:
"Accounts Receivable" means (a) all of Seller's or USFLI's, as
appropriate, accounts receivable due and payable under any Fleet Services
Contract, (b) all rebates or other credits due and payable to Seller or USFLI
from any
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manufacturer in connection with any acquisition of any Vehicles, (c) all
rebates or other credits due and payable to Seller or USFLI from any Vehicle
service vendor, and (d) all of Seller's or USFLI's, as appropriate, accounts
receivable due and payable under any of the other Purchased Assets, in each
instance as of the date hereof, together with any additions thereto and subject
to any reductions therefrom arising in the ordinary course after the date
hereof through and until the Closing Date.
"Action" means any action, complaint, counterclaim,
investigation, petition, suit or other proceeding, whether civil or criminal,
in law or in equity, or before any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person; provided, however, that (i) Associates First
Capital Corporation and Persons controlled by it shall not be considered
Affiliates of Seller, and (ii) Seller and Persons controlled by it shall not be
considered Affiliates of Buyer.
"Agreed Accounting Principles" means:
(a) the generally accepted accounting principles, policies and
practices in the United States applied by Seller in the preparation of
Seller's audited financial statements as of and for the year ended
December 31, 1995, without regard to whether with respect to any matter
there is more than one generally accepted accounting principle, or
generally accepted accounting principles would permit or allow for more
than one treatment or approach;
(b) that the generally accepted accounting principles, policies
and practices consistently applied by Seller shall prevail with respect to
all accounts, including, but not limited to, those principles, policies
and practices of Seller relating to residual values and annual residual
review procedures; and
(c) that any provision for credit loss reserves shall be
disregarded.
"Agreed Adjustments" is defined in Section 2.5(b).
"Agreed Rate" means, as of the date of any payment of interest to
be made by reference thereto, the interest rate per annum established on such
date by Citibank, N.A. as its "prime" rate, or, if that rate is no longer
established
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or published, a comparable interest rate, in each case, calculated on the basis
of actual days elapsed and a 365-day year.
"Agreement" means this Agreement by and between Buyer and Seller
as amended or supplemented together with all Exhibits and Schedules hereto.
"Approval" means any approval, authorization, consent,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from, or any notice, statement or other communication required
to be filed with or delivered to, any Governmental Entity or any other Person.
"Assigned Assets and Liabilities" is defined in Section 15.5(b).
"Assignee" is defined in Section 15.5(b).
"Assumed Contracts" means the Fleet Services Contracts, the
Facility Leases, the Contracts listed on Schedule 1.2(a) (commitments to
purchase new Vehicles being listed on Schedule 1.2(a) as of June 4, 1996 and
subject to changes in the ordinary course of business through the date hereof)
and the Contracts listed on Schedule 7.2.
"Assumed Liabilities" means Liabilities:
(i) reflected in the calculation of Closing Date Net Assets Sold, as
adjusted pursuant to Section 2.5, or
(ii) arising under, accruing or relating to periods, events or
circumstances on or after the Closing Date which arise under,
relate to or are in connection with the Purchased Assets, or the
ownership, use, possession, enjoyment or operation thereof and,
provided, however, Assumed Liabilities shall not include (a) any
Liabilities of USFLI other than those related to the USFLI Assets
arising under, accruing or relating to periods, events or
circumstances after the Closing Date, (b) any Losses related to
the Litigation listed on Schedule 4.19, (c) any cause of action
or claim arising or accruing before the Closing Date regardless
of whether an Action thereon was commenced before or after the
Closing Date, or (d) any Taxes (whether imposed directly or
assessed against the Purchased Assets or the Business) for any
taxable period, or portion thereof, ending
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before the Closing Date (except to the extent reimbursable by
customers of the Business), or
(iii) arising under, accruing or relating to the employment of the
Transferred Employees on and after the Closing Date.
"Audited Change in Purchase Price" is defined in Section 2.5(a).
"Auditors" means Coopers & Lybrand L.L.P., independent public
accountants to Seller.
"Auditors' Accounting Report" is defined in Section 2.5(a).
"Base Cash Portion" is defined in Section 2.3(a).
"Business" means the business of Seller's Fleet Services business
unit as conducted as of the date hereof and the business of USFLI that
collectively includes but is not limited to (i) the leasing of automobiles and
trucks, (ii) providing fleet management services to the owners and operators of
automobiles and trucks that include, without limitation, maintenance
management, insurance services and license and title management services, (iii)
providing automobile and truck purchase and disposal services, and (iv)
providing universal fuel credit card services.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which banking institutions in the City of New York, New York or
Chicago, Illinois generally are authorized or required by law or executive
order to close.
"Buyer's Defined Contribution Plan" is Buyer's defined
contribution employee benefit plan, which is intended to be qualified under
Code Sections 401(a) and 401(k).
"Change in Earning Assets" means (i) the ending balance shown on
the line entitled "Subtotal-Earning Assets" on the Closing Date Statement of
Net Assets, excluding, however, any assets repurchased from USLI Fleet
Financing, Inc., minus (ii) the ending balance shown on the line entitled
"Subtotal-Earning Assets" on the Initial Statement of Net Assets Sold.
"Change in Net Assets Sold" means the sum of (i) the Closing Date
Net Assets Sold minus (ii) the Year End Net Assets Sold.
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"Change in Purchase Price" means (i) 0.1379 multiplied by the
Change in Earning Assets, plus (ii) the Change in Net Assets Sold.
"Closing" means the consummation of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities pursuant to this
Agreement.
"Closing Date" means the date of the Closing.
"Closing Date Net Assets Sold" means Net Assets Sold as of the
Closing Date.
"Closing Date Statement of Net Assets Sold" is defined in Section
2.4(c).
"Code" means the Internal Revenue Code of 1986, as amended.
"Competitive Business" is defined in Section 7.4.
"Contract" means any written agreement, arrangement, bond,
commitment, franchise, indemnity, indenture, instrument, lease or license.
"Disclosure Schedule" means the Disclosure Schedule of even date
herewith delivered by Seller to Buyer which sets forth certain exceptions to
the representations and warranties made by Seller in Article IV.
"Employee Benefit Plans" means all Employee Pension Benefit Plans
(as defined in Section 3(2) of ERISA), Employee Welfare Benefit Plans (as
defined in Section 3(1) of ERISA) and any other employee benefit policies,
plans or arrangements maintained by Seller in which the Employees participate.
"Employees" means those personnel employed by Seller or USFLI in
connection with the Business as of the date hereof and designated central
services personnel, in each case listed on Schedule 1.2(c) (including any such
employees on leave or short-term disability), together with any additions
thereto and subject to any reductions therefrom arising in the ordinary course
after the date hereof through and until the Closing Date as indicated on the
updated Schedule 1.2(c) prepared and delivered to Buyer by Seller pursuant to
Section 7.3(a).
"Encumbrance" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether
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imposed by agreement, understanding, Law, equity or otherwise, provided,
however, with respect to the Stock, that "Encumbrance" shall not mean any
restrictions on transfer generally arising under any applicable federal or
state securities Laws.
"Environmental Laws" means any and all Laws relating to the
environment in effect as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any Person other than Seller or USFLI who
is a member of a group which is under common control with Seller who together
with Seller is treated as a single employer within the meaning of Sections
414(b), (c), (m) or (o) of the Code.
"Estimated Cash Portion" is defined in Section 2.4(a).
"Estimated Change in Purchase Price" is defined in Section
2.4(b).
"Estimated Closing Date Statement of Net Assets" is defined in
Section 2.4(b).
"Estimated Closing Date Net Assets Sold" is defined in Section
2.4(b).
"Excluded Assets" means any and all assets of any kind or nature
of Seller or any Affiliate of Seller other than the Purchased Assets and any
assets of USFLI other than the USFLI Assets.
"Excluded Liabilities" means any and all Liabilities with respect
to the Purchased Assets or the USFLI Assets other than the Assumed Liabilities.
"Facility Leases" means the Contracts providing for Seller's
leasehold interest in the premises listed on Schedule 1.2(d).
"Final Audited Change in Purchase Price" is defined in Section
2.5(c).
"Fleet Services Contracts" means each Contract to which Seller or
USFLI is a party in connection with the transactions of Seller's Fleet Services
business unit listed on Schedule 1.2(e) as of May 31, 1996, together with any
additions and subtractions in the ordinary course of
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business to the date hereof and such other similar Contracts that comply with
the provisions of Section 6.2; provided, however, that "Fleet Services
Contracts" shall not mean any insurance policy, self-insurance arrangement,
bond, guaranty or indemnity agreement, or any other Contract listed on Schedule
4.7.
"Ford" means Ford Motor Company, a Delaware corporation.
"Ford Holdings" means Ford Holdings, Inc., a Delaware corporation
and the parent company of Seller.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Hazardous Substance" means substances that are defined or listed
in, or otherwise classified pursuant to, any applicable Environmental Laws as
"hazardous substances," "hazardous materials," "hazardous wastes" or "toxic
substances."
"Incentive Compensation Plans" means those sales incentive plans
of Seller listed on Schedule 1.2(f).
"Indemnifiable Claim" means any Loss for or against which any
party is entitled to indemnity under this Agreement.
"Indemnified Party" means a party entitled to indemnity under
this Agreement.
"Indemnifying Party" means a party obligated to provide indemnity
under this Agreement.
"Initial Statement of Net Assets Sold" means the Initial
Statement of Net Assets Sold as of December 31, 1995 set forth as Exhibit A.
"Insurance Proceeds" means (i) cash proceeds received by Seller
or USFLI from any casualty insurance policy insuring any Purchased Asset, USFLI
Assets or Assumed Liability against any hazard prior to the Closing, and all of
Seller's or USFLI's, as appropriate, rights to receive the same, in each case
less (A) any applicable deductible, co-payment or retention payable by Seller
or USFLI, and (B) any amounts expended by Seller or USFLI to repair, or
mitigate any damage to, any Purchased Asset, USFLI Asset or Assumed Liability,
and (ii) to the extent assignable, all
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rights of Seller or USFLI as loss payee and/or additional insured under the
individual insurance policies carried by each lessee of the Vehicles.
"Intangible Property" means the service marks, trademarks,
tradenames and registrations or applications for registration of the foregoing
owned and used by Seller or USFLI, as appropriate, and the computer software
applications and software licenses used by Seller (other than retail computer
software licenses), exclusively in connection with the Business, including, but
not limited to, those items listed on Schedule 1.2(g) and, for the avoidance of
doubt, excluding the names and marks "USL," "USL Capital," "U.S. Leasing,"
"Ford," "Ford Motor Company," the Ford "oval," and any derivatives thereof.
"IRS" means the Internal Revenue Service or any successor entity.
"Law" means any constitutional provision, statute, ordinance or
other law, rule, regulation, or interpretation of any Governmental Entity and
any Order.
"Liabilities" means any liabilities or obligations of any kind or
nature, whether absolute, contingent, accrued, known or unknown.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, obligation, penalty or settlement of any kind or
nature, whether foreseeable or unforeseeable, including, but not limited to,
interest or other carrying costs, penalties, legal, accounting and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified person.
"Net Assets Sold" means, as of any date, the book value of the
Purchased Assets, net of the Assumed Liabilities, as shown on Seller's books of
account as of such date, calculated in accordance with the Agreed Accounting
Principles.
"Order" means any award, decision, decree, injunction, judgment,
order, ruling, assessment or writ or verdict entered, issued, made or rendered
by any Governmental Entity.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
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"Permitted Encumbrance" means any Encumbrance that:
(i) is a lien of a landlord, carrier, warehouseman, mechanic,
materialman, or any other statutory lien arising in the ordinary course of
business;
(ii) is a lien for Taxes not yet due or being contested in good
faith (with Taxes being contested as of the date hereof set forth at
Section 4.11 of the Disclosure Schedule);
(iii) is a right of a customer under a Fleet Services Contract to
use any property leased thereunder from Seller or USFLI arising by the
terms of any Fleet Services Contract;
(iv) with respect to the right of Seller or USFLI to use any real
property leased to Seller or USFLI, arises by the terms of the applicable
Facility Lease;
(v) is a purchase money security interest arising in the ordinary
course of business;
(vi) with respect to any Assumed Contract other than those
specifically mentioned above, arises by the terms of the applicable
Assumed Contract.
"Person" means an association, a corporation, a limited liability
company, an individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Prepaid Items" means Seller's or USFLI's prepaid expenses and
licenses incurred in connection with the Business as of the date hereof,
together with any additions thereto and subject to any reductions therefrom
arising in the ordinary course after the date hereof through and until the
Closing Date.
"Purchase Price" is defined in Section 2.3.
"Purchased Assets" means:
(i) the Stock, together with the charter documents, franchises,
corporate seals, minute books, stock books and other corporate records
having to do with the corporate organization and capitalization of USFLI;
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(ii) (A) the Assumed Contracts and (B) Contracts for the purchase
by Seller of Vehicles which are to be leased pursuant to Fleet Services
Contracts in effect on the Closing Date which satisfy the requirements of
Section 6.2;
(iii) the Vehicles (including, but not limited to, Seller's
interest as a lienholder);
(iii) the Accounts Receivable;
(iv) the Intangible Property;
(v) all furniture, fixtures and equipment listed on Schedule
1.2(h) hereto and all materials and supplies owned by Seller located at
the real property leased to Seller under the Facility Leases or in the
possession of any Transferred Employee pursuant to equipment agreements
between Seller and such Transferred Employee as described on Schedule
1.2(h);
(vi) the Prepaid Items;
(vii) the Security Deposits;
(viii) all sales data, customer lists, information relating to
customers, suppliers' names, mailing lists, and advertising matter, if
any, relating to the Business;
(ix) all books and records relating solely to the Business,
except as otherwise provided in Section 3.4;
(x) all unemployment compensation, workers' compensation and
other credits, reserves or deposits with applicable Governmental Entities
relating to the Transferred Employees;
(xi) the Insurance Proceeds;
(xii) all transferable Permits used by Seller exclusively in
connection with the Business;
(xiii) all other assets reflected in the calculation of Closing
Date Net Assets Sold, as adjusted pursuant to Section 2.5; and
(xiv) any and all proceeds received by Seller from any sale,
transfer or other disposition of any of the foregoing consistent with the
provisions of Section 6.2.
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"Retirement Plan" means the USL Capital Corporation Retirement
Plan.
"Security Deposits" means all security deposits and other moneys
deposited by customers as prepaid expenses or any prepaid monthly rentals
relating to any Vehicle or any Fleet Services Contract.
"Services Agreement" means an agreement substantially in the of
Exhibit C hereto.
"Severance Plans" means those Employee Benefit Plans of Seller
listed on Schedule 1.2(i), as amended through June 7, 1996.
"Stock" means all of the outstanding capital stock of USFLI.
"Tax" means any foreign, federal, state, county or local income,
sales and use, excise, franchise, real and personal property, transfer, gross
receipt, capital stock, production, business and occupation, disability,
employment, payroll, severance or withholding tax or charge imposed by any
Governmental Entity, any interest and penalties (civil or criminal) related
thereto or to the nonpayment thereof, and any Loss in connection with the
determination, settlement or litigation of any Tax liability.
"Tax Return" means a report, return or other information required
to be supplied to a Governmental Entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that includes any subsidiary.
"Total Cash Portion" is defined in Section 2.3(a).
"Transferred Employees" is defined in Section 7.3(a).
"USFLI" means United States Fleet Leasing, Inc., a California
corporation.
"USFLI Assets" means the following assets of USFLI: (i) all Fleet
Services Contracts to which USFLI is a party, (ii) any assets of USFLI which
arise under, relate to or are in connection with the items set forth on
Schedule 1.2(b), and (iii) the interest of USFLI, if any, in the Vehicles,
Accounts Receivable, Intangible Property, Prepaid Items, Security Deposits,
books and records related solely to the Business, Insurance Proceeds, Permits
and any and all proceeds received by USFLI from any sale, transfer or other
disposition of any of the foregoing.
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"USFLI Balance Sheet" is defined in Section 4.14.
"Vehicles" means the motor vehicles, forklifts and other
ancillary equipment leased to any Person under any Fleet Services Contract,
together with any other motor vehicles, forklifts and other ancillary equipment
held for remarketing, sale or lease by Seller or USFLI in connection with the
Business, together with any additions thereto and subject to any reductions
therefrom arising in the ordinary course after the date hereof through and
until the Closing Date. All Vehicles under lease as of May 31, 1996 are
listed on Schedule 1.2(j).
"WARN Act" is defined in Section 5.5.
"Year End Net Assets Sold" means the book value of the Net Assets
Sold as of December 31, 1995 as shown on the Initial Statement of Net Assets
Sold.
"1996 Incentive Compensation" is defined in Section 7.3(c).
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Purchased Assets. Subject to the terms
and conditions of this Agreement, on the Closing Date Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept from Seller, all of Seller's right, title and interest in,
to and under the Purchased Assets. Seller shall not sell or transfer, and
Buyer shall not acquire any rights in and to, the Excluded Assets.
2.2 Assumption of Assumed Liabilities. Subject to the terms and
conditions of this Agreement, on the Closing Date Buyer shall assume, shall
take subject to and shall become liable for the Assumed Liabilities. Buyer
shall not assume, shall not take subject to and shall not be liable for the
Excluded Liabilities.
2.3 Purchase Price and Allocation.
(a) The total purchase price (the "Purchase Price") payable to
Seller by Buyer for the Purchased Assets shall consist of:
(i) $779,146,648 (the "Base Cash Portion" which was determined in
the manner set forth on Schedule 2.3(a)); and
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(ii) the Change in Purchase Price (the sum of the Base Cash
Portion and the Change in Purchase Price being the "Total Cash Portion").
(b) The Purchase Price shall be allocated among the Purchased
Assets and the Assumed Liabilities as mutually agreed by Buyer and Seller.
Buyer and Seller agree that such agreed allocation shall be used, reported and
implemented for all federal, state, local and other Tax purposes.
2.4 Amount Payable at Closing.
(a) Estimated Cash Portion. Buyer shall pay the Estimated Cash
Portion to Seller or Seller's designee at the Closing by wire transfer of funds
immediately available in the City of New York. The "Estimated Cash Portion"
shall be the sum of:
(i) the Base Cash Portion; and
(ii) the Estimated Change in Purchase Price.
(b) Estimated Change in Net Assets Sold. No later than five days
prior to the Closing Date, Seller shall prepare and deliver to Buyer a notice
setting forth Seller's good faith estimate of the Closing Date Net Assets Sold
(the "Estimated Closing Date Net Assets Sold") and of the Change in Purchase
Price (the "Estimated Change in Purchase Price"), together with a schedule
setting forth in detail the calculations supporting Seller's computation
thereof.
(c) Closing Date Statement of Net Assets Sold. Not later than 5
Business Days after the Closing Date, Seller shall prepare and deliver to Buyer
a statement of Net Assets Sold as of the Closing Date substantially in the form
of the Initial Statement of Net Assets Sold prepared in accordance with the
Agreed Accounting Principles and the adjustments provided for in Schedule 6.2
and Section 7.3 (such statement, as so prepared, being the "Closing Date
Statement of Net Assets Sold").
2.5 Procedure to Reconcile Change in Net Assets Sold.
(a) Audit of Closing Date Statement of Net Assets Sold by
Auditors. On the first Business Day after the delivery of the Closing Date
Statement of Net Assets Sold, Buyer and Seller shall direct the Auditors to
conduct an audit in accordance with the standards of the American Institute of
Certified Public Accountants, to be completed as promptly as practicable but in
any event not later than
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45 days thereafter, of the Closing Date Statement of Net Assets Sold and the
Estimated Change in Purchase Price, and, upon completion of such audit, to
deliver written notice (the "Auditors' Accounting Report") to each of Buyer and
Seller setting forth (i) a schedule of all adjustments, if any, to the Closing
Date Statement of Net Assets Sold and the Estimated Change in Purchase Price
determined by the Auditors to be required under the Agreed Accounting
Principles and the adjustments provided for in Schedule 6.2 and Section 7.3 to
generate the Closing Date Statement of Net Assets Sold and calculate the Change
in Purchase Price hereunder, and (ii) a report stating that in their opinion
(A) the Closing Date Statement of Net Assets Sold, after giving effect to such
adjustments, if any, as they believe to be required under the Agreed Accounting
Principles and the adjustments for provided in Schedule 6.2 and Section 7.3 and
as audited by such firm has been prepared in accordance with the Agreed
Accounting Principles and the adjustments provided for in Schedule 6.2 and
Section 7.3 and presents fairly the Closing Date Net Assets Sold in accordance
with the Agreed Accounting Principles consistently applied for all relevant
periods and the adjustments provided for in Schedule 6.2 and Section 7.3, and
(B) the Change in Purchase Price, after giving effect to such adjustments to
the Estimated Change in Purchase Price, if any, as they believe to be required
under the Agreed Accounting Principles and the adjustments provided for in
Schedule 6.2 and Section 7.3, has been determined in accordance with the
provisions of this Agreement (such Change in Purchase Price as so determined
being the "Audited Change in Purchase Price").
(b) Review by Buyer. Promptly following receipt of the Auditors'
Accounting Report, Buyer shall review the same and, as promptly as practicable,
but in any event not later than 30 days thereafter, may deliver to Seller a
certificate signed by its chief financial officer setting forth its objections
to the Auditors' Accounting Report together with a summary of the reasons
therefor and calculations supporting such adjustments that, in its view, are
necessary to eliminate such objections; provided, however, that Buyer shall
only be entitled to lodge objections relating to the Closing Date Statement of
Net Assets Sold and shall not be entitled to lodge any objections relating to
the Initial Statement of Net Assets Sold, and that, consistent with the terms
of the Agreed Accounting Principles, Buyer shall not be entitled to lodge any
objection with respect to the accounting treatment in the Closing Date
Statement of Net Assets Sold of any item as to which the circumstances giving
rise to the basis for such objection arose prior to January 1, 1996. Buyer
shall not be entitled to lodge any such objections, and no such certificate may
be delivered, unless the objections and the
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corresponding adjustments provided for in such certificate amount to an
increase or decrease in the Audited Change in Purchase Price, in the aggregate,
of not less than $1.0 million. In the event Buyer does not so object within
such 30-day period, the Audited Change in Purchase Price set forth in the
Auditors' Accounting Report shall be final and binding as the Change in
Purchase Price under this Agreement. In the event Buyer so objects within such
30-day period, Buyer and Seller shall endeavor to resolve by written agreement
(the "Agreed Adjustments") any differences as to the Audited Change in Purchase
Price and, in the event Seller and Buyer so resolve any such differences, the
Audited Change in Purchase Price set forth in the Auditors' Accounting Report
as adjusted by the Agreed Adjustments shall be final and binding as the Change
in Purchase Price under this Agreement.
(c) Audit by Additional Accounting Firm. In the event any
objections lodged by Buyer in accordance with Section 2.5(b) above are not
resolved by Agreed Adjustments within the 30-day period next following the
30-day period referred to in Section 2.5(b) above, then Buyer and Seller shall
jointly select a national accounting firm acceptable to both Buyer and Seller
(or, if they cannot agree on such selection, they shall select a national
(big-six) accounting firm by lot after eliminating the Auditors and Buyer's
independent public accountants) and shall direct the firm so selected (the
"Additional Accounting Firm") to conduct, as promptly as practicable, but in
any event not later than 45 days after such direction, such audit of the
Closing Date Statement of Net Assets Sold and the Change in Purchase Price
(each as determined by the Auditors and as set forth in the Auditors'
Accounting Report) as they believe to be necessary to resolve the objections
(it being understood that under no circumstances shall they be charged with
reconsidering or conducting an audit of any elements of the Closing Date
Statement of Net Assets Sold or the Audited Change in Purchase Price as to
which no objection has been lodged and which do not bear directly on the
matters or conclusions objected to), and to deliver a written notice (the
"Additional Accounting Report") to each of Buyer and Seller setting forth what
adjustments, if any, to the Closing Date Statement of Net Assets Sold and the
Audited Change in Purchase Price the Additional Accounting Firm believes to be
required under the Agreed Accounting Principles and the adjustments provided
for in Schedule 6.2 and Section 7.3 to resolve such objections, and the amount
of the Change in Purchase Price after giving effect to such adjustments;
provided, however, that the Additional Accounting Report shall not recommend
any adjustments whatsoever unless the aggregate net amount of all such
adjustments (including both the Auditors' and the Additional
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Accounting Firm's adjustments in the aggregate) would result in an increase or
decrease in the Audited Change in Purchase Price of not less than $1.0 million
(such Audited Change in Purchase Price if and as so adjusted being the "Final
Audited Change in Purchase Price"). In such event, the Final Audited Change in
Purchase Price shall be final and binding as the Change in Purchase Price under
this Agreement.
(d) Access to Information; Fees and Expenses. The parties hereto
shall make available to the Auditors, Buyer, Seller and, if applicable, the
Additional Accounting Firm, such books, records and other information
(including work papers) as any of them may reasonably request to audit the
Closing Date Statement of Net Assets Sold and prepare and review the Auditors'
Accounting Report hereunder; provided, however, that under no circumstances
shall Seller be required to make available to Buyer Tax Returns filed by any of
Seller's Affiliates. The fees and expenses of the Auditors shall be paid 50%
by Buyer and 50% by Seller. The fees and expenses of the Additional Accounting
Firm, if any, shall be allocated to Buyer in the same proportion as the
aggregate dollar amount of adjustments unsuccessfully asserted by Buyer bears
to the total dollar amount of adjustments asserted by Buyer.
(e) Procedure in Event of Qualified Report. If either the
Auditors or the Additional Accounting Firm should conclude that it is unable to
determine one or more issues or amounts necessary to complete an audit of the
Closing Date Statement of Net Assets Sold and the Change in Purchase Price and
prepare and deliver the Auditors' Accounting Report or the Additional
Accounting Report, it shall promptly so notify Buyer and Seller who shall
endeavor to jointly agree on such issue or amount. If Seller and Buyer are
unable to reach a written agreement concerning such issue or amount within 30
days after receipt of any such notice, the issue or amount in question shall be
determined in accordance with the provisions of Section 15.15. The decision
reached pursuant thereto shall be conclusive and binding for purposes of use
hereunder by the Auditors or the Additional Accounting Firm, as the case may
be.
2.6 Final Payment of Purchase Price. Promptly, but in any event
not later than 5 Business Days, after the final determination of the Change in
Net Assets Sold as set forth herein, (i) in the event that the Total Cash
Portion exceeds the Estimated Cash Portion, Buyer shall pay to Seller by wire
transfer of funds immediately available in the City of New York an amount equal
to such excess plus interest thereon from the Closing Date to the date of
payment thereof at the Agreed Rate, or (ii) in the event the
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Estimated Cash Portion exceeds the Total Cash Portion, Seller shall pay to
Buyer by wire transfer of funds immediately available in the City of New York
an amount equal to such excess plus interest thereon from the Closing Date to
the date of payment thereof at the Agreed Rate.
ARTICLE III
CLOSING
3.1 Closing Date. The Closing shall take place at the offices
of O'Melveny & Myers, Embarcadero Center West, 275 Battery Street, San
Francisco, California 94111-3305 on the first Business Day of the month
following the month during which the last of the conditions specified in
Articles VIII (other than Section 8.3), IX or X shall have been satisfied, but
if the last such condition is satisfied not more than five Business Days prior
to the last Business Day of such month, then on the first Business Day of the
second succeeding month, or at such other place or on such other date as Seller
and Buyer may agree.
3.2 Items to be Delivered at the Closing By Seller. At the
Closing, Seller shall deliver or cause to be delivered to Buyer:
(a) certificates representing the Stock, properly endorsed for
transfer to or accompanied by a duly executed stock power in favor of
Buyer;
(b) an executed Bill of Sale and Assignment substantially in the
form of Exhibit B;
(c) an executed Services Agreement;
(d) with respect to each Fleet Services Contract, an executed
letter, in form and substance reasonably satisfactory to Buyer, addressed
to the customer thereunder advising such customer of the assignment to and
assumption of such Fleet Services Contract by Buyer as of the Closing
Date;
(e) an executed Lease Assignment and Assumption Agreement with
respect to each Facility Lease substantially in the form of Exhibit D;
(f) an executed Trademark Assignment and Assumption Agreement
with respect to all Intangible Property that is registered, or as to which
registration is pending, with the U.S. Patent and Trademark Office
substantially in the form of Exhibit E;
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(g) executed certificates or other instruments of title in
respect of any Purchased Asset the ownership of which is as a matter of
Law evidenced by such certificate or other instrument of title;
(h) instruments of transfer in the form customarily used in
commercial transactions in the places in which the Purchased Assets which
are personal property are located sufficient to transfer to Buyer such
Purchased Assets not otherwise transferred to Buyer by the Bill of Sale
referred to above;
(i) such other instruments of transfer necessary or appropriate
to transfer to and vest in Buyer all of Seller's right, title and interest
in, to and under the Purchased Assets;
(j) all documentation required to exempt Seller from the
withholding requirements of Section 1445 of the Code;
(k) an executed Limited Power of Attorney in the Form of Exhibit
H hereto with respect to Vehicles;
(l) the Purchased Assets, to the extent in Seller's possession;
(m) any other certificates or other documents referred to herein
as then to be delivered by Seller; and
(n) an executed USFLI Assumption Agreement substantially in the
form of Exhibit K hereto, pursuant to USFLI shall assign to Seller or
Seller's designee, and Seller or its designee shall assume, all assets and
Liabilities of USFLI other than the USFLI Assets.
3.3 Items to be Delivered at the Closing by Buyer. At the
Closing, Buyer shall deliver to Seller:
(a) by wire transfer of funds immediately available in the City
of New York, the Estimated Cash Portion;
(b) an executed Assumption Agreement substantially in the form of
Exhibit F;
(c) an executed Services Agreement;
(d) an executed Lease Assignment and Assumption Agreement with
respect to each Facility Lease substantially in the form of Exhibit D;
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(e) an executed Trademark Assignment and Assumption Agreement
with respect to all Intangible Property that is registered, or as to which
registration is pending, with the U.S. Patent and Trademark Office
substantially in the form of Exhibit E;
(f) such other instruments of assumption necessary or appropriate
to transfer to and evidence the assumption by Buyer of all of the Assumed
Liabilities, including, but not limited to, such other instruments as may
be requested by any creditor or any other Person whose Approval is
required to consummate the transactions contemplated by this Agreement;
and
(g) any other certificates or other documents referred to herein
as then to be delivered to Buyer.
3.4 Removal of Books and Records; No Access to Seller's
Premises. Within a reasonable period of time after the Closing, Buyer and
Seller shall arrange the removal from Seller's premises of all books and
records relating solely to the Business; provided, however, Seller shall have
no obligation to deliver to Buyer (i) any information, documents or materials
required to be kept confidential by applicable Law, including but not limited
to employee personnel files, (ii) any privileged attorney-client communications
or attorney-work product related to any Excluded Assets or any Excluded
Liability, or (iii) any other information documents or materials related solely
to any Excluded Assets or Excluded Liabilities. Buyer acknowledges and agrees
that, except to the extent of specific arrangements to the contrary under
Services Agreement or as otherwise agreed by Buyer and Seller, as of the
Closing, Buyer's representatives and Transferred Employees shall be permitted
access to Seller's premises only upon reasonable prior notice and for the
purpose of retrieving assets of Buyer. Buyer's representatives when on
Seller's premises shall observe all rules and regulations of Seller, including
those regarding security.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise indicated on the Disclosure Schedule, and
subject to the provisions of Section 5.6, Seller represents and warrants to
Buyer as follows:
4.1 Organization and Related Matters. Seller is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware. Seller has all necessary corporate power and authority to
execute,
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deliver and consummate the transactions contemplated by this Agreement. USFLI
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of Seller and USFLI is
duly qualified and in good standing to do business in each jurisdiction in
which its failure to so qualify might reasonably be expected to have a material
adverse effect on its business or properties. Schedule 4.1 correctly lists the
current directors and executive officers of USFLI. USFLI is not a registered
or reporting company under the Exchange Act. USFLI does not own directly or
indirectly capital stock of or other equity interests in any Person.
4.2 Stock. Seller owns the Stock, beneficially and of record,
free and clear of any Encumbrances. At the Closing, Buyer will acquire good
and marketable title to and complete ownership of the Stock, free and clear of
any Encumbrances, and Seller will deliver certificates representing all of the
outstanding shares of Stock. The authorized capital stock of USFLI consists of
625,000 shares of common stock, $.40 par value, of which 2,500 shares are
issued and outstanding, and 70,000 shares of preferred stock, $.40 par value,
of which no shares are issued or outstanding. There are no outstanding
Contracts or other rights to subscribe for or purchase, or Contracts or other
obligations to issue or grant any rights to acquire, any equity securities of
USFLI, or to restructure or recapitalize USFLI. There are no outstanding
Contracts of Seller or USFLI to repurchase, redeem or otherwise acquire any
equity securities of USFLI. All outstanding equity securities of USFLI are
duly authorized, validly issued and outstanding and are fully paid and
nonassessable. There are no preemptive rights in respect of any equity
securities of USFLI.
4.3 Assumed Contracts. (a) Each Assumed Contract is legally
valid and binding, and is enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally. Each of Seller and USFLI has duly
performed all its obligations thereunder to the extent that such obligations to
perform have accrued, and no breach or default, or, to Seller's knowledge,
alleged breach or default, or event which would (with the passage of time,
notice or both) constitute a breach or default by Seller or USFLI thereunder,
or, to Seller's knowledge, any other party or obligor with respect thereto, has
occurred or, assuming that the requisite Approvals set forth on Schedule 4.5
are sought and obtained, as a result of the execution, delivery and performance
of this Agreement will occur, except in each case for such as
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would not have a material adverse effect on the value of the Purchased Assets
and the Assumed Liabilities, taken as a whole.
(b) Each Fleet Services Contract originally made by Seller or
USFLI and, to Seller's knowledge, each Fleet Services Contract acquired by
Seller or USFLI, arose out of a bona fide transaction and was created in
compliance with applicable Laws. Unless a Fleet Services Contract was acquired
from another Person, such Contract is substantially in the form of one of
Seller's standard forms listed in Schedule 4.3(b) or prior versions thereof.
No understanding or agreement has been reached by Seller or USFLI with a
customer or obligor of the Business for any variation of the terms and
conditions of any Fleet Services Contract, except as expressly set forth
therein. Each Fleet Services Contract constitutes the entire agreement of the
parties with respect to the subject matter thereof, except as the same may have
been modified in writing or by the custom and practice of the parties thereto
in the ordinary course of business, and (iii), except as may arise in the
ordinary course of business, no Fleet Services Contract is the subject of any
defense, set-off or counterclaim to the payment of the amount of the unpaid
balance thereof. To the knowledge of Seller, no customer under a Fleet
Services Contract is subject to a pending bankruptcy, receivership, insolvency
or other similar proceeding providing for debtors relief.
4.4 Title. With respect to the Assumed Contracts, Vehicles,
Accounts Receivable and other assets included in the Purchased Assets and the
USFLI Assets: (a) either Seller or USFLI, as set forth in the records, has
either good title to or a perfected first priority security interest in all
Vehicles, and good title to all Assumed Contracts and all Contracts included in
the USFLI Assets, free and clear of all Encumbrances other than Permitted
Encumbrances except, in the case of Vehicles subject to "Self-funded" leases to
Automated Data Processing, Inc., liens in its favor. All Fleet Services
Contracts which are leases are secured primarily by Vehicles.
4.5 Authorization; No Conflicts. The execution, delivery and
performance by Seller of this Agreement and the agreements set forth as
Exhibits hereto to which Seller is or will be a party have been duly and
validly authorized by the Board of Directors of Seller and by all other
necessary corporate action on the part of Seller and its Affiliates. This
Agreement constitutes the legally valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
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moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally. The execution, delivery and performance
by Seller of this Agreement and the agreements set forth as Exhibits hereto to
which Seller is or will be a party will not (a) violate, or constitute a breach
or default (whether upon lapse of time and/or the occurrence of any act or
event or otherwise) under, the charter documents or by-laws of Seller or any
USFLI, (b) result in the imposition of any Encumbrance against any Purchased
Asset (except for Permitted Encumbrances), or (c) violate any Law the violation
of which would have a material adverse effect on the value of the Purchased
Assets and the Assumed Liabilities, taken as a whole. Schedule 4.5 lists, as
of the date hereof, all Approvals and Permits required to be obtained by Seller
to consummate the purchase and sale of the Purchased Assets and the assumption
of the Assumed Liabilities as contemplated by this Agreement or which a failure
by Seller to obtain would permit any third party to terminate any Assumed
Contract or Contract to which USFLI is a party, or to accelerate the maturity
of any indebtedness which is an Assumed Liability. Except for matters
identified on Schedule 4.5 as requiring that certain actions be taken by or
with respect to a third party or Governmental Entity, the execution, delivery
and performance of this Agreement by Seller will not require filing or
registration with, or the issuance of any Approval or Permit by, any third
party or Governmental Entity, and will not constitute an event that would
permit any Person to terminate any Contract which is included in the Purchased
Assets or the USFLI Assets or to accelerate the maturity of any indebtedness
which is an Assumed Liability.
4.6 Legal Proceedings. There is no Order or Action pending, or,
to the knowledge of Seller, threatened, against or affecting Seller or any of
its properties or assets that individually or when aggregated with one or more
other Orders or Actions has, or, if determined adversely to the interest of
Seller, might reasonably be expected to have, a material adverse effect on the
value of the Purchased Assets and the Assumed Liabilities, taken as a whole, or
Seller's ability to perform this Agreement.
4.7 Insurance. Schedule 4.7 lists, as of the date hereof, all
insurance policies owned by Seller, and all insurance policies owned, or
self-insurance pools administered, by Seller's Affiliates, under which the
Purchased Assets or the Assumed Liabilities are insured. All of such insurance
policies and such self-insurance arrangements, to the extent the Purchased
Assets or the Assumed Liabilities are insured thereby or Seller with respect to
the Purchased Assets or the Assumed Liabilities
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participates therein, are in full force and effect and none of Seller or any of
its Affiliates is in default thereunder.
4.8 Intangible Property. Schedule 1.2(g) lists, as of the date
hereof, all items of Intangible Property. Subject, with respect to any
Intangible Property identified on Schedule 1.2(g) as licensed to Seller, to the
terms of the applicable license agreements, Seller owns or has rights to use
all of the Intangible Property and does not use any Intangible Property by
consent of any other person and is not required to and does not make any
payments to others with respect thereto. Seller has not received any notice to
the effect that the Intangible Property or any use by Seller of the same
conflicts with or infringes or allegedly conflicts with or infringes the rights
of any Person.
4.9 Compliance with Law. Seller, with respect to the Purchased
Assets and the Assumed Liabilities, and USFLI have conducted their respective
Businesses in all material respects in accordance with applicable Law. To
Seller's knowledge, (i) except as permitted by the terms of the "Hazardous
Materials Addendum" to the Fleet Services Contracts listed on Schedule 4.9, no
lessee of Seller is permitted to transport or store any Hazardous Substance in
any Vehicle, and (ii) there has not been any generation, use, transportation,
treatment, storage, spillage, discharge, release or disposal of any Hazardous
Substance in connection with Seller's or USFLI's ownership, use or control of
the Purchased Assets, the Assumed Liabilities or the USFLI Assets in violation
of any Environmental Law which has created any material liability of Seller or
USFLI. Neither Seller nor USFLI has received any written communication from a
Governmental Entity that alleges that Seller or USFLI is not in compliance with
any applicable Law with respect to the Business, the Purchased Assets, the
USFLI Assets or the Assumed Liabilities nor, to Seller's knowledge, is Seller
or USFLI under investigation or review by any Governmental Entity with respect
to the Business, the Purchased Assets, the USFLI Assets or the Assumed
Liabilities.
4.10 No Brokers or Finders. No agent, broker, finder, or
investment or commercial banker, or other Person or firm engaged by or acting
on behalf of Seller or any of its Affiliates in connection with the
negotiation, execution or performance of this Agreement or the transactions
contemplated by this Agreement is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this Agreement or
such transactions except for J.P. Morgan Securities Inc., as to which Seller
shall have full responsibility and Buyer shall have no liability.
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4.11 Taxes. (a) Seller has paid all Taxes the nonpayment of
which would result in any Encumbrance on any of the Purchased Assets or the
USFLI Assets except Permitted Encumbrances; (b) all Tax Returns that are
required to be filed by or with respect to USFLI on or before the Closing Date
have been or will be duly filed (all such returns being accurate and complete);
(c) all Taxes shown as due on the Tax Returns referred to in clause (b) have
been paid or will be paid in full; (d) as of the date hereof, no issues
relating to USFLI that have been raised by the IRS or any other taxing
authority in connection with the examination of any of the Tax Returns referred
to in clause (b) are pending; and (e) USFLI is not currently a party to any tax
sharing agreement or arrangement.
4.12 Retirement Plan. To Seller's knowledge, the Retirement
Plan is in substantial compliance with ERISA and the Code. The Retirement Plan
has received a favorable determination letter from the IRS, and Seller is not
aware of any circumstances likely to result in revocation of such favorable
determination letter. No Employee Benefit Plan of which Seller is or has been
a sponsor or to which it contributes or has contributed is subject to the
requirements of Title IV of ERISA.
4.13 Permits. Schedule 4.13 lists, as of June 3, 1996, all
Permits required for Seller and USFLI to carry on the Business as conducted at
such date, the absence of which could reasonably be expected to have a material
adverse affect on the Business, the Purchased Assets or the Assumed
Liabilities.
4.14 Financial Statements.
(a) Seller has delivered to the Buyer a true and correct
copy of the Initial Statement of Net Assets Sold. The Initial Statement of Net
Assets Sold was prepared in accordance with the Agreed Accounting Principles
and presents fairly in all material respects the assets and liabilities of the
Business as at December 31, 1995, except as noted therein and subject to the
absence of footnotes.
(b) Seller has delivered to the Buyer a true and correct
copy of the balance sheet of USFLI as at December 31, 1995 (the "USFLI Balance
Sheet"). The USFLI Balance Sheet presents fairly in all material respects the
assets and liabilities of USFLI as at such date, except as noted therein and
subject to the absence of footnotes.
4.15 Absence of Certain Changes. Since December 31, 1995 to the
date hereof:
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(a) Seller and USFLI have conducted the Business only in
the ordinary and usual course, consistent with past management practices,
including its credit, collection, control of delinquencies and other
policies and practices relating to the Fleet Services Contracts and the
conduct of its businesses generally.
(b) There has not been, occurred or arisen any change in
or event affecting the Business, the Purchased Assets or the assets of
USFLI that has had or would have a material adverse effect on the value
thereof, taken as a whole, except for changes affecting generally the
fleet leasing or financing industries as a whole, including, but not
limited to, changes in or affecting interest rates, securities markets,
applicable Laws or comparable events.
4.16 Records. The customer files, accounting records and stored
computer data relating to or connected with the Purchased Assets, Assumed
Liabilities and the USFLI Assets, including the Fleet Services Contracts and
Vehicles, are true and correct in all material respects and accurately reflect
the information set forth therein, including the amount of the Account
Receivable, the status thereof and all transactions relating thereto, all
reserves, holdbacks, deposits or other sums due and owing by Seller or USFLI to
others with respect thereto, and all payments, credits and adjustments required
to be applied to the balance thereof.
4.17 Consumer Leases. None of the Fleet Services Contracts are
leases to lessees who are individuals.
4.18 Real Property. USFLI does not own any real property.
4.19 Litigation. Schedule 4.19 sets forth a list, as of May 31,
1996, of all pending and, to the knowledge of Seller, threatened lawsuits or
claims with respect to the Business, the Purchased Assets, the Assumed
Liabilities or the USFLI Assets, which (a) involves a claim by Seller or USFLI
of more than $250,000 or a claim against Seller or USFLI of an unspecified
amount or for more than $50,000, (b) seeks any injunctive relief or (c) relates
to the transactions contemplated by this Agreement.
4.20 No Labor Disputes. In each case with respect to the
Business, (i) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened; (ii) no attempt to organize any group or all of the
Employees has been made or, to Seller's knowledge, proposed; (iii) no agreement
restricts Seller from relocating, closing or terminating any of its operations
or
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facilities; and (iv) in the past three years there has not been any work
stoppage.
4.21 No Collective Bargaining Agreement. Seller is not now, and
the consummation of the transactions contemplated by this Agreement will not
cause, Seller or Buyer to become bound by, obligated under or responsible for
any labor contract, collective bargaining agreement, consent decree, or
conciliation agreement relating to employment of the Employees.
4.22 Bonus and Similar Plans or Obligations. Except for
Liability assumed by Buyer pursuant to Section 7.3, Seller is not a party to or
subject to or directly or indirectly liable under: (i) any incentive, bonus, or
commission plan or similar arrangement or understanding for the benefit of one
or more of the Employees, or (ii) any management, consulting, deferred
compensation, severance, termination or employment Contract with any Person,
any of which in any event could result in a liability of or material obligation
against Buyer under such Contract with respect to any Employees (including, but
not limited to, the Transferred Employees).
4.23 Effect of Sale Transaction. Except for Liability assumed
by Buyer pursuant to Section 7.3, no Employee shall be entitled to any
severance pay or retention bonus from Buyer solely as a result of the
consummation of the transactions contemplated hereby.
4.24 Managed Vehicles. Schedule 1.2(e) identifies the Fleet
Services Contracts pursuant to which Seller manages motor vehicles for
customers, and the number of motor vehicles, as of May 31, 1996, being managed
by Seller thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Organization and Related Matters. Buyer is a corporation
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation. Buyer has all necessary corporate power and
authority to execute, deliver and consummate the transactions contemplated by
this Agreement. Buyer is duly qualified and in good standing to do business in
each jurisdiction in which its failure to so qualify might reasonably be
expected to have a material adverse effect on its business or properties.
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5.2 Authorization; No Conflicts. The execution, delivery and
performance of this Agreement by Buyer has been duly and validly authorized by
the Board of Directors of Buyer and by all other necessary corporate action on
the part of Buyer and its Affiliates. This Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally. The execution,
delivery and performance of this Agreement by Buyer will not (a) violate, or
constitute a breach or default (whether upon lapse of time and/or the
occurrence of any act or event or otherwise) under, the charter documents or
by-laws of Buyer, (b) violate any Law the violation of which would have a
material adverse effect on Buyer's ability to perform its obligations under
this Agreement, or (c) violate any Contract to which Buyer is a party, the
violation of which would have a material adverse effect on Buyer's ability to
perform its obligations under this Agreement. Schedule 5.2 lists, as of the
date hereof, all material Approvals and Permits required to be obtained by
Buyer to consummate the purchase and sale of the Purchased Assets and the
assumption of the Assumed Liabilities as contemplated by this Agreement.
Except for matters identified on Schedule 5.2 as requiring that certain actions
be taken by or with respect to a third party or Governmental Entity, the
execution, delivery and performance of this Agreement by Buyer will not require
filing or registration with, or the issuance of any Approval or Permit by, any
third party or Governmental Entity.
5.3 Legal Proceedings. There is no Order or Action pending, or
to the knowledge of Buyer, threatened, against or affecting Buyer or any of its
properties or assets that individually or when aggregated with one or more
other Actions has or, if determined adversely to the interest of Buyer, might
reasonably be expected to have, a material adverse effect on Buyer's ability to
perform this Agreement.
5.4 No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other Person or firms engaged by or acting
on behalf of Buyer or its Affiliates in connection with the negotiation,
execution or performance of this Agreement or the transactions contemplated by
this Agreement is or will be entitled to any broker's or finder's or similar
fees or other commissions as a result of this Agreement or such transactions.
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5.5 WARN Act. Buyer is not planning or contemplating, and has
not made or taken, any decisions or actions concerning the Employees after the
Closing that would require the service of notice by Seller under the Worker
Adjustment and Retraining Act of 1988 (the "WARN" Act).
5.6 Disclaimer of Certain Representations and Warranties. BUYER
ACKNOWLEDGES AND AGREES THAT THE PURCHASE AND SALE OF THE PURCHASED ASSETS AND
THE ASSUMPTION OF THE ASSUMED LIABILITIES HEREUNDER SHALL BE WITHOUT
REPRESENTATION OR WARRANTY BY SELLER, EXPRESS OR IMPLIED, AND BUYER SHALL
UNCONDITIONALLY ACCEPT THE PURCHASED ASSETS AND THE ASSUMED LIABILITIES "AS IS,
WHERE IS" AND WITH ALL FAULTS, EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE IV.
THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE IV ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES OF SELLER OF ANY KIND
WHATSOEVER, AND SELLER HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE, BY
VIRTUE OF HAVING TRANSFERRED THE PURCHASED ASSETS OR THE ASSUMED LIABILITIES
PURSUANT TO THIS AGREEMENT OR OTHERWISE, AND SELLER HEREBY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY EXCEPT THE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN ARTICLE IV, INCLUDING, BUT NOT LIMITED TO, ANY REPRESENTATION OR
WARRANTY AS TO (A) THE CONDITION, DESIGN, VALUE, OPERATION, EXISTENCE, FREEDOM
FROM ANY LATENT OR OTHER DEFECT (WHETHER OR NOT DISCOVERABLE), MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF ANY PART OR PORTION OF THE PURCHASED
ASSETS, (B) THE CREDITWORTHINESS OF ANY LESSEE OR ANY OTHER PERSON WHO MAY BE
OR MAY HAVE BEEN OBLIGATED UNDER ANY OF THE ASSUMED CONTRACTS OR THE
COLLECTIBILITY OF ANY AMOUNT NOW OR HEREAFTER PAYABLE UNDER ANY ASSUMED
CONTRACT, AND (C) EXCEPT WITH RESPECT TO ANY MATTER SPECIFICALLY COVERED BY
SELLER'S REPRESENTATIONS AND WARRANTIES IN ARTICLE IV, ANY OTHER MATTER AS TO
THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER SIMILAR OR DISSIMILAR TO THE
FOREGOING, IT BEING UNDERSTOOD THAT ALL SUCH DISCLAIMED RISKS, AS BETWEEN
SELLER AND BUYER, ARE TO BE BORNE SOLELY BY BUYER.
5.7 Investment Representation. Buyer is acquiring the Stock
from Seller for Buyer's own account, for investment purposes only and not with
a view to or for sale in connection with any distribution thereof.
ARTICLE VI
INTERIM COVENANTS
6.1 Access. Seller shall permit Buyer and its representatives
(which term shall be deemed to include its independent accountants and
counsel), subject to the rights of lessees, to have reasonable access during
normal business
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hours, upon reasonable notice and in such manner as will not unreasonably
interfere with the conduct of its business, to its properties, books, records,
operating instructions and procedures and all other information with respect to
the Purchased Assets, the USFLI Assets and Assumed Liabilities as Buyer may
from time to time request, and to make copies of such books, records and other
documents as Buyer considers necessary or appropriate for the purposes of
familiarizing itself with the Purchased Assets, the USFLI Assets and the
Assumed Liabilities, obtaining any necessary Approvals of or Permits for the
transactions contemplated by this Agreement and conducting an evaluation of the
Purchased Assets, the USFLI Assets and the Assumed Liabilities; provided,
however, that under no circumstances shall Seller be required to provide to
Buyer and its representatives access to, nor shall any of them have rights to
make copies of, (i) Tax Returns filed by any of Seller's Affiliates, (ii) any
information, documents or materials subject to confidentiality agreements with
third parties or required to be kept confidential by Law, including employee
personnel files, or (iii) any privileged attorney-client communications or
attorney work-product (except with respect to litigation to be managed by Buyer
pursuant to this Agreement, to the extent necessary for Buyer to prepare for
such management and, to the extent possible, in a manner consistent with
preserving any applicable privilege).
6.2 Conduct of Business. Seller agrees that it shall not and
agrees to cause USFLI not to, without the prior written consent of Buyer:
(a) conduct the Business in any manner except in the ordinary and
usual course and consistent with the management practices of Seller
currently in effect, including, that each of Seller and USFLI shall
continue its finance, credit, credit limit administration, collection,
control of delinquencies and other policies and practices relating to the
Fleet Services Contracts, the Vehicles, the Accounts Receivable and the
conduct of the Business generally as presently in effect and shall make
available to Buyer all information necessary to monitor compliance with
such policies and practices;
(b) terminate or fail to renew or preserve any material Permits
relating to the Business;
(c) sell, transfer, mortgage, encumber or otherwise dispose of
any of the Purchased Assets, the USFLI Assets or the Assumed Liabilities
except for sales or transfers of Vehicles pursuant to Seller's or USFLI's
asset remarketing activities and dispositions of assets not material in
amount (any and all proceeds
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received by Seller or USFLI from which shall be, consistent with the
provisions of Section 1.2, Purchased Assets hereunder);
(d) agree to or make any commitment to take any actions
prohibited by this Section 6.2; or
(e) amend the charter documents or by-laws of USFLI;
provided, however, that no such consent of Buyer shall be required to or in
connection with any aspect of any transaction entered into by Seller or USFLI,
(w) which is within the approval authority granted to the President of Seller's
Fleet Services Division pursuant to internal operating policies of Seller and
Ford in effect on December 31, 1995, (x) to the extent that Seller or USFLI, on
or prior to the date hereof, has committed to a customer to extend financing,
advance funds, provide leased equipment or acquire motor vehicles or equipment
on such customer's behalf (any commitments to acquire motor vehicles being
listed on Schedule 1.2(a) hereto as of June 4, 1996, subject to changes in the
ordinary course of business through the date hereof), (y) which is disclosed on
Schedule 6.2 or (z) to the extent that such transaction involves Excluded
Assets or Excluded Liabilities; provided, further, that promptly following
execution of this Agreement Buyer shall designate a representative to approve
or reject transactions subject to Buyer's approval pursuant to this Section
6.2, and Buyer shall be deemed to have given its approval to any transaction if
Buyer has not responded in writing within two Business Days following receipt
of written notice via facsimile from Seller to Buyer's designated
representative, accompanied by Seller's explanation of the reason for the
proposed transaction.
6.3 Permits and Approvals. Seller and Buyer shall cooperate and
endeavor to obtain, and will promptly prepare all registrations, filings and
applications, requests and notices preliminary to, all Approvals and Permits
identified on Schedules 4.5 and 5.2. Buyer and Seller shall each bear half of
any out-of-pocket costs, expenses incurred or fees paid to Governmental
Entities in order to obtain such Approvals and Permits. To the extent that the
Approval of a third party with respect to any Assumed Contract is required in
connection with the transactions contemplated by this Agreement but is not
obtained prior to the Closing Date, Buyer and Seller shall cooperate in good
faith to develop an alternative arrangement to ensure that Buyer obtains the
benefits of each such Assumed Contract consistent with the economic results
intended by this Agreement, provided that neither
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Buyer nor Seller shall be required to incur any out-of-pocket expenses in
connection with the same.
6.4 Government Filings. Buyer and Seller shall make any and all
filings required under any Law requiring filings with any Governmental Entity
with respect to the transactions contemplated hereby. Seller and Buyer shall
furnish each other such necessary information and reasonable assistance as the
other may reasonably request in connection with its preparation of necessary
filings or submissions under the provisions of such Laws. Seller and Buyer
will immediately supply to each other copies of all correspondence, filings or
communications, including file memoranda evidencing telephonic conferences, by
such party or its Affiliates with any Governmental Entity or members of its
staff, with respect to the transactions contemplated by this Agreement and any
related or contemplated or inconsistent transactions.
6.5 Bulk Transfer Laws. Buyer and Seller waive compliance with
any applicable bulk transfer Laws.
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS
7.1 Seller's Post-Closing Access. Buyer shall cooperate with
Seller to make available to Seller all financial, Tax and other information
acquired by Buyer in this transaction and reasonably required by Seller in
connection with (a) any audit or other investigation by any taxing authority or
any required reports or submissions (including any consolidated financial or
statutory reporting obligations of Seller or its Affiliates) to Governmental
Entities with respect to the Purchased Assets, the USFLI Assets or the Assumed
Liabilities relating to any period (or portion thereof) ending on or before the
Closing Date, and (b) matters relating to insurance coverage of the Purchased
Assets, the USFLI Assets or the Assumed Liabilities, third-party litigation,
claims, proceedings and investigations. Buyer shall preserve the information
under clause (a) above for at least ten years after the Closing Date, and will
dispose thereof only after it shall have given Seller 90 days' prior written
notice of such impending disposition and the opportunity (at Seller's expense)
to remove and retain such information. Any information obtained pursuant to
this Section 7.1 or pursuant to any other section hereof providing for the
sharing of information shall be subject to Section 14.2.
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7.2 Insurance; Indemnity Obligations.
(a) Seller and its Affiliates shall maintain in effect until
11:59 PM on the Closing Date all casualty and liability insurance policies and
bonds listed on Schedule 4.7 (or comparable replacement policies) at Seller's
expense. After the Closing Date, Buyer shall obtain those casualty and
liability insurance policies and bonds, if any, as Buyer may deem appropriate
at Buyer's expense.
(b) Buyer and Seller shall cooperate to ensure that no
certificates of insurance indicating coverage for Seller or its Affiliates
(other than USFLI) with respect to the Purchased Assets,the USFLI Assets or the
Assumed Liabilities shall be issued after the Closing Date. Buyer shall not
cause any such certificates of insurance to be issued after the Closing Date.
Buyer shall assist Seller as reasonably required in obtaining the return of any
such certificates outstanding as of the Closing Date.
(c) As of the Closing Date, Seller shall cause all of Seller's
rights and obligations under those casualty and insurance liability policies,
guaranties or other indemnity obligations of Seller listed on Schedule 7.2
relating to the Purchased Assets, the USFLI Assets or the Assumed Liabilities
to be assigned to and assumed by Buyer.
7.3 Employee Matters.
(a) Not later than 5 days prior to the Closing Date, Seller shall
prepare and deliver to Buyer an updated Schedule 1.2(c), identifying the
Employees as of such date; provided, however, that any Employee not a new hire
to replace an Employee being removed from updated Schedule 1.2(c) must be
approved by the Buyer in writing prior to being added to Schedule 1.2(c).
Except as provided otherwise in Schedule 1.2(c), as of the Closing Date, Buyer
shall offer to each of the Employees continued employment in a position having
at least the same base salary and comparable compensation plans to those
applicable to such Employee as of May 1, 1996 (any Employees who accept
employment with Buyer as of the Closing Date are "Transferred Employees");
provided, however, compliance with such requirement will not be construed to
limit the ability of the Buyer to terminate any Transferred Employee at any
time thereafter for any reason. As of the Closing Date, provided that Buyer
has offered continued employment to the Employees as provided above (and except
as otherwise specified in Schedule 1.2(c)), Seller shall terminate the
employment of all of the Employees.
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(b) Except as provided in this Section 7.3, Seller shall pay,
discharge and be responsible for (i) all salary, wages and claims arising out
of or relating to the employment of the Employees before the Closing Date and
(ii) any employee benefits (including, but not limited to, accrued vacation,
annual or long-term incentive program, 401(k) plan, retirement plan,
non-qualified deferred compensation plan and group health coverage continuation
pursuant to Code Section 4980B(f)) arising under the Employee Benefit Plans
prior to the Closing Date, including benefits with respect to claims incurred
prior to the Closing Date but reported after the Closing Date. From and after
the Closing Date, Buyer shall pay, discharge and be responsible for all salary,
wages, claims and benefits arising out of or relating to the employment of the
Transferred Employees by Buyer on and after the Closing Date, including,
without limitation, any continuation coverage required pursuant to Code Section
4980B as the result of any "qualifying event" (within the meaning of Code
Section 4980B(f)(3)) occurring with respect to any Transferred Employee (or any
spouse or dependent of any Transferred Employee) on or after the Closing Date,
other than continuation coverage elected by any such Employee, spouse or
beneficiary under Seller's group health plan pursuant to Code Section 4980B.
(c) For Transferred Employees covered under the Incentive
Compensation Plans, Buyer shall assume and be responsible for all payments
earned during calendar year 1996 after the Closing Date by such Transferred
Employees and all amounts earned before the Closing Date but unpaid as of the
Closing Date, under the terms of the Incentive Compensation Plans (the "1996
Incentive Compensation") (the accrued liabilities for which through the last
day of the month preceding the Closing Date shall be reflected on the Closing
Date Statement of Net Assets Sold). Buyer shall, to the extent any claim with
respect to such 1996 Incentive Compensation is lodged against Seller or any of
its Affiliates, with respect to Transferred Employees, indemnify, defend and
hold harmless Seller and its present and former directors, officers, employees,
Affiliates, agents and assigns from and against any and all Losses, directly or
indirectly, as a result of, or based upon or arising from the same, except for
any such Loss attributable to the inaccuracy of Seller's books and records.
(d) To the extent an Employee listed on Schedule 1.2(c) updated
pursuant to clause (a) above becomes eligible for any benefits under the
Severance Plans due to the failure of Buyer to offer a comparable position (as
defined in the applicable Severance Plan), Buyer shall reimburse Seller for any
and all severance payments and outplacement
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expenses related to such Employee, to the extent provided under the Severance
Plans, as administered and determined by Seller in accordance with the
Severance Plans. Buyer shall assume and be responsible for paying all
severance payments and outplacement expenses related to any Transferred
Employee who becomes eligible for any benefits under the Severance Plans within
the 366-day period following the Closing Date. To the extent any claim under
the Severance Plans during such period is lodged against Seller and its present
and former directors, officers, employees, Affiliates, agents and assigns, with
respect to Transferred Employees, Buyer shall indemnify, defend and hold
harmless such Indemnified Parties from and against any and all Losses
(including reasonable attorney's fees) directly or indirectly as a result of,
or based upon or arising from the same. Further, Buyer agrees that, for the
period of time (in weeks or months) that would be used to determine the amount
of Severance Pay under Seller's Severance Plans as applicable to the
Transferred Employees referred to above, the premium rate for continuation
coverage in accordance with Code Section 4980B that is applicable to such
Transferred Employee (and such Transferred Employee's beneficiaries) under
Buyer's medical plan shall not exceed the premium rate that applies to active
employees of Buyer as of the date of such Transferred Employee's termination of
employment.
(e) Buyer shall have the option to assume and discharge Seller's
liability described on Schedule 1.2(c) to the Transferred Employees identified
thereon under Seller's relocation policy. If such option is exercised, Buyer
shall indemnify Seller against any and all Losses (including reasonable
attorneys' fees) based upon or arising from the same. At Buyer's option,
Seller shall transfer and assign to Buyer without recourse the notes and deeds
of trust described in Schedule 1.2(c) made by certain Transferred Employees in
connection with Seller's relocation program. In consideration thereof Buyer
shall pay to Seller the outstanding principal balance of such notes together
with accrued but unpaid interest and other charges due and payable thereunder.
All costs and expenses of such assignment, including but not limited to escrow
charges and title insurance, if any, shall be paid by Buyer. The options set
forth in this paragraph (d) shall be exercised by Buyer and the transactions
contemplated thereby completed within thirty days after the Closing Date.
(f) Buyer agrees to amend Buyer's Defined Contribution Plan,
effective no later than the last business day of the month next following the
Closing Date, if and to the extent an amendment is necessary, to allow Buyer's
Defined Contribution Plan to accept a trust-to-trust
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transfer from the Retirement Plan, and deliver to Seller no later than the
Closing Date a copy of the most recent determination letter issued by the
Internal Revenue Service with respect to Buyer's Defined Contribution Plan. As
soon as practicable following the Closing Date, Buyer and Seller agree to
transfer from the Retirement Plan to Buyer's Defined Contribution Plan the
assets and liabilities of the Retirement Plan attributable to the Transferred
Employees, including notes that represent the participant loans of Transferred
Employees. Buyer shall take all reasonable action to ensure continued
qualification of Buyer's Defined Contribution Plan under Sections 401(a) and
401(k) of the Code.
(g) Buyer shall cause all Transferred Employees as of the Closing
to be eligible to participate in the "employee welfare benefit plans" and
"employee pension benefit plans" (as defined in Sections 3(1) and 3(2) of
ERISA, respectively) of Buyer in which similarly situated employees of Buyer
are generally eligible to participate; provided, however, such Transferred
Employees and their beneficiaries and dependents, to the extent that such
Transferred Employees and their beneficiaries and dependents are otherwise
eligible for coverage in accordance with the terms of Buyer's plans, shall not
be excluded from coverage on account of any pre-existing condition under any
such plan that is a group health plan of Buyer subject to Part 6 of Title I of
ERISA. Except as provided below, for purposes of any length of service
requirements, waiting periods, vesting periods or differential benefits based
on length of service in any such plan for which a Transferred Employee may be
eligible after the Closing, Buyer shall ensure that service by such Transferred
Employee with Seller or any Affiliate of Seller shall be deemed to have been
service with the Buyer; provided, however, Buyer shall not be required (i) to
treat service with Seller or any Affiliate of Seller as service with Buyer for
purposes of benefit accrual under any defined benefit pension plan maintained
by Buyer, or (ii) to grant past service credit for purposes of determining the
applicable benefit schedule under Buyer's short-term disability plan. In
addition, Buyer shall ensure that each Transferred Employee receives credit
under any welfare benefit plan of Buyer for any deductible paid by such
Transferred Employee and his or her dependents for the current plan year under
a plan maintained by Seller; provided, however, that Seller as soon as
practicable following the Closing Date provides the necessary information
related to such Transferred Employees to accomplish such credit.
(h) Notwithstanding any other provision of this
Agreement, the Closing Date Statement of Net Assets Sold
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shall reflect an accrued liability as of the Closing Date for retiree medical
benefits with respect to the Transferred Employees under Seller's applicable
plans in the amount of $2,400,000. In consideration thereof, Buyer
acknowledges that it maintains a plan that provides retiree medical benefits
and agrees that it shall cause all Transferred Employees to be eligible to
receive such retiree medical benefits on the same basis that employees of Buyer
hired after January 1, 1994 are eligible to receive such benefits, treating all
service with Seller or any Affiliate of Seller for this purpose as service with
Buyer. Notwithstanding the above, Buyer will vest in its retiree medical plan
those Employees listed on Schedule 7.3(h) who become Transferred Employees on
the Closing Date and in addition Buyer will provide retiree medical benefits to
Transferred Employees who attain age 60 with 10 years continuous service or age
55 with 15 years of continuous service, treating all continuous service with
Seller or any Affiliate of Seller through the Closing Date for this purpose as
service with Buyer.
(i) Buyer shall give credit for and honor after the
Closing Date all unused sick leave accrued by Transferred Employees as
Employees of Seller as of the Closing Date, subject to Buyer's maximum sick
leave allowances, if any, for similarly situated employees of Buyer.
(j) This Agreement is not intended, nor shall it be construed, to
create any express or implied third-party beneficiary rights in any person,
including, but not limited to, present or former employees of Seller, the
Employees, and any beneficiaries or dependents thereof.
7.4 Noncompetition.
(a) For a period of three years commencing on the Closing Date,
Seller agrees not to (and agrees to cause its Affiliates not to) at any time,
directly or indirectly, anywhere in the United States, so long as Buyer
continues to engage in a like business:
(i) own, manage, operate, control, or be connected in any manner
with the ownership, management, operation, or control of any Person or
entity that engages in the same or similar type of business as the
Business or engages in a business competitive with the Business (a
"Competitive Business");
(ii) engage in any activity which is the same as, similar to or
in competition with the Business; or
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(iii) interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between Buyer and any customer or
prospective customer, supplier, lessee or employee of Buyer, including,
without limitation, the customers and suppliers of the Business prior to
the Closing Date.
(b) For a period of two years commencing on the Closing Date,
Seller agrees not to solicit employment for or of the Transferred Employees or
induce any Transferred Employee to leave the employ of Buyer.
(c) Notwithstanding anything in Section 7.4(a) to the contrary,
nothing in this Agreement shall in any way restrict or limit the rights of
Seller or its Affiliates (i) as an investor to hold and make investments not in
excess of 10% of the outstanding securities of any corporation the securities
of which are listed on a nationally recognized securities exchange or traded in
a nationally recognized over-the- counter market, and (ii) to continue to carry
on or enter into any business in which any of them is engaged as of the date
hereof (other than the Business), whether or not any such business is a
Competitive Business.
(d) For a period of three years commencing on the Closing Date,
Seller agrees not to (and agrees to cause its Affiliates and any Person
purchasing the other businesses of Seller whether by way of assets or stock not
to) use the customer lists of the Business being delivered to Buyer at Closing
in connection with any automobile or truck fleet leasing and/or management
marketing activities.
(e) The obligations contained in this Section 7.4 are of special
and unique character which gives them a peculiar value. Buyer may not be
reasonably or adequately compensated in damages in an action at law in the
event that Seller breaches such obligations. Seller therefore expressly agrees
that Buyer shall be entitled to preliminary and permanent injunctive and other
equitable relief to prevent a breach of said obligations, in addition to any
other rights and remedies that Buyer may have.
7.5 Apportionment; Accounts Receivable. Except as otherwise
provided herein, (a) Seller will be entitled to all income earned in or from
and will be responsible for all obligations, liabilities or expenses arising
out of the ownership or operation of the Purchased Assets with respect to
events occurring prior to the Closing Date, and (b) Buyer will be entitled to
all income earned in or from and will be responsible for all obligations,
liabilities or expenses arising out of the ownership or operation of the
Purchased Assets with respect to events occurring on and after the
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Closing Date. If Seller receives any amounts in payment of obligations owed to
Buyer including, but not limited to, payments in respect of the Accounts
Receivable, Seller shall promptly deliver or pay them over to Buyer. If Buyer
receives any amounts in payment of obligations owed to Seller, Buyer shall
promptly deliver or pay them over to Seller.
7.6 Use of Excluded Intangible Property. Buyer acknowledges and
agrees that no rights to ownership or use whatsoever with respect to any
intangible property of any kind, other than the Intangible Property, that is
owned by Seller, Ford or any Affiliate of Ford, including, but not limited to,
the names and marks "USL," "USL Capital," "U.S. Leasing," "Ford," "Ford Motor
Company," the Ford "oval," and any derivatives thereof, shall be a Purchased
Asset hereunder. Buyer agrees that, except to the extent that other agreements
with Ford or any Affiliate of Ford permit it use of such intangible property,
it shall, not later than sixty (60) days after the Closing Date, cease and
desist from the use of any such excluded intangible property in connection with
any advertising, marketing, or solicitation efforts; provided, however, that
with respect to the use of materials printed prior to the Closing Date it shall
cease and desist from all use of such excluded intangible property 180 days
from the date hereof and provided, further, that the foregoing shall not be
construed to require Buyer to reexecute or cause customers to reexecute Assumed
Contracts. It is understood that after the Closing Date, Buyer may use the
corporate and trade names "United States Fleet Leasing, Inc.," and "United
States Fleet Leasing" and "U.S. Fleet Leasing," and Seller agrees not to (and
agrees to cause its Affiliates and any Person purchasing other businesses of
Seller whether by way of assets or stock not to ) use the names "United States
Fleet Leasing, Inc.," "United States Fleet Leasing" or "U.S. Fleet Leasing" or
any derivative thereof that includes the word "Fleet." Under no circumstances
will any Affiliate of Ford other than Seller or its subsidiaries be required to
cease using any such derivative which it now uses in connection with any of its
businesses, including any Competitive Business.
7.7 Liens on Vehicles. Buyer and Seller agree that to the
extent that Seller is a record lienholder of any Vehicle, Seller shall remain
such exclusively as agent for, and solely for the benefit of, Buyer, shall hold
such lien in trust for Buyer and shall act solely at the instruction of Buyer
with respect thereto until such Vehicle is transferred from USFLI to another
Person. Following the Closing, Buyer and USFLI shall be free at any time to
take any actions consistent with their positions as beneficial owners, free and
clear of any lien of Seller, of the
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Vehicles. Seller shall cooperate with Buyer in order to permit any other
Person to become the registered owner, lienholder or the holder of any other
equivalent interest in any Vehicle, provided that Seller shall not be required
to incur any cost or expense in connection with the same. Pursuant to the
provisions of Article XII, Buyer agrees to indemnify and hold harmless Seller
and its present and former directors, officers, employees, Affiliates, agents
and assigns from and against any Losses of Seller, directly or indirectly, as a
result of, or based upon or arising from, Seller's status as a record
lienholder of any or all of the Vehicles.
7.8 Power of Attorney. Effective upon the Closing Date, Seller
shall appoint Buyer its agent and attorney-in-fact for the limited purpose of
executing financing statements, statements of assignment or termination,
certificate of title documentation and other related instruments with respect
to the lien of Seller on the Vehicles referred to in Section 7.7 above. Seller
agrees to execute and deliver to Buyer at Closing a limited power of attorney
for the above purposes in the form of Exhibit H.
7.9 Executive, Management and Sales Car Lease Programs.
Effective as of the Closing Date, Buyer and Seller shall enter into an
agreement substantially in the form of Exhibit G providing for the provision of
fleet services by Buyer to Seller on the terms and conditions set forth
therein.
7.10 Litigation Management.
(a) Buyer agrees, from and after the Closing Date, to manage for
Seller the litigation set forth on Schedule 4.19 (other than the employment
litigation identified as Item 1 to Schedule 4.19), and any other litigation of
a similar nature brought after the date hereof with respect to events or
circumstances arising prior to the Closing Date (the "Managed Litigation").
Seller shall designate an individual to whom Buyer shall direct all
communications with regard to the Managed Litigation, and who shall have the
authority to direct Buyer in respect thereof. Buyer shall promptly inform
Seller of any material developments with respect to the Managed Litigation,
including (i) the settlement or resolution of any Action, and (ii) any event
which makes it reasonably likely that Seller will incur any liability in
connection with such Managed Litigation. Seller will instruct Buyer with
regard to any decisions in connection with the Managed Litigation. Seller
shall reimburse Buyer for out-of-pocket expenses incurred in connection with
managing the Managed Litigation.
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(b) Buyer agrees, after the Closing Date upon any
reasonable request by Seller, to make available to Seller Transferred Employees
for assistance and testimony in any litigation of Seller involving the
Business, the Purchased Assets or the Assumed Liabilities, other than Actions
by Seller against Buyer. Seller shall reimburse Buyer, or the Transferred
Employees, as applicable, for out-of-pocket expenses in connection with such
assistance and testimony, but such assistance shall otherwise be provided
without charge. Seller agrees, after the Closing Date upon any reasonable
request by Buyer, to make available to Buyer any individuals in its employ for
assistance and testimony in any litigation of Buyer involving the Business, the
Purchased Assets or the Assumed Liabilities, other than Actions by Buyer
against Seller. Buyer shall reimburse Seller, or the individual, as
applicable, for out-of-pocket expenses in connection with such assistance and
testimony, but such assistance shall otherwise be provided without charge.
(c) Buyer agrees, promptly after the Closing Date, to
replace and substitute a Transferred Employee (or other agent or representative
of Buyer) for any employee of Seller not a Transferred Employee and who has
been appointed agent for service of process of, or other notice upon, USFLI or
Seller pursuant to applicable Law or any Assumed Contract.
(d) The settlement limitations set forth in Section 12.3(c)
below shall apply to the settlement of such litigation as if the Seller were an
Indemnified Party.
ARTICLE VIII
GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be
subject to the following conditions:
8.1 No Orders; Legal Proceedings. No Law or Order shall have
been enacted, entered, issued, promulgated or enforced by any Governmental
Entity, nor shall any Action have been instituted and remain pending by any
Governmental Entity at what would otherwise be the Closing Date, which
prohibits or restricts or would (if successful) prohibit or restrict the
transactions contemplated by this Agreement.
8.2 Approvals. To the extent required by applicable Law, all
material Permits and Approvals required to be obtained from any Governmental
Entity shall have been received or obtained on or prior to the Closing Date.
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8.3 Deliveries. All items to be delivered at the Closing
pursuant to Sections 3.2 and 3.3 shall be available for delivery in accordance
therewith.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect the Closing shall be subject
to the following conditions except to the extent waived in writing by Buyer:
9.1 Representations and Warranties and Covenants of Seller. The
representations and warranties of Seller herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time, Seller shall have in all material respects performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and Seller
shall have delivered to Buyer a certificate of Seller in form and substance
satisfactory to Buyer, dated the Closing Date and signed by its President to
such effect.
9.2 No Material Adverse Change. There shall not have been,
occurred or arisen any change in or event affecting the Purchased Assets or the
Assumed Liabilities that has had a material adverse effect on the value of the
Purchased Assets and the Assumed Liabilities, taken as a whole, subsequent to
the date hereof, except for changes affecting generally the leasing or
financing industries as a whole, including, but not limited to, changes in or
affecting interest rates, securities markets, accounting principles, practices
or conventions, applicable Laws or comparable events.
9.3 Consents and Approvals. All Approvals required to be
obtained as a condition for Seller's or USFLI's assignment to Buyer of the
Contract listed as Item 1 of Schedule 7.2 shall have been obtained (subject,
however, to Buyer having provided any assurances reasonably requested by the
counterparty to such Contract including, without limitation, assurances with
respect to the underwriting and administrative policies, procedures and
standards to be applied by Buyer from and after the Closing Date).
9.4 Fairness Opinion. Buyer shall have received an opinion of
Salomon Brothers Inc affirming the fairness of the transactions contemplated
hereby, from a financial point of view.
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Closing shall be subject
to the following conditions, except to the extent waived in writing by Seller:
10.1 Representations and Warranties and Covenants of Buyer. The
representations and warranties of Buyer herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time, Buyer shall have in all material respects performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and Buyer
shall have delivered to Seller a certificate of Buyer in form and substance
satisfactory to Seller, dated the Closing Date and signed by its President to
such effect.
ARTICLE XI
TERMINATION OF OBLIGATIONS; SURVIVAL
11.1 Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated by this
Agreement shall automatically terminate, without any notice, demand or action
by either party, if the Closing does not occur on or before the close of
business on September 30, 1996 unless extended by mutual consent in writing of
Buyer and Seller and otherwise may be terminated at any time before the Closing
as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer and
Seller.
(b) Conditions to Buyer's Performance Not Met. By Buyer by
written notice to Seller if any event occurs or condition exists which
would render impossible the satisfaction of one or more conditions to the
obligations of Buyer to consummate the transactions contemplated by this
Agreement as set forth in Articles VIII or IX.
(c) Conditions to Seller's Performance Not Met. By Seller by
written notice to Buyer if any event occurs or condition exists which
would render impossible the satisfaction of one or more conditions to the
obligation of Seller to consummate the transactions contemplated by this
Agreement as set forth in Articles VIII or X.
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(d) Material Breach. By Buyer or Seller if there has been a
material misrepresentation or other material breach by the other party in
its representations, warranties and covenants set forth herein; provided,
however, that the breaching party shall have 10 Business Days after
receipt of notice from the other party of its intention to terminate this
Agreement if such breach continues, in which to cure such breach.
(e) Guaranty. By Seller if Associates Corporation of North
America, a Delaware corporation, has not delivered to Seller a guaranty in
the form of Exhibit J on or before June 25, 1996, and by Buyer if either
Ford or Ford Motor Credit Company has not delivered to Buyer a guaranty in
the form of Exhibit I on or before June 25, 1996.
(f) Fairness Opinion. By Seller if Buyer has not received the
fairness opinion described at Section 9.4 within two days after the date
hereof.
11.2 Effect of Termination. In the event that this Agreement
shall be terminated pursuant to Section 11.1, all further obligations of the
parties under this Agreement shall terminate; provided that the obligations of
the parties contained in Sections 14.2, 15.11 and 15.15 shall survive any such
termination, and that a termination under Section 11.1 shall not relieve either
party of any liability for a breach of, or for any misrepresentation under this
Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any such breach or
misrepresentation.
11.3 Survival of Representations and Warranties and Covenants.
The representations, warranties and covenants of the parties contained in this
Agreement and in any other document delivered in connection herewith (other
than covenants or agreements the performance of which is specified to occur on
or prior to the Closing or the Closing Date, which shall not survive the
Closing) shall survive the Closing and shall expire 18 months after the Closing
Date, except in the case of representations and warranties set forth in (i)
Sections 4.3(a), 4.5, 4.6, 4.7, 4.8, 4.9 and 4.16, which shall expire 24 months
after the Closing Date, (ii) Section 4.3(b) which shall expire 30 months after
the Closing Date, and (iii) Sections 4.1, 4.2, 4.4, 4.11, 4.12, 4.18, 4.19, 5.1
and 5.2, which shall survive indefinitely; provided, further, that if a claim
or notice is given under Article XII with respect to any representation,
warranty or covenant prior to the applicable expiration date, such
representation, warranty or covenant shall continue
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indefinitely with respect to such claim until such claim is finally resolved.
ARTICLE XII
INDEMNIFICATION
12.1 Obligations of Seller. Subject to the provisions of
Section 12.4, from and after the Closing, Seller agrees to indemnify and hold
harmless Buyer and its present and former directors, officers, employees,
Affiliates (including USFLI), agents and assigns from and against any and all
Losses suffered or incurred by such Indemnified Party, directly or indirectly,
as a result of, or based upon or arising from:
(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Seller in or
pursuant to this Agreement (which for the purpose of determining Losses
for indemnification purposes shall exclude all materiality qualifications
contained therein other than materiality qualifications contained in
Sections 4.6, 4.9 and 4.15(b));
(b) the Excluded Assets;
(c) the Excluded Liabilities (even if such Liability is set forth
on the Disclosure Schedule or otherwise excepted from the representations
and warranties in Article IV, or the survival period for a representation
and warranty or covenant relating to the same subject matter has expired
pursuant to Section 11.3);
(d) non-compliance with any applicable bulk transfer Laws in
connection with or as a result of the transfer of the Purchased Assets and
the Assumed Liabilities pursuant to this Agreement; and
(e) any breach of Law under ERISA or the Code in connection with,
or any breach or failure to perform the terms of, any employee benefit
plan or arrangement maintained, sponsored, contributed to or administered
by Seller or its ERISA Affiliates (other than a breach or failure by Buyer
or its ERISA Affiliates).
12.2 Obligations of Buyer. Subject to the provisions of Section
12.4, from and after the Closing, Buyer agrees to indemnify and hold harmless
Seller and its present and former directors, officers, employees, Affiliates,
agents and assigns from and against any Losses
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suffered or incurred by such Indemnified Party, directly or indirectly, as a
result of, or based upon or arising from:
(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Buyer in or
pursuant to this Agreement (which, other than with respect to Section
4.15(b) and Section 9.2, for the purpose of determining Losses for
indemnification purposes, shall exclude all materiality qualifications
contained herein);
(b) the Assumed Liabilities; and
(c) the matters described in Sections 7.3(d) and 7.7.
12.3 Procedure.
(a) Notice. Any party seeking indemnification of any Loss or
potential Loss arising from a claim asserted by a third party shall give
written notice to the party from whom indemnification is sought. Written
notice to the Indemnifying Party of the existence of a third- party claim shall
be given by the Indemnified Party within 30 days after its receipt of a written
assertion of liability from the third party. The Indemnified Party shall not
be foreclosed by any failure to provide timely notice of the existence of a
third party claim to the Indemnifying Party except to the extent that the
Indemnifying Party incurs an out-of-pocket expense or otherwise has been
materially prejudiced as a direct result of such delay.
(b) Defense. The Indemnifying Party shall be entitled to assume
the defense and control of any Indemnifiable Claim. If the Indemnifying Party
assumes the defense of any Indemnifiable Claim, it shall retain experienced
counsel reasonably satisfactory to the Indemnified Party. If the Indemnifying
Party does not assume such defense, the Indemnified Party may compromise or
settle the claim on behalf of and for the account and risk of the Indemnifying
Party, who shall be bound by the result.
(c) Settlement Limitations. Notwithstanding anything in this
Section 12.3 to the contrary, the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any
Indemnifiable Claim or permit a default or consent to entry of any judgment
unless the claimant and the Indemnifying Party provide to the Indemnified Party
an unqualified release from all liability in respect of the claim.
Notwithstanding the foregoing, if a settlement offer solely for money damages
is made by the applicable third party
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claimant, and the Indemnifying Party notifies the Indemnified Party in writing
of the Indemnifying Party's willingness to accept the settlement offer and pay
the amount called for by such offer, and the Indemnified Party declines to
accept such offer, the Indemnified Party may continue to contest such claim,
free of any participation by the Indemnifying Party, and the amount of any
ultimate liability with respect to such Indemnifiable Claim that the
Indemnifying Party has an obligation to pay hereunder shall be limited to the
lesser of (i) the amount of the settlement offer that the Indemnified Party
declined to accept or (ii) the aggregate Losses of the Indemnified Party with
respect to such claim. If the Indemnifying Party makes any payment on any
claim, the Indemnifying Party shall be subrogated, to the extent of such
payment, to all rights and remedies of the Indemnified Party to any insurance
benefits or other claims of the Indemnified Party with respect to such claim.
12.4 Mitigation; Limitations on Indemnification.
(a) The Indemnified Party shall take all reasonable steps to
mitigate all Losses, including, but not limited to, availing itself of any
defenses, limitations, rights of contribution, claims against third parties and
other rights at Law (it being understood that any out- of-pocket costs paid to
third parties in connection with such mitigation shall constitute Losses), and
shall provide such evidence and documentation of the nature and extent of any
Loss as may be reasonably requested by the Indemnifying Party. Any
Indemnifiable Claim shall be limited to the amount of actual damages sustained
by the Indemnified Party by reason of such breach or nonperformance, less (i)
any Tax benefits realized or realizable by the Indemnified Party based on the
present value thereof by reason of such Losses and (ii) the dollar amount of
any insurance proceeds receivable by the Indemnified Party with respect to such
Losses.
(b) Except for the breach of any ERISA, Environmental Laws or
Seller's or USFLI's title to the Purchased Assets, Seller shall not be required
to indemnify any other Person under Section 12.1(a) (other than for breach of
Sections 4.1, 4.2, 4.4, 4.9 (to the extent it relates to Hazardous Substances),
4.11, 4.12, 4.18, or 4.19, 7.3 or 7.5) unless the aggregate of all amounts for
which indemnity would otherwise be payable by Seller exceeds $5 million, and, in
such event, Seller shall be responsible only for the amount in excess of such $5
million. Buyer shall not be required to indemnify any other Person under
Section 12.2(a) (other than for breach of Sections 5.1, 5.2, 7.3 or 7.5) unless
the aggregate of all amounts for which
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indemnity would otherwise be payable by Buyer exceeds $5 million, and in such
event, Buyer shall be responsible only for the amount in excess of such $5
million. Seller's indemnity obligations under Section 12.1(a) (other than for
breach of Sections 4.1, 4.2, 4.4, 4.9 (to the extent it relates to Hazardous
Substances), 4.11, 4.12, 4.18, or 4.19, 7.3 or 7.5) shall be limited, in the
aggregate, to $110 million. Buyer's indemnity obligations under Section 12.2(a)
(other than for breach of Sections 5.1, 5.2, 7.3 or 7.5) shall be limited, in
the aggregate, to $110 million.
12.5 Remedies Exclusive. The remedies provided for in this
Article XII shall constitute the sole and exclusive remedy for any post-Closing
claims made for breach of this Agreement or in connection with the transactions
contemplated hereby, except for claims arising out of any breach of Section
14.2. In no event shall a breach of a representation and warranty be used as
evidence of or deemed to constitute bad faith, misconduct or fraud, even in the
event that it is shown that any party or its Affiliates or any of their
respective directors, employees, officers, representatives, advisors, or agents
knew or should have known of the existence of information which was
inconsistent with any of the representations and warranties made herein. Each
party hereby waives any provision of Law to the extent that it would limit or
restrict the agreement contained in this Section 12.5. Notwithstanding
anything to the contrary elsewhere in this Agreement, no party or its
Affiliates shall seek or be liable for any punitive or consequential damages,
including, but not limited to, loss of revenue or income, or loss of business
reputation or opportunity relating to any breach or alleged breach of this
Agreement, except to the extent that such punitive or consequential damages are
awarded to a third party with respect to a matter which is an Indemnifiable
Claim; provided, however, that the foregoing shall not prevent Buyer from
seeking damages for lost profits in the event of a breach of Section 7.4
(noncompetition).
ARTICLE XIII
TAX MATTERS
13.1 Allocation of Tax Liabilities; Indemnification.
(a) Subject to the provisions of Section 13.2, Seller shall be
liable for and shall hold Buyer harmless against any liability for Taxes of (i)
USFLI for any taxable year or other taxable period that ends on or before the
Closing Date and, in the case of any taxable year or other taxable period that
includes the Closing Date, that part of the taxable year or other taxable
period that ends at the
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close of the Closing Date, (ii) USFLI that are attributable to any other
corporation and that are imposed on USFLI as a result of membership of USFLI in
a consolidated, combined or unitary group of Seller prior to the Closing Date
and (iii) any Tax of Seller not otherwise provided for in Section 13.8.
(b) Buyer shall be liable for and shall hold Seller harmless
against any liability for Taxes of USFLI for any taxable year or other taxable
period that begins after the close of the Closing Date and, in the case of any
taxable year or other taxable period that includes the Closing Date, that part
of the taxable year or other taxable period that begins after the close of the
Closing Date.
(c) Whenever it is necessary for purposes of this Section 13.1 to
determine the liability for Taxes of USFLI for a taxable year or period that
begins on or before and ends after the Closing Date, the determination shall be
made by assuming that USFLI had a taxable year which ended at the close of
business on the Closing Date, except that exemptions, allowances or deductions
that are calculated on an annual basis (such as the deduction for depreciation)
shall be apportioned on a time basis.
(d) Buyer shall promptly (and in any event within 15 business
days) notify Seller in writing upon receipt by Buyer, any of its Affiliates or
USFLI of notice of any pending or threatened audits or assessments relating to
Taxes for which Seller would be required to indemnify Buyer pursuant to Section
13.1(a); provided, however, that no failure or delay in giving such notice
shall relieve Seller of its obligation unless Seller is prejudiced thereby.
Seller shall have the sole right to represent USFLI's interest in any audit or
administrative or court proceeding relating to any Tax that the Seller is
required to indemnify pursuant to Section 13.1(a), and to employ counsel of its
choice at its expense. Notwithstanding the foregoing, Seller shall not be
entitled to settle, either administratively or after the commencement of
litigation, any claim for Taxes which would adversely affect the liability for
Taxes of Buyer or USFLI for any period after the Closing Date without the prior
written consent of Buyer. Such consent shall not be unreasonably withheld, and
shall not be necessary to the extent that Seller has agreed to indemnify Buyer
against the effects of any such settlement. If Seller elects not to assume the
defense of any claim for Taxes which may be the subject of indemnification by
Seller pursuant to Section 13.1(a), Seller shall not be entitled to participate
in such defense. Neither Buyer nor USFLI may agree to settle any claim for
Taxes which may be the subject of indemnification by Seller under Section
13.1(a) without
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the prior written consent of Seller, which consent shall not be unreasonably
withheld.
13.2 Tax Covenants. Buyer covenants that it will not cause or
permit USFLI or any Affiliate of Buyer (i) to take any action on the Closing
Date other than in the ordinary course of business, including but not limited
to the distribution of any dividend or the effectuation of any redemption that
could give rise to any Tax liability of Seller or any of its Affiliates, or
(ii) to make any election or deemed election under Section 338 of the Code.
13.3 Refunds. Any refunds (including interest thereon) of Taxes
paid or indemnified by Seller pursuant to Section 13.1(a) shall be for the
account of Seller. Any refunds (including interest thereon) of Taxes paid or
indemnified by Buyer pursuant to Section 13.1(b) shall be for the account of
Buyer. Buyer agrees to assign and promptly remit (and to cause USFLI to assign
and promptly remit) to Seller all refunds (including interest thereon) of Taxes
which Seller is entitled to hereunder and which are received by Buyer or USFLI
or any other Affiliate of Buyer. Seller agrees to assign and promptly remit to
Buyer all refunds (including interest thereon) of Taxes which Buyer is entitled
to hereunder and which are received by Seller or any of its Affiliates.
13.4 Returns and Reports.
(a) Seller shall file or cause to be filed when due all Tax
Returns with respect to Taxes that are required to be filed by or with respect
to USFLI for taxable years or periods ending on or before the Closing Date and
shall pay any Taxes shown as due on such Tax returns. Unless otherwise
required, Tax Returns with respect to Taxes for taxable years ending on the
Closing Date shall be prepared on a basis consistent with past practices and
Treasury Regulations Section 1.1502-76(b)(1); provided, however, that if the
Closing Date falls in the middle of a month, Seller and Buyer may agree to
allocate the tax items ratable to such month consistent with Treasury
Regulations Section 1.1502-76(b)(2)(iii). Buyer shall file or cause to be
filed when due all Tax Returns that are required to be filed by or with respect
to USFLI for taxable years or periods ending after the Closing Date and shall
pay any Taxes shown as due on such Tax Returns. Buyer shall cause USFLI to
consent to join, for all taxable periods of USFLI ending on or before the
Closing Date for which USFLI is eligible to do so, in any consolidated,
combined or unitary Tax Returns relating to Tax which Seller shall request it
to join.
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(b) With respect to any Tax Return with respect to Taxes that
covers a period beginning before and ending after the Closing Date, a copy of
such Tax Return shall be provided to Seller within 45 days prior to the due
date (including extensions) for the filing thereof, and Seller shall have the
right to approve (which approval shall not be unreasonably withheld) such Tax
Return to the extent it relates to the portion of the period ending on the
Closing Date. Seller shall promptly pay to Buyer the amount of Taxes
attributable to such period (as determined pursuant to Section 13.1(c) above)
at the time such Tax Return is filed.
(c) With respect to any taxable year of USFLI ending after
December 31, 1995 and on or prior to the Closing Date, Buyer shall promptly
cause USFLI to prepare and provide to Seller such information as Seller
reasonably requests and as is necessary for preparation of tax returns for such
period.
13.5 Disputes. If Buyer and Seller cannot agree on any
calculation required to be made under Sections 13.1(c), 13.3, 13.4 or 13.5(b),
Buyer and Seller shall jointly select a national accounting firm acceptable to
both Buyer and Seller (or, if they cannot agree on such selection, they shall
select a national (big-six) accounting firm by lot after eliminating the
Auditors and Buyer's independent public accountants) and shall direct the firm
so selected to make such calculation as promptly as practicable, but in any
event not later than 30 days after such direction, and to deliver a written
notice to each of Buyer and Seller setting forth the results of such
calculation. The results of such calculation as made by such firm shall be
final and binding, and the fees and expenses of such firm shall be paid 50% by
Buyer and 50% by Seller.
13.6 Price Adjustment. Buyer and Seller agree that any payment
made under this Article XIII will be treated by the parties on their Tax
Returns as an adjustment to the Purchase Price.
13.7 Survival. Notwithstanding anything in this Agreement to
the contrary, the provisions of this Article XIII shall survive through the
expiration of the applicable statute of limitations as the same may be
extended.
13.8 Transfer, Use and Property Taxes.
(a) Buyer and Seller shall share equally the cost of payment of
all real and personal property transfer Taxes, if any, and all sales, use and
other similar Taxes, if any, imposed on or in connection with the purchase,
sale or
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transfer of the Purchased Assets to, and the assumption of the Assumed
Liabilities by, Buyer pursuant to this Agreement.
(b) Except, in the case of Taxes with respect to the Purchased
Assets or the USFLI Assets that are stated below to be payable by Seller, to
the extent that any Tax is treated as a liability on the Closing Date Statement
of Net Assets Sold or is reimbursable by a customer pursuant to a Fleet
Services Contract, or, in the case of Taxes with respect to the Purchased
Assets that are stated below to be payable by Buyer, to the extent that any
prepaid Taxes are treated as an asset on the Closing Date Statement of Net
Assets Sold:
(i) all sales and use Taxes applicable to the Purchased Assets
or the USFLI Assets arising prior to the Closing Date shall be payable by
Seller and all such Taxes arising thereafter shall be payable by Buyer;
and
(ii) all property Taxes applicable to the Purchased Assets or the
USFLI Assets arising in connection with their ownership, use, operation or
maintenance prior to the Closing Date, prorated to the Closing Date
(provided Buyer's maximum liability for such prorated taxes shall not
exceed $20,000), shall be payable by Seller, and all such Taxes arising in
connection with their ownership, use, operation or maintenance on and
after the Closing Date shall be payable by Buyer.
ARTICLE XIV
PUBLICITY/CONFIDENTIALITY
14.1 Publicity and Reports. Seller and Buyer shall coordinate
all publicity relating to the transactions contemplated by this Agreement, and
neither party shall issue any press release, publicity statement or other
public notice relating to the identity of Buyer or the Purchase Price (or any
component thereof) hereunder without consulting with the other party, except
that neither party shall be precluded from making such filings or giving such
notices as may be required by Law or the rules of any stock exchange.
14.2 Confidentiality. All information disclosed by any party or
its representatives, whether before or after the date hereof, in connection
with the transactions contemplated by, or the discussions and negotiations
preceding, this Agreement to any other party or its representatives shall be
kept confidential by such other
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party and its representatives and shall not be used by any such Persons other
than as contemplated by this Agreement, except to the extent that such
information (i) was known by the recipient when received, (ii) is or hereafter
becomes obtainable from other sources other than by breach of Law or any
Contract, (iii) is necessary or appropriate to disclose to a Governmental
Entity having jurisdiction over the parties, (iv) as may otherwise be required
by Law or (v) to the extent such duty as to confidentiality is waived in
writing by the other party. If this Agreement is terminated in accordance with
its terms, each party shall return all documents and reproductions thereof
received by it or its representatives from the other party and, in the case of
reproductions, all such reproductions made by the receiving party that include
information not within the exceptions contained in the first sentence of this
Section 14.2, unless the recipients provide assurances satisfactory to the
requesting party that such documents have been destroyed. Seller represents
and warrants that (A) it shall keep confidential all information about the
Business and USFLI except to the extent such information is subject to the
exceptions set forth in (iii) and (iv) above, and (B) an Affiliate has entered
into confidentiality agreements with each of the other bidders for the Business
to whom Seller provided confidential or proprietary information with respect to
the Business.
ARTICLE XV
GENERAL
15.1 Amendments; Waivers. This Agreement and any schedule or
exhibit attached hereto may be amended only by agreement in writing of both
parties. No waiver of any provision nor consent to any exception to the terms
of this Agreement shall be effective unless in writing and signed by the party
to be bound and then only to the specific purpose, extent and instance so
provided.
15.2 Exhibits and Schedules; Integration. Each exhibit and
schedule delivered pursuant to the terms of this Agreement shall be in writing
and shall constitute a part of this Agreement, although such exhibits and
schedules need not be attached to each copy of this Agreement. This Agreement,
together with such exhibits and schedules, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in connection therewith.
15.3 Best Efforts. Each party will use its best efforts to
cause all conditions to its obligations hereunder to be timely satisfied, to
the end that the transactions
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contemplated by this Agreement shall be effected substantially in accordance
with its terms as soon as reasonably practicable.
15.4 Governing Law. This Agreement, the legal relations between
the parties and any Action, whether contractual or non- contractual, instituted
by any party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement shall be governed by and
construed in accordance with the Laws of the State of California applicable to
contracts made and performed in such State and without regard to conflicts of
law doctrines.
15.5 Assignment. Except as set forth in this Section 15.5,
neither this Agreement nor any rights or obligations under it are assignable.
(a) Buyer may assign its rights hereunder to any subsidiary of
Associates First Capital Corporation, a Delaware corporation, so long as (i)
Buyer shall remain liable for the performance of all obligations hereunder,
(ii) the assignee shall execute and deliver a written acknowledgement
reasonably satisfactory to Seller, to the effect that the assignee is bound and
shall abide by the terms hereof, and pursuant to which the assignee makes
substantially the representations and warranties set forth at Article V.
(b) On or prior to the Closing, Seller may transfer all or a
portion of the Purchased Assets and the Assumed Liabilities (the "Assigned
Assets and Liabilities") to Ford Motor Credit Company or another Affiliate of
Ford (the "Assignee"), so long as (i) Seller shall remain liable for the
performance of all obligations hereunder, (ii) the Person providing a guaranty
of Seller's obligations hereunder shall have provided Buyer written
confirmation that its guaranty is not impaired or adversely affected by such
assignment, and (iii) the Assignee executes and delivers a written
acknowledgement, in form and substance reasonably satisfactory to Buyer, to the
effect that, upon the instruction of Seller on the Closing Date, the Assignee
shall transfer the Assigned Assets and Liabilities to Buyer. Seller covenants
and agrees to cause the Assignee to execute and deliver to Buyer on the Closing
Date a Bill of Sale and Assignment in the form of Exhibit B and an Assumption
Agreement in the form of Exhibit F, and Buyer agrees to execute and deliver to
the Assignee an Assumption Agreement in form of Exhibit F, in each case with
respect to the Assigned Assets and Liabilities, as applicable. Seller further
covenants and agrees to cause the Assignee to execute and deliver to Buyer such
other instruments of
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transfer necessary to transfer to and vest in Buyer all of the Assignee's
right, title and interest in, to and under the Assigned Assets and Liabilities.
15.6 Headings. The descriptive headings of the Articles,
Sections and subsections of this Agreement are for convenience only and do not
constitute a part of this Agreement.
15.7 Counterparts. This Agreement and any amendment hereto or
any other agreement or document delivered pursuant hereto may be executed in
one or more counterparts and by different parties in separate counterparts.
All of such counterparts shall constitute one and the same agreement or other
document and shall become effective unless otherwise provided therein when one
or more counterparts have been signed by each party and delivered to the other
party.
15.8 Parties in Interest. This Agreement shall be binding upon
and inure to the benefit of each party, and nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
15.9 Performance by Subsidiaries. Each party agrees to cause
its subsidiaries to comply with any obligations hereunder relating to such
subsidiaries and to cause its subsidiaries to take any other action which may
be necessary or reasonably requested by the other party in order to consummate
the transactions contemplated by this Agreement.
15.10 Notices. Any notice or other communication hereunder must
be given in writing and (a) delivered in person, (b) transmitted by telex,
telefax or telecommunications mechanism provided that any notice so given is
also mailed or sent as provided in clause (c) or (c) mailed by certified or
registered mail, postage prepaid, receipt requested or sent by reputable
overnight courier as follows:
If to Buyer, addressed to:
Associates Commercial Corporation
300 East Carpenter Freeway
Irving, TX 75062-2726
Telecopy: 214/541-3173
Attn: John D. Kines
With a copy to:
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Associates Commercial Corporation
300 East Carpenter Freeway
Irving, TX 75062-2726
Telecopy: 214/541-3389
Attn: Francis C. Suarino
If to Seller, addressed to:
USL Capital Corporation
733 Front Street
San Francisco, California 94111
Telecopy: 415-986-0584
Attn: General Counsel
With copies to:
Ford Motor Company
The American Road, Room 1187
Dearborn, Michigan 48121
Telecopy: 313-337-9591
Attn: Secretary
and:
O'Melveny & Myers
Citicorp Center
153 East 53rd Street
New York, New York 10022-4611
Telecopy: 212-326-2061
Attn: C. Douglas Kranwinkle, Esq.
or to such other address or to such other person as either party shall have
last designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number specified in (or pursuant to) this Section
15.10 and an appropriate answer back is received, (ii) if given by mail or
courier or any other means, when actually delivered.
15.11 Expenses. Except as otherwise provided in Section 6.3,
Seller and Buyer shall each pay their own expenses incident to the negotiation,
preparation and performance of this Agreement and the transactions contemplated
hereby, including, but not limited to, the fees, expenses and disbursements of
its advisers.
15.12 Attorneys' Fees. In the event of any Action by any party
arising under or out of, in connection with or in respect of this Agreement,
including any participation in bankruptcy proceedings to enforce against a
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party a right or claim in such proceedings, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses incurred in such
Action. Attorneys' fees incurred in enforcing any judgement in respect of this
Agreement are recoverable as a separate item. The parties intend that the
preceding sentence be severable from the other provisions of this Agreement,
survive any judgment and, to the maximum extent permitted by law, not be deemed
merged into such judgment.
15.13 Representation By Counsel; Interpretation. Seller and
Buyer each acknowledge that each party to this Agreement has been represented
by counsel in connection with this Agreement and the transactions contemplated
by this Agreement. Accordingly, any rule of Law or any legal decision that
would require interpretation of any claimed ambiguities in this Agreement
against the party that drafted it has no application and is expressly waived.
The provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of Buyer and Seller.
15.14 Severability. If any provision of this Agreement is
determined to be invalid, illegal or unenforceable by any Governmental Entity,
the remaining provisions of this Agreement shall remain in full force and
effect provided that the essential terms and conditions of this Agreement for
both parties remain valid, binding and enforceable. To the extent permitted by
Law, the parties hereby to the same extent waive any provision of Law that
renders any provision hereof prohibited or unenforceable in any respect.
15.15 Dispute Resolution; Agreement to Arbitrate.
(a) The parties will attempt in good faith to resolve any
dispute, controversy or claim under, arising out of, relating to or in
connection with this Agreement, including, but not limited to, the negotiation,
execution, interpretation, construction, performance, non-performance, breach,
termination, validity, scope, coverage or enforceability of this Agreement or
any alleged fraud in connection therewith, promptly by negotiations between
representatives of the parties. If any such dispute, controversy or claim
should arise, duly authorized representatives of Buyer and Seller will meet at
least once and will attempt to resolve the matter. Either representative may
request the other to meet again within 14 days thereafter, at a mutually agreed
time and place. If the matter has not been resolved within 30 days after the
first meeting of the representatives (which period may be extended by mutual
agreement), the parties will attempt in good faith to resolve the controversy
or claim in accordance
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with the Center for Public Resources Model Procedure for Mediation of Business
Disputes.
(b) If the matter has not been resolved pursuant to the foregoing
procedures within 60 days after the first meeting (which period may be extended
by mutual agreement), the matter shall be settled, at the request of either
party, by arbitration conducted in accordance with the provisions of the
Federal Arbitration Act (9 U.S.C. Section Section 1-16) and in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes, by one arbitrator mutually selected by the parties. If the
parties are unable to agree on the selection of an arbitrator, they shall
select an arbitrator through the procedures established by the Center for
Public Resources Rules for Non-Administered Arbitration of Business Disputes.
The arbitration of such issues, including the determination of any amount of
damages suffered by any party hereto by reason of the acts or omissions of any
party, shall be final and binding upon the parties, except that the arbitrator
shall not be empowered to act as amiable compositeur or authorized to award
punitive damages with respect to any such claim, dispute or controversy. No
party shall seek any punitive damages relating to any matters under, arising
out of, in connection with or relating to this Agreement. Equitable remedies
shall be available in any such arbitration. The parties intend that this
agreement to arbitrate be valid, binding, enforceable and irrevocable. The
substantive and procedural Law of the State of California shall apply to any
such arbitration proceedings. The place of any such arbitration shall be San
Francisco, California. Judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction thereof.
(c) Notwithstanding the provisions of this Section 15.15, either
party may seek injunctive or other equitable relief to maintain the status quo
before any court of competent jurisdiction in connection with any claim,
dispute or controversy arising out of this Agreement.
15.16 Further Assurances. Each party shall execute and deliver
such further certificates, agreements and other documents and take such other
actions as the other party may reasonably request to consummate or implement
the transactions contemplated hereby or to evidence such events or matters.
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IN WITNESS WHEREOF, each of Buyer and Seller has caused this
Agreement to be executed by its duly authorized representative as of the date
first above written.
ASSOCIATES COMMERCIAL CORPORATION
By: /s/ J.D. Kines
-------------------------------
Name: J.D. Kines
Title: Executive Vice President
USL CAPITAL CORPORATION
By: /s/ J.G. Duff
-----------------------------
Name: J.G. Duff
Title: Chairman and Chief Executive
Officer
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EXHIBITS AND SCHEDULES
Registrant has not submitted the exhibits and schedules listed in the Table of
Contents. The Registrant agrees to furnish a copy of any omitted exhibit or
schedule to the Commission upon the Commission's request.