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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): MAY 24, 1996
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FLEETWOOD ENTERPRISES, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-7699 95-1948322
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
3125 MYERS STREET, RIVERSIDE, CA 92503-5527
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (909) 351-3500
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 24, 1996, Fleetwood Enterprises, Inc. ("Fleetwood")
consummated the sale to Associates First Capital Corporation, a
Delaware corporation ("Associates"), of all the outstanding capital
stock of Fleetwood Credit Corp., a California corporation ("FCC"),
its wholly-owned recreational vehicle financing subsidiary, for an
aggregate purchase price of $156.6 million (subject to certain
potential post-closing adjustments) pursuant to the terms of that
certain Stock Purchase Agreement dated April 22, 1996 between
Fleetwood and Associates Commercial Corporation, a Delaware
corporation, as assigned to Associates on May 24, 1996 (the
"Agreement"). The aggregate purchase price amount was determined
through negotiations between Fleetwood and Associates. Associates
is a diversified finance company that currently provides
financing for dealers of Fleetwood's manufactured homes.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Pro forma consolidated balance sheet as of April 28, 1996 and
pro forma consolidated statement of operations for the year
ending April 28, 1996.
(c) Exhibits.
EXHIBIT DESCRIPTION
2.1 Stock Purchase Agreement dated April 22, 1996 between Fleetwood and
Associates Commercial Corporation regarding the sale of all the
outstanding capital stock of FCC.
2.2 Assignment of Stock Purchase Agreement from Associates Commercial
Corporation to Associates dated May 24, 1996.
99.1 Pro forma consolidated balance sheet as of April 28, 1996 and pro
forma consolidated statement of operations for the year ending
April 28, 1996.
99.2 Press Release dated May 24, 1996 issued by Fleetwood.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLEETWOOD ENTERPRISES, INC.,
a Delaware corporation
Date: June 6, 1996 By: /s/ Paul M. Bingham
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Paul M. Bingham,
Financial Vice President
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Stock Purchase Agreement dated April 22, 1996 between Fleetwood and
Associates Commercial Corporation regarding the sale of all the
outstanding capital stock of FCC.
2.2 Assignment of Stock Purchase Agreement from Associates Commercial
Corporation to Associates dated May 24, 1996.
99.1 Pro forma consolidated balance sheet as of April 28, 1996 and pro
forma consolidated statement of operations for the year ending
April 28, 1996.
99.2 Press Release dated May 24, 1996 issued by Fleetwood.
___________________________
* Exhibit 2.1 contains a listing of the schedules to the exhibit document.
Fleetwood agrees to furnish supplementally a copy of any omitted schedules
to the Securities and Exchange Commission upon request.
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Exhibit 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered
into as of April 22, 1996 by and between Fleetwood Enterprises, Inc., a
Delaware corporation ("Fleetwood"), and Associates Commercial Corporation, a
Delaware corporation ("Buyer"), for the purchase and sale of all of the
outstanding capital stock of Fleetwood Credit Corp., a California corporation
("Company").
BACKGROUND FACTS
The Company is a recreational vehicle ("RV") financing company and
wholly-owned subsidiary of Fleetwood, a manufacturer of RVs and manufactured
housing. Buyer is a commercial finance company.
Fleetwood desires to sell to Buyer and Buyer desires to purchase
all of the issued and outstanding shares of the Company, consisting of
1,000,000 shares of Common Stock, par value $1.00 per share (the "Shares").
NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties and covenants hereinafter set forth, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 promulgated under the Exchange Act by the SEC, as in effect on the date
hereof.
"Apportioned Short Period" shall have the meaning set forth in
Section 10.3(b).
"Balance Sheet" shall have the meaning set forth in Section 3.10.
"Business Day" means a day other than a Saturday or a Sunday or
other day on which commercial banks in Los Angeles, California, Dallas, Texas
or Chicago, Illinois are authorized or required by law to close.
"Closing" shall have the meaning set forth in Section 2.2.
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"Closing Date" means the day on which the Closing occurs pursuant
to Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" means the collateral described in and subject to the
Financing Agreements that consists of motor homes, travel trailers and
folding trailers manufactured and/or distributed by Fleetwood.
"Company Employee" has the meaning set forth in Section 9.1(a).
"Confidentiality Agreement" shall have the meaning set forth in
Section 7.1.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding commitment, whether written or oral.
"Contractual Obligation" means, as to a Person, any provision of
any note, bond or security issued by such Person or of any mortgage,
indenture, deed of trust, franchise, Contract, instrument or undertaking to
which such Person is a party or by which it or any of its property or assets
is subject.
"Customer" means the primary obligor under any Finance Agreement.
"DOJ" shall have the meaning set forth in Section 5.3.
"Employee Benefit Arrangements" means each and all pension,
supplemental pension, accidental death and dismemberment, life and health
insurance and benefits (including medical, dental, vision and
hospitalization), short- and long-term disability, savings, bonus, deferred
compensation, incentive compensation, holiday, vacation, severance pay,
salary continuation, sick pay, sick leave, tuition refund, service award,
company car, scholarship, relocation, patent award, fringe benefit, flexible
spending account programs and other employee benefit plans, contracts or
policies providing employee or executive compensation or benefits to Company
Employees, other than the Employee Benefit Plans.
"Employee Benefit Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained or contributed to by
the Company or in which the Company participates or participated and which
provides benefits to Company Employees, including (i) any such plans that are
"employee welfare benefit plans" as defined in Section 3(1) of ERISA and (ii)
any such plans that are "employee pension benefit plans" as defined in
Section 3(2) of ERISA. See definition of "Fleetwood Plans" below.
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"Environmental Law" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, and any applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items of all
Governmental Authorities and all applicable judicial, administrative and
regulatory decrees, judgments and orders, any of which relate to the
protection of human health or the environment from the effects of Hazardous
Materials, including, but not limited to, those pertaining to reporting,
licensing, permitting, investigating and remediating emissions, discharges,
releases or threatened releases of Hazardous Materials into the air, surface
water, groundwater or land, or relate to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any Person who would be treated as a member
of a controlled group of Fleetwood or the Company under Section 4001(a)(14)
of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated from time to time thereunder.
"Finance Agreements" means wholesale financing agreements, retail
financing agreements and rental dealer agreements of the Company.
"Financial Statements" shall have the meaning set forth in Section
3.10(a).
"Fleetwood Plans" means each and all Employee Benefit Plans and
Employee Benefit Arrangements sponsored or maintained by Fleetwood or the
Company under which any Company Employee participates or is entitled to
receive benefits.
"FTC" shall have the meaning set forth in Section 5.3.
"GAAP" means generally accepted accounting principles in the United
States of America as applied by the Company and the Subsidiary on a
consistent basis from period to period.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" means, individually and collectively, (i) Fleetwood, (ii)
the Company, (iii) the Subsidiary, and (iv) any other entity as to which the
Company or the
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Subsidiary is liable for Taxes incurred pursuant to Treasury Regulations
Section 1.1502-6 or pursuant to any other provision of federal, state, local
or foreign law or regulation.
"Hazardous Material" means any substance: (i) which is defined as a
hazardous waste, hazardous substance, pollutant or contaminant under any
Environmental Law; (ii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and
is regulated by any Governmental Authority; or (iii) which contains gasoline,
diesel fuel or other petroleum hydrocarbons.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended from time to time.
"Indemnified Person" means any Person entitled to seek
indemnification hereunder.
"Indemnifying Person" means any Person from whom indemnification is
being sought hereunder.
"Interim Date" shall have the meaning set forth in Section 3.12.
"Interim Period" shall have the meaning set forth in Section
12.1(i).
"IRS" means the United States Internal Revenue Service.
"Knowledge of Fleetwood" with reference to any of the
representations and warranties of Fleetwood means the actual knowledge of any
"executive officer" of Fleetwood or the Company or the Subsidiary, or of any
other employee of Fleetwood or the Company or the Subsidiary who is charged
with overall responsibility for a department of Fleetwood or the Company or
the Subsidiary, to the extent such officer or employee had, on the date
hereof, responsibility for matters that are the subject of such
representation and warranty.
"Leased Property" has the meaning set forth in Section 3.15.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement or any financing lease having
substantially the same economic effect as any of the foregoing).
"Loss" means any loss, liability, claim, damage or expense
(including reasonable attorneys' fees and disbursements and the costs of
investigation).
"Material Adverse Effect" means a material adverse effect on (a)
the business, operations, property or condition (financial or other) of the
Company and
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Subsidiary taken as a whole or (b) the ability of Fleetwood to
consummate the transactions contemplated by this Agreement.
"Operating Agreement" shall have the meaning set forth in
Section 8.1(c).
"Permitted Lien" means (a) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business, (b) Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the
ordinary course of business, (c) Liens for Taxes and other governmental
charges which are not due and payable or which may thereafter be paid without
penalty, and (d) other imperfections of title, restrictions or encumbrances,
if any, which Liens, imperfections of title, restrictions or other
encumbrances do not, individually or in the aggregate, materially impair the
continued use and operation of the specific assets to which they relate. In
the case of Collateral under Finance Agreements, Permitted Liens shall only
include Liens that are subordinate to the interest of the secured party and
which the related Customer is obligated to remove under the Finance Agreement.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Pre-Closing Tax Period shall have the meaning set forth in Section
10.3(b).
"Purchase Price" has the meaning set forth in Section 2.1.
"Records" means all of the ledgers, journals, bookkeeping
memoranda, account cards, reports, computer listings, indexes, stored
computer data, Customer files, credit files, magnetic media, Collateral
records and all other correspondence, memoranda and records, including
Federal, state and local Tax Returns of the Company and the Subsidiary.
"Requirement of Law" means, as to any Person, the Certificate or
Articles of Incorporation and Bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Restricted Territory" shall have the meaning set forth in Section
11.1.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the SEC promulgated from time
to time thereunder.
"SEC" means the Securities and Exchange Commission.
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"Securitization Instruments" shall have the meaning set forth
in Section 3.25(a).
"Securitization Servicer" shall have the meaning set forth in
Section 3.25(a).
"Securitization Transaction" has the meaning set forth in Section
3.25(a).
"Servicing Agreement" has the meaning set forth in Section 3.23.
"Shares" is defined in the recitals hereto.
"Short Period" shall have the meaning set forth in Section 10.3(b).
"Subsidiary" means Fleetwood Credit Receivables Corp., a California
corporation.
"Subsidiary Shares" means all of the issued and outstanding shares
of the Subsidiary, consisting of 1,000 shares of common stock, no par value.
"Tax" or "Taxes" means all federal, state, local, foreign or other
taxes, including net income, alternative minimum or add-on minimum tax, gross
income, unitary, gross receipts, sales, use, intangible, ad valorem,
franchise, profits, license, withholding on amounts paid to or by the Company
or the Subsidiary, payroll, employment, excise, severance, stamp, transfer,
occupation, premium, property or environmental windfall profit tax, custom,
duty or other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any jurisdiction or other Governmental Authority
(federal, state, local or foreign) on the Group.
"Tax Claim" shall have the meaning set forth in Section 10.3(d).
"Tax Indemnitee" shall have the meaning set forth in Section
10.3(d).
"Tax Indemnitor" shall have the meaning set forth in Section
10.3(d).
"Tax Returns" means all returns or material reports or forms
required to be filed with a Governmental Authority with respect to Tax.
"Third Party Claim" shall have the meaning set forth in Section
10.5(a).
"Title IV Pension Plan" shall have the meaning set forth in Section
3.19(e).
"WARN Act" means the Worker Adjustment and Retraining Notification
Act of 1988, as amended from time to time.
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1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Terms defined in this Agreement in Sections other than
Section 1.1 shall have the meanings as so defined when used in this Agreement.
(b) Unless express reference is made to Business Days,
references to days shall be to calendar days.
ARTICLE II
TRANSFER OF SHARES
2.1 PURCHASE AND SALE OF THE SHARES. On the terms and subject to
the conditions of this Agreement, Fleetwood will sell, transfer and deliver
to Buyer, and Buyer will purchase from Fleetwood, (i) the Shares and (ii) the
Covenant Not to Compete set forth in Article XI for a total purchase price of
One Hundred Fifty-Six Million Six Hundred Thousand Dollars ($156,600,000)
("Purchase Price"), payable at the time and in accordance with the terms set
forth in Section 2.3 and subject to adjustment in accordance with Section 2.4.
2.2 CLOSING. The closing ("Closing") of the purchase and sale of
the Shares shall be held at the offices of Gibson, Dunn & Crutcher, Jamboree
Center, 4 Park Plaza, Irvine, California, at 10:00 a.m. on May 30, 1996, or
if the conditions to Closing set forth in Article VIII shall not have been
satisfied or waived by such date, subject to the termination rights set forth
in Article XIII, as soon as practicable after such conditions shall have been
satisfied or waived. The date on which the Closing shall occur is
hereinafter referred to as the "Closing Date."
2.3 DELIVERIES. At the Closing, Buyer shall deliver to Fleetwood
by wire transfer (to a bank account designated at least three Business Days
prior to the Closing Date in writing by Fleetwood) immediately available
funds in an amount equal to the Purchase Price. At the Closing, Fleetwood
shall deliver or cause to be delivered to Buyer certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank in proper form for transfer, with appropriate transfer stamps, if
any, affixed thereto. In addition, at the Closing Buyer and Fleetwood shall
deliver to and receive from each other all documents required to be delivered
and received pursuant to Article VIII hereof.
2.4 ADJUSTMENT TO PURCHASE PRICE.
(a) By May 15, 1996, Fleetwood shall deliver to Buyer the
unaudited balance sheet as of, and unaudited consolidated statements of
income and cash flows for the Company's fiscal year ended April 30, 1996,
prepared on the same basis as the unaudited financial statements referred to
in Section 3.10 hereof. For the purpose of the Closing, in the event that
the "total shareholders' equity" of the Company as of
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April 30, 1996, as reflected on such unaudited financial statements, is less
than $96.6 million, then the Purchase Price payable at the Closing shall be
reduced by a dollar amount equal to the amount by which such shareholders'
equity as of April 30, 1996 is less than $96.6 million.
(b) On or before July 31, 1996, Fleetwood shall
deliver to Buyer the April 30, 1996 financial statements referred to in (a)
above audited by Fleetwood's independent auditing firm. If the audited "total
shareholder's equity" of the Company as of April 30, 1996 does not equal or
exceed $96.6 million, then Fleetwood concurrently shall remit to Buyer, without
interest, the differential between $96.6 million and the audited "total
shareholder's equity" as of such date. Fleetwood agrees that the unaudited
April 30, 1996 financial statements referred to in Section 2.4(a) above and the
audited financial statements referred to in this Section 2.4(b) shall have been
prepared in accordance with (i) GAAP, (ii) the books and records of the Company
and the Subsidiary, and (iii) those accounting policies, procedures and
practices of the Company and the Subsidiary that were in effect or existing, as
appropriate, on the Interim Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FLEETWOOD
Fleetwood hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION; STANDING AND AUTHORITY OF FLEETWOOD. Fleetwood
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. Fleetwood has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings
required to be taken by Fleetwood to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly taken. This Agreement has been duly
executed and delivered by Fleetwood and constitutes a valid and binding
obligation of Fleetwood, enforceable against Fleetwood in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
3.2 ORGANIZATION; STANDING AND AUTHORITY OF THE COMPANY. The
Company is a corporation duly organized and validly existing under the laws
of the State of California. The Company is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a Material Adverse Effect. The Company has all requisite corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals
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necessary to enable it to carry on its business as presently conducted other
than such franchises, licenses, permits, authorizations and approvals the
lack of which, individually or in the aggregate, would not have a Material
Adverse Effect. Fleetwood has made available to Buyer (i) the Articles of
Incorporation, as amended to date, and the Bylaws, as in effect on the date
hereof, of the Company and (ii) the stock certificate and transfer books and
the minute books of the Company.
3.3 ORGANIZATION; STANDING AND AUTHORITY OF THE SUBSIDIARY. The
Subsidiary is a corporation duly organized and validly existing under the
laws of the State of California. The Subsidiary is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a Material Adverse Effect. The Subsidiary has all requisite corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to carry on its
business as presently conducted other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually or in
the aggregate, would not have a Material Adverse Effect. Fleetwood has made
available to Buyer (i) the Articles of Incorporation, as amended to date, and
the Bylaws, as in effect on the date hereof, of the Subsidiary and (ii) the
stock certificate and transfer books and the minute books of the Subsidiary.
3.4 THE SHARES. Fleetwood has good and valid title to the Shares,
free and clear of any Liens and has full power and authority to transfer good
and valid title to the Shares free and clear of any Liens. Assuming Buyer
has the requisite power and authority to be the lawful owner of the Shares,
upon delivery to Buyer at the Closing of certificates representing the
Shares, duly endorsed by Fleetwood for transfer to Buyer, and upon
Fleetwood's receipt of the Purchase Price, good and valid title to the Shares
will pass to Buyer, free and clear of any Liens other than those arising from
acts of Buyer or its Affiliates. Other than this Agreement and except as set
forth on Schedule 3.4, the Shares are not subject to any voting trust
agreement or other Contractual Obligation restricting or otherwise relating
to the voting, dividend rights or disposition of the Shares. The
certificates representing the Shares to be delivered at Closing will
constitute all of the outstanding Shares.
3.5 THE SUBSIDIARY SHARES. The Company has good and valid title
to the Subsidiary Shares, free and clear of all Liens. Other than this
Agreement and except as set forth on Schedule 3.4, the Subsidiary Shares are
not subject to any voting trust agreement or other Contractual Obligation
restricting or otherwise relating to the voting, dividend rights or
disposition of the Subsidiary Shares. The certificates representing the
Subsidiary Shares to be delivered at Closing will constitute all of the
outstanding Subsidiary Shares.
3.6 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of
the Company consists of 1,000,000 shares of Preferred Stock, $1.00 par value,
and 8,000,000
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shares of Common Stock, $1.00 par value. The Shares were duly authorized and
validly issued and are outstanding, fully paid and nonassessable. Except for
the Shares, there are no shares of capital stock or other equity securities
of the Company outstanding. Fleetwood is the record owner of the Shares.
The Shares have not been issued in violation of, and none of the Shares are
subject to, any preemptive or subscription rights. There are no outstanding
warrants, options, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments (other than this Agreement)
pursuant to which Fleetwood or the Company is or may become obligated to
issue, sell, purchase, return or redeem any shares of capital stock or other
securities of the Company, and no equity securities of the Company are
reserved for issuance for any purpose.
3.7 CAPITAL STOCK OF THE SUBSIDIARY. The authorized capital stock
of the Subsidiary consists of 1,000 shares of Common Stock, no par value.
The Subsidiary Shares were duly authorized and validly issued and are
outstanding, fully paid and nonassessable. Except for the Subsidiary Shares,
there are no shares of capital stock or other equity securities of the
Subsidiary outstanding. The Company is the record owner of the Subsidiary
Shares. The Subsidiary Shares have not been issued in violation of, and none
of the Subsidiary Shares are subject to, any preemptive or subscription
rights. There are not outstanding warrants, options, "phantom" stock rights,
agreements, convertible or exchangeable securities or other commitments
(other than this Agreement) pursuant to which Fleetwood or the Company or the
Subsidiary is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of the Subsidiary, and
no equity securities of the Subsidiary are reserved for issuance for any
purpose.
3.8 EQUITY INTERESTS. Other than its ownership of all the
outstanding capital stock of the Subsidiary, the Company does not directly or
indirectly own capital stock of or other equity interests in any Person. The
Subsidiary does not directly or indirectly own capital stock of or other
equity interests in any Person.
3.9 NO BREACH OR DEFAULT; CONSENTS AND APPROVALS.
(a) Except as set forth in Schedule 3.9, the execution and
delivery by Fleetwood of this Agreement and other documents referenced herein
to which Fleetwood is a party and the consummation of the transactions
contemplated hereby and thereby will not result in or constitute any of the
following: (i) a default or an event that, with the giving of notice or
lapse of time, or both, would be a default, breach or violation of the
charter documents or bylaws of Fleetwood or the Company or the Subsidiary or
any Contractual Obligation of the Company or the Subsidiary, (ii) an event
that would permit any party to terminate any Company Contract or Subsidiary
Contract or to accelerate the maturity of any indebtedness or other
Contractual Obligation of the Company or the Subsidiary, (iii) the creation
or imposition of any Lien on any of the properties of the Company or the
Subsidiary, or (iv) a violation of any order, writ, injunction, decree,
statute, rule or regulation applicable to Fleetwood or the Company or the
Subsidiary.
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(b) Except as set forth in Schedule 3.9, no authorization,
consent or approval of any Governmental Authority or any third party is
necessary for the consummation by Fleetwood of the transactions contemplated
by this Agreement and the other documents referenced herein to which
Fleetwood is a party.
3.10 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Fleetwood has delivered to Buyer the audited consolidated
balance sheets of the Company and its Subsidiary as of April 30, 1995 and
1994 and related consolidated statements of income, shareholder's equity and
cash flows for the three years in the period ended April 30, 1995, and its
unaudited consolidated balance sheet ("Balance Sheet") as of, and unaudited
consolidated statements of income and cash flows for the nine-months in the
period ended January 31, 1996 ("Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP and fairly present the
financial condition and results of operations of the Company and Subsidiary
taken as a whole as of the respective dates thereof and for the respective
periods covered thereby. The unaudited financials were prepared in
accordance with GAAP and the books and records of the Company and the
Company's accounting policies and procedures and present fairly the financial
position and results of operations of the Company and Subsidiary taken as a
whole as of the dates and for the periods covered thereby, except (a) as set
forth on Schedule 3.10 and (b) for the absence of complete footnotes.
(b) Except as reflected on the Balance Sheet or disclosed on
Schedule 3.10, the Company and the Subsidiary do not have any material
indebtedness, obligations or liabilities other than (i) liabilities which
have arisen in the ordinary course of business since the date of the Balance
Sheet, and (ii) those liabilities otherwise disclosed on Schedule 3.10 or
another Schedule to this Agreement.
3.11 FINANCE RECEIVABLES; ADEQUACY OF RESERVE FOR POTENTIAL CREDIT
LOSSES.
(a) All finance receivables as shown on the Balance Sheet
were originated in the ordinary course of the Company's business.
(b) The "reserve for potential credit losses" shown on the
Financial Statements and the "reserve for potential credit losses" shown on
the unaudited Balance Sheet were established in accordance with GAAP.
Fleetwood makes no representation or warranty as to the financial ability of
the Customers to pay any amounts due under the Finance Agreements and any
such failure by such Customers to pay any such amounts shall not entitle the
Company or Buyer to indemnification or reimbursement from Fleetwood.
3.12 ABSENCE OF CHANGES OR EVENTS. Except as set forth on Schedule
3.12, since January 31, 1996 (the "Interim Date") the Company and the
Subsidiary have been operated only in the ordinary and usual course,
consistent with past
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management practices, including its credit, collection, control of
delinquencies and other policies and practices relating to the Finance
Agreements and the conduct of its businesses generally, and there has not
been any material adverse change in the assets, liabilities or the business
condition of the Company and the Subsidiary taken as a whole, other than
changes relating to the economy in general. Except as set forth in Schedule
3.12 hereto, since the Interim Date neither the Company nor the Subsidiary
has (a) paid or declared any cash, stock or other dividends; (b) made any
other distribution on or payment, redemption or repurchase with respect to
outstanding shares; (c) sold or otherwise disposed of any of its property or
assets of any kind or character other than in the ordinary course of
business; (d) suffered any decrease in stockholders' equity; (e) entered into
any agreement, written or oral, contemplating any indebtedness or transaction
outside of the usual and ordinary course of its business; or (f) entered into
any transaction which would result in the recognition of goodwill or any
other intangible asset. Since the Interim Date, there has not been any
change in the accounting principles, policies or practices of the Company or
the Subsidiary as theretofore applied, or the method or ratio of allocating
or charging expenses, including the basis upon which assets and liabilities
are recorded and earnings and profits are ascertained.
3.13 TAXES.
(a) The Group has filed or caused to be filed in a timely
manner (within any applicable extension periods) with the appropriate
Governmental Authority all Tax Returns required to be filed by the Code or by
applicable Tax laws. As of the time of filing the Tax Returns of the Group
or any Tax Returns of the Group not yet filed as of the Closing Date, the Tax
Returns correctly reflected or will correctly reflect the facts regarding the
income, business, assets, operations, activity, or status of the Group and
any other information required to be shown thereon. All Taxes due from the
Company and the Subsidiary prior to the date hereof have been timely paid in
full by the due date thereof (within any applicable extension periods). The
federal consolidated income Tax Returns of the Group have been examined by
the IRS for all taxable years through the year ended April 30, 1991, and all
deficiencies resulting from such examinations have either been paid or
adequately provided for.
(b) Except as set forth in Schedule 3.13, there are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Returns with respect to the Company or
Subsidiary.
(c) As of the close of business on the Closing Date, the
Company and the Subsidiary will not be a party to any Tax sharing agreement
or similar arrangement.
(d) To the Knowledge of Fleetwood, (i) the charges, accruals,
and reserves for Taxes with respect to the Company and Subsidiary for any
Pre-Closing Tax Period (as defined in Section 10.3(b)) or any Pre-Closing Tax
Period for which no
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Tax Return has yet been filed reflected on the books of the Company and
Subsidiary (excluding any provision for deferred income taxes) are adequate
to cover such Taxes; (ii) all Tax Returns filed with respect to Tax years of
the Company and Subsidiary through the Tax year ended April 30, 1991 have
been examined and closed or are Tax Returns with respect to which the
applicable period for assessment under applicable law, after giving effect to
extensions or waivers, has expired; (iii) neither the Company nor Subsidiary
is delinquent in the payment of any Tax or has requested any extension of
time within which to file any Tax Return and has not yet filed such Return;
(iv) there are no request for rulings or determinations in respect of any Tax
pending between the Company or Subsidiary or any member of the Group; (v)
there are no requests for rulings or determinations in respect of any Tax
pending between the Company or Subsidiary and any Governmental Authority;
(vi) neither the Company nor Subsidiary owns any interest in real property in
the State of New York or in any other jurisdiction in which a Tax is imposed
on the transfer of a controlling interest in an entity that owns any interest
in real property; (vii) none of the property owned or used by the Company or
Subsidiary is subject to a tax benefit transfer lease executed in accordance
with Section 168(f) of the Internal Revenue Code of 1954, as amended; (viii)
none of the property owned or used by the Company or Subsidiary is subject to
a lease, other than a "true" lease for federal income tax purposes; (ix) none
of the property owned by the Company or Subsidiary is "tax-exempt use
property" within the meaning of Section 168(h) of the Code; (x) there are no
liens for Taxes upon the assets of the Company or Subsidiary except liens for
current Taxes not yet due; (xi) Fleetwood is not subject to withholding under
Section 1445 of the Code with respect to any transaction contemplated hereby;
(xii) neither the Company nor Subsidiary has been a member of an affiliated
consolidated, combined or unitary group other than one of which Fleetwood was
the common parent; (xiii) neither the Company nor Subsidiary will be required
to include any adjustment in taxable income for any Tax period or portion of
a Tax period following the Closing Date under Section 481(c) of the Code (or
any similar provision of the Tax laws of any jurisdiction) as a result of a
change in method of accounting for a Pre-Closing Tax Period or pursuant to
the provisions of any agreement entered into with any Governmental Authority
with regard to the Tax liability of the Company or Subsidiary for any
Pre-Closing Tax Period other than as reflected in the deferred tax asset on
the books of the Company and the Subsidiary; (xiv) all information set forth
in the notes to the financial records of the Company and the Subsidiary
relating to Tax matters is true and complete; (xv) the Company possesses, or
will possess on the Closing Date, all previously filed Tax Returns (except
that Tax Returns relating to consolidated or combined return Taxes will be
provided on a pro forma basis and will only contain the separate return
information for the Company and the Subsidiary) and work papers (other than
work papers not relating to separate return information for the Company and
the Subsidiary) reasonably necessary for Buyer to duly file all Tax Returns
for periods ending after the Closing Date, including a schedule showing all
adjustments made in consolidation or combination of the Company and the
Subsidiary with other members of the Group; and (xvi) there are no deferred
intercompany transactions (within the meaning of Treasury Regulations Section
1.1502-13 or any predecessor provision) between
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Fleetwood and/or any other member of the Group and the Company and/or the
Subsidiary, which would impose Tax liability on the Company and/or the
Subsidiary after the Closing Date.
(e) Fleetwood, the Company and Subsidiary have disclosed on
their federal income Tax Returns all positions taken therein that in
Fleetwood's judgment could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662 or its predecessor.
(f) Schedule 3.13(f) sets forth (i) all federal income Tax
elections under the Code and all Tax-related elections or agreements under
the state tax laws that are in effect with respect to the Company and/or the
Subsidiary as of the Closing Date; and (ii) the amount of any net operating
loss carryover, net capital loss carryover, investment or other credit
carryover, unused foreign tax, or excess charitable contribution allocable to
the Company and the Subsidiary as of April 30, 1994.
3.14 ASSETS OTHER THAN REAL PROPERTY INTERESTS. The Company and
the Subsidiary have good and valid title to all assets reflected on the
Balance Sheet, except those sold or otherwise disposed of since the date of
the Balance Sheet in the ordinary course of business, in each case free and
clear of all Liens except any Permitted Liens and those Liens set forth on
Schedule 3.14. This Section 3.14 does not relate to real property or
interests in real property, such items being the subject of Section 3.15.
3.15 REAL PROPERTY. Neither Company nor the Subsidiary owns in fee
or otherwise any real property. Schedule 3.15 sets forth a complete list of
all real property and interests in real property leased by the Company
(individually, a "Leased Property") and as to Leased Property, identifies any
leases relating thereto. The Company has good and valid title to the
leasehold estates in all Leased Property, in each case free and clear of all
Liens, easements, covenants, rights-of-way and other similar restrictions of
any nature whatsoever, except (i) Permitted Liens, (ii) easements, covenants,
rights-of-way and other similar restrictions of record, and (iii) (A) zoning,
building and other similar restrictions, (B) Liens that have been placed by
any developer, landlord or other third party on property over which the
Company has easement rights or on any Leased Property and subordination or
similar agreements relating thereto and (C) unrecorded easements, covenants,
rights-of-way or other similar restrictions, none of which items set forth in
clauses (A), (B) and (C) above, individually or in the aggregate, materially
impair the continued use and operation of the property to which they relate.
3.16 INTELLECTUAL PROPERTY. Schedule 3.16 sets forth a list of all
registered patents, trademarks, trade names, service marks and copyrights
(registered or unregistered) and applications therefor, other than those
relating to computer software (collectively, "Intellectual Property"), owned,
used, filed by or licensed to the Company or the Subsidiary. With respect to
registered trademarks, Schedule 3.16 contains a list of all jurisdictions in
which such trademarks are registered or applied for and all registration and
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application numbers. Except as disclosed on Schedule 3.16, the Company or
the Subsidiary, as appropriate, owns or has the right to use, without payment
to any other party, the Intellectual Property listed on such Schedule 3.16,
and the consummation of the transactions contemplated hereby will not alter
or impair any such Intellectual Property. Except as disclosed on Schedule
3.16, the Company or the Subsidiary has not licensed to any third party, on
an exclusive basis or otherwise, the right to use or exploit any Intellectual
Property in any jurisdiction or otherwise transferred or assigned any
Intellectual Property to any third party in any jurisdiction. Except as set
forth on Schedule 3.16, no claims are pending or, to the Knowledge of
Fleetwood, threatened against the Company or the Subsidiary by any person
with respect to the ownership, validity, enforceability or use of any
Intellectual Property listed on Schedule 3.16 or otherwise challenging or
questioning the validity or effectiveness of any such Intellectual Property.
3.17 MATERIAL CONTRACTS. Schedule 3.17 sets forth a list of each
of the following types of Contracts to which the Company or the Subsidiary is
a party:
(a) any Contractual Obligation relating to the borrowing of
money by the Company or the Subsidiary or the guarantee by the Company or the
Subsidiary of any such obligation;
(b) any Contractual Obligation relating to the loaning of
money by the Company or the Subsidiary;
(c) any Securitization Instrument (as defined in Section
3.25);
(d) any agreement relating to the repurchase of securities;
(e) any sale and leaseback or similar agreements;
(f) any Servicing Agreement;
(g) any employment contract (excluding retention bonus and
severance agreements referred to in Section 3.17(i));
(h) any Contractual Obligation between Fleetwood and the
Company or the Subsidiary involving consideration to either party with a
value of at least $150,000;
(i) any Contract (other than agreements covered by paragraph
(g) above) that provides for the payment by the Company or the Subsidiary of
any retention bonus or severance compensation to any Company Employee, or for
the provision, vesting and/or acceleration of any employee benefits following
a change of ownership or control of the Company or the Subsidiary;
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(j) any interest rate cap agreements and other interest rate
hedging agreements;
(k) any Contracts relating to interest subvention payments to
the Company; or
(l) any other Contract which has an aggregate future payment
obligation in excess of $100,000 and is not terminable by notice of not more
than 90 days for a cost of less than $100,000.
Except as disclosed on Schedule 3.17, each Contract listed thereon
is valid, binding and in full force and effect and is enforceable by the
Company or the Subsidiary, as appropriate, in accordance with its terms.
Except as disclosed in Schedule 3.17, the Company or the Subsidiary, as
appropriate, has performed all material obligations required to be performed
by it to date under the Contracts and is not in breach or default in any
material respect thereunder and, to the Knowledge of Fleetwood, no other
party to any of the Contracts is in breach or default in any material respect
thereunder.
3.18 LITIGATION. Schedule 3.18 sets forth a list, as of the date
of this Agreement, of all pending and, to the Knowledge of Fleetwood,
threatened lawsuits or claims which (a) involves a claim by the Company or
the Subsidiary of more than $250,000 or a claim against the Company or the
Subsidiary of an unspecified amount or for more than $100,000, (b) seeks any
injunctive relief or (c) relates to the transactions contemplated by this
Agreement. Except as disclosed on Schedule 3.18, neither the Company nor the
Subsidiary is in default under any judgment, order or decree of any court,
administrative agency or commission or other Governmental Authority
applicable to it or any of its properties, assets, operations or businesses;
except where such default would not have a Material Adverse Effect.
3.19 EMPLOYEE BENEFIT PLAN; ERISA.
(a) Schedule 3.19 sets forth a list of each Fleetwood Plan.
Fleetwood has made available to Buyer true, complete and correct copies of
(i) each Fleetwood Plan, (ii) the most recent annual report on Form 5500
filed with the IRS with respect to each Fleetwood Plan (if any such report
was required), (iii) the most recent summary plan description for each
Fleetwood Plan for which such a summary plan description is required, and
(iv) each trust agreement and group annuity contract relating to any
Fleetwood Plan.
(b) Neither Fleetwood, the Company nor the Subsidiary has
engaged in a transaction in connection with which Fleetwood, the Company, the
Subsidiary or any trustee or administrator of the Fleetwood Plans or any such
trust would be subject to either a material liability or civil penalty
assessed pursuant to Sections 409, 502(i) or 502(1) of ERISA or a material
tax imposed pursuant to Section 4971, 4972, 4974, 4975, 4976 or 4980B of the
Code. Except as described in Schedule 3.19, each of
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the Fleetwood Plans has been operated and administered in all material
respects in accordance with its governing documents and applicable laws,
including but not limited to ERISA and the Code. Each Fleetwood Plan
intended to be a qualified plan under Code Section 401 has received a
favorable determination letter to that effect and nothing has occurred since
the issuance of such letter that would adversely affect the tax qualification
of any such Fleetwood Plan. There are no pending or, to the Knowledge of
Fleetwood, threatened claims against, by or on behalf of any of the Fleetwood
Plans or any fiduciary thereof or by any governmental agency, Company
Employee or beneficiary thereof covered under any such Fleetwood Plan with
respect to the qualification or administration of any Fleetwood Plan. None of
the directors or officers of Fleetwood, the Company or the Subsidiary (and
employees with responsibility for employee benefit matters) has any knowledge
of any basis for any such claim.
(c) None of Fleetwood, the Company, the Subsidiary or any
ERISA Affiliate is or has been obligated to contribute to a multiemployer
plan (as defined in Section 3(37) of ERISA).
(d) None of the Fleetwood Plans or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as
of the last day of the most recent fiscal year of each of the Fleetwood
Plans. No contribution failure has occurred with respect to any Fleetwood
Plan sufficient to give rise to a lien under Section 302(f) of ERISA.
(e) In the past six (6) years, no notice of intent to
terminate any pension plan that is subject to Subtitle B of Title IV of ERISA
for which Fleetwood or an ERISA Affiliate is a contributing sponsor (a "Title
IV Pension Plan") has been provided to participants or filed with the Pension
Benefit Guaranty Corporation ("PBGC") under Section 4041 of ERISA, nor has
the PBGC instituted any proceeding under Section 4042 of ERISA to terminate
any Title IV Pension Plan, nor has there been any termination or partial
termination of any such Title IV Pension Plan within the meaning of Code
Section 411(d)(3).
(f) Other than communications regarding retention bonuses
(including the five percent (5%) additional payments) and severance payments,
neither Fleetwood, the Company nor the Subsidiary has made, nor will it or
any of its employees or representatives make prior to the Closing Date, any
representation to or agreement with any of the Company Employees (whether
written or oral) with respect to the provision of any employee benefits by
the Company or the Subsidiary beyond the Closing under the Fleetwood Plans.
(g) Each Fleetwood Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code, complies with the
applicable requirements of Section 4980B(f) of the Code.
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3.20 EMPLOYEE AND LABOR RELATIONS.
(a) There is no labor strike, dispute, or work stoppage or
lockout pending, or, to the Knowledge of Fleetwood, threatened, against the
Company or the Subsidiary.
(b) To the Knowledge of Fleetwood, no union organization
campaign is in progress with respect to the Company Employees, and no
question concerning representation exists respecting such Employees.
(c) There is no unfair labor practice charge or complaint
against the Company pending, or, to the Knowledge of Fleetwood, threatened,
before the National Labor Relations Board.
(d) There is no pending, or, to the Knowledge of Fleetwood,
threatened, employee grievance.
(e) No charges with respect to or relating to the Company or
the Subsidiary are pending before the Equal Employment Opportunity Commission
or any other Governmental Authority responsible for the prevention of
unlawful employment practices.
(f) Schedule 3.20 sets forth a true and complete list of all
persons in the employ of the Company or Subsidiary as of the date hereof,
including any person on short and long term disability.
3.21 COMPLIANCE WITH APPLICABLE LAWS. The Company and the
Subsidiary are in compliance with all applicable Requirements of Law, except
for such incidents of noncompliance which, individually and in the aggregate,
would not have a Material Adverse Effect. Neither the Company nor the
Subsidiary has received any written communication from a Governmental
Authority that alleges that the Company or the Subsidiary is not in
compliance with any Requirement of Law, except where noncompliance would not
have a Material Adverse Effect. This Section 3.21 does not relate to
environmental matters, which are the subject of Section 3.22, or matters with
respect to Taxes, which are the subject of Section 3.13.
3.22 ENVIRONMENTAL MATTERS. To the Knowledge of Fleetwood:
(a) Neither the Company nor the Subsidiary is in material
violation of any applicable Environmental Law nor is the Company or the
Subsidiary under investigation or review by any Governmental Authority with
respect to compliance therewith, or with respect to the generation, use,
treatment, storage or disposal, or the spillage or other release of any
Hazardous Material;
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(b) There is no Hazardous Material that may pose any material
risk to safety, health or the environment on or under any property owned,
leased or operated by the Company or the Subsidiary as of the date hereof and
there has heretofore been no spillage, discharge, release or disposal of any
such Hazardous Material on or under such property by the Company or the
Subsidiary in an amount and of a nature which could reasonably be expected to
result in material liability to the Company or the Subsidiary; and
(c) No pending citations, fines, penalties or claims have
been asserted against the Company or the Subsidiary under any Environmental
Law.
3.23 LOAN SERVICING ACTIVITY. The Company has made available to
Buyer true and complete copies of all servicing agreements ("Servicing
Agreements") to which the Company or the Subsidiary is a party as of the date
hereof, and all such Servicing Agreements are listed on Schedule 3.17. All of
the Servicing Agreements are valid and binding obligations of the Company or
Subsidiary as of the date hereof and are enforceable in accordance with their
terms. There has been no material default or breach, or written claim of
default or breach received, by the Company or the Subsidiary prior to the
date hereof, relating to any Servicing Agreement. No sanctions or penalties
have been imposed upon the Company or the Subsidiary prior to the date hereof
under any Servicing Agreement.
3.24 COMPLIANCE WITH LENDING REGULATIONS.
(a) BUSINESS COMPLIANCE. The Company and the Subsidiary are
in material compliance with all laws, regulations, orders, writs, decrees,
injunctions and other requirements of any court or Governmental Authority
applicable to them, including (i) the rules and regulations of any applicable
agency, (ii) any applicable local, state or federal laws, and any regulations
thereunder pertaining to unlawful discrimination in lending (including,
without limitation, equal credit opportunity, retail installment sales, and
fair credit reporting), truth-in-lending or consumer credit (including,
without limitation, the Federal Consumer Credit Protection Act, Federal
Truth-in-Lending Act and Regulation Z thereunder, and the Federal Equal
Credit Opportunity Act and Regulation B thereunder), and (iii) all applicable
usury and interest limitations laws.
(b) REPORTING COMPLIANCE. The Company and the Subsidiary, as
the case may be, have each timely filed all reports required to be filed by
any governmental agency or by any federal, state or municipal law or
regulation. Neither the Company nor the Subsidiary has taken or omitted to
take any action the effect of which would operate to invalidate or materially
impair (i) any approvals of any governmental agency, rating agency or
insurer, (ii) any vehicle insurance policy or (iii) any fidelity bond, direct
surety bond, or errors and omissions insurance policy required by any
governmental agency or insurer.
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3.25 SECURITIZATION TRANSACTIONS.
(a) The Company, as the servicer ("Securitization Servicer")
of each outstanding transaction under which the Company or Subsidiary has
pooled and sold or pledged Loans in an asset backed securitization sold
either as a private placement or a public offering under the Securities Act
(a "Securitization Transaction"), has complied in all material respects with
all agreements ("Securitization Instruments") and conditions to be performed
or satisfied by it with respect to agreements pursuant to which it is bound
under each such Securitization Transaction, and has complied in all material
respects with all Federal and state laws relating to each such Securitization
Transaction. Schedule 3.25 contains a complete list of all such
Securitization Transactions.
(b) Securitization Servicer has performed all of its material
obligations under the Securitization Instruments and under any existing
Federal or state law relating to the Securitization Transactions, and has
made all filings required to be made by or under the Exchange Act related
thereto.
3.26 MINUTE BOOKS AND STOCK RECORDS. Fleetwood has delivered or
made available to Buyer true and correct copies of the minute books of the
Company and its Subsidiary, which contain a complete and correct record of
all meetings of the Boards of Directors of the Company and its Subsidiary and
all meetings of its and their shareholders and all actions by written consent
without a meeting by such Boards of Directors and its and their shareholders
since the date of incorporation and reflect accurately in all material
respects all actions by such directors and by shareholders with respect to
all transactions referred to in such minutes.
3.27 FINANCE AGREEMENTS. With respect to the Finance Agreements of
the Company and the Subsidiary:
(a) Either the Company or the Subsidiary, as set forth in the
Records, has either good title to or a perfected first priority security
interest in all Collateral, and good title to all documents, free and clear
of all claims, liens and encumbrances other than Permitted Encumbrances.
Except as described in Schedule 3.27, all Finance Agreements are secured
primarily by Collateral.
(b) The Customer files, accounting records and stored
computer data relating to or connected with all of the businesses of the
Company and the Subsidiary, including the Finance Agreements and Collateral
are true and correct in all material respects and accurately reflect all
information set forth therein, including the amount of the receivable, the
status thereof and all transactions relating thereto, all reserves,
holdbacks, deposits or other sums due and owing by the Company or the
Subsidiary to others with respect thereto, and all payments, credits and
adjustments required to be applied to the balance thereof.
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(c) Each of the Finance Agreements (i) is a genuine, legal,
valid and binding obligation of each of the parties thereto, enforceable in
accordance with its terms subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (ii) arose
out of a bona fide transaction in the ordinary course of business, (iii) was
created in compliance with all applicable laws, and (iv) is substantially in
the form of one of the standard forms set forth in Schedule 3.27 other than
rental dealer agreements, copies of all of which have been made available to
Buyer. Except as is described in Schedule 3.27, no understanding or
agreement has been reached with a Customer or an obligor for any variation of
the terms and conditions of any Finance Agreement, except as expressly set
forth therein, and each Finance Agreement constitutes the entire agreement of
the parties with respect to the subject matter thereof. No Finance Agreement
is subject to any defense, set-off or counterclaim to the payment of the
amount of the unpaid balance thereof (except as specifically reserved for in
the financial statements). Except as is described on Schedule 3.27, to the
Knowledge of Fleetwood, no Customer under a Finance Agreement is subject to a
pending bankruptcy, receivership, insolvency or other similar proceeding
providing for debtors relief. Neither the Company nor the Subsidiary, as
applicable, nor any Customer is in material default under any Finance
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Fleetwood as follows:
4.1 ORGANIZATION; STANDING AND AUTHORITY OF BUYER. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. All corporate acts and other proceedings required to be
taken by Buyer to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly taken. This Agreement has been duly executed and delivered by
Buyer and constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.2 NO BREACH OR DEFAULT; CONSENTS AND APPROVALS.
(a) Except as set forth in Schedule 4.2, the execution and
delivery by Buyer of this Agreement and other documents referenced herein to
which Buyer is a party and the consummation of the transactions contemplated
hereby and thereby will not result in or constitute any of the following: (i)
a default or an event that,
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with the giving of notice or lapse of time, or both, would be a default,
breach or violation of the charter documents or bylaws of Buyer or any
material Buyer Contract, (ii) an event that would permit any party to
terminate any material Buyer Contract or to accelerate the maturity of any
indebtedness or other material obligation of Buyer, (iii) the creation or
imposition of any material Lien on any of the properties of Buyer, or (iv) a
violation of any order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer, except for violations which would not have a material
adverse effect on the financial condition, assets or results of operations of
Buyer.
(b) Except as set forth in Schedule 4.2, no authorization,
consent or approval of any Governmental Authority or any third party is
necessary for the consummation by Buyer of the transactions contemplated by
this Agreement and the other documents referenced herein to which Buyer is a
party.
4.3 INVESTMENT INTEREST; ACCREDITED INVESTOR; RISK. The Shares
purchased by Buyer pursuant to this Agreement are being acquired for
investment only and not with a view to any public distribution thereof, and
Buyer will not offer to sell or otherwise dispose of the Shares so acquired
by it in violation of any of the registration requirements of the Securities
Act or of any other Requirement of Law. Buyer represents and warrants that
it is an "Accredited Investor" as such term is defined in Rule 501 under
Regulation D of the Securities Act. Buyer represents that it is able to bear
the economic risk of its investment in the Shares for an indefinite period of
time.
4.4 AVAILABILITY OF FUNDS. Buyer has available all funds required
to consummate the transactions contemplated hereby.
4.5 BUYER'S ACKNOWLEDGMENT. Buyer acknowledges and agrees that,
(a) other than the representations and warranties of Fleetwood specifically
contained in this Agreement, there are no representations or warranties of
Fleetwood either expressed or implied with respect to Fleetwood, the Company
or the transactions contemplated hereby and (b) it shall have a right to
indemnification solely as provided in Article X hereof and shall have no
claim or right to indemnification with respect to any information, documents
or materials furnished by Fleetwood or the Company or any of their officers,
directors, employees, agents or advisors to Buyer, including, without
limitation, the PaineWebber Incorporated Information Memorandum dated
February, 1996 or any information, documents or material made available to
Buyer in certain "data rooms," management presentations or in any other form
in expectation of the transactions contemplated by this Agreement.
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ARTICLE V
MUTUAL COVENANTS
Each of Fleetwood and Buyer covenants and agrees as follows:
5.1 CONSENTS. Without modifying the mutual condition set forth in
Section 8.1: (i) Fleetwood shall, and shall cause the Company and the
Subsidiary to, use best efforts to obtain all consents needed to consummate
the transactions contemplated by this Agreement, and (ii) Buyer shall
cooperate with Fleetwood and the Company and the Subsidiary in any reasonable
manner in connection with Fleetwood and the Company and the Subsidiary
obtaining any consents required in connection with the transactions
contemplated herein; PROVIDED, HOWEVER, that such cooperation shall not
include any requirement of any party hereto to commence any litigation or
offer or grant any accommodation (financial or otherwise) to any third party.
To the Knowledge of Fleetwood, no such third party has requested any such
accommodation in exchange for such consent or otherwise expressed an intent
to withhold such consent.
5.2 PUBLICITY. Fleetwood and Buyer agree that, from the date
hereof through the Closing Date, no public release or announcement concerning
the transactions contemplated hereby shall be issued by either party without
the prior consent of the other party (which consent shall not be unreasonably
withheld or delayed), except as such release or announcement may be required
by law or the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance.
5.3 ANTITRUST NOTIFICATION. Each of Fleetwood and Buyer will as
promptly as practicable file with the United States Federal Trade Commission
(the "FTC") and the United States Department of Justice (the "DOJ") the
notification and report form, if any, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information will be in substantial compliance with the
requirements of the HSR Act. Each of Buyer and Fleetwood shall furnish to
the other such necessary information and reasonable assistance as the other
may request in connection with its preparation of any filing or submission
which is necessary under the HSR Act. Fleetwood and Buyer shall keep each
other apprised of the status of any communications with, and inquiries or
requests for additional information from, the FTC and the DOJ and shall
comply promptly with any such inquiry or request. Each of Fleetwood and
Buyer will use its best efforts to obtain any clearance required under the
HSR Act for the purchase and sale of the Shares.
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5.4 RECORDS.
(a) On the Closing Date, Fleetwood shall deliver or cause to
be delivered to Buyer all of the Records, subject to the following:
(i) Buyer recognizes that certain Records may contain
incidental information relating to the Company or may relate primarily to
Fleetwood or subsidiaries or divisions of Fleetwood other than the Company or
businesses of the Company previously sold, and that Fleetwood may retain such
Records and shall, upon request, provide copies of the relevant portions
thereof to Buyer;
(ii) Fleetwood may retain all Records prepared in
connection with the sale of the Shares, including bids received from other
parties and analyses relating to the Company; and
(iii) Fleetwood may retain any Tax Returns, and Buyer
shall be provided with copies of such Returns upon request, to the extent
that they relate to the Company's separate returns or separate tax liability.
(b) After the Closing, with reasonable advance written notice
and at the expense of the requesting party, Buyer and Fleetwood agree to
furnish or cause to be furnished to each other and their representatives,
employees, counsel and accountants access, during normal business hours, to
such information (including Records pertinent to the Company and the
Subsidiary) and assistance relating to the Company and the Subsidiary as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any tax returns, reports or forms or the defense of
any tax claim or assessment; PROVIDED, HOWEVER, that such access does not
unreasonably disrupt the normal operations of Fleetwood, Buyer or the Company.
ARTICLE VI
COVENANTS OF FLEETWOOD
Fleetwood covenants and agrees as follows:
6.1 ACCESS. Subject to the confidentiality provisions of Section
7.1 hereof, prior to the Closing, Fleetwood will, and will cause the Company
and the Subsidiary to, give Buyer and its representatives, employees, counsel
and accountants reasonable access, during normal business hours and upon
reasonable advance notice, to the personnel, properties and Records of the
Company and the Subsidiary; PROVIDED, HOWEVER, that such access does not
unreasonably disrupt the normal operations of the Company or the Subsidiary.
Subject to prior approval by Fleetwood not to be unreasonably withheld,
Fleetwood shall permit Buyer, in the presence of Fleetwood management and
regarding topics pre-approved by Fleetwood, (i) to discuss employment
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matters with certain Company Employees after the execution of this Agreement
and prior to the Closing and (ii) to discuss with up to thirty (30) of the
Company's Employees the fact that their services may not be needed effective
immediately after the Closing; provided that, Buyer shall indemnify Fleetwood
and its Affiliates pursuant to Section 10.2 for any Losses incurred relating
to Buyer's actions under (ii) above, whether or not the Closing occurs.
6.2 INTERIM OPERATIONS. Except as set forth in Schedule 3.12 or
as otherwise contemplated by this Agreement or consented to or approved by
Buyer in writing, Fleetwood covenants and agrees that from the Interim Date
until the Closing Date or the earlier termination of this Agreement pursuant
to Article XIII hereof, the Company and the Subsidiary:
(a) Shall be operated in the ordinary and usual course,
consistent with the management practices in effect on the Interim Date,
including, that each (i) shall continue its finance, credit, credit limit
administration, collection, control of delinquencies and other policies and
practices relating to the receivables and the conduct of its businesses
generally as were in effect on the Interim Date and shall make available to
Buyer information necessary to monitor compliance with such policies and
practices, (ii) shall not sell, transfer, mortgage or otherwise dispose of,
or encumber, any of the assets of the Company or the Subsidiary, other than
in the ordinary course of business, consistent with existing practice, (iii)
shall not make or become obligated to make any capital expenditures or enter
into any commitments therefor, except in the ordinary course of business,
consistent with existing practice, and (iv) shall not change in any way its
accounting policies or practices from those in effect on the Interim Date;
(b) Shall not amend their Articles of Incorporation or
By-Laws;
(c) Shall use best efforts to preserve intact their business
organization, to keep available the services of their present officers and
key employees, and to preserve the goodwill of those having business
relationships with each of them;
(d) Shall not authorize for issuance, issue, sell or deliver
any shares of capital stock or any other securities or issue any securities
convertible into or exchangeable for, or options, warrants to purchase,
scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or enter into any contract, understanding or
arrangement with respect to the issuance of, any shares of capital stock or
any other securities or enter into any arrangement or contract with respect
to the purchase or voting of any shares of capital stock, or adjust, split,
combine or reclassify its capital stock or other securities, or make any
other changes in its capital structure;
(e) Shall not declare, sets aside, pay or make any dividend
or other distribution or payment (whether in cash, stock or property) with
respect to, or purchase or redeem, any shares of their capital stock; and
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(f) Except as may be required to comply with applicable law,
shall not (i) adopt or amend any existing bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment or other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or welfare of any present or
former director, officer or employee, or (except for normal increases in the
ordinary course of business that are consistent with current practices)
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any existing plan or
arrangement (including without limitation the granting of stock options,
stock appreciation rights, shares of restricted stock or performance units)
or take any action or grant any benefit not expressly required under the
terms of any existing agreements, trusts, plans, funds or other such
arrangements or enter into any contract, agreement, commitment or arrangement
to do any of the forgoing, or (ii) make any loan to, or otherwise extend
credit to, any employee, officer, director or shareholder of the Company or
the Subsidiary, and on the Closing Date, no such loans to employees,
officers, directors or shareholders shall be outstanding, except pursuant to
and under any employee pension benefit plan.
(g) Shall not enter into any Finance Agreements primarily
secured by assets other than Collateral.
(h) On the Company's April 30, 1996 unaudited balance sheet
to be delivered pursuant to Section 2.4(a), the Company's reserve for
potential credit losses will be approximately two percent (2%) of the sum of
the Company's owned and managed receivables as of April 30, 1996.
6.3 INSURANCE. Fleetwood shall keep, or cause to be kept, all
insurance policies presently maintained relating to the Company and the
Subsidiary and their properties, or replacements therefor, in full force and
effect through the close of business on the Closing Date. Schedule 6.3(a)
sets forth all the insurance policies presently owned and maintained by the
Company and the Subsidiary. Any and all additional insurance policies
presently maintained relating to the Company and the Subsidiary are
maintained by Fleetwood and described on Schedule 6.3(b). Neither Buyer nor
the Company will have any rights under any such Fleetwood insurance policies
from and after the Closing Date; provided that Fleetwood shall take such
actions as are necessary to seek recovery of insurable Losses under Article X
hereof.
6.4 RESIGNATIONS. On the Closing Date, Fleetwood shall cause to
be delivered to Buyer duly signed resignations, effective immediately after
the Closing, of all directors of the Company and Subsidiary, and shall take
such other action as is necessary to accomplish the foregoing.
6.5 INTERCOMPANY PAYABLES; OTHER AMOUNTS. Before the Closing
Date, Fleetwood shall, to the extent feasible, cause the Company and the
Subsidiary to settle all
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intercompany payables and receivables between Fleetwood and the Company and
the Subsidiary, including all subvention amounts due to the Company and all
delayed check-hold payments due from the Company. Any such intercompany
amounts not so settled by the Closing Date shall be paid within thirty (30)
days of Closing. Fleetwood agrees promptly to forward to the Company any and
all amounts due to the Company that are received by Fleetwood after the
Closing Date.
6.6 TAX CHANGES. Without the prior written consent of Buyer
(which consent shall not be unreasonably withheld), neither Fleetwood, the
Company, or the Subsidiary or any Affiliate of Fleetwood shall, to the extent
it may effect or relate to the Company or the Subsidiary, make or change any
tax election, change an annual accounting period, or adopt or change any
method of tax accounting if any such action or omission would have the effect
of increasing the Tax liability or decreasing and Tax asset of the Company,
the Subsidiary, Buyer, or any Affiliate of Buyer.
6.7 ASSUMPTION OF DEBT; TERMINATION; RELEASE. Fleetwood and the
Company shall negotiate and enter into such agreements as may be reasonably
required to consummate (a) the assumption by Fleetwood of approximately
$80,000,000 of outstanding debt under those certain $100,000,000 Master Shelf
Agreements dated March 27, 1991 and October 29, 1993, as amended,
respectively, between the Company and The Prudential Insurance Company of
America; (b) the termination of the Amendment to Support Agreement, dated
October 29, 1993; and (c) the release of the Company from any obligations
under such Master Shelf Agreements.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
7.1 CONFIDENTIALITY. Buyer acknowledges that the information
heretofore and hereafter provided to it by Fleetwood is subject to the terms
of a confidentiality agreement between Buyer and Fleetwood (the
"Confidentiality Agreement"), the terms of which are incorporated herein by
reference. Effective upon, and only upon, the Closing, the Confidentiality
Agreement will terminate; provided, however, that Buyer acknowledges that the
Confidentiality Agreement will terminate only with respect to information
relating solely to the Company and the Subsidiary; and provided, further,
however, that Buyer acknowledges that any and all other information provided
to it by Fleetwood or Fleetwood's representatives concerning Fleetwood shall
remain subject to the terms and conditions of the Confidentiality Agreement
after the date of the Closing. Except as required by applicable law,
Fleetwood covenants and agrees to keep confidential and not to disclose any
material non-public information regarding the Company or the Subsidiary after
the Closing as if subject itself to the Confidentiality Agreement.
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7.2 INTERCOMPANY PAYABLES; OTHER AMOUNTS. On the Closing Date,
Buyer shall, to the extent feasible, cause the Company to settle all
intercompany payables and receivables between Fleetwood and the Company. To
the extent any such intercompany amounts remain unsettled as of the time of
Closing, Buyer shall cause the Company to pay such amounts as promptly as
practicable and in no event later than thirty (30) days after Closing. Buyer
agrees to promptly forward or cause to be forwarded to Fleetwood any and all
amounts due to Fleetwood that are received by Buyer or the Company after the
Closing Date.
7.3 FORD BOARD APPROVAL. Buyer shall use its best efforts to
obtain the approval of the board of directors of Ford Motor Company to the
consummation of the transactions contemplated by this Agreement as soon as
practicable in May 1996.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 MUTUAL CONDITIONS. The obligation of each party to effect the
transactions contemplated hereby shall be subject to fulfillment, at or prior
to the Closing, of each of the following conditions:
(a) There shall be no claim, action, suit, injunction, order,
investigation or other proceeding pending or threatened before any court or
Governmental Authority which restrains or prohibits the transactions
contemplated by this Agreement or the obtaining of material damages or other
relief in connection therewith.
(b) The waiting period under the HSR Act, if applicable to
the purchase and sale of the Shares, shall have expired or been terminated.
(c) Fleetwood and the Company shall have entered into, and
there shall be in effect on the Closing Date, an agreement governing the
on-going business relationship between the Company and Fleetwood (the
"Operating Agreement") in substantially the form attached as EXHIBIT A hereto.
8.2 BUYER'S CONDITIONS. The obligations of Buyer to purchase and
pay for the Shares are subject to fulfillment (or written waiver by Buyer) as
of the Closing of each of the following conditions:
(a) The representations and warranties of Fleetwood made in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as specifically contemplated by this Agreement, on
and as of the Closing Date, as though made on and as of the Closing Date, and
Fleetwood shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Fleetwood by the time of the Closing;
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and Fleetwood shall have delivered to Buyer a certificate dated the Closing
Date and signed by an authorized officer of Fleetwood confirming the
foregoing.
(b) Buyer shall have received opinions dated the Closing Date
of Gibson, Dunn & Crutcher, counsel to Fleetwood, William H. Lear, General
Counsel to Fleetwood, and Richard de la Pena, General Counsel to the Company,
as to the matters set forth in EXHIBIT B, which opinions shall be reasonably
satisfactory in form and substance to Buyer.
(c) Buyer shall have received a certified copy of the duly
adopted resolutions of the Board of Directors of Fleetwood authorizing the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
(d) Buyer shall have received an incumbency certificate with
respect to all parties executing on behalf of Fleetwood this Agreement or any
of the documents relating to the transactions contemplated hereby.
(e) The Board of Directors of Ford Motor Company shall have
approved the Agreement and the transactions contemplated herein.
(f) Buyer shall have received prior to Closing a certificate
signed by Fleetwood to the effect that Fleetwood is not a "foreign person" as
defined in Section 1445 of the Code.
(g) All third party consents (including those set forth on
Schedule 3.9 and Schedule 8.2), terminations, approvals, permits and
authorizations required to be obtained by Fleetwood, the Company or the
Subsidiary in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been made or obtained, and Fleetwood, the Company or the Subsidiary
shall have delivered to Buyer evidence thereof that is reasonably
satisfactory to Buyer.
8.3 FLEETWOOD'S CONDITIONS. The obligations of Fleetwood to sell
and deliver the Shares to Buyer are subject to fulfillment (or written waiver
by Fleetwood) as of the Closing of each of the following conditions:
(a) The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as specifically contemplated by this Agreement, on and as
of the Closing Date, as though made on and as of the Closing Date, and Buyer
shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Buyer by the time of the Closing; and Buyer shall have
delivered to Fleetwood a certificate dated the Closing Date and signed by an
authorized officer of Buyer confirming the foregoing.
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(b) Fleetwood shall have received an opinion dated the
Closing Date of Francis C. Suarino, Esq., counsel to Buyer, as to the matters
set forth in EXHIBIT C, which opinion shall be reasonably satisfactory in
form and substance to Fleetwood.
(c) Fleetwood shall have received a certified copy of the
duly adopted resolutions of the Board of Directors of Buyer authorizing the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
(d) Fleetwood shall have received an incumbency certificate
with respect to all parties executing on behalf of Buyer this Agreement or
any of the documents relating to the transactions contemplated hereby.
(e) Any and all support agreements, lines of credit,
guarantees, letters of credit and similar instruments issued or guaranteed by
Fleetwood relating to the business of the Company or Subsidiary shall be
canceled or terminated and no acceleration of any indebtedness of Fleetwood
shall be caused by the Closing.
ARTICLE IX
EMPLOYEE BENEFIT MATTERS
9.1 EMPLOYMENT.
(a) Effective as of the Closing, each employee of the Company
or the Subsidiary who is listed on Schedule 3.20 or as agreed to between
Buyer and Fleetwood shall continue to be employed by the Company or the
Subsidiary, as appropriate (or may be transferred to one of their
Affiliates), provided, however, that any such continued employment shall not
be construed to limit the ability of the Buyer, the Company, the Subsidiary
or their Affiliates to terminate any such employee at any time for any
reason. Each employee who remains an employee of the Company or the
Subsidiary as of the Closing shall be hereinafter referred to as a "Company
Employee." If necessary, Schedule 3.20 shall be amended to be current as of
the Closing Date. Employment of Company Employees after the Closing shall be
subject to all of Buyer's policies and practices, including the policy of
employment-at-will.
(b) In the event Buyer terminates any Company Employees
(other than for "For Cause" as defined in EXHIBIT D attached hereto) within
one year after the Closing Date, Buyer shall pay such individuals severance
benefits equal to those payable under its own severance plan or, if greater,
those that would be payable pursuant to the severance terms set forth on
EXHIBIT D attached hereto, in either case, giving full credit for all service
with the Company both before and after the Closing Date.
(c) Buyer has no present intention (subject to its discretion
as to employee performance) to terminate the employment of any material
number of Company
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Employees within sixty (60) days following the Closing Date, and Buyer
assumes all obligations and liabilities, if any, under the WARN Act arising
out of the transactions contemplated by this Agreement. Buyer also agrees to
comply with the terms of the WARN Act following the Closing Date.
(d) Nothing contained herein, whether expressed or implied,
is intended to confer upon any Company Employee or their legal
representatives, any rights or remedies, including, without limitation, any
rights of employment for any period of any nature or kind whatsoever under or
by reason of this Agreement.
(e) For a period of two (2) years from and after the Closing
Date, Fleetwood will not without Buyer's consent, which consent shall not be
unreasonably withheld, solicit Company Employees for employment.
9.2 BENEFITS.
(a) IN GENERAL. On and after the Closing Date, Buyer shall
provide Company Employees with the employee benefits generally provided to
other employees of the Buyer, subject to the terms of the Buyer's plans.
(b) WELFARE BENEFIT PLANS. Buyer will grant for purposes of
vacation and all welfare benefit plans (as defined in Employee Retirement
Income Security Act of 1974, as amended), except its retiree medical plan,
past service credit to all Company Employees for all periods of time credited
to such Company Employees under the Company's welfare benefit plans. No past
service credit is granted for Buyer's retiree medical plan. With respect to
the Short Term Disability Plan, Company Employees will receive past service
credit for eligibility purposes but will be considered a new hire in 1996 for
purposes of the applicable benefit schedule. With respect to Buyer Benefit
Plans that provide medical or dental benefits after the Closing Date, such
plans shall waive any exclusions or limitations with respect to pre-existing
conditions, and actively-at-work exclusions and shall provide that any
expenses incurred on or before the Closing Date shall be taken into account
under such Buyer Benefit Plans for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions.
(c) DEFINED CONTRIBUTION PENSION PLAN. Buyer shall take
whatever action is necessary, including amendment of its defined contribution
pension plan, to grant to each Company Employee past service credit for all
purposes under Buyer's defined contribution pension plan for all periods of
service credited to each such Company Employee under Fleetwood's Retirement
Plan. Within 90 days after the Closing Date, Fleetwood shall provide to
Buyer such information as the Buyer requires to establish the service for the
Company Employees credited under Fleetwood's defined contribution pension
plan.
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(d) DEFINED BENEFIT PENSION PLAN. No past service credit for
benefit accrual purposes will be granted under the Buyer's Defined Benefit
Pension Plan. Buyer shall take whatever action is necessary, including
amendment of its defined benefit pension plan, to grant to each Company
Employee past service credit for vesting purposes only under Buyer's defined
benefit pension plan for all periods of service credited to each such Company
Employee under Fleetwood's Retirement Plan. Within ninety (90) days after
the Closing Date, Fleetwood shall provide to Buyer such information as the
Buyer requires to establish the service for the Company Employees credited
under Fleetwood's defined contribution pension plan.
9.3 FLEETWOOD RETENTION BONUS. After the Closing Date, the
Company shall pay retention bonuses to designated Company Employees at the
times, in the amounts and on the terms attached hereto as EXHIBIT E; provided
that Buyer or the Company shall remit to Fleetwood at the time such payments
would otherwise be made the aggregate amount of retention bonuses deferred by
Company Employees plus Fleetwood's share of employment taxes applicable to
such deferred amounts. Fleetwood shall thereafter be solely liable for the
ultimate payment of any such deferred amounts and any earnings credited
thereto.
9.4 FLEETWOOD PLANS. Effective as of the Closing Date, except as
provided below, the Company shall cease to be a participating employer under
each and every Fleetwood Plan (including, without limitation, the Fleetwood
Retirement Plan, Supplemental Benefit Plan, Deferred Compensation Plan and
Restoration Plan), and except as provided below, the Company Employees shall
cease receiving or making additional contributions thereunder in respect of
periods following the Closing Date; provided, however, the Company shall
continue to be a participating employer under the Fleetwood Deferred
Compensation Plan solely to permit Company Employees to defer any amounts
payable pursuant to the retention bonus terms set forth in EXHIBIT E hereto
pursuant to an election previously made thereunder. Fleetwood shall take, or
cause to be taken, all such action as may be necessary (i) to effect such
cessation of participation, including without limitation, the provision of
such notice to Company Employees participating in such plans as may be
required by ERISA, and (ii) to cause the benefits payable under the Fleetwood
Retirement Plan to be paid to Company Employees as soon as is
administratively practicable following the Closing Date. Following the
Closing Date, Fleetwood shall be solely responsible for the disposition of
benefits accrued under such plans.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY FLEETWOOD. Subject to the terms and
conditions of this Article X, Fleetwood shall indemnify Buyer, its Affiliates
(including the Company) and each of their respective officers, directors,
employees and agents against, and hold them harmless from, any Losses
suffered or incurred by any such Indemnified Person
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(other than any relating to Taxes, for which indemnification provisions are
set forth in Section 10.3) to the extent arising from, (a) if the Closing
occurs, any breach of any representation or warranty (both of which for the
purposes of determining Losses for indemnification purposes shall exclude any
materiality and knowledge qualifiers contained therein) of Fleetwood
contained in this Agreement or in any certificate, instrument or other
document delivered pursuant hereto or (b) any breach of any covenant of
Fleetwood contained in this Agreement requiring performance after the Closing
Date or (c) other than as set forth on the Balance Sheet or as contemplated
by Section 3.10(b), any liability or financial obligation of any nature,
whether known or unknown or fixed or contingent in nature, relating to the
business and operations of the Company and the Subsidiary prior to the
Closing Date; PROVIDED, HOWEVER, that Fleetwood shall not have any liability
under this Section 10.1 unless the aggregate of all Losses relating thereto
for which Fleetwood would, but for this provision, be liable exceeds on a
cumulative basis an amount equal to $2,000,000 (and then only to the extent
of any such excess). Notwithstanding the foregoing, Fleetwood and Buyer
agree that, if the Closing occurs, Fleetwood shall share equally with the
Company the legal fees incurred by the Company after the Closing relating
directly to the Company's appeal of the jury verdict rendered on March 19,
1996 in the Superior Court, Bergen County Division, State of New Jersey in
the Cedar Ridge Trailer Sales, Inc., ET AL. v. National Community Bank of New
Jersey, Fleetwood, the Company, Ganis, ET AL. litigation or the retrial of
such litigation; provided that, Fleetwood's costs hereunder shall be limited
to a maximum of one hundred thousand dollars ($100,000); provided further
that, the Company shall submit written documentation of its legal fees
related thereto in form and substance reasonably satisfactory to Fleetwood
prior to reimbursement by Fleetwood therefore. In no event shall any amounts
paid by Fleetwood hereunder be included in a determination of Fleetwood's
aggregate liability under the preceding sentence of this Section 10.1.
10.2 INDEMNIFICATION BY BUYER. Subject to the terms and conditions
of this Article X, Buyer shall, and shall cause the Company, jointly and
severally, to, indemnify Fleetwood and each of its Affiliates, officers,
directors, employees and agents against, and hold them harmless from, any
Losses suffered or incurred by any such Indemnified Person (other than any
relating to Taxes, for which indemnification provisions are set forth in
Section 10.3) to the extent arising from, (a) if the Closing occurs, any
breach of any representation or warranty (both of which for the purposes of
determining Losses for indemnification purposes shall exclude any materiality
and knowledge qualifiers contained therein) of Buyer contained in this
Agreement or in any certificate, instrument or other document delivered
pursuant hereto or (b) any breach of any covenant of Buyer contained in this
Agreement requiring performance after the Closing Date or (c) any liability
or financial obligation of any nature, whether known or unknown or fixed or
contingent in nature, relating to the business and operations of the Company
and the Subsidiary on or after the Closing Date (including, without
limitation, any loss related in any manner to employment decisions or
terminations by the Company or Subsidiary effective as of or after the
Closing).
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10.3 TAX INDEMNIFICATION.
(a) Subject to the terms and conditions of this Article X,
Fleetwood shall indemnify Buyer and its Affiliates (including the Company)
and each of their respective officers, directors, employees and agents and
hold them harmless from (i) all liability for Taxes of the Group incurred
during the Pre-Closing Tax Period (as defined in Section 10.3(b)) and (ii)
all liability for reasonable legal fees and expenses incurred with respect to
any item indemnified pursuant to clause (i). Notwithstanding the foregoing,
Fleetwood shall not have any liability under this Section 10.3 relating to
state Taxes unless the aggregate of all Losses relating thereto for which
Fleetwood would, but for this provision, be liable exceeds on a cumulative
basis an amount equal to $125,000 (and then only to the extent of any such
excess).
(b) For purposes of this Agreement, "Pre-Closing Tax Period"
shall mean any Tax period ending prior to or on the Closing Date (including,
as defined below, any Short Period or Apportioned Short Period). In order to
appropriately apportion any Taxes relating to a period that includes (but
that would not, but for this Section, close on) the Closing Date, Fleetwood
and the Buyer will, to the extent permitted by applicable law, elect with the
relevant Governmental Authority to treat for all purposes the Closing Date as
the last day of a Tax period of the Company and the Subsidiary, and such
period shall be treated as a "Short Period." In any case where applicable
law does not permit the Company and the Subsidiary to treat the Closing Date
as the last day of a Short Period, then for purposes of this Agreement, the
portion of Taxes attributable to the operations of the Company and the
Subsidiary for an Apportioned Short Period (as defined below) shall be (i) in
the case of Taxes that are not based on income or gross receipts, the total
amount of such Taxes for the period in question multiplied by a fraction, the
numerator of which is the number of days in the Apportioned Short Period, and
the denominator of which is the total number of days in the entire period in
question, and (ii) in the case of Taxes that are based on income or gross
receipts, the Taxes that would be due with respect to the Apportioned Short
Period, if such Period were a Short Period. "Apportioned Short Period" means
with respect to any Taxes imposed on the Company and the Subsidiary on a
periodic basis for which the Closing Date is not the last day of a Short
Period, the period of time beginning on the first day of the actual Tax
period in question that includes (but does not end on) the Closing Date and
ending on and including the Closing Date. All determinations necessary to
give effect to the foregoing allocations shall be made in a manner consistent
with the prior practice of the Company and the Subsidiary.
(c) Buyer agrees to indemnify Fleetwood and its Affiliates
for any additional Tax owed by Fleetwood and its Affiliates resulting from
any transaction initiated by the Company or Buyer not in the ordinary course
of business occurring on the Closing Date after Buyer's purchase of the
Common Stock of the Company.
(d) If a claim is made by the IRS that, if successful, might
result in an indemnity payment to either Fleetwood or Buyer pursuant to this
Section 10.3, the
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party against whom the claim is asserted and who would be entitled to receive
an indemnity payment (the "Tax Indemnitee") shall promptly notify the party
against whom indemnification is sought (the "Tax Indemnitor") in writing of
such claim (a "Tax Claim"). If notice of a Tax Claim is not given to the Tax
Indemnitor within a sufficient period of time to allow the Tax Indemnitor to
effectively contest such Tax Claim taking into account the facts and
circumstances with respect to such Tax Claim, the Tax Indemnitor shall not be
liable to the Tax Indemnitee to the extent that the Tax Indemnitor's ability
to effectively contest such Tax Claim is actually prejudiced as a result
thereof.
(e) With respect to any Tax Claim, the Tax Indemnitor shall
control all proceedings taken in connection with such Tax Claim (including,
without limitation, selection of counsel) and, without limiting the
foregoing, may in its sole discretion (and at its sole cost and expense)
pursue or forego any and all administrative appeals, proceedings, hearings,
and conferences with any Governmental Authority with respect thereto and may,
in its sole discretion, either pay the Tax claimed and sue for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner. The Tax Indemnitee, and each of its Affiliates, shall
cooperate with the Tax Indemnitor in contesting any Tax Claim, which
cooperation shall include, without limitation, the retention and (upon the
Tax Indemnitor's request) the provision to the Tax Indemnitor of Records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify
at proceedings relating to such Tax Claim.
(f) In no case shall the Tax Indemnitee settle or otherwise
compromise any Tax Claim that might result in an indemnity payment without
the Tax Indemnitor's prior written consent, which consent shall not be
unreasonably withheld.
10.4 LOSSES NET OF INSURANCE, ETC.
(a) The amount of any Loss or Tax for which indemnification
is provided under this Article X shall be net of any (i) related reserves
reflected on the Company's balance sheet as of the Closing Date, (ii) any Tax
refund payable to the Company and (iii) all amounts recovered or recoverable
by the Indemnified Person under insurance policies with respect to such Loss
or Tax and shall be (x) increased to take account of any net actual Tax cost
incurred by the Indemnified Person arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (y) reduced to take
account of any actual net tax benefit realized by the Indemnified Person
arising from the incurrence or payment of any such Loss or Tax. In computing
the amount of any such Tax cost or Tax benefit, the Indemnified Party shall
be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified Loss or
Tax.
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(b) If the Indemnifying Person makes any payment under this
Article X in respect of any Losses, the Indemnifying Person shall be
subrogated, to the extent of such payment, to the rights of the Indemnified
Person against any insurer or third party with respect to such Losses.
(c) Notwithstanding anything to the contrary elsewhere in
this Agreement, no Indemnifying Person shall, in any event, be liable to the
other party for any consequential damages, including, but not limited to,
loss of revenue or income, cost of capital, diminution in value or loss of
business reputation or opportunity relating to the breach or alleged breach
of this Agreement. Each party agrees that it will not seek punitive damages
as to any matter under, relating to or arising out of the transactions
contemplated by this Agreement.
(d) The parties hereto agree that the indemnification
provisions of this Article X are intended to provide the exclusive remedy as
to all Losses either may incur arising from, or relating to the transactions
contemplated hereby and each party hereby waives, to the extent they may do
so, any other rights or remedies that may arise under any applicable statute,
rule or regulation.
10.5 PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN UNDER
SECTION 10.3).
(a) In order for an Indemnified Person to be entitled to any
indemnification provided for under this Agreement (other than under Section
10.3) in respect of, arising out of or involving a claim or demand made by
any Person against the Indemnified Person (a "Third Party Claim"), such
Indemnified Person must notify the Indemnifying Person in writing, and in
reasonable detail, of the Third Party Claim within 10 Business Days after
receipt by such Indemnified Person of written notice of the Third Party
Claim; PROVIDED, HOWEVER, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Person shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Person shall not be liable for any
Losses incurred during the period in which the Indemnified Person failed to
give such notice). Thereafter, the Indemnified Person shall deliver to the
Indemnifying Person, within five Business Days after the Indemnified Person's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Person relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified
Person, the Indemnifying Person will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense thereof with
counsel selected by the Indemnifying Person. Should the Indemnifying Person
so elect to assume the defense of a Third Party Claim, the Indemnifying
Person will not be liable to the Indemnified Person for legal fees and
expenses subsequently incurred by the Indemnified Person in connection with
the defense thereof. If the Indemnifying Person assumes such defense, the
Indemnified Person
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shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Person, it being understood that the Indemnifying Person shall
control such defense. The Indemnifying Person shall be liable for the fees
and expenses of counsel employed by the Indemnified Person for any period
during which the Indemnifying Person has not assumed the defense thereof
(other than during any period in which the Indemnified Person shall have
failed to give notice of the Third Party Claim as provided above).
(c) If the Indemnifying Person chooses to defend or prosecute
any Third Party Claim, all parties hereto shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon
the Indemnifying Person's request) the provision to the Indemnifying Person
of Records and information which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.
(d) Whether or not the Indemnifying Person shall have assumed
the defense of a Third Party Claim, the Indemnified Person shall not admit
any liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the Indemnifying Person's prior written consent (which
consent shall not be unreasonably withheld). All Tax Claims (as defined in
Section 10.3) shall be governed by Section 10.3.
10.6 SURVIVAL OF REPRESENTATIONS; TERMINATION OF INDEMNIFICATION.
The representations, warranties and covenants in this Agreement and in any
other document delivered in connection herewith shall survive the Closing.
The obligation to indemnify and hold harmless shall not terminate with
respect to any item as to which the Person to be indemnified shall have,
before the expiration of the applicable period, previously made a claim by
delivering a written notice (stating in reasonable detail the basis of such
claim) to the Indemnifying Person. The obligations to indemnify and hold
harmless a Person pursuant to Section 10.3 shall survive the Closing for the
full period of all applicable statute of limitations giving effect to any
waiver, mitigation, or extension thereof.
ARTICLE XI
COVENANT NOT TO COMPETE
11.1 COVENANT NOT TO COMPETE. Until such time as the Operating
Agreement expires or otherwise terminates, Fleetwood covenants and agrees
with Buyer that, except as otherwise permitted by the Operating Agreement, it
will not, either directly or indirectly itself or through a wholly or
partially owned subsidiary, compete or engage in the business of wholesale or
retail financing (whether sale or lease) of RV's manufactured and/or
distributed by Fleetwood or any Affiliate thereof in the United States (the
"Restricted Territory").
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11.2 CONSIDERATION. Fleetwood acknowledges and agrees that it will
receive a direct, material and substantial benefit from the consummation of
the transactions contemplated by this Agreement and that such direct,
material and substantial benefit is good and sufficient consideration to it
for the performance of its obligations under this Article XI.
11.3 PURCHASE PRICE ALLOCATION. Fleetwood and Buyer agree to
allocate $5,000,000 of the Purchase Price set forth in Article II to the
Covenant Not to Compete. Notwithstanding any terms to the contrary in this
Article XI, the agreement by Fleetwood and Buyer to allocate $5,000,000 of
the Purchase Price in Article II to the Covenant Not to Compete shall not
limit in any way the remedies otherwise available to Buyer for any breach of
this Article XI.
11.4 REASONABLENESS OF COVENANT. Fleetwood recognizes and
acknowledges that the Covenant Not to Compete together with Fleetwood's
performance thereunder is necessary in order to protect and maintain the
proprietary interests and other legitimate business interests of Buyer and to
afford Buyer the benefit of its bargain under this Agreement and that such
covenants are reasonable in all respects.
11.5 SEPARATE COVENANTS. The parties intend for the covenants
contained in this Article XI to comply with the provisions of the laws of
each state in the United States and to be construed as a series of separate
covenants, one for each city, county, market area or business area in the
Restricted Territory, for each year. Except for geographic coverage, each
such covenant shall be deemed identical in terms to the covenants contained
herein.
11.6 EQUITABLE RELIEF. The parties hereto agree that the
obligations contained in this Article XI are of a special and unique
character which gives them a peculiar value, and that Buyer may not be
reasonably or adequately compensated in damages in an action at law in the
event that Fleetwood breaches such obligations. Fleetwood 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.
ARTICLE XII
CERTAIN CLOSING AND POST-CLOSING MATTERS
12.1 TAX MATTERS.
(a) Fleetwood will include the income of the Company and the
Subsidiary on the Fleetwood consolidated federal income Tax Returns for all
periods through the Closing Date and pay any federal income Taxes
attributable to such income. The income of the Company will be apportioned
to the period up to and including the Closing Date and the period after the
Closing Date by closing the books of the Company as
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of the end of the Closing Date in conformance with Treasury Regulations
Section 1.1502-76(b)(ii)(A). With respect to any items of income, gain,
loss, or expense incurred in a transaction described in Section 10.3(c),
Buyer and Fleetwood agree to report all such items on Buyer's federal income
tax return to the extent permitted by Treasury Regulations Section
1.1502-76(b)(ii)(B).
(b) Other than income Tax Returns described in Section
12.1(a) or with respect to periods for which a unitary or combined income Tax
Return of Fleetwood will include the operations of the Company and/or the
Subsidiary, Buyer shall prepare or cause to be prepared and file or cause to
be filed all Tax Returns of the Company and the Subsidiary for Tax periods
ending prior to the Closing Date or for a Short Period (as defined in Section
10.3(b)) and which are due after the Closing Date. Buyer shall file such Tax
Returns consistent with the manner in which Fleetwood previously filed such
Tax Returns and shall permit Fleetwood to review and comment on each such Tax
Return prior to filing and shall make such revisions to such Tax Returns as
are reasonably requested by Fleetwood. Fleetwood shall reimburse Buyer for
Taxes of the Company and the Subsidiary with respect to such periods within
fifteen (15) business days after payment by Buyer, the Company, or the
Subsidiary of such Taxes to the extent such Taxes are not accrued on the
books of the Company and the Subsidiary on the Closing Date.
(c) Buyer shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Company and the Subsidiary for Tax
periods which begin before the Closing Date and end after the Closing Date.
Fleetwood shall pay to Buyer within fifteen (15) business days after the date
on which Taxes are paid with respect to such period an amount equal to the
portion of such Taxes which relates to the Apportioned Short Period (as
defined and determined under Section 10.3(b)) to the extent such Taxes are
not accrued on the books of the Company and the Subsidiary on the Closing
Date.
(d) Any refunds or credits of Taxes of the Company and the
Subsidiary attributable to any taxable period ending on or before or any
portion of a tax period up to the Closing Date shall be for the account of
Fleetwood. In addition, to the extent that a claim for refund or a
proceeding results in a payment or credit against Tax by a taxing authority
to the Buyer, the Company, or the Subsidiary of any amount accrued on the
books of the Company and the Subsidiary on the Closing Date, or to the extent
a proceeding with a tax authority shifts a deduction or other tax benefit
from the Pre-Closing Tax Period to a Tax period following the Closing Date,
the Buyer shall pay the net tax benefit of such amount or reimburse Fleetwood
for such benefit within fifteen (15) business days after receipt or
entitlement thereto. Any refunds or credits of Taxes of the Company and the
Subsidiary attributable to any taxable period beginning after or any portion
of a tax period after the Closing Date shall be for the account of Buyer.
Any refunds or credits of Taxes of the Company for any tax period that begins
before and ends after the Closing Date shall be prorated between Fleetwood
and Buyer. Buyer and
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Fleetwood shall cooperate to effect the purposes of the foregoing provisions.
Any amounts payable to Buyer or Fleetwood shall be net of any tax cost or
benefit to the payor attributable to the receipt of such refund and/or the
payment of such amounts; in no event shall such payment exceed the amount of
the refund. Notwithstanding the foregoing, the control of the prosecution of
a claim for refund of Taxes attributable to Pre-Closing Tax Periods paid
pursuant to a deficiency assessed subsequent to the Closing Date as a result
of an audit shall be governed by the provisions of Section 10.3.
(e) Fleetwood shall be responsible for filing any amended
consolidated, combined or unitary Tax returns for taxable years ending on or
prior to the Closing Date which are required as a result of examination
adjustments made by the IRS or by the applicable state, local or foreign
taxing authorities for such taxable years as finally determined. For those
jurisdictions in which separate Tax Returns are filed by the Company, any
required amended returns resulting from such examination adjustments, as
finally determined, shall be prepared by Fleetwood and furnished to Buyer or
the Company, as the case may be, for approval (which approval shall not be
unreasonably withheld or delayed), signature and filing at least 30 days
prior to the due date for filing such returns.
(f) Fleetwood, Buyer, the Company, and the Subsidiary shall
cooperate fully, as and to the extent requested by the other party, in
connection with filing of Tax Returns pursuant to this Section 12.1 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request)
the provision of records and information which are reasonably relevant to any
such Tax Returns, audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information
and explanation of any material provided hereunder.
(g) All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement (including
any New York State Gains Tax, New York City Transfer Tax and any similar Tax
imposed in other states or subdivisions) shall be borne and paid equally by
Fleetwood and Buyer when due. Buyer will, at the joint expense of Fleetwood
and the Buyer, file all necessary Tax returns and other documentation with
respect to all such Taxes and fees, and, if required by applicable law,
Fleetwood will, and will cause its Affiliates to, join in the execution of
any such Tax returns and other documentation.
(h) Any Tax sharing agreement between Fleetwood and the
Company will be terminated as of the close of business on the Closing Date
and will have no further effect for any taxable year (whether the current
year, a future year, or any past year). Upon termination of any such Tax
sharing agreement, Fleetwood, the Company and the Subsidiary shall make any
payments required under such agreement with respect to
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any Taxes covered by such agreement and accrued as of the close of business
on the Closing Date.
(i) Buyer and Fleetwood acknowledge that Company will pay
Fleetwood $7.5 million for Deferred Tax Assets (as defined below)
representing $6.2 million for the taxable period ending April 30, 1995 for
which returns have been filed and $1.3 million estimated amount for the
taxable period beginning May 1, 1995 and ending as of the close of business
on the Closing Date for which returns have not been filed (hereinafter the
"Interim Period"). Within 60 days after the Tax Returns are filed for the
Interim Period, Buyer shall cause the Company to pay Fleetwood, or Fleetwood
shall pay the Company, as appropriate, an amount reflecting the difference
between (i) the $1.3 million estimated amount of Deferred Tax Assets for the
Interim Period and (ii) the actual amount for the Deferred Tax Assets as
ultimately reflected in the Tax Returns for the Interim Period. For purposes
of this Section 12.1(i), Deferred Tax Assets refers to the $7.5 million
reflected in Schedule 3.12 for the deferred tax payments made by Fleetwood on
behalf of the Company in excess of amounts reimbursed by the Company to
Fleetwood.
12.2 ACCESS TO FORMER BUSINESS RECORDS. For a period of five (5)
years following the Closing, Buyer will retain all Records of the Company and
the Subsidiary arising prior to the Closing in accordance with the Buyer's
then existing records retention policies and/or procedures; provided,
however, in the case of Records relating to Taxes and Tax Returns of the
Company and the Subsidiary, the period shall be six (6) years or, if notified
by Fleetwood, until the termination of any applicable statute of limitations.
During such period, Buyer will afford authorized representatives of Fleetwood
access to all of such Records at reasonable times and during normal business
hours at the principal business office of the Company, or at such other
location or locations at which such Records may be stored or maintained from
time to time, and will permit such representatives to make abstracts from, or
copies of, any of such Records, or to obtain temporary possession of any
thereof as may be reasonably required by Fleetwood at Fleetwood's sole cost
and expense. During such period, Buyer will, at Fleetwood's expense,
cooperate with Fleetwood in furnishing information, evidence, testimony, and
other reasonable assistance in connection with any action, proceeding, or
investigation relating to the business of the Company prior to the Closing.
12.3 USE OF TRADEMARK AND TRADE NAMES. Notwithstanding anything to
the contrary in this Agreement, the Company may continue to use the name
"Fleetwood Credit Corp." and the Subsidiary may continue to use the name
"Fleetwood Credit Receivables Corp." and the name "Fleetwood" to the extent
permitted pursuant to the terms of the Operating Agreement.
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ARTICLE XIII
TERMINATION
13.1 TERMINATION. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Fleetwood and Buyer;
(b) by Fleetwood if any of the conditions set forth in
Sections 8.1 or 8.3 shall have become incapable of fulfillment, and shall not
have been waived by Fleetwood;
(c) by Buyer if any of the conditions set forth in Sections
8.1 or 8.2 shall have become incapable of fulfillment, and shall not have
been waived by Buyer; or
(d) by either party hereto, if the Closing does not occur on
or prior to 180 days after the date of this Agreement, unless the delay is
caused by the failure of Fleetwood or Buyer to fulfill their respective
obligations hereunder.
13.2 NOTICE OF TERMINATION. In the event of termination by
Fleetwood or Buyer pursuant to this Article XIII, written notice thereof
shall forthwith be given to the other party and the transactions contemplated
by this Agreement shall be terminated, without further action by either
party. If the transactions contemplated by this Agreement are terminated as
provided herein:
(a) Buyer shall promptly return all documents and copies and
other material received directly or indirectly from Fleetwood or the Company
relating to the transactions contemplated hereby, whether so obtained before
or after the execution hereof, to Fleetwood; and
(b) all confidential information received by Buyer with
respect to the businesses of Fleetwood and the Company shall be treated in
accordance with the Confidentiality Agreement which shall remain in full
force and effect notwithstanding the termination of this Agreement.
13.3 EFFECT OF TERMINATION. If this Agreement is terminated and
the transactions contemplated hereby are abandoned as described in this
Article XIII, this Agreement shall become void and of no further force and
effect, except for the provisions of (i) Section 7.1 relating to the
obligation of Buyer to keep confidential certain information and data
obtained by it, (ii) Section 14.4 relating to certain expenses, (iii) Section
14.5 relating to attorneys' fees and expenses, (iv) Section 5.2 relating to
publicity, (v) Section 14.10 relating to finder's fees and broker's fees and
(vi) this
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Article XIII; provided, however, that if any party hereto willfully fails to
perform its obligations herein or willfully neglects to perform acts that are
necessary to the fulfillment of conditions hereof or willfully prevents the
fulfillment of a condition hereof, the other party may seek any available
legal and equitable remedies in addition to those provided herein.
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one Business Day in the
case of express mail or overnight courier service), as follows:
(i) if to Buyer:
Associates Commercial Corporation
300 East Carpenter Freeway
Irving, Texas 75062
Attention: President - Housing Services and
Communications Finance Group
with a copy to:
Associates Commercial Corporation
300 East Carpenter Freeway
Irving, Texas 75062
Attention: General Counsel
and a copy to:
Associates Corporation of North America
250 East Carpenter Freeway
Irving, Texas 75062
Attention: General Counsel
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(ii) if to Fleetwood:
Fleetwood Enterprises, Inc.
3125 Myers Street
Riverside, California 92503-5527
Attention: William H. Lear, Esq.
General Counsel
with a copy to:
Gibson, Dunn & Crutcher
Jamboree Center, 4 Park Plaza
Irvine, California 92714-8557
Attention: Robert E. Dean, Esq.
14.2 ASSIGNMENT. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable (including by operation of
law in connection with a merger, or sale of substantially all the assets, of
Buyer) by Buyer prior to the Closing, except to a corporation which directly
or through one or more wholly-owned subsidiaries owns 100% of the voting
stock of Buyer), without the prior written consent of Fleetwood.
14.3 NO THIRD-PARTY BENEFICIARIES. Except as provided in Article X
as to Indemnified Persons, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person or entity, other
than the parties hereto and such assigns, any legal or equitable rights
hereunder.
14.4 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise provided in this Agreement, all
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees, costs or expenses.
14.5 ATTORNEYS' FEES. Should any litigation be commenced
concerning this Agreement or the rights and duties of any party with respect
to it, the party prevailing shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for such party's attorneys'
fees and expenses determined by the court in such litigation or in a separate
action brought for that purpose.
14.6 AMENDMENTS. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by both parties hereto.
14.7 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings
contained in this Agreement, in any Exhibit or Schedule hereto and in the
table of contents to this Agreement, are for reference purposes only and
shall not affect in any way the meaning or
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interpretation of this Agreement. Any matter disclosed in one Schedule
hereto shall be deemed incorporated by reference into each other Schedule
hereto and disclosed in each such Schedule. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit, but not otherwise defined therein, shall
have the meaning as defined in this Agreement.
14.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which taken together
shall constitute one and the same instrument.
14.9 ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreement and the Operating Agreement contain the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior oral and written agreements and understandings
relating to the subject matter hereof.
14.10 FINDERS AND BROKERS. Fleetwood represents and warrants that
the only broker or finder that has acted for Fleetwood in connection with
this Agreement or the transactions contemplated hereby or that may be
entitled to any brokerage fee, finder's fee or commission in respect thereof
is PaineWebber, Inc. and that Fleetwood will pay all fees or commissions
which may be payable to PaineWebber, Inc. Buyer represents and warrants that
it has retained no such brokers or finders in connection with this Agreement
or the transactions contemplated hereby and that no such party is entitled to
any such fee or commission from Buyer in connection with this Agreement or
the transactions contemplated hereby.
14.11 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision hereof.
14.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
14.13 CONSENT TO JURISDICTION: FORUM SELECTION. The parties agree
that all actions or proceedings arising in connection with this Agreement
shall be tried and litigated exclusively in the Federal courts located in
either the County of Orange or the County of Riverside, State of California.
The aforementioned choice of venue is intended by the parties to be mandatory
and not permissive in nature, thereby precluding the possibility of
litigation between the parties with respect to or arising out of this
Agreement in any jurisdiction other than those specified in this paragraph.
Each party hereby waives any right it may have to assert the doctrine of
forum non conveniens or similar doctrine or to
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object to venue with respect to any proceeding brought in accordance with
this paragraph, and stipulates that the Federal courts located in the County
of Orange or the County of Riverside, State of California shall have in
personam jurisdiction and venue over each of them for the purpose of
litigating any dispute, controversy or proceeding arising out of or related
to this Agreement. Each party hereby authorizes and accepts service of
process sufficient for personal jurisdiction in any action against it as
contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
as set forth in this Agreement, or in the manner set forth in Section 14.1 of
this Agreement for the giving of notice. Any final judgment rendered against
a party in any action or proceeding shall be conclusive as to the subject of
such final judgment and may be enforced in other jurisdictions in any manner
provided by law.
14.14 JURY WAIVER. FLEETWOOD AND BUYER EACH HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY MATTER IN ANY WAY ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE INSTRUMENTS TO BE EXECUTED IN
CONNECTION HEREWITH.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
FLEETWOOD ENTERPRISES, INC.
By: /s/ Paul M. Bingham
-----------------------------------------
Name:: Paul M. Bingham
---------------------------------------
Title: Executive Vice President
---------------------------------------
ASSOCIATES COMMERCIAL CORPORATION
By: /s/ Rocco A. Macri
-----------------------------------------
Name: Rocco A. Macri
---------------------------------------
Title: Executive Vice President
---------------------------------------
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EXHIBITS
Exhibit A Fleetwood Operating Agreement
Exhibit B Form of Opinions of Gibson, Dunn & Crutcher, WilliamH. Lear
and Richard de la Pena
Exhibit C Form of Opinion of Francis C. Suarino
Exhibit D Severance Bonus Terms and Conditions
Exhibit E Retention Bonus Terms and Conditions
SCHEDULES
Schedule 3.4 Restrictions on Company Shares and Subsidiary Shares
Schedule 3.9 No Breach or Default; Consents and Approvals
Schedule 3.10 Exceptions to Financial Statements
Schedule 3.12 Certain Changes
Schedule 3.13 Taxes
Schedule 3.13(f) Certain Tax Elections; Carryovers
Schedule 3.14 Liens
Schedule 3.15 Leasehold Interests
Schedule 3.16 Intellectual Property
Schedule 3.17 Material Contracts
Schedule 3.18 Material Litigation
Schedule 3.19 Employee Benefit Plans
Schedule 3.20 Company and Subsidiary Employees
Schedule 3.25 Securitization Transactions
Schedule 3.27 Finance Agreements
Schedule 4.2 No Breach or Default; Consents and Approvals
Schedule 6.3(a) Insurance Policies Maintained by the Company
Schedule 6.3(b) Insurance Policies Maintained by Fleetwood
Schedule 8.2 Consents and Regulatory Approvals
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Exhibit 2.2
ASSIGNMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged, Associates Commercial Corporation ("Assignor") assigns
all its right, title, interest and obligations under that certain Stock
Purchase Agreement dated as of April 22, 1996 between Assignor and Fleetwood
Enterprises, Inc. to Associates First Capital Corporation.
Dated: May 24, 1996
--------------------------------
ASSOCIATES COMMERCIAL CORPORATION
BY: /s/ Rocco A. Macri
--------------------------------
NAME: Rocco A. Macri
--------------------------------
TITLE: Executive Vice President
--------------------------------
ACCEPTED:
ASSOCIATES FIRST CAPITAL CORPORATION
BY: /s/ Richard W. Ulrich
--------------------------------
NAME: Richard W. Ulrich
--------------------------------
TITLE: Senior Vice President
--------------------------------
<PAGE>
Exhibit 99.1
FLEETWOOD ENTERPRISES, INC.
PRO FORMA FINANCIAL STATEMENTS
The pro forma financial statements attached hereto are unaudited and set
forth the financial position of Fleetwood at April 28, 1996 and the results
of its operations for the year then ended. For pro forma purposes, the
financial position of FCC and the results of operations of FCC for the year
ended April 28, 1996 have been excluded from Fleetwood's pro forma financial
statements. The FCC financial position and results of operations are
represented by the amounts subtracted from the Consolidated Statement of
Operations and Consolidated Balance Sheet columns in the Pro Forma
Adjustments columns. The pro forma balance sheet assumes the FCC disposition
occurred at the balance sheet date. The pro forma statement of operations
assumes the FCC disposition occurred on May 1, 1995. The pro forma financial
statements have not been compiled, reviewed or audited by independent
auditors. The disposition resulted in a gain to Fleetwood on the sale of the
FCC stock of approximately $55 million after selling expenses.
The pro forma statement of operations does not purport to be indicative
of the operating results which would have been achieved had the disposition
of FCC occurred on May 1, 1995 and should not be construed as representative
of future operating results.
<PAGE>
FLEETWOOD ENTERPRISES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
APRIL 28, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CONSOLIDATED PRO FORMA
STATEMENT OF PRO FORMA STATEMENT OF
OPERATIONS ADJUSTMENTS OPERATIONS
------------- ----------- -------------
<S> <C> <C> <C>
Operating Revenues:
Manufacturing sales $2,809,277 $ -- $2,809,277
Finance revenues 52,211 (52,211) --
---------- ---------- ----------
2,861,488 (52,211) 2,809,277
Cost and Expenses:
Cost of products sold 2,276,595 -- 2,276,595
Operating expenses 413,120 (11,970) 401,150
Finance interest expense 23,747 (23,747) --
---------- ---------- ----------
2,713,462 (35,717) 2,677,745
Operating income 148,026 (16,494) 131,532
Other Income (Expense):
Loss on disposition of European
subsidiary (28,000) -- (28,000)
Investment income 14,032 14,102 28,134
Interest expense (1,429) (5,760) (7,189)
Other (5,142) -- (5,142)
---------- ---------- ----------
(20,539) 8,342 (12,197)
Income before provision for income
taxes 127,487 (8,152) 119,335
Provision for income taxes (48,329) 3,449 (44,880)
Minority interest in net loss of
subsidiary 451 -- 451
---------- ---------- ----------
Net income $ 79,609 $ (4,703) $74,906
---------- ---------- ----------
---------- ---------- ----------
Net income per Common and
equivalent share $ 1.71 $ .10 $ 1.61
---------- ---------- ----------
---------- ---------- ----------
Dividends declared per share of
Common Stock outstanding $.60
----------
----------
Common and equivalent shares
outstanding 46,469
----------
----------
</TABLE>
See accompanying notes.
2
<PAGE>
FLEETWOOD ENTERPRISES, INC.
UNAUDITED PRO FORMA BALANCE SHEET
APRIL 28, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
CONSOLIDATED PRO FORMA PRO FORMA
BALANCE SHEET ADJUSTMENTS BALANCE SHEET
------------- ----------- -------------
<S> <C> <C> <C>
ASSETS
Cash $ 38,436 $ 133,956 $ 172,392
Investments 320,355 (48,217) 272,138
Receivables:
Manufacturing 173,380 -- 173,380
Finance 334,302 (334,302) --
Inventories 137,899 -- 137,899
Property, plant and equipment 266,895 (308) 266,587
Other assets 158,381 (12,689) 145,692
---------- --------- ----------
TOTAL ASSETS $1,429,648 $(261,560) $1,168,088
---------- --------- ----------
---------- --------- ----------
LIABILITIES AND STOCK-
HOLDERS' EQUITY
Accounts payable $ 104,850 $ -- $ 104,850
Employee compensation and
benefits 111,016 (1,464) 109,552
Federal and state taxes on income (14,547) 17,541 2,994
Long-term debt 370,829 (290,829) 80,000
Other liabilities 208,363 (22,085) 186,278
---------- --------- ----------
TOTAL LIABILITIES 780,511 (296,837) 483,674
STOCKHOLDERS' EQUITY 649,137 35,277 684,414
---------- --------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,429,648 $(261,560) $1,168,088
---------- --------- ----------
---------- --------- ----------
</TABLE>
See accompanying notes.
3
<PAGE>
FLEETWOOD ENTERPRISES, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1) The pro forma Statement of Operations has been prepared under the
assumption that the sale of FCC closed on May 1, 1995, the beginning of
fiscal year 1996; therefore, all of the FCC operating income for 1996
has been eliminated. It is assumed that $80 million of long-term debt
assumed by Fleetwood on behalf of FCC on April 22, 1996 was outstanding
for the entire year. Accordingly, interest expense has been recognized
for all of fiscal 1996. It is further assumed that Fleetwood had the
cash proceeds from the sale of FCC ($156.6 million) and an additional
$80 million from the debt assumption available for investment throughout
the year.
2) The pro forma Balance Sheet has been prepared under the assumption that
the sale of FCC closed on April 28, 1996. Adjustments have been made to
remove the accounts of FCC from the consolidated amounts. The net
proceeds from the sale of FCC have been included in total assets and the
gain on sale has been added to stockholders' equity.
3) The historical consolidated financial information that will appear in
the Company's Form 10-K for fiscal 1996 presents FCC as a discontinued
operation. The historical information presented here is shown on a full
consolidation basis including FCC.
4
<PAGE>
Exhibit 99.2
[LETTERHEAD]
FLEETWOOD ANNOUNCES COMPLETION OF
FINANCE COMPANY SALE
RIVERSIDE, Calif., May 24, 1996 -- Fleetwood Enterprises, Inc., the
nation's leading producer of manufactured housing and recreational vehicles,
announced today that it has completed the sale of Fleetwood Credit Corp., its
RV finance subsidiary. The Company previously announced on April 22, 1996
that it had signed an agreement to sell the subsidiary to Associates First
Capital Corporation in a cash transaction valued at $157 million. Fleetwood
said today it would realize a gain on the sale of approximately $55 million,
after selling expenses, that will be recognized in its first quarter which
ends July 28, 1996.
Commenting on the transaction, Fleetwood President Glenn Kummer said,
"Now that the sale is completed, we look forward to working with Associates
to facilitate their efforts in providing competitive financing programs and
excellent service to Fleetwood RV dealers."
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