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AMENDMENT NO. 2 TO
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITTES EXCHANGE ACT OF 1934
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14C-5(D)(2))
[X] Definitive Information Statement
TRANS LEASING INTERNATIONAL, INC.
(Name of Registrant as Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
Filing fee: $9,216.40. Fee determined pursuant to Rule 0-11(c)(2) based
upon bona fide estimate of aggregate proceeds to the Company of
$46,082,009.50 upon the sale of substantially all of its assets.
(4) Proposed maximum aggregate value of transaction: $46,082,009.50
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _____________________________________________
(2) Form, Schedule or Registration Statement No.: _______________________
(3) Filing Party: _______________________________________________________
(4) Date Filed: _________________________________________________________
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TRANS LEASING INTERNATIONAL, INC.
3000 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
(847) 272-1000
INFORMATION STATEMENT
INTRODUCTION
This Information Statement is being furnished to holders of shares of common
stock, par value $.01 per share (the "Common Stock"), of Trans Leasing
International, Inc., a Delaware corporation (the "Company"), in connection
with the irrevocable written consent of the holders of a majority of the
Company's outstanding Common Stock to:
(i) The sale (the "Proposed Sale") to General Electric Capital
Corporation, a New York corporation (the "Purchaser"), of substantially all
of the assets of the Company and its subsidiaries, pursuant to an Asset
Purchase Agreement, dated as of August 27, 1997 (the "Asset Purchase
Agreement"), by and among the Purchaser, the Company and the Company's
subsidiaries for $46,082,009 in cash (the "Purchase Price"), plus the
payment by the Purchaser of certain debt obligations and expenses of the
Company and the assumption by the Purchaser of certain liabilities relating
to the business of the Company and its subsidiaries as more fully described
in this Information Statement. See "The Asset Purchase Agreement-- Purchase
Price." A copy of the Asset Purchase Agreement is attached hereto as Annex
A.
(ii) The change of the Company's name following the Proposed Sale to
"TLII Liquidating Corporation."
(iii) The dissolution and liquidation of the Company and the payment of
the net proceeds of the Proposed Sale to the holders of the Common Stock
pursuant to a Plan of Liquidation and Dissolution (the "Plan") as more
fully described in the Information Statement. A copy of the Plan is
attached hereto as Annex B.
This Information Statement is first being mailed to stockholders on or about
November 5, 1997. This Information Statement is furnished for information
purposes only. THE COMPANY IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
THE PROPOSED SALE IS CONDITIONED UPON, AMONG OTHER THINGS, THE SECURING OF
ALL NECESSARY GOVERNMENTAL APPROVALS AND CONSENTS AND THE CONSENT OF CERTAIN
PARTIES TO AGREEMENTS WITH THE COMPANY AND ITS SUBSIDIARIES. THERE CAN BE NO
ASSURANCE THAT THE CONDITIONS TO THE PROPOSED SALE WILL BE SATISFIED OR WAIVED
AND THAT THE PROPOSED SALE WILL BE CONSUMMATED. SEE "THE ASSET PURCHASE
AGREEMENT--CONDITIONS" AND "THE PROPOSED SALE--REGULATORY MATTERS."
Since the Proposed Sale involves a sale of assets, the stockholders of the
Company will retain their equity interest in the Company following its
consummation. After the Proposed Sale, the Company will dissolve and liquidate
and pay out the net proceeds of the Proposed Sale to the holders of the Common
Stock as a liquidating dividend pursuant to the Plan. See "The Asset Purchase
Agreement--Assets to Be Sold" and "The Proposed Sale--Use of Proceeds;
Dissolution and Liquidation Following the Proposed Sale."
THE INFORMATION CONTAINED HEREIN UNDER "SUMMARY--THE COMPANIES--GENERAL
ELECTRIC CAPITAL CORPORATION" AND "CERTAIN INFORMATION CONCERNING THE
PURCHASER" HAS BEEN SUPPLIED BY THE PURCHASER. NO PERSONS HAVE BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS INFORMATION STATEMENT
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AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center,
13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. The Commission
maintains a Web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission, including the Company. The address is http://www.sec.gov. Copies
of such material also can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. The Common Stock is
traded on the Nasdaq National Market. Reports and other information concerning
the Company may be inspected at the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.............................................................. 1
AVAILABLE INFORMATION..................................................... 2
SUMMARY................................................................... 4
THE COMPANIES............................................................. 4
THE STOCKHOLDER CONSENT................................................... 4
THE PROPOSED SALE......................................................... 5
THE STOCKHOLDER CONSENT................................................... 8
THE PROPOSED SALE......................................................... 8
Background of the Proposed Sale......................................... 8
Opinion of Rodman & Renshaw............................................. 9
Approval of the Board of Directors; Reasons for the Proposed Sale and
Dissolution and Liquidation............................................ 12
Use of Proceeds; Dissolution and Liquidation Following the Proposed
Sale................................................................... 13
Certain Tax Consequences................................................ 14
Regulatory Matters...................................................... 14
Interests of Certain Persons in the Proposed Sale....................... 15
No Appraisal Rights..................................................... 15
Accounting Treatment.................................................... 15
THE ASSET PURCHASE AGREEMENT.............................................. 16
Assets to Be Sold....................................................... 16
Purchase Price.......................................................... 17
Representations and Warranties.......................................... 17
Certain Covenants....................................................... 18
Exclusivity............................................................. 19
Employment and Employee Benefit Plans................................... 19
Conditions.............................................................. 19
Termination............................................................. 20
CERTAIN INFORMATION CONCERNING THE PURCHASER.............................. 20
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION.............................. 20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............ 21
MARKET PRICE DATA......................................................... 21
DOCUMENTS INCORPORATED BY REFERENCE....................................... 22
Annexes
A.Asset Purchase Agreement.............................................. A-1
B.Plan of Liquidation and Dissolution................................... B-1
C.Opinion of Rodman & Renshaw, Inc...................................... C-1
</TABLE>
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SUMMARY
The following is a summary of certain information contained elsewhere in this
Information Statement. Reference is made to, and this summary is qualified in
its entirety by, the more detailed information contained in this Information
Statement and the Annexes hereto. Unless the context otherwise requires,
references in this Information Statement to the "Company" shall be deemed to
refer to the Company together with its subsidiaries and references in this
Information Statement to the "Purchaser" shall be deemed to refer to the
Purchaser together with its subsidiaries. Unless otherwise defined herein,
capitalized terms used in this summary have the respective meanings ascribed to
them elsewhere in this Information Statement. Stockholders are urged to read
this Information Statement and the Annexes hereto in their entirety.
THE COMPANIES
The Company............... The Company provides capital equipment leasing
services to the medical and commercial
marketplaces and also provides automobile
leasing. Healthcare equipment represents the
largest portion of the Company's business. The
principal executive offices of the Company are
located at 3000 Dundee Road, Northbrook IL
60062, and its telephone number is (847) 272-
1000.
The Purchaser............. The Purchaser, a subsidiary of the General
Electric Company, is a global diversified
financial services company which provides
equipment management, mid-market and
specialized financing, speciality insurance and
a variety of consumer services such as car
leasing, home mortgage and credit cards. The
principal executive offices of the Purchaser's
Vendor Financial Services Division, which is
engaged in financing small ticket and middle
market commercial equipment and will operate
the Company's business after the closing, are
located at 55 Federal Road, Danbury CT 06810,
and its telephone number is (800) 876-2033.
THE STOCKHOLDER CONSENT
Consent Required.......... Pursuant to Sections 271 and 275 of the
Delaware General Corporation Law (the "DGCL"),
the written consent of the holders of a
majority of the shares of Common Stock
outstanding and entitled to vote is required to
approve the Proposed Sale and the Plan. The
Estate of Richard Grossman, Deceased, as to
whose shares Mr. Larry S. Grossman, Chairman of
the Board and Chief Executive Officer of the
Company, has voting power, Mr. Larry S.
Grossman individually and Mr. Clifford V.
Brokaw, III, a director of the Company
(collectively, the "Majority Holders"), hold
approximately 50.6% in the aggregate of the
outstanding Common Stock and have irrevocably
consented in writing to the Proposed Sale and
the Plan, which consent satisfies the Section
271 and Section 275 requirements. The granting
by the Majority Holders of such consent was
required as a condition to the Purchaser's
willingness to enter into the Asset Purchase
Agreement. After the execution of the Asset
Purchase Agreement, the Majority Holders
consented pursuant to Section 242 of the DGCL
to amend the Company's certificate of
incorporation after the Proposed Sale to change
the Company's name to "TLII Liquidating
Corporation". See "The Stockholder Consent."
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THE PROPOSED SALE
Assets to Be Sold......... Pursuant to the Asset Purchase Agreement, the
Company and its subsidiaries have agreed to
sell to the Purchaser substantially all of
their assets and business. See "The Asset--
Purchase Agreement--Assets to Be Sold."
Purchase Price............ The Asset Purchase Agreement provides for the
sale by the Company to the Purchaser of
substantially all of the assets and business of
the Company and its subsidiaries for
$46,082,009 in cash plus the payment by the
Purchaser of certain debt obligations and
expenses of the Company and the assumption by
the Purchaser of certain liabilities, all as
more fully described in this Information
Statement. See "The Asset Purchase Agreement--
Purchase Price."
Closing of the Proposed The consummation of the Proposed Sale (the
Sale...................... "Closing") will occur on December 11, 1997 or,
if later, at least five business days following
the satisfaction or waiver of conditions
contained in the Asset Purchase Agreement. See
"The Asset Purchase Agreement--Conditions."
Approval by the Board of The Board of Directors believes that the
Directors................. Proposed Sale and the liquidation and
dissolution of the Company are in the best
interests of the Company and has unanimously
approved the Asset Purchase Agreement and the
Plan. The Board of Directors' approval of the
Proposed Sale is based upon a number of factors
described in this Information Statement. See
"The Proposed Sale--Approval by the Board of
Directors; Reasons for the Proposed Sale" and
"The Proposed Sale--Interests of Certain
Persons in the Proposed Sale."
Opinion of Rodman & Rodman & Renshaw, Inc. ("Rodman & Renshaw") was
Renshaw.................. engaged to render an opinion as to the fairness
from a financial point of view of the
consideration to be received by the
stockholders of the Company upon the closing of
the Asset Purchase Agreement. On August 27,
1997, the date the Board of Directors approved
the Asset Purchase Agreement, Rodman & Renshaw
delivered to the Board of Directors its opinion
to the effect that, as of the date of its
opinion and subject to the assumptions made,
matters considered and limits of the review
undertaken, as set forth in such opinion, the
sum of $10.00 per share, which amount senior
management of the Company informed Rodman &
Renshaw was expected to be the approximate
amount to be distributed per share to holders
of Common Stock out of the net proceeds of the
Proposed Sale, is fair to such stockholders
from a financial point of view.
A copy of the opinion of Rodman & Renshaw is
attached to this Information Statement as Annex
C. The attached opinion sets forth the
assumptions made, matters considered, the scope
and limitations of the review undertaken and
procedures followed by Rodman & Renshaw, and
should be read in its entirety. See "The
Proposed Sale--Opinion of Rodman & Renshaw."
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Use of Proceeds;
Dissolution and
Liquidation Following
the Proposed Sale........
Of the $46,082,009 in gross proceeds from the
Proposed Sale, approximately $5.2 million will
be used to pay expenses, including for the
cancellation of vested employee stock options,
severance and employment agreements and
director warrants. It is currently anticipated
that the remaining net proceeds, after the
payment of other expenses, will be
approximately $10.00 per share of Common Stock
and that such an amount will be paid early in
1998. See "The Proposed Sale--Use of Proceeds;
Dissolution and Liquidation Following the
Proposed Sale."
Certain Tax Consequences.. The Proposed Sale will be a taxable transaction
to the Company for United States Federal income
tax purposes. However, the Purchaser has agreed
to pay, subject to certain limitations, the
Company's income taxes on the Proposed Sale.
Distributions to the stockholders of the net
proceeds of the Proposed Sale will result in
taxable gain to them. See "The Proposed Sale--
Certain Tax Consequences."
Conditions to the The obligations of the Company and the
Proposed Sale............ Purchaser to consummate the Proposed Sale are
subject to the satisfaction or waiver of
certain conditions customary to a transaction
of this nature, including, among others, the
occurrence of certain events described in "The
Proposed Sale--Regulatory Matters;" obtaining
all governmental approvals; the absence of
orders of any court or governmental entity that
enjoin, restrain or prohibit the Asset Purchase
Agreement or the consummation of the
transactions contemplated by the Asset Purchase
Agreement; the receipt of consents to the
Proposed Sale of third parties who have
agreements with the Company; and the Company
and the purchased assets and business not
having experienced a material adverse change,
as well as other conditions. See "The Asset
Purchase Agreement-- Conditions."
Regulatory Matters........ The Company and the Purchaser's parent
corporation each filed notification and report
forms under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR
Act") and the applicable waiting period under
the HSR Act was terminated on September 26,
1997. See "The Proposed Sale--Regulatory
Matters."
Termination............... The Asset Purchase Agreement may be terminated
in certain circumstances, including the
following: (i) by mutual consent of the Company
and the Purchaser; (ii) by either the Company
or the Purchaser if the Closing does not occur
on or before January 31, 1998; (iii) by either
the Company or the Purchaser if any court or
other governmental body shall have issued a
final order prohibiting the transactions
contemplated by the Asset Purchase Agreement;
or (iv) by either the Company or the Purchaser
if there shall have been a breach of any
covenant, representation or warranty set forth
in the Asset Purchase Agreement which would
permit the terminating party to decline to
close such transactions. See "The Asset
Purchase Agreement--Termination."
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Interests of Certain
Persons in the Proposed
Sale.....................
In connection with the Proposed Sale, the
Company and the Purchaser have entered into
agreements with the Company's Chairman and
Chief Executive Officer and President and Chief
Operating Officer providing for, among other
things, severance and noncompetition covenant
payments to them. Such agreements provide,
among other things, for noncompetition payments
to the Chairman and Chief Executive Officer of
$465,947 per year for seven years and to the
President and Chief Operating Officer of
$60,973 per year for seven years and for
severance payments by the Company of $440,000
to the Chairman and Chief Executive Officer and
$665,000 to the President and Chief Operating
Officer. The Board has also approved the
transfer at closing to the parents of the
Chairman and Chief Executive Officer of life
insurance policies the Company has maintained
on their behalf, which policies have a cash
surrender value of $400,327. In addition, the
Purchaser has agreed, subject to certain
limitations, to indemnify the directors and
officers of the Company against claims made
against them after the closing. For information
regarding such matters and other information
relating to the interests of certain persons in
the Proposed Sale, see "The Proposed Sale--
Interests of Certain Persons in the Proposed
Sale," and "The Asset Purchase Agreement--
Certain Covenants--Indemnification."
No Appraisal Rights....... Under the DGCL, holders of shares of Common
Stock will not be entitled to appraisal rights
in connection with the Proposed Sale.
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THE STOCKHOLDER CONSENT
Section 271 of the DGCL permits a Delaware corporation to sell all or
substantially all of its assets if the sale is approved and Section 275 of the
DGCL permits a Delaware corporation to dissolve if the dissolution is approved
by stockholders holding a majority of the shares entitled to vote thereon.
The Majority Stockholders own approximately 50.6% of the outstanding Common
Stock. In order to satisfy a condition to the Purchaser's willingness to enter
into the Asset Purchase Agreement, the Majority Stockholders irrevocably
consented in writing to the Asset Purchase Agreement and the Plan pursuant to
Section 228 of the DGCL. This written consent satisfies the Section 271 and
Section 275 stockholder approval requirements. After the execution of the
Asset Purchase Agreement, the Majority Holders consented pursuant to Section
242 of the DGCL to amend the Company's certificate of incorporation after the
Proposed Sale to change the Company's name to "TLII Liquidating Corporation."
Accordingly, no vote of any other stockholder is necessary and stockholder
votes are not being solicited.
Subject to the terms and conditions of the Asset Purchase Agreement, it is
contemplated that the Proposed Sale will be consummated not earlier than 20
days after the mailing of this Information Statement and following
satisfaction or waiver of the conditions contained in the Asset Purchase
Agreement. See "The Asset Purchase Agreement--Conditions." Thereafter, the
Company will be dissolved and the net proceeds will be distributed to the
stockholders. This Information Statement is first being mailed to stockholders
on or about November 5, 1997.
THE PROPOSED SALE
BACKGROUND OF THE PROPOSED SALE
The terms of the Proposed Sale are the result of arm's-length negotiations
between the Purchaser and the Company. For many years, the Common Stock traded
in what the Board of Directors believed to be a low range relative to
comparable companies. For example, in the fiscal year ended June 30, 1996, the
high and low sales prices per share of Common Stock were $2.88 and $3.88,
respectively. The Board discussed this from time to time and it was
attributed, at least in part, to a general lack of research coverage by
securities analysts and to a small trading volume relative to the Company's
size due to the large number of shares held by Richard Grossman, who was the
Company's largest stockholder and for many years its Chairman, Chief Executive
Officer and President prior to his death in October 1996. The Company had
taken steps to attempt to improve stockholder value prior to Richard
Grossman's death, such as the possible sale of the Company, including pursuing
a sale in 1993 which was not completed, and a Common Stock buyback program.
Upon Richard Grossman's death, the Board of Directors elected Larry S.
Grossman, Richard Grossman's brother and the administrator of his estate,
Chairman of the Board and Chief Executive Officer of the Company because of
his experience and familiarity with the Company and its business. He was a
Vice President of the Company from its founding in 1972 to 1981, its President
from 1981 to 1982 and a director of the Company from 1972 to 1981 and since
1991. The Board also elected Michael J. Heyman, who had been a director of the
Company since 1991, as the Company's President and Chief Operating Officer.
Because of Richard Grossman's death and the attendant publicity, various
companies approached the Company to suggest possible acquisitions of the
Company in the fall of 1996, but none of such proposals was definitive and
those which mentioned price were at prices at or slightly above the then
market price range of about $3.63 to $5.88 and therefore were not considered
worthy of pursuit by the Board.
The Purchaser first approached Company management in January 1997. During
the following months the Purchaser periodically contacted Company management
and requested information which was provided. In the course of discussions
with the Purchaser's representatives, management advised them that any
transaction would have to involve a substantial premium to the book value of
the Company's assets, would have to be structured like most sales of public
companies to minimize contingencies and residual liabilities for the Company
and its stockholders, would require an offer of employment to all of the
Company's employees and would require
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arrangements with Messrs. Grossman and Heyman, whose services the Purchaser
did not require if it acquired the Company, similar in value to those
described under "--Interests of Certain Persons in the Proposed Sale." The
Purchaser conducted a due diligence investigation and discussed possible terms
and structures for a transaction with the Company. In May 1997, the Purchaser
proposed that the structure for any transaction be a purchase of assets. This
approach was initially rejected by the Company due to its potential for
exposing the Company's directors and stockholders to liabilities not assumed
by the Purchaser and due to its complexity. The Purchaser made various
revisions to its proposal to address the Company's objective of having any
transaction be similar in effect for its stockholders to a tender offer or
cash merger with few or no indemnity obligations and little or no potential
stockholder liability. Throughout this process, the Board members were kept
generally informed of the status of the talks and the topic was discussed at
the June 5, 1997 Board meeting. When significant progress had been made in the
negotiations with the Purchaser to the point where senior management felt that
it could recommend a transaction to the directors, a Board meeting was
scheduled.
The Board met on August 22, 1997 to consider the Proposed Sale and
liquidation and dissolution of the Company. Such meeting was attended by all
of the directors as well as the Company's Vice President--Finance, Stephen
Hupp, and representatives of Kirkland & Ellis, legal counsel to the Company,
and Rodman & Renshaw. The Board was apprised of the status of negotiations of
the Asset Purchase Agreement and related documents, the principal terms of the
transactions, the DGCL and case law regarding directors' duties in connection
with the sale of a company and dissolution and liquidation procedures and of
Rodman & Renshaw's analysis discussed below under "--Opinion of Rodman &
Renshaw" and were provided with written materials regarding such matters. At
this meeting, the Board was apprised of recent inquiries from other companies
regarding a business combination with the Company. None of these companies had
made any definitive proposal and the Board did not consider that any would be
likely to make a proposal as attractive or as certain of completion as the
Purchaser's proposal. The Board next met on August 25, 1997 and at such
meeting received an update on the status of negotiations and were provided
with drafts of the agreements with Messrs. Grossman and Heyman described in
"--Interests of Certain Persons in the Proposed Sale" and a draft of the Plan
and the directors were given the opportunity to discuss such matters and
continue their discussions from the preceding meeting. All of the directors,
as well as the others mentioned above, also attended this meeting. After the
negotiations with the Purchaser were concluded, the Board met again on August
27, 1997 and unanimously approved the Proposed Sale, the Asset Purchase
Agreement and related documents, the dissolution and liquidation of the
Company and the Plan.
OPINION OF RODMAN & RENSHAW
At the meeting of the Board of Directors held on August 27, 1996, Rodman &
Renshaw delivered its opinion to the effect that, as of such date, based upon
the assumptions made, matters considered and limits of the review undertaken,
as set forth in such opinion, the sum of $10.00 per share of Common Stock,
which senior management expects will be the approximate amount to be
distributed as a result of the Proposed Sale (see "--Use of Proceeds;
Dissolution and Liquidation Following the Proposed Sale"), is fair to the
Company's stockholders from a financial point of view. Rodman & Renshaw had
previously rendered an oral opinion to such effect and explained its analysis
at the meetings of the Board of Directors on August 22 and August 25, 1997.
The Company had retained Rodman & Renshaw to render a fairness opinion in
connection with the Proposed Sale based upon Rodman & Renshaw's
qualifications, expertise and reputation.
The full text of Rodman & Renshaw's written opinion is attached hereto as
Annex C to this Information Statement and is incorporated herein by reference.
Stockholders of the Company are urged to, and should, read the opinion
carefully and in its entirety for the assumptions made, matters considered and
limits of the review undertaken by Rodman & Renshaw. Rodman & Renshaw's
opinion is directed to the Board of Directors and only to the fairness from a
financial point of view of the sum of $10.00 per share to the holders of
Common Stock in the Proposed Sale and does not address any other aspect of the
Proposed Sale, including the Company's use of the sale proceeds, nor does it
constitute a recommendation to any holder of Common Stock. Rodman & Renshaw's
opinion assumes that the sum of $10.00 per share will be distributed to the
holders of Common Stock
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as soon as practicable after the closing of the Proposed Sale. Although the
Company believes that the summary of the opinion of Rodman & Renshaw set forth
herein describes the material portions thereof, such summary is qualified in
its entirety by reference to the full text of such opinion.
In arriving at its opinion, Rodman & Renshaw reviewed the Asset Purchase
Agreement and certain publicly available business and financial information
relating to the Company. Rodman & Renshaw also reviewed certain other
information, including financial forecasts, furnished to Rodman & Renshaw by
the Company and discussed the business and prospects of the Company with its
management. In addition, Rodman & Renshaw considered certain financial data of
the Company, and compared that data with stock market data for publicly held
companies in businesses similar to those of the Company and considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. Rodman & Renshaw also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which it deemed relevant.
Rodman & Renshaw relied upon the completeness and accuracy of all information
supplied or otherwise made available to it by the Company and relied upon the
representations of management of the Company that they are unaware of any
information or facts that would make the information provided incomplete or
misleading. In connection with its review, Rodman & Renshaw did not assume any
responsibility for independent verification of any of the foregoing
information. With respect to the financial forecasts, Rodman & Renshaw assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company's management as to the future
financial performance of the Company's business and that management was not
aware of any facts that would make such forecasts incomplete or misleading. In
addition, Rodman & Renshaw did not make an independent evaluation or appraisal
of the assets or liabilities (contingent or otherwise) of the Company's
business, nor was it furnished with any such evaluations or appraisals. Rodman
& Renshaw's opinion was necessarily based upon financial, economic, market or
other conditions as they existed and could be evaluated on the date of the
opinion. In connection with its engagement, Rodman & Renshaw was not requested
to, and did not, solicit third party indications of interest in acquiring the
Company. In addition, although Rodman & Renshaw evaluated the fairness of the
expected distribution to the holders of the Common Stock from a financial point
of view, Rodman & Renshaw was not asked to and did not recommend the form or
amount of consideration payable to the Company in the Proposed Sale.
In arriving at its opinion and making its presentation to the Board of
Directors, Rodman & Renshaw performed a variety of financial analyses. The
summary set forth below includes all material financial analyses discussed by
Rodman & Renshaw with the Board of Directors, but does not purport to be a
complete description of the analyses performed by Rodman & Renshaw in arriving
at its opinion. Arriving at a fairness opinion is a complex process that
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances and, therefore, such an opinion is not necessarily susceptible to
partial analysis or summary description. Rodman & Renshaw believes that its
analyses must be considered as a whole and that selecting portions of its
analyses or portions of the factors considered by it, without considering all
analyses and factors, could create an incomplete view of the evaluation process
underlying its opinion. In performing its analyses, Rodman & Renshaw made
numerous assumptions with respect to industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of the Company. Any estimates incorporated in the analyses
performed by Rodman & Renshaw are not necessarily indicative of actual values
or future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, estimates of the value of businesses
and securities neither purport to be appraisals nor necessarily reflect the
prices at which businesses or securities may actually be sold. Accordingly,
such analyses and estimates are inherently subject to substantial uncertainty.
No public company utilized as a comparison is identical to the Company, and
none of the similar transactions utilized as a comparison is identical to the
Proposed Sale. Accordingly, an analysis of publicly traded comparable companies
and comparable acquisition transactions is not mathematical; rather it involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the comparable companies or the companies involved
in comparable acquisition transactions and other factors that could affect
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the public trading value of the comparable companies or company or transaction
to which they are being compared.
Rodman & Renshaw is a nationally recognized investment banking firm. As part
of its investment banking business, Rodman & Renshaw is regularly engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. In the ordinary course of business, Rodman &
Renshaw and its affiliates may actively trade equity securities of the
Company, debt and equity securities of the Purchaser's parent and debt
securities of the Purchaser for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
The following is a summary of all material analyses performed by Rodman &
Renshaw in connection with its fairness opinion.
Adjustment to The Company's Financial Data. The Company does not book
securitizations as sales, but keeps the leases that have been securitized on
its books and records income during the term of the leases. Had the Company
booked the securitizations as sales, as certain other leasing companies do, it
would have had an impact on the Company's income statement and balance sheet.
Rodman examined the Company's last three securitization programs, and assumed
the Company will securitize $138.6 million of leases in the fourth quarter of
calendar year 1997, and calculated the impact such securitizations had or
would have on the Company's fiscal year income statement for the year ended
June 30, 1997, calendar year income statement for the year ended December 31,
1997 and balance sheet as of June 30, 1997 and December 31, 1997 if they were
booked as sales (the "Securitization Impact"). Based on this analysis, Rodman
& Renshaw was able to perform its valuation analysis of the Company based on
both the method by which the Company presently records securitizations and if
it had recorded them as sales.
Comparable Companies Analysis. Rodman & Renshaw reviewed certain publicly
available historical information for the period from January 1, 1996 to
December 31, 1996 and projected 1997 financial results (reflecting estimates
of the Company's management) of certain leasing and finance companies
considered by Rodman & Renshaw to be reasonably comparable to the Company,
including DVI, Inc., First Sierra Financial Inc., Leasing Solutions, Inc.,
Prime Capital Corporation and Rockford Industries, Inc. This analysis
indicated that (i) the appropriate equity value multiple for the Company based
on the comparable companies for the last twelve months earnings and for
calendar year 1997 estimated earnings averaged 14.1 times and 12.4 times
respectively and (ii) the appropriate equity value multiple for the Company
based on the comparable companies book equity value averaged 1.8 times. Rodman
& Renshaw then applied these comparable companies multiplier ranges to the
Company's unaudited 1997 fiscal year earnings, projected 1997 calendar year
earnings (as provided by the Company's management) and unaudited June 30, 1997
book value to imply a range of equity values for the Company. In addition,
Rodman & Renshaw applied the same multiples to the Company's financial
performance including the Securitization Impact. The comparable companies
analysis indicated a hypothetical equity value for the Company of between
$8.13 and $13.22 per share.
Comparable Acquisitions Analysis. Rodman & Renshaw reviewed the acquisition
multiples of companies considered by Rodman & Renshaw to be reasonably
comparable to the Company that were the target companies in certain recent
transactions involving partial or complete acquisitions. The comparable
transactions involved transactions for target companies in the leasing and
finance industries. Rodman & Renshaw calculated certain multiples (including
net income and book value) of the prices paid in such acquisitions and applied
such multiples to the Company's unaudited fiscal 1997 financial results and
financial results assuming the Securitization Impact to imply a hypothetical
equity value for the Company. The comparable acquisitions analysis indicated a
hypothetical equity value for the Company of between $9.50 to $12.25 per
share.
Discounted Cash Flow Analysis. Rodman & Renshaw calculated the estimated
cash flow available for stockholders of the Company that the Business could be
expected to generate using management's projections of future financial
performance for the period from July 1, 1997 through June 30, 2003 based on
projections
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developed by management. Using these projections, Rodman & Renshaw then
calculated estimated terminal values at the end of the projection period by
assuming the cash available for fiscal year 2003 would be available in
perpetuity and then discounting this back at a rate of 9.8%, the Company's
cost of equity. The unleveraged cash flows for the projected period and the
terminal value were then discounted using an annual discount rates of 9.8%
(chosen to reflect the cost of equity of the Company) to imply a hypothetical
equity for the Company. Three cases were calculated: a base case, an upside
case and a downside case. The upside case assumed higher volume growth. The
downside case assumed lower volume growth. The discounted cash flow analysis
indicated a hypothetical equity value for the Company of between $8.16 to
$13.79 per share.
Summary of Valuation. Rodman & Renshaw then averaged the various
hypothetical equity values for the Company. This resulted in a range of
hypothetical values of between $9.75 to $11.93 per share. Rodman & Renshaw
informed the Board of Directors of the Company that this range was a function
of numerous factors including, but not limited to, the public float of
comparable companies, investors' expectations as to the growth of the
comparable companies and the probability of achieving projections. In
addition, as discussed above, arriving at a fairness opinion is a complex
process that is not mathematical but involves complex considerations and
judgments concerning a variety of factors. Based on the foregoing, Rodman &
Renshaw concluded that a distribution to each stockholder of $10.00 per share
is fair from a financial point of view.
Forward-Looking Information. The Company does not make, as a matter of
course, public forecasts or projections as to future performance or earnings.
However, in connection with its ongoing budgetary and financing activities,
management of the Company periodically prepares certain projections of results
of operations. Certain of such projections were provided to Rodman & Renshaw
for its review in connection with the Proposed Sale and Rodman & Renshaw's
preparation of its opinion. THE PROJECTIONS PROVIDED TO RODMAN & RENSHAW WERE
BASED UPON MANY ESTIMATES AND ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC
AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF MANAGEMENT OF THE COMPANY, INCLUDING, WITHOUT LIMITATION, THE
EFFECT OF GENERAL ECONOMIC AND MARKET CONDITIONS, BUSINESS CONDITIONS, CHANGES
IN PUBLIC TASTE, COMPETITION, CHANGES IN BUSINESS STRATEGY AND AVAILABILITY,
TERMS AND DEPLOYMENT OF CAPITAL. ACCORDINGLY, ACTUAL RESULTS MAY BE MATERIALLY
HIGHER OR LOWER THAN THOSE PROJECTED. THE INCLUSION OF SUCH PROJECTIONS IN
RODMAN & RENSHAW'S ANALYSIS SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE
COMPANY OR ANY OTHER PERSON THAT SUCH PROJECTIONS WILL PROVE TO BE CORRECT.
Pursuant to the terms of Rodman & Renshaw's engagement, the Company agreed
to pay Rodman & Renshaw a fee for rendering a fairness opinion in connection
with the Proposed Sale. Rodman & Renshaw was retained to provide a fairness
opinion in its capacity as an independent financial advisor. Pursuant to a
letter agreement dated July 23, 1997, the Company agreed to pay Rodman &
Renshaw $200,000 in cash, as follows: (i) $50,000 upon execution of the
engagement letter; and (ii) $150,000 upon presenting its opinion to the Board
of Directors of the Company. The Company has also agreed to reimburse Rodman &
Renshaw for its reasonable out-of-pocket expenses, and to indemnify Rodman &
Renshaw against certain liabilities, including liabilities under the federal
securities laws or relating to or arising out of Rodman & Renshaw's
engagement. Previously, in July 1996, Rodman & Renshaw had performed financial
advisory services for Fluoroscan Imaging Systems, Inc. of which Mr. Larry
Grossman, Chairman and Chief Executive Officer of the Company, was then Chief
Executive Officer.
APPROVAL OF THE BOARD OF DIRECTORS; REASONS FOR THE PROPOSED SALE AND
DISSOLUTION AND LIQUIDATION
The Board of Directors believes that the Proposed Sale and the liquidation
and dissolution of the Company are in the best interests of the Company's
stockholders. Accordingly, the Board of Directors has approved the Asset
Purchase Agreement and the Plan. In reaching its determination, the Board of
Directors consulted with the Company's management as well as its financial and
legal advisors and considered the following factors:
1. Current industry, economic and financial market conditions relating to
the Company and its Business, as well as the financial condition, assets,
liabilities, businesses and operations of the Company, both on a historical
and prospective basis.
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2. The belief of the Board of Directors that the industry in which the
Company operates is highly competitive and consolidating.
3. The results of the Company's consideration of other alternatives to
the Proposed Sale, including the Board of Directors' judgment that a
disposition of the Company or its assets on terms more favorable to the
Company and its stockholders would not likely be available.
4. Rodman & Renshaw's presentations to the Board of Directors on August
22 and August 25, 1997 and its opinion. See "--Opinion of Rodman &
Renshaw."
5. The proposed terms and structure of the Proposed Sale, including the
terms of the Asset Purchase Agreement, the Purchaser's desire to acquire
the Company's assets and the fact that the Company's representations and
warranties contained in the Asset Purchase Agreement, other than the
representation and warranty as to title to assets and liens, do not survive
the Closing and the Company is not required to provide the Purchaser with
post-closing indemnification for breaches thereof. See "The Asset Purchase
Agreement--Representations and Warranties."
6. The fact that the Purchaser required the Majority Stockholders to
provide their irrevocable consent in writing to the adoption of the Asset
Purchase Agreement and the Proposed Sale as a condition to its willingness
to enter into the Asset Purchase Agreement.
In view of the wide variety of factors considered in connection with its
evaluation of the Proposed Sale, the Board of Directors did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination.
USE OF PROCEEDS; DISSOLUTION AND LIQUIDATION FOLLOWING THE PROPOSED SALE
Use of Proceeds
Of the $46,082,009 in gross proceeds from the Proposed Sale, approximately
$3,914,000 will be used to cancel vested employee stock options and director
warrants, $1,105,000 will be used to pay the severance payments described in
"--Interests of Certain Persons in the Proposed Sale" and approximately
$173,000 will be used to pay the premiums on the directors and officers
liability insurance referred to in "The Asset Purchase Agreement--Conditions."
It is currently anticipated that the remaining proceeds, after the payment of
such expenses, will be approximately $10.00 per share of Common Stock and that
such amount will be paid early in 1998.
Dissolution and Liquidation Following the Proposed Sale
Following the Proposed Sale, the Company's assets will consist principally
of cash from the proceeds of sale. Since the Company will no longer have any
operating assets, the Company will cease business other than winding up its
affairs and matters incidental thereto and distributing the net proceeds to
its stockholders. It is anticipated that the Common Stock will continue to be
quoted on the Nasdaq National Market or in the over-the-counter market after
consummation of the Proposed Sale until such proceeds are distributed in
cancellation of the Common Stock.
The Plan. As noted above, the Company's Board and the Majority Stockholders
have approved the Plan. The following is a summary of the material terms of
the Plan, a copy of which is attached hereto as Annex B to this Information
Statement and is incorporated herein by reference. This summary is qualified
in its entirety by reference to the full text of the Plan. The Plan provides
that after consummation of the Proposed Sale the Company will not engage in
any business except for purposes of preserving the value of the Company's
assets (which will consist principally of the sale proceeds), winding up its
business affairs and making the pro rata distribution (the "Liquidating
Distribution") to its stockholders of all of its remaining assets except those
required for paying any claims or obligations of the Company. It further
provides that, as promptly as practicable after the consummation of the
Proposed Sale, the Company will be dissolved upon filing a Certificate of
Dissolution pursuant to the DGCL. The Plan requires that the Company sell all
of its remaining assets, pay or
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make provisions for the payment of all of its known or ascertainable
liabilities and make the Liquidating Distribution. The Board may, in its sole
discretion, establish a contingency reserve to satisfy any claims against the
Company and expenses of the sale of its assets and the liquidation and
dissolution. The Liquidating Distribution will be in complete redemption and
cancellation of all of the outstanding Common Stock. The Board will fix a
record date for the Liquidating Distribution, after which certificates
representing Common Stock will not be assignable or transferable on the
Company's books except by will, intestate succession or operation of law. The
stockholders must surrender their certificates (or, if required by the Board
in its absolute discretion, furnish indemnity bonds in case of lost or
destroyed certificates) as a condition to their receipt of the Liquidating
Distribution. If a Liquidating Distribution cannot be made, whether because a
stockholder cannot be located, has not surrendered a certificate evidencing
Common Stock or for any other reason, the distribution will be transferred to
and deposited with the state official authorized under Delaware law to receive
proceeds of such distribution. The proceeds will be held for such
stockholder's benefit and, if not properly claimed, will escheat to the State
of Delaware. The Plan provides for the Company to continue to indemnify its
officers, directors, employees and agents in accordance with its Certificate
of Incorporation and Bylaws. The Board is authorized to establish, if
necessary for any reason to complete the liquidation and distribution, a
liquidating trust into which any remaining assets of the Company may be
transferred to be held as a reserve for contingent liabilities. The Company
has no plan to use a liquidating trust, but believes the flexibility provided
by the Plan to allow such a trust to be established is advisable.
Stockholders' Continuing Liability. If a court were to hold that the Company
failed to pay or to make adequate provision for its liabilities, a creditor of
the Company might obtain an injunction delaying or diminishing the
distributions to the stockholders anticipated pursuant to the Plan. Further,
pursuant to Section 282 of the DGCL, the stockholders of the Company may be
held personally liable for the payment of any claim against the Company, but
such personal liability shall not exceed the lesser of the stockholder's pro
rata share of the claim or the amount distributed to such stockholder pursuant
to the Plan. The Purchaser has agreed in the Asset Purchase Agreement to
indemnify the stockholders of the Company against any such liability, subject
to certain limitations. See "The Asset Purchase Agreement--Certain Covenants--
Indemnification."
CERTAIN TAX CONSEQUENCES
The Proposed Sale will be a taxable transaction to the Company for income
tax purposes. However, the Purchaser has agreed in the Asset Purchase
Agreement to pay, subject to certain limitations, the federal and state income
taxes of the Company arising from the Proposed Sale. Distributions to the
stockholders of the net proceeds of the Proposed Sale via a liquidating
dividend will generally be taxable as a capital transaction for those
shareholders that hold the Company's stock as a capital asset. Upon the
complete liquidation of the Company's stock, the liquidating distribution
provided in exchange for the shares will generally be treated as a capital
gain/loss equal to the proceeds of the distribution less the stockholder's tax
basis in such shares exchanged. For shares held longer than twelve months, the
liquidating distribution will generally be treated as long-term capital
gain/loss for income tax purposes and, for shares held longer than 18 months,
capital gains will be taxed at a lower rate. Stockholders are encouraged to
consult with their tax advisors as to their particular tax treatment.
REGULATORY MATTERS
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Proposed Sale may not be consummated until
notifications have been given and certain information has been furnished to
the FTC and the Antitrust Division of the Department of Justice (the
"Antitrust Division"), and specified waiting period requirements have been
satisfied. The Company and the Purchaser's parent corporation have filed
notification and report forms under the HSR Act with the FTC and the Antitrust
Division and the required waiting period under the HSR Act was terminated by
the FTC on September 26, 1997.
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At any time before or after the Proposed Sale, the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the Proposed
Sale or seeking the divestiture of the business purchased by the Purchaser or
the divestiture of substantial assets of the Purchaser. Private parties and
state attorneys general may also bring legal action under federal or state
antitrust laws under certain circumstances. Based upon an examination of
information available to the Company and the Purchaser relating to the
businesses in which the Company and the Purchaser are engaged, the Company
believes that the Proposed Sale will not violate the antitrust laws.
There can be no assurance that a challenge to the consummation of the
Proposed Sale on antitrust grounds will not be made or that, if such a
challenge were made, the Company or the Purchaser would prevail. The
obligations of the Company and the Purchaser to consummate the Proposed Sale
are subject to the condition that there be no order that enjoins, restrains or
prohibits the Asset Purchase Agreement or the consummation of transactions
contemplated by the Asset Purchase Agreement. See "The Asset Purchase
Agreement--Certain Covenants" and "--Conditions."
INTERESTS OF CERTAIN PERSONS IN THE PROPOSED SALE
In connection with the Proposed Sale, the Company and the Purchaser entered
into separate agreements with Larry S. Grossman, Chairman and Chief Executive
Officer of the Company, and Michael J. Heyman, President and Chief Operating
Officer of the Company. Under Mr. Grossman's agreement, on the Closing Date
the Company will pay him $440,000 in satisfaction of its obligations to make
severance payments and provide outplacement services to him under the
severance agreement he entered into with the Company in October 1996 in
connection with his assumption of executive duties with the Company. Also
under such agreement, Mr. Grossman agrees with the Purchaser to release it
from employment-related claims and, for a seven-year term commencing on the
Closing Date, not to engage directly or indirectly in the equipment leasing
business, not to solicit the employment of or hire employees of the Company or
the Purchaser and not to disclose confidential information relating to the
Company's business. In consideration for such agreements, the Purchaser will
pay Mr. Grossman $465,947 on each of the first seven anniversaries of the
Closing Date. Mr. Heyman's agreement contains similar provisions. Under it,
the Company will pay him $665,000 in satisfaction of its obligations to make
severance payments to him and provide him with outplacement services under the
employment agreement he entered into with the Company in connection with his
assumption of executive duties with the Company. In consideration for his
agreements with the Purchaser, Mr. Heyman will be paid $60,973 by it on each
of the first seven anniversaries of the Closing Date. As further severance and
in connection with the Proposed Sale, the Board authorized the Company to
convey to Mr. Heyman the title to his Company automobile, which automobile has
a depreciated book value of approximately $51,800. The Board also authorized
the transfer to Messrs. Grossman and Heyman on the Closing Date of certain
furniture and computers used by them in the Company's business, the
depreciated book value of which for Mr. Grossman is approximately $11,900 and
for Mr. Heyman is approximately $11,200. At the same time, the Board
authorized the transfer on the Closing Date to the parents of Mr. Grossman
life insurance policies which it had, as disclosed in previous proxy
statements of the Company, maintained on their behalf pursuant to an agreement
entered into with them before the Company's initial public offering. The cash
surrender value of such policies is $400,327 and such transfer will release
the Company from any obligation under such agreement. The Company's directors
and officers, as well as the estate of Richard Grossman, also have interest in
the Proposed Sale by virtue of their holdings of Common Stock and options and
warrants exercisable for Common Stock. See "Security Ownership of Certain
Beneficial Owners and Management."
NO APPRAISAL RIGHTS
Pursuant to the DGCL, holders of shares of Common Stock will not be entitled
to rights of appraisal in connection with the Proposed Sale.
ACCOUNTING TREATMENT
The Proposed Sale will be accounted for as a purchase.
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THE ASSET PURCHASE AGREEMENT
Although the Company believes that the following summary describes the
material terms and conditions of the Asset Purchase Agreement, such summary is
qualified in its entirety by reference to the full text of the Asset Purchase
Agreement, a copy of which is attached as Annex A to this Information Statement
and is incorporated herein by reference. Terms which are not otherwise defined
in this summary have the meaning set forth in the Asset Purchase Agreement.
ASSETS TO BE SOLD
The Asset Purchase Agreement provides for the sale by the Company to the
Purchaser of substantially all of its assets.
Assets to Be Transferred
The assets to be sold or transferred by the Company to the Purchaser pursuant
to the Asset Purchase Agreement (the "Acquired Assets") include all of the
assets of the Company other than the Excluded Assets (as defined below),
including: (a) all "Financing Contracts" (generally defined as lease, rental,
lease purchase and conditional sale contracts where the Company is lessor or
seller) and all accounts receivable and credit enhancements relating thereto;
(b) ownership interests or security interests, including any rights to residual
interests, in all equipment subject to Financing Contracts; (c) recoveries of
amounts written off on Financing Contracts; (d) business, financial and tax
records, files, books and contracts relating to the Acquired Assets or to the
Assumed Liabilities (as defined below); (e) backlog of commitments to enter
into Financing Contracts; (f) unexpired product warranties from the
manufacturers of the equipment which is part of the Acquired Assets; (g) leases
of real property used in the Business (other than the lease for the Company's
existing headquarters (the "Current Headquarters Lease")); (h) leases of
personalty related to the Business; (i) to the extent transferable, permits;
(j) tradenames; (k) machinery, equipment, fixtures, installations and other
personal property, including vehicles, furniture, supplies, office equipment,
software and computers; (l) certain specified contracts (the "Assigned
Contracts"); (m) sales and promotional literature and other selling material,
books, records, files, plans, designs, specifications, customer lists, supplier
lists, credit information, business records and plans and other data; (n)
intellectual property owned or used; (o) accounts, accounts receivable and
notes receivable; (p) bank accounts, lock boxes and safe deposit boxes; (q)
prepaid charges and expenses, including with respect to insurance premiums,
leases and rentals and utilities; (r) rights, claims, credits, causes or action
or rights of set-off against third parties relating to the Acquired Assets or
the Assumed Liabilities, whether known or unknown, liquidated or unliquidated,
fixed or contingent; (s) invoices, bills of sale and other instruments and
documents evidencing title to the Acquired Assets; (t) to the extent
transferable, insurance policies; (u) all goodwill associated with the
Company's business or the Acquired Assets; (v) cash and cash equivalents; and
(w) trust certificates and other documents evidencing the rights of the Company
with respect to securitizations.
Assumed Liabilities
Pursuant to the Asset Purchase Agreement, the Purchaser will assume and agree
to pay, perform, fulfill and discharge the (i) liabilities and obligations of
the Company under (A) the Financing Contracts constituting the Acquired Assets
and (B) the Assigned Contracts; (ii) liabilities and obligations under the
transferred office leases; (iii) liabilities and obligations with respect to
specified debt obligations which are not to be prepaid at Closing; (iv)
liabilities and obligations with respect to sales, use or property taxes
relating to the Acquired Assets; and (v) liabilities and obligations with
respect to accounts payable incurred in the ordinary course of business.
Excluded Assets
The assets being retained by the Company (the "Retained Assets") include: (a)
the Current Headquarters Lease, leasehold improvements on the premises leased
thereunder and prepaid charges and expenses in respect thereof; (b) any real
property or interests therein other than in respect of the transferred office
leases, except any such property or interests constituting a credit enhancement
to a Financing Contract; (c) certain specified Financing Contracts, equipment
leased thereunder and recoveries, credit enhancements, accounts receivable,
backlog and residuals with respect thereto; (d) the capital stock of each
subsidiary of the Company and the
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minute books, stock transfer books and seals of the Company and its
subsidiaries; (e) the bank account into which the Purchase Price will be paid;
(f) business records relating to the Excluded Assets or Retained Liabilities
(as defined below); (g) the telephone system and security system located in the
premises leased under the Current Headquarters Lease; (h) certain items of
office furniture, computer equipment and other assets; (i) the life insurance
policies discussed in "The Proposed Sale--Interests of Certain Persons in the
Proposed Sale", including the cash surrender value thereof; (j) rights, claims,
credits, causes of action or rights of set-off against third parties relating
to the Excluded Assets or the Retained Liabilities; (k) the Company's rights
under the Asset Purchase Agreement; and (l) the Company's rights in the assets
of its 401(k) plan.
Liabilities Not Assumed
The liabilities of the Company which are not being assumed by the Purchaser
(the "Retained Liabilities") are liabilities and obligations (i) attributable
to Excluded Assets; (ii) relating to actions or inactions by the Company in
respect of actual or alleged violations of laws; (iii) in respect of income
taxes; (iv) arising from any breach, or from any fact or transaction involving
a breach, of any covenant, agreement, representation or warranty of any Seller
contained in the Asset Purchase Agreement or arising from, out of, or in
connection with, the transactions contemplated by the Asset Purchase Agreement;
(v) with respect to any of the Company's current or former employees,
directors, consultants or advisors whether arising prior to, on or after the
Closing Date, including any (A) under any benefit plan, (B) in respect of
payroll taxes, (C) arising from any employee or employment related litigation,
(D) in respect of any collective bargaining agreement and (E) in respect of any
severance, bonus or vacation pay agreements or arrangements; (vi) arising from
litigation, investigations or other proceedings in respect of the Company; and
(vii) incurred by the Company on or after the Closing Date.
PURCHASE PRICE
Payment at Closing
The Asset Purchase Agreement provides for the sale by the Company to the
Purchaser of the Acquired Assets for an aggregate consideration equal to: (i)
$46,082.009.50 in cash; (ii) the amount of accrued employee expenses at the
Closing Date (which the Company will pay after the Closing Date) for payroll,
bonuses, commissions, vacation, tuition reimbursement and FICA and Medicare;
(iii) amounts necessary to prepay specified debt obligations not assumed by the
Purchaser (which the Company will prepay on the Closing Date); and (iv) the
assumption of the Assumed Liabilities.
Closing
If the conditions to the Proposed Sale are then satisfied or waived, the
Closing will take place on December 11, 1997 or, if later, at least five
business days following the satisfaction or waiver of the conditions to Closing
set forth in the Asset Purchase Agreement. See "--Conditions."
REPRESENTATIONS AND WARRANTIES
The Asset Purchase Agreement contains various customary representations and
warranties of the Company and the other Sellers and the Purchaser. These
include representations and warranties by the Company and the other Sellers as
to (i) corporate organization, good standing and corporate power and authority,
(ii) authorization of the Asset Purchase Agreement; (iii) charter documents and
corporate records; (iv) no violations of charter or laws and no liens arising
from the transaction; (v) governmental and other consents; (vi) compliance with
laws; (vii) financial statements; (viii) the absence of certain changes; (ix)
the absence of undisclosed liabilities; (x) employees and labor relations; (xi)
employee benefit plans; (xii) tax matters; (xiii) title to properties and
absence of liens; (xiv) litigation and orders; (xv) brokers; (xvi) status of
the Financing Contracts; (xvii) state takeover statutes; (xviii) powers of
attorney; (xix) accuracy of books and records; (xx) inclusion of all assets for
the business; and (xxi) no breaches of specified leases and contracts. Of such
representations, only the one regarding title to properties and absence of
liens survives the Closing. The Purchaser's representations and warranties
include those as to (i) corporate organization and good standing, (ii)
authorization of the Asset Purchase Agreement, (iii) no violation of charter or
laws arising from the transaction and (iv) governmental and other consents.
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CERTAIN COVENANTS
General
Pursuant to the Asset Purchase Agreement, the Company and the Purchaser have
made various customary covenants for transactions of this type. The Company has
agreed, among other things, that from the date of the Asset Purchase Agreement
through the Closing Date, except as otherwise consented to by the Purchaser in
writing, the Company will (i) conduct its business only in the usual, regular
and ordinary course and in accordance with past practice; (ii) use its
commercially reasonable efforts to preserve its business relationship with
clients, lenders, suppliers, customers and others; (iii) maintain its
properties in good repair; (iv) use its commercially reasonable efforts to
maintain insurance coverages; (v) not enter into any Financing Contract with a
yield of less than 9% or which, when added to all other Financing Contracts
with the same obligor, would exceed an equipment cost of $1 million; (vi) not
sell or securitize Financing Contracts and not sell other assets except in the
ordinary course; (vii) not acquire any material assets; (viii) subject to
exceptions, not modify Financing Contracts; (ix) not, except in the ordinary
course pursuant to the Company's existing credit facilities, subject Acquired
Assets to liens; (x) not, subject to certain exceptions, dispose of any of its
assets; (xi) not transfer, amend or terminate intellectual property rights;
(xii) not enter into transactions with affiliates; (xiii) not amend its
certificate of incorporation or bylaws; (xiv) not declare or pay dividends on
the Common Stock; (xv) not create new subsidiaries; (xvi) not take actions
which would cause the Company's representations to be incorrect; (xvii) not
grant compensation increases to employees except for those already scheduled;
(xviii) not settle any litigation relating to the transactions contemplated
thereby; and (xix) not enter into certain types of Financing Contracts. The
Asset Purchase Agreement also requires the Company to take, at the Purchaser's
request, such actions as the Purchaser may reasonably request to have certain
Financing Contracts held by securitization entities transferred to the Company.
Expenses
The Asset Purchase Agreement provides that each party will bear its own
expenses incurred in connection with the transactions contemplated by the Asset
Purchase Agreement, except as specified below. The Purchaser has agreed to pay,
subject to certain limitations, all transfer, sales, stamp, registration,
documentation or similar taxes payable in connection with the transfer of the
Purchased Assets. As noted above under "The Proposed Sale--Certain Tax
Consequences," the Purchaser has agreed to pay the Company's income taxes
arising as a result of the Proposed Sale. The Purchaser has also agreed to pay,
subject to certain limitations, the Company's reasonable out-of-pocket expenses
for payments to accountants, legal counsel and governmental entities after the
Closing Date, up to $500,000, so long as it is using its commercially
reasonable efforts to wind up its affairs in as short a period as is reasonably
practicable. The Purchaser also has agreed to pay the HSR filing fee and the
filing fee for and expenses of printing and mailing of this Information
Statement.
Indemnification
The Purchaser has agreed in the Asset Purchase Agreement to indemnify the
stockholders of the Company against any losses incurred by them arising out of,
relating to or resulting from claims against them arising after the Closing
Date which relate to actions after the Closing Date to liquidate and wind up
the affairs of the Company. The Purchaser has also agreed in the Asset Purchase
Agreement to indemnify the persons who are directors and officers of the
Company at the Closing Date against losses incurred by them arising out of,
relating to or resulting from claims against them arising after the Closing
Date which relate to their actions as directors and officers prior to the
Closing Date or their actions after the Closing Date to liquidate and wind up
the affairs of the Company. Such indemnification obligations are subject to
certain limitations, including that the Purchaser is not required to indemnify
any person against such person's gross negligence, willful misconduct or
knowing violation of law, the Purchaser's maximum liability for such
indemnification may not exceed $5 million and no indemnitee is entitled to
recover any amount for an indemnification claim if such indemnitee has not
given the Purchaser notice of such claim prior to the fifth anniversary of the
Closing Date.
18
<PAGE>
Reasonable Efforts
Pursuant to the Asset Purchase Agreement, each of the parties has agreed,
among other things, to use its commercially reasonable efforts to facilitate
the consummation of the Proposed Sale. Each party has agreed to make all
filings, applications, statements and reports to all governmental authorities
which are required to be made prior to the Closing Date by such party pursuant
to applicable law in connection with the Asset Purchase Agreement and the
Proposed Sale.
EXCLUSIVITY
The Asset Purchase Agreement provides that neither the Company nor any of
its directors, officers, employees, representatives, or agents will initiate,
solicit or encourage any inquiries or the making or implementation of any
proposal or offer with respect to a merger, acquisition, consolidation, or
similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of, the Company, or engage in
any negotiations concerning, or provide any confidential information to, or
have any discussions with any person relating to such a proposal.
EMPLOYMENT AND EMPLOYEE BENEFIT PLANS
The Asset Purchase Agreement provides that the Purchaser will offer
employment to employees of the Company who are actively employed on the
Closing Date other than the Company's Chairman and President and those
employees who are on leave for long-term disability (such employees who accept
the Purchaser's offer of employment are referred to herein as the "Continuing
Employees"). Purchaser's offer of employment shall be on salary levels
substantially similar to the salaries received by the Continuing Employees
immediately prior to the Closing Date and the Purchaser will use its
reasonable efforts to provide benefits which are at least generally consistent
with those offered to similarly situated employees of the Purchaser. The
Company expects to terminate the employment of all of its employees (except
Messrs. Grossman and Heyman) effective at the Closing.
To the extent any employee benefit plan, program or policy of the Purchaser
or its affiliates is made available to Continuing Employees (such employee
benefit plans, programs and/or policies are referred to herein as "Plans"),
(i) service with the Company by any such employee prior to the Closing shall
be credited for eligibility and vesting purposes under the Plans (but not for
benefit accrual or entitlement purposes) and (ii) with respect to any Plans
which are welfare plans, Continuing Employees shall be provided credit for any
co-payments or deductibles made or borne by such employees and all pre-
existing condition exclusions, other than, to the extent permitted by
applicable law, exclusions that were applicable under the comparable welfare
plans maintained by the Company for its employees prior to the Closing Date,
shall be waived.
Effective as of the Closing, the Purchaser will provide former Company
employees who are then being provided "continuation coverage" under "COBRA"
and Company employees who do not become employees of the Purchaser with
"continuation coverage" under the Company's health care plan in effect as of
the Closing or an equivalent health insurance policy at the same cost each
such former employee would have paid if he or she had been eligible for
continuation coverage under the Company's health plan immediately prior to the
Closing.
CONDITIONS
The obligations of the parties to consummate the Proposed Sale are subject
to, among others, the following conditions: (i) the representations and
warranties of each party shall have been accurate, true and correct in all
material respects, except, in the case of the Purchaser's condition, for
failures which would not have a material adverse effect on the Company's
business or the Purchaser's ability to conduct such business or consummate the
Proposed Sale (a "Material Adverse Effect"); (ii) each party shall have
complied with all of their respective covenants, obligations and agreements in
the Asset Purchase Agreement to be performed on or prior to the Closing Date;
(iii) no law shall have been adopted and no court or government order shall
have been entered which would enjoin, restrain, make illegal or prohibit the
consummation of the transactions contemplated by the Asset Purchase Agreement;
(iv) all waiting and review periods under the HSR Act shall have expired or
terminated; and (v) a director and officer liability insurance policy in
specified form shall be in full force and effect.
19
<PAGE>
The Purchaser's obligations to consummate the Proposed Sale are also subject
to, among others, the following conditions: (i) all consents and approvals of
governmental authorities and under certain specified contracts of the Company
shall have been obtained; (ii) there shall have been since the date of the
Asset Purchase Agreement no changes that have had or would be reasonably likely
to have a Material Adverse Effect; (iii) delivery of such agreements,
documents, instruments and certificates as shall be reasonably requested by the
Purchaser to consummate the transactions contemplated by the Asset Purchase
Agreement; (iv) the Company shall have delivered an updated disclosure schedule
to the Asset Purchase Agreement; (v) no action or proceeding shall be pending
seeking to restrain, prevent, materially delay or change in any material
respect the transactions, seeking penalties, fines or material damages in
connection with the transactions or which otherwise could have a Material
Adverse Effect; (vi) the Financing Contracts shall as of the Closing Date have
a net book value equal to or greater than 90% of their net book value on June
30, 1997; (vii) the Company shall have sold certain leases for at least 90% of
their net book value; (viii) the Company shall have arranged for the Purchaser
to assume the lease for the Company's new headquarters office space; and (ix)
the Company shall have changed its corporate name.
TERMINATION
The Asset Purchase Agreement may be terminated on or prior to the Closing
Date: (i) by the written consent of the Company and the Purchaser; (ii) by
either the Company or the Purchaser, if the Closing has not occurred on or
before January 31, 1998; (iii) by either the Company or the Purchaser, if any
court or other governmental body shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the Proposed Sale and such order or other action shall have become
final and nonappealable; or (iv) by either the Company or the Purchaser, if
there has been a breach of any covenant, representation or warranty set forth
in the Asset Purchase Agreement which would permit the terminating party to
decline to close the transactions.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser, a subsidiary of the General Electric Company, is a global
diversified financial services company which provides equipment management,
mid-market and specialized financing, specialty insurance and a variety of
consumer services such as car leasing, home mortgages and credit cards. The
principal executive offices of the Purchaser's Vendor Financial Services
Division, which is engaged in financing small ticket and middle market
commercial equipment and will operate the Company's business after the Closing,
are located at 55 Federal Road, Danbury, CT 06810, and its telephone number is
(800) 876-2033.
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
At Closing, following the transfer of the assets to be sold, the Company's
pro forma consolidated financial condition will comprise the following:
Cash or gross proceeds equal to the sum of (i) $46,082,009; and (ii) an
amount representing the Company's accrued employee expenses for payroll,
bonuses, commissions, vacation, tuition reimbursement, FICA and Medicare.
Liabilities for accrued employee expenses incurred by the Company up to the
time of Closing.
Net proceeds available to stockholders and to pay for expenses noted below
incurred after the Closing equal to $46,082,009.
Pro forma expenses after Closing include severance payments of $1,105,000 as
described in "The Proposed Sale--Interests of Certain Persons in the Proposed
Sale" and premium expenses related to directors and officers liability
insurance of $173,000. After Closing the Company expects to distribute
approximately $3,914,000 to holders of vested employee stock options and
director warrants not yet exercised. The remaining net cash represents
approximately $10.00 per share and will be distributed to stockholders through
a liquidating dividend in 1998.
20
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 1997, the total number of
shares of Common Stock beneficially owned, and the percent so owned, by each
Director of the Company, by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, by the
Company's Chief Executive Officer and the Company's four most highly
compensated executive officers during the fiscal year ended June 30, 1997
(other than the Chief Executive Officer) and by all Directors and executive
officers as a group. The address for all such persons is in care of the
Company. The number of shares owned are those "beneficially owned," as
determined under the rules of the Commission, and such information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which a person has
sole or shared voting power or investment power and any shares of Common Stock
which the person has the right to acquire within 60 days through the exercise
of any option, warrant or right, through conversion of any security, or
pursuant to the automatic termination of power of attorney or revocation of
trust, discretionary account or similar arrangement.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME CAPACITY OWNERSHIP CLASS
---- -------- ----------------- ----------
<C> <S> <C> <C>
Estate of Richard Grossman. Greater than 5% holder 1,927,000 47.7%
Larry S. Grossman.......... Chairman, Chief
Executive Officer and
greater than 5% holder 2,166,000(a) 50.7
Michael J. Heyman.......... President, Chief
Operating Officer and
Director 139,000(b) 3.3
Joseph Rabito.............. Executive Vice President 76,548(c) 1.9
Kevin Dunworth............. Vice President--Sales -0- *
Stephen Hupp............... Vice President--Finance -0- *
Larry Bier................. Director 20,000(d) *
Clifford V. Brokaw, III.... Director 170,000(e) 4.2
Mark C. Matthews........... Director 55,000(d) 1.3
John W. Stodder............ Director 90,000(f) 2.2
All Directors and executive
officers as a group
(9 persons)............... 2,716,548(g) 57.8%
</TABLE>
- --------
* Less than 1%
(a) Includes the 1,927,000 shares held by the estate of Richard Grossman over
which Larry S. Grossman has investment and voting control and 235,000
shares covered by options and warrants.
(b) Includes 135,000 shares covered by options and warrants.
(c) Includes 74,156 shares covered by options.
(d) Represents shares covered by warrants.
(e) Includes 55,000 shares covered by warrants.
(f) Includes 85,000 shares covered by warrants.
(g) Includes 1,927,000 shares held by the estate of Richard Grossman over which
Larry S. Grossman has investment and voting control and 659,156 shares
covered by options and warrants.
MARKET PRICE DATA
The Common Stock is listed and traded on the Nasdaq National Market under the
symbol "TLII." On August 27, 1997, the last trading day preceding the public
announcement of the execution and delivery of the Asset Purchase Agreement, the
high and low sale prices per share of Common Stock were $7.31 and $7.19,
respectively. On October 31, 1997, the most recent practicable date prior to
the printing of this Information Statement, the closing price per share of
Common Stock on the Nasdaq National Market was $9.38.
21
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934 are incorporated by reference
into this document: the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997, a copy of which is being delivered with this
Information Statement.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Information Statement
and prior to the date of the Meeting shall be deemed to be incorporated herein
by reference from the date of filing such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Information Statement to the extent that a statement contained herein (or in
any subsequently filed document which also is or is deemed to be incorporated
by reference herein) modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Information Statement.
November 5, 1997
22
<PAGE>
ANNEX A
ASSET PURCHASE AGREEMENT
BY AND AMONG
GENERAL ELECTRIC CAPITAL CORPORATION
AS BUYER
AND
TRANS LEASING INTERNATIONAL, INC.
TRANS LEASING INSURANCE SERVICES, INC.
LEASECARD AUTO GROUP, INC.
NUVOTRON, INC.
TL LEASE FUNDING CORP. III
TL LEASE FUNDING CORP. IV
AS SELLERS
DATED AS OF AUGUST 27, 1997
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I DEFINITIONS...................................................... 1
ARTICLE IIPURCHASE AND SALE................................................ 10
2.1. Purchase and Sale of Acquired Assets............................ 10
2.2. Excluded Assets................................................. 13
2.3. Assumption of Liabilities....................................... 15
2.4. Retained Liabilities............................................ 16
2.5. Purchase Price.................................................. 17
2.6. Allocation of Purchase Price.................................... 17
2.7. Treatment of Seller's Debt Obligations.......................... 17
2.8. Fairness Opinion................................................ 18
ARTICLE IIICLOSING......................................................... 19
3.1. The Closing; Time and Place..................................... 19
3.2. Assignment of Contracts, Rights and Obligations................. 19
3.3. Payment of Taxes and Fees....................................... 19
3.4. Notices of Sale................................................. 19
ARTICLE IVREPRESENTATIONS OF SELLERS....................................... 20
4.1. Organization, Good Standing, Power, Etc......................... 20
4.2. Authorization of Agreement...................................... 20
4.3. Charter Documents and Corporate Records......................... 20
4.4. No Violations................................................... 20
4.5. Governmental and Other Consents................................. 20
4.6. Compliance with Laws............................................ 21
4.7. Financial Statements............................................ 21
4.8. Absence of Changes.............................................. 22
4.9. Absence of Undisclosed Liabilities.............................. 22
4.10. Employees, Labor Relations, Etc................................. 22
4.11. Employee Benefit Plans, Etc..................................... 23
4.12. Tax Matters..................................................... 23
4.13. Title to Properties; Absence of Liens, Etc...................... 24
4.14. Litigation and Orders........................................... 24
4.15. Broker.......................................................... 25
4.16. Financing Contracts............................................. 25
4.17. State Takeover Statutes......................................... 25
4.18. Powers of Attorney.............................................. 25
4.19. Books and Records............................................... 25
4.20. Entire Business................................................. 25
4.21. No Breaches or Defaults......................................... 25
ARTICLE VREPRESENTATIONS OF BUYER.......................................... 26
5.1. Organization and Standing of Buyer.............................. 26
5.2. Authorization of Agreement...................................... 26
5.3. No Violations................................................... 26
5.4. Governmental and Other Consents................................. 26
</TABLE>
A-2
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE VIBETWEEN SIGNING AND CLOSING...................................... 27
6.1. Commercially Reasonable Efforts; Cooperation by Parties......... 27
6.2. Access and Investigations....................................... 27
6.3. Conduct of Business............................................. 28
6.4. Information Statement........................................... 30
6.5. Required Notices................................................ 31
6.6. Employee Matters................................................ 31
6.7. No Shop......................................................... 32
6.8. Lease Swaps..................................................... 33
ARTICLE VIICONDITIONS TO SELLERS' OBLIGATION............................... 33
7.1. Representations and Warranties True............................. 33
7.2. Performance of Agreements....................................... 33
7.3. Deliveries of Buyer............................................. 33
7.4. Officer's Certificate........................................... 34
7.5. No Injunction, Etc.............................................. 34
7.6. HSR Act......................................................... 34
7.7. Information Statement........................................... 34
7.8. D&O Insurance................................................... 34
ARTICLE VIIICONDITIONS TO BUYER'S OBLIGATION............................... 34
8.1. Representations and Warranties True............................. 34
8.2. Performance of Agreements....................................... 35
8.3. Deliveries of Seller............................................ 35
8.4. Officer's Certificate........................................... 35
8.5. No Injunction, Proceeding or Litigation......................... 35
8.6. Approvals and Consents.......................................... 36
8.7. No Material Adverse Effect...................................... 36
8.8. Financing Contracts............................................. 36
8.9. Employees....................................................... 36
8.10. Certain Leases.................................................. 36
8.11. D&O Insurance................................................... 36
8.12. Lease Sublet.................................................... 37
8.13. HSR Act......................................................... 37
8.14. Information Statement........................................... 37
8.15. Change of Sellers' Corporate Names.............................. 37
8.16. Tax Certifications.............................................. 37
8.17. Disclosure Supplement........................................... 37
ARTICLE IXPOST-CLOSING AGREEMENTS.......................................... 38
9.1. Non-Competition................................................. 38
9.2. Further Assurances.............................................. 39
9.3. Mail; Payments.................................................. 39
9.4. Rights of Enforcement and Settlement............................ 39
9.5. Records......................................................... 40
9.6. Tax Matters..................................................... 40
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C> <C>
9.7. Change of Sellers' Corporate Names. 42
9.8. Costs and Expenses................. 43
9.9. D&O Policy......................... 43
9.10. Indemnification by Buyer........... 43
ARTICLE XTERMINATION PRIOR TO CLOSING....... 45
10.1. Termination........................ 45
10.2. Effect on Obligations.............. 45
ARTICLE XIMISCELLANEOUS..................... 46
11.1. Fees and Expenses.................. 46
11.2. No Third Party Beneficiaries....... 46
11.3. Successors and Assigns............. 46
11.4. Notice............................. 46
11.5. Arbitration........................ 47
11.6. Public Announcements............... 48
11.7. Severability....................... 48
11.8. Governing Law...................... 49
11.9. Entire Agreement................... 49
11.10. Modification and Waiver............ 49
11.11. Specific Performance............... 49
11.12. Counterparts....................... 49
</TABLE>
A-4
<PAGE>
This asset purchase agreement (the "Agreement"), is made and entered as of
the 27th day of August, 1997 by and between Trans Leasing International, Inc.,
a Delaware corporation ("Parent"), and Trans Leasing Insurance Services, Inc.,
an Illinois corporation, Leasecard Auto Group, Inc., a Delaware corporation,
Nuvotron, Inc., a Delaware corporation, TL Lease Funding Corp. III, a Delaware
corporation ("TLFC III"), and TL Lease Funding Corp. IV, a Delaware
corporation ("TLFC IV"), each a wholly-owned subsidiary of Parent
(collectively, the "Operating Subsidiaries" and, together with Parent,
"Sellers"), on the one hand, and General Electric Capital Corporation, a New
York corporation ("Buyer"), on the other hand. Capitalized terms used herein
have the meanings given to them in Article I.
WITNESSETH:
Whereas, Sellers are engaged in the business of leasing, financing and
remarketing Equipment (the "Business");
Whereas, Sellers desire to sell to Buyer the Acquired Assets, and Buyer
wishes to purchase from Sellers the Acquired Assets; and
Whereas, stockholders of Parent representing more than fifty percent (50%)
of the issued and outstanding shares of Parent's Common Stock have executed
and delivered a written consent approving this Agreement and the transactions
contemplated hereby.
Now, therefore, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, Sellers and Buyer hereby agree as follows:
ARTICLE I
Definitions
Definitions. The following terms, as used herein, shall have the following
meanings:
"Accounts Receivable" means each and all trade accounts, finance accounts,
installment notes and other receivables of Sellers relating to the Financing
Contracts invoiced prior to the Closing Date and all claims of Sellers,
whether for payment or otherwise, relating thereto or arising therefrom.
"Acquired Assets" has the meaning given to it in Section 2.1.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such
Person, but specifically including, in the case of a Seller, any director or
officer of such Seller, any holder of a 10% or more equity interest in such
Seller and any family member or trust for the benefit of any of the foregoing.
"Agreement" has the meaning assigned to that term in the Introduction.
"Alternative Proposal" has the meaning assigned to that term in Section 6.7.
"Ancillary Documents" means all Contracts, instruments, certificates and
other documents executed and delivered in connection with the transactions
contemplated hereby.
"APR" means, with respect to a Financing Contract, the per annum financing
charge payable by the Obligor pursuant to such Financing Contract as
determined based on the Sellers' books and records.
"Assigned Contracts" has the meaning assigned to that term in Section
2.1(l).
A-5
<PAGE>
"Assumed Liabilities" has the meaning assigned to that term in Section 2.3.
"Assumed Taxes" means sales, use or property Taxes relating to the Acquired
Assets, whether arising before or after the Closing.
"Backlog" means any commitment made by or on behalf of Seller to enter into a
financing, leasing or other transaction, which transaction (i) has not
commenced on or prior to the Closing Date and (ii) had it commenced prior to
the Closing Date, would have constituted a Financing Contract.
"Balance Sheet" means the draft audited balance sheet of Parent and its
consolidated subsidiaries for the fiscal year ended June 30, 1997 prepared in
accordance with GAAP (except as may be indicated therein or in the notes
thereto), delivered to Buyer by Parent and attached hereto as Section 1.1 of
the Disclosure Schedule.
"Benefit Plan" means each plan, program, policy, payroll practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, retirement benefits, welfare benefits, performance awards,
stock or stock-related awards, fringe benefits or other employee benefits of
any kind, whether funded or unfunded, including, without limitation, each
"employee benefit plan," within the meaning of Section 3(3) of ERISA and each
"multi-employer plan" within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA.
"Business" has the meaning assigned to that term in the Preamble.
"Business Day" means any day excluding Saturday, Sunday and any day on which
commercial banks in New York City or Chicago, Illinois are authorized or
required by Law or other governmental action to close.
"Buyer" has the meaning assigned to that term in the Introduction.
"Closing" has the meaning assigned to that term in Section 3.1.
"Closing Date" has the meaning assigned to that term in Section 3.1.
"Closing Schedule" means a schedule to this Agreement to be delivered by
Sellers to Buyer on the Closing Date and attached hereto as Exhibit A, prepared
on a basis consistent with past practices of Sellers and certified as accurate
by the President of Parent, setting forth (i) employee expenses of Sellers
accrued in the ordinary course of business as set forth under account numbers
20313, 20500, 20550, 20560, 20570, 20575 and 20600 in the books and records of
Sellers (accrued tuition reimbursement, gross payroll, accrued vacation,
accrued commissions, accrued executive and manager bonus, accrued bonus--other,
and FICA and Medicare payable, respectively) and (ii) amounts necessary to
prepay debt obligations of Sellers listed in Section 2.7 to the extent the same
are not assumed by Buyer (including any prepayment penalties or make-whole
premiums thereon) as of the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable regulations thereunder.
"Commission" has the meaning assigned to that term in Section 4.7.
"Company Benefit Plan" has the meaning assigned to that term in Section 4.11.
"Contracts" means all contracts, agreements, arrangements, leases, sales
orders, purchase orders, understandings and commitments of any nature
whatsoever, whether written or oral, and including all amendments thereof and
supplements thereto.
"Credit Enhancement" means any (a) security deposit or unapplied advance
rental payment, (b) investment certificate, certificate of deposit,
authorization to hold funds, hypothecation of account or like instrument, (c)
letter of credit, guarantee, lease guarantee bond or postponement agreement,
(d) recourse agreement, (e) security
A-6
<PAGE>
agreement, (f) property, (g) certificate representing shares or the right to
purchase shares in the capital of any corporation or (h) bond or debenture, in
each case pledged, assigned, mortgaged, charged, made, delivered or transferred
as security for the performance of any obligation under or with respect to any
Financing Contract.
"Current Headquarters Lease" means that certain lease, dated December 1,
1994, as amended September 15, 1995, by and between Parent and Korman/Lederer
Management Co. covering the premises located at 3000 Dundee Road, Northbrook,
Illinois.
"Disclosure Schedule" means the written disclosure schedule delivered by
Sellers to Buyer as of the date hereof.
"D&O Indemnitees" has the meaning assigned to that term in Section 9.10(a).
"Documents" means all books, records, files, computer tapes, computer discs,
microfilm and other documents.
"Employee Agreement" means each management, employment, severance,
consulting, non-compete, confidentiality, or similar agreement or contract
between any Seller and any employee pursuant to which any Seller has any
liability, contingent or otherwise.
"Employees" has the meaning assigned to that term in Section 4.10(a).
"Environmental Laws" means all federal, state, local and foreign statutes,
laws (including, without limitation, applicable principles of common law),
rules, regulations and ordinances, and all applicable judicial and
administrative orders, judgments and decrees (as each has been or may be
amended from time to time) relating to Environmental Matters.
"Environmental Matter" means any matter arising out of, relating to, or
resulting from pollution, contamination, protection of the environment, human
health or safety, health or safety of employees, sanitation, and any matters
relating to emissions, discharges, disseminations, releases or threatened
releases of Hazardous Substances into the air (indoor and outdoor), surface
water, groundwater, soil, land surface or subsurface, buildings, facilities,
real or personal property or fixtures or otherwise arising out of, relating to,
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of, or exposure to, Hazardous
Substances.
"Equipment" means property with respect to which any Seller is the lessor,
seller, lender or secured party, as the case may be, pursuant to the terms of a
Financing Contract (whether initially or as assignee) or property which is held
by any Seller for sale or lease.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each business or entity which is a member of a
"controlled group of corporations," under "common control" or a member of an
"affiliated service group" with any Seller within the meaning of Section
414(b), (c) or (m) of the Code, or required to be aggregated with any Seller
under Section 414(o) of the Code, or is under "common control" with any Seller,
within the meaning of Section 4001(a)(14) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Asset" has the meaning assigned to that term in Section 2.2.
"Excluded Subsidiaries" means all Subsidiaries of Parent.
"Financing Contract" means any Contract (including any schedule, addendum or
amendment thereto or assignment, assumption, renewal or novation thereof) in
existence on the date hereof or which may be entered
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into by any Seller between the date hereof and the Closing Date and any
ancillary agreements relating thereto, which is in the form of a lease, rental
or lease purchase agreement with respect to property, or any sale Contract
(including an installment sale Contract or conditional sale agreement)
relating to the sale of property or any secured or unsecured loan, with
respect to which any Seller is the lessor, owner, seller, lender, secured
party or obligee (whether initially or as an assignee).
"GAAP" means generally accepted accounting practices as used in the United
States, applied on a consistent basis.
"Governmental Entity" means any foreign or domestic (federal, state or
local) government, governmental instrumentality or governmental or other
regulatory or administrative authority, agency or commission or court.
"Hazardous Substances" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents
or chemicals (including, without limitation, petroleum or any by-products or
fractions thereof, any form of natural gas, lead, asbestos and asbestos-
containing materials, polychlorinated biphenyls ("PCBs") and PCB-containing
equipment, radon and other radioactive elements, electromagnetic field
radiation and other radiation, infectious, carcinogenic, mutagenic, or
etiologic agents, pesticides, defoliants, explosives, flammables, corrosives
and urea formaldehyde foam insulation) that are regulated by, or may now or in
the future form the basis of liability under, any Environmental Laws.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or
any successor law, and the rules and regulations issued pursuant to that Act
or any successor law.
"Included Bank Accounts" has the meaning assigned to that term in Section
2.1(p).
"Income Tax" or "Income Taxes" means all Taxes based on or measured by net
income, including franchise Taxes which are based on or measured by net
income.
"Income Tax Return" means any Tax Return relating to Income Taxes.
"Indemnitees" has the meaning assigned to that term in Section 9.10(a).
"Information Statement" has the meaning assigned to that term in Section
6.4.
"Intellectual Property" means (a) all inventions and discoveries (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all know-how, trade secrets,
technical information, and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice (including
ideas, research and development, formulas, compositions, manufacturing and
production processes, techniques and methods, technical data, designs,
drawings, blue prints, patterns, specifications, assembly procedures, test
procedures, instruction manuals, operation manuals, maintenance manuals,
reliability data, quality control data, customer and supplier lists, parts
lists, pricing and cost information, and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Law" means any foreign or domestic (federal, state or local) law, statute,
ordinance, rule or regulation or body of law or Order.
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"Lien" means any lien, security interest, mortgage, pledge, hypothecation,
encumbrance or other interest or claim, whether arising by agreement, by
statute or otherwise.
"Litigation" means any claim, demand, notice, action, suit, proceeding,
arbitration, investigation, audit, inquiry or hearing by or before any
Governmental Entity or private arbitration tribunal.
"Loss" or "Losses" means each and all of the following items: claims,
losses, liabilities, obligations, payments, damages (including, without
limitation, actual, consequential or punitive damages), charges, judgments,
fines, penalties, amounts paid in settlement, Taxes, costs and expenses
(including, without limitation, interest which may be imposed in connection
therewith, reasonable costs and expenses of investigation, actions, suits,
proceedings, demands, assessments and reasonable fees, expenses and
disbursements of counsel, consultants and other experts).
"Material Adverse Effect" means any circumstances, change or effect that
individually or, when taken together with all other adverse circumstances,
changes or effects, has, or is reasonably likely to have, a material adverse
effect on (i) the Acquired Assets or (ii) the business, financial condition or
results of operations of the Business or (iii) Buyer's ability to conduct the
Business or (iv) Sellers' ability to consummate the transactions contemplated
hereby or satisfy their obligations hereunder.
"Net Book Value" means (a) with respect to any Financing Contract which the
applicable Seller has classified as a loan, installment sale or capital lease,
(i) the future minimum payments under such Financing Contract, plus (ii) the
Residual of the Equipment subject to such Financing Contract, plus (iii) the
Accounts Receivable on such Financing Contract, less (iv) the unearned income
on such Financing Contract, and (b) with respect to any Financing Contract
which the applicable Seller has classified as an operating lease, (i) the
value of the Equipment subject to such Financing Contract, net of accumulated
depreciation, plus (ii) the Accounts Receivable on such Financing Contract.
"New Headquarters Lease" means that certain lease, dated March 21, 1997 by
and between Parent and New Deerco Corporation (assigned by O'Donnell Wicklund
Pigozzi and Peterson) covering the premises located at 570 Lake Cook Road,
Deerfield, Illinois 60015.
"Notice" has the meaning assigned to that term in Section 9.10(c).
"Obligor" means any Person who is an obligor, purchaser, hirer, borrower or
lessee under any Financing Contract or the guarantor thereof.
"Operating Subsidiaries" has the meaning assigned to that term in the
Introduction.
"Order" means any judgment, order, injunction, ruling, decree, stipulation
or award of any Governmental Entity or private arbitration tribunal.
"Parent" has the meaning assigned to that term in the Introduction.
"Pension Plan" means each Company Benefit Plan which is subject to Title IV
of ERISA.
"Permit" means all rights and incidents in and to all licenses, franchises,
grants, easements, permits, consents, registrations, certificates, approvals,
orders or other authorizations of any Governmental Entity relating to the
Business.
"Permitted Investments" means: (i) negotiable instruments or securities
(whether certificated or uncertificated) which evidence (A) obligations of or
fully guaranteed by the United States of America, (B) time deposits in, or
bankers' acceptances or certificates of deposit issued by, any depository
institution or trust company organized under the laws of the United States of
America or any state thereof, and (C) commercial
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paper having a maturity of less than 180 days; and (ii) demand deposits in any
depository institution or trust company referred to in (i)(B) above.
"Permitted Liens" means (i) liens for Taxes or assessments or other
governmental charges or levies not yet due and (ii) deposits securing public or
statutory obligations of any Seller.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a Governmental Entity.
"Purchase Price" has the meaning assigned to that term in Section 2.5.
"Recovery" means any payment received under a Financing Contract in existence
on or at any time prior to the Closing Date as to which any amounts have been
written off the books and records of Sellers prior to Closing.
"Residual" means the estimated value of Equipment upon expiration of the
Financing Contract to which it is subject, as determined by Sellers and
established on their books and records at (a) the inception of such Financing
Contract or (b) if lower, the lowest estimated value of such Equipment
reflected on the books and records of Sellers during the period beginning with
the inception of such Financing Contract and ending on Closing.
"Retained Liabilities" has the meaning assigned to that term in Section 2.4.
"Scheduled Employees" has the meaning assigned to that term in Section 6.6.
"SEC Reports" has the meaning assigned to that term in Section 4.7.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitizations" means those transactions referred to in Sections 2.7(f),
(g) and (h).
"Sellers" has the meaning assigned to that term in the Introduction.
"Subsidiary" when used with respect to any Person means any corporation or
other organization, whether incorporated or unincorporated, of which such
Person directly or indirectly owns or controls at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which such Person is a general partner, but excluding the
trusts in which TLFC III and TLFC IV have beneficial interests.
"Tax" and "Taxes" means any taxes, charges, fees, levies, imposts, duties,
and other assessments, including but not limited to any income, alternative
minimum or add-on tax, estimated, gross income, gross receipts, sales, use,
transfer, transactions (including the Chicago Transaction Tax), intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise (including but not
limited to the Federal communications excise tax under Code Section 4251),
severance, stamp (including but not limited to the Florida Documentary Stamp
Tax), occupation, premium, recording (including but not limited to the
Tennessee Recordation Tax), real property, personal property, federal highway
use, commercial rent, environmental (including but not limited to taxes under
Section 59A of the Code) or windfall profit tax, the Tennessee Single Article
Tax, custom, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, penalties, or
additions to Tax and any interest or penalties proposed with respect to the
filing, obligation to file or failure to file any Tax Return.
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"Tax Return" means any report, return, statement, estimate, declaration,
letter, notice, form or other information or filing, including any schedule or
attachment thereto, and including any amendment thereto, required to be
supplied to a taxing authority in connection with Taxes.
"Third Party Claim" has the meaning assigned to that term in Section
9.10(c).
"TLFC III" has the meaning assigned to that term in the Introduction.
"TLFC IV" has the meaning assigned to that term in the Introduction.
"Tradenames" means the tradenames "Trans Leasing International" and
"LeaseCard" plus all other tradenames and trademarks and all variations
thereof in which the name "Trans Leasing" or "LeaseCard" appears that are, or
at any time in the five years prior to the Closing Date have been, used by
Sellers and/or any of their Affiliates in connection with the Business.
"Transferred Office Lease" has the meaning assigned to that term in Section
2.1(g).
"Transfer Taxes" has the meaning assigned to that term in Section 3.3.
"Yield" means, with respect to a Financing Contract, the per annum yield on
such Financing Contract as shown on the Sellers' books and records.
ARTICLE II
Purchase and Sale
2.1. Purchase and Sale of Acquired Assets Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Sellers shall sell,
transfer, assign, convey and deliver to Buyer, and Buyer shall purchase and
acquire from Sellers, all of each Seller's right, title to and interest in and
to all of such Seller's assets and properties of any nature whatsoever,
wherever located, whether now owned or acquired subsequent to the date hereof
and prior to the Closing, whether or not used or held for use in connection
with the conduct of the Business, but excluding the Excluded Assets (each and
all of the foregoing items being herein referred to as the "Acquired Assets").
Without limiting the generality of the foregoing, the Acquired Assets shall
include all of each Seller's right, title to and interest in and to the
following:
(a) all Financing Contracts including, without limitation, all of the
Financing Contracts listed in Section 2.1(a) of the Disclosure Schedule,
all Accounts Receivable and all Credit Enhancements relating thereto
including: (i) all amounts payable thereunder to any Seller (including
interest, rental penalties, late charges, residual and renewal proceeds,
insurance proceeds and indemnity payments due from third parties); (ii) the
right to demand, sue for, recover, receive and give receipts for all
amounts due (whether or not from Obligors or other Persons under or
relating to such Financing Contracts and Accounts Receivable and under or
relating to any Credit Enhancement in respect of such Financing Contracts
and Accounts Receivable); (iii) the benefit of, and the right (present and
future, actual or contingent) to sue on, all representations, warranties,
covenants, undertakings and indemnities from Obligors under or in
connection with such Financing Contracts and Accounts Receivable and from
any other Person under or in connection with any Credit Enhancement and so
that the sale hereunder shall be a sale of absolute legal and beneficial
title and all rights and interest therein (present and future, actual or
contingent) in accordance with this Agreement;
(b) all ownership interests or security interests, as the case may be,
including any rights to the residual interests, in all Equipment, subject
to the rights of Obligors under any Financing Contract relating to such
Equipment, together with insurance proceeds due from third parties in
respect of such Equipment;
(c) all Recoveries;
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(d) an original or copy of all business, financial and Tax records,
files, books and Contracts relating to the Acquired Assets or to the
Assumed Liabilities, including books and records which reflect the
principal terms of each Financing Contract which is included in the
Acquired Assets;
(e) all Backlog;
(f) all unexpired product warranties from the manufacturers of the
Equipment which is part of the Acquired Assets as well as any and all
unexpired component part manufacturer's warranties relating to the Acquired
Assets to the extent the same are assignable;
(g) those leases of real property used in the Business that are listed in
Section 2.1(g) of the Disclosure Schedule (the "Transferred Office Leases")
together with all of Sellers' right, title to and interest in (x) any and
all buildings, facilities and other structures and improvements thereon,
(y) any and all rights, privileges, hereditaments and appurtenances
appertaining thereto or to any of such buildings or other structures or
improvements, and (z) any and all fixtures, machinery, installations,
equipment and other property attributable thereto or located thereon,
therein or thereunder;
(h) those leases of personalty related to the Business, including those
leases listed in Section 2.1(h) of the Disclosure Schedule;
(i) to the extent transferable, all Permits, including, without
limitation, all Permits set forth in Section 2.1(i) of the Disclosure
Schedule;
(j) all Tradenames;
(k) all machinery, equipment, fixtures, installations and all other
personal property of each Seller, including, without limitation, all
vehicles, furniture, supplies, items historically expensed, office
equipment, software, materials, computer hardware, and other personal
property not normally included in inventory;
(l) the Contracts set forth in Section 2.1(l) of the Disclosure Schedule
(the "Assigned Contracts");
(m) all sales and promotional literature and other selling material,
books, records, files, plans, designs, specifications, customer lists,
supplier lists, credit information, business records and plans, studies,
surveys, reports, correspondence, computer software, data processing
systems, data bases and other data;
(n) all Intellectual Property owned or used by any Seller in the Business
or otherwise, including, without limitation, all Intellectual Property set
forth in Section 2.1(n) of the Disclosure Schedule;
(o) all accounts, accounts receivable and notes receivable, together with
any unpaid interest or fees accrued thereon or other amounts due with
respect thereto and all claims arising therefrom in each case relating to
services rendered in the operation of the Business;
(p) all bank accounts, lock boxes and safe deposit boxes of any Seller,
including, without limitation, those bank accounts, lock boxes and safe
deposit boxes set forth in Section 2.1(p) of the Disclosure Schedule, but
excluding the account listed in Section 2.2(e) of the Disclosure Schedule
(the "Included Bank Accounts");
(q) all of each Seller's prepaid charges and expenses, including any such
charges and expenses with respect to insurance premiums, leases and rentals
and utilities, except to the extent associated with any Excluded Asset or
Retained Liability;
(r) all of each Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Acquired Assets or
the Assumed Liabilities, whether known or unknown, liquidated or
unliquidated, fixed or contingent (including, without limitation, all of
each Seller's rights, claims, credits, causes of action or rights of set-
off under the Securitizations), and all rights of each Seller under or
pursuant to all warranties, representations and guarantees made by
suppliers, manufacturers, contractors and other third parties in connection
with products or services purchased by or furnished to any Seller for use
in the Business or affecting any of the Acquired Assets;
(s) all invoices, bills of sale and other instruments and documents
evidencing any Seller's title to any of the Acquired Assets;
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(t) to the extent transferable, each insurance policy maintained by any
Seller with respect to the Business or the Acquired Assets, including,
without limitation, (i) the insurance policies which are maintained by each
Seller with respect to any item of Equipment included in the Acquired
Assets (whether or not on behalf of Seller or any lessee's or Obligor's
interest in such Equipment) and (ii) any Seller's interests as primary
insured or loss payee under any other policies of insurance with respect to
any such Equipment;
(u) all goodwill associated with the Business or the Acquired Assets;
(v) all cash and cash equivalents of Sellers; and
(w) all trust certificates and other documents evidencing the rights of
Sellers with respect to the Securitizations.
2.2. Excluded Assets. Notwithstanding the provisions of Section 2.1, the
Acquired Assets shall not include any of the following assets of Sellers (the
"Excluded Assets"):
(a) the Current Headquarters Lease and all leasehold improvements on the
premises leased thereunder and all prepaid charges and expenses in respect
thereof;
(b) any real property or interests therein other than in respect of the
Transferred Office Leases, except any such real property or interests
constituting a Credit Enhancement;
(c) the Financing Contracts listed in Section 8.10 of the Disclosure
Schedule, all Equipment leased thereunder and all Recoveries, Credit
Enhancements, Accounts Receivable, Backlog, and Residuals with respect
thereto;
(d) all capital stock of each Excluded Subsidiary and the minute books,
stock transfer books and seal of each Seller and each Excluded Subsidiary;
(e) the bank account of Parent listed in Section 2.2(e) of the Disclosure
Schedule;
(f) all business records of Sellers relating to the Excluded Assets or
Retained Liabilities;
(g) the telephone system and security system located in the premises
leased under the Current Headquarters Lease;
(h) those items of office furniture, computer equipment and other assets,
each to the extent such items and their undepreciated book value are listed
in Section 2.2(h) of the Disclosure Schedule;
(i) those life insurance policies listed in Section 2.2(i) of the
Disclosure Schedule, including the cash surrender value thereof;
(j) all of each Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Excluded Assets or
the Retained Liabilities, whether known or unknown, liquidated or
unliquidated, fixed or contingent, and all rights of each Seller under or
pursuant to all warranties, representations and guarantees made by
suppliers, manufacturers, contractors and other third parties in connection
with products or services purchased by or furnished to any Seller affecting
any of the Excluded Assets;
(k) Sellers' rights under this Agreement; and
(l) Sellers' rights in the assets of Sellers' 401(k) plan.
2.3. Assumption of Liabilities. (a) Except with respect to liabilities and
obligations expressly excluded pursuant to Section 2.4, as of the Closing and
in reliance on the representations, warranties, covenants and agreements made
to Buyer herein, Buyer shall assume and thereafter pay, perform or discharge,
and effective as of the Closing, does hereby assume, only the following
liabilities and obligations of Sellers (collectively, the "Assumed
Liabilities"):
(i) all liabilities and obligations under (A) the Financing Contracts
constituting the Acquired Assets and (B) the Assigned Contracts;
(ii) all liabilities and obligations under the Transferred Office Leases;
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(iii) all liabilities and obligations with respect to the debt
obligations of Sellers not prepaid at Closing and which are listed in
Section 2.3(a)(iii) of the Disclosure Schedule;
(iv) all liabilities and obligations with respect to the Assumed Taxes;
and
(v) all liabilities and obligations with respect to accounts payable of
Sellers incurred in the ordinary course of business as set forth in the
books and records of Sellers as account numbers 20300, 20310, 20311, 20312,
20314 and 20350 (accounts payable--operating expenses, accrued expenses,
accrued telephone expense, accrued federal express, accrued bank fees and
accrued closers club, respectively) and which are listed in Section
2.3(a)(v) of the Disclosure Schedule (which Section of the Disclosure
Schedule shall be required to be delivered by Sellers only as of the
Closing Date).
(b) From and after the Closing, Buyer shall indemnify and hold harmless
Sellers and their Affiliates and their respective officers, directors,
employees, agents, successors and assigns from and against any and all Losses
incurred by any of them arising out of, relating to or resulting from any
failure or alleged failure by Buyer to pay, perform or discharge when due any
of the Assumed Liabilities.
2.4. Retained Liabilities. (a) Notwithstanding any other provision of this
Agreement, Buyer shall not and does not assume, agree to pay, perform or
discharge, or otherwise have any liability or responsibility for any liability
or obligation of any Seller not included in the Assumed Liabilities,
regardless of whether such liability or obligation is fixed or contingent,
asserted or unasserted, and whether arising prior to, on or after the Closing
Date (collectively, the "Retained Liabilities"). Without limiting the
generality of the foregoing, the Retained Liabilities shall include:
(i) any and all liabilities and obligations to the extent attributable to
any Excluded Asset;
(ii) any liabilities and obligations relating to actions or inactions by
any Seller in respect of actual or alleged violations of Laws;
(iii) any liability or obligation of any Seller in respect of any Income
Taxes;
(iv) any liabilities and obligations arising from any breach, or from any
fact or transaction involving a breach, of any covenant, agreement,
representation or warranty of any Seller contained herein or arising from,
out of, or in connection with, the transactions contemplated by this
Agreement;
(v) any liabilities or obligations of any Seller or any of its Affiliates
or any Company Benefit Plan with respect to any of its or their current or
former employees, directors, consultants or advisors whether arising prior
to, on or after the Closing Date, including, but not limited to, (A)
liabilities and obligations under any Company Benefit Plan, (B) liabilities
and obligations in respect of any payroll Taxes, (C) liabilities and
obligations arising from any employee or employment related Litigation, (D)
liabilities and obligations in respect of any collective bargaining
agreement to which any Seller is or was a party and (E) liabilities and
obligations in respect of any severance, bonus or vacation pay agreements
or arrangements;
(vi) any liabilities or obligations arising from any Litigation,
investigation or other proceeding pending or threatened in respect of any
Seller and for any of its directors in connection with any of the
transactions contemplated hereby; and
(vii) any liabilities or obligations incurred by any Seller on or after
the Closing Date.
(b) From and after the Closing, Sellers shall, jointly and severally,
indemnify and hold harmless Buyer, its Affiliates, their respective officers,
directors, employees, agents, successors and assigns from and against any and
all Losses incurred by any of them arising out of, relating to or resulting
from any failure or alleged failure by any Seller to pay, perform or discharge
when due any of the Retained Liabilities.
2.5. Purchase Price. The purchase price to be paid to Sellers for the
Acquired Assets (the "Purchase Price") shall be an amount equal to
$46,082,009.50 plus amounts set forth in the Closing Schedule, provided that
amounts payable in respect of prepayments of debt obligations shall, at
Sellers' instruction, be paid by Buyer directly to the applicable lender.
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2.6. Allocation of Purchase Price. The Purchase Price shall be allocated
among the Acquired Assets based on the fair market value of each Acquired
Asset as of the Closing Date as determined by Buyer and otherwise in
accordance with Section 1060 of the Code. Within 60 days after the Closing,
Buyer shall provide to Sellers copies of Internal Revenue Service Form 8594
and any required exhibits thereto, which shall be prepared in a manner
consistent with this Section 2.6. Buyer and Sellers shall file and cause their
Affiliates to file, all Tax Returns in a manner consistent with such
allocation of the Purchase Price and shall take no position contrary thereto
unless required to do so by applicable Tax laws.
2.7. Treatment of Seller's Debt Obligations. Sellers' obligations for
borrowed money outstanding at the time of Closing shall be treated as follows:
(a) The Amended and Restated Note Agreements, dated as of November 30,
1994, among Parent and Principal Mutual Life Insurance Company,
Massachusetts Mutual Life Insurance Company, Phoenix Home Life Mutual
Insurance Company, TMG Life Insurance Company and Core States Bank, N.A.:
The consent of the holders of the notes issued pursuant to these agreements
will be obtained prior to the Closing in order that Parent shall prepay the
notes at Closing with funds provided by Buyer as part of the Purchase
Price;
(b) The Amended and Restated Note Agreement, dated as of November 30,
1994, between Parent and Massachusetts Mutual Life Insurance Company: The
consent of the holder of the notes issued pursuant to this agreement will
be obtained prior to the Closing in order that Parent shall prepay the
notes at Closing with funds provided by Buyer as part of the Purchase
Price;
(c) The Credit Agreement, dated as of January 31, 1996, between Parent
and The First National Bank of Chicago: Parent will prepay all outstanding
obligations under this agreement at Closing with funds provided by Buyer as
part of the Purchase Price;
(d) The Revolving Credit and Term Loan and Security Agreement, dated as
of December 20, 1996, between Parent and First Union National Bank of North
Carolina: Parent will prepay all outstanding obligations under this
agreement at Closing with funds provided by Buyer as part of the Purchase
Price;
(e) Indenture, dated as of October 1, 1992, between Parent and American
National Bank and Trust Company of Chicago: Buyer will assume all
outstanding obligations under this agreement at the Closing;
(f) Agreements pertaining to the creation of, and issuance of lease
backed notes by, the PSSFC Equipment Lease Trust 1994-1: Buyer will acquire
trust certificates representing 100% of the beneficial interest of such
trust and assume Sellers' obligations under the related Pooling and
Servicing Agreement and any other ancillary agreements;
(g) Agreements pertaining to the creation of, and issuance of lease
backed notes by, the TLFC IV Equipment Lease Trust 1995-1: Buyer will
acquire trust certificates representing 100% of the beneficial interest of
such trust and assume Sellers' obligations under the related Pooling and
Servicing Agreement and any other ancillary agreements; and
(h) Agreements pertaining to the creation of, and issuance of lease
backed notes by, the TLFC IV Equipment Lease Trust 1996-1: Buyer will
acquire trust certificates representing 100% of the beneficial interest of
such trust and assume Sellers' obligations under the related Pooling and
Servicing Agreement and any other ancillary agreements.
Buyer shall pay all costs and expenses of obtaining any required rating
agency approval for the treatment of Sellers' debt obligations as set forth in
the foregoing paragraphs (f), (g), and (h).
2.8. Fairness Opinion. Sellers have received, and have delivered to Buyer a
true and complete copy of, the opinion of Rodman & Renshaw to the effect that,
as of the date hereof, the anticipated net distribution to the stockholders of
Sellers from the proceeds of the Purchase Price is fair to the stockholders of
Sellers from a financial point of view.
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ARTICLE III
Closing
3.1. The Closing; Time and Place. The Closing of the purchase and sale of
the Acquired Assets (the "Closing") shall take place at the offices of
Kirkland & Ellis, 200 East Randolph Drive, Chicago, IL 60601, commencing at
9:00 a.m. (Chicago time), as promptly as practicable, but in no event later
than five Business Days after the day on which the last of the conditions set
forth in Articles VII and VIII is satisfied or waived, or at such other place,
date and time as the parties may agree in writing (the date of the Closing
shall be the "Closing Date").
3.2. Assignment of Contracts, Rights and Obligations. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any Contract if an attempted assignment thereof,
without the consent of any person not a party to this Agreement, would
constitute a breach or default thereof, cause or permit the acceleration or
termination thereof, or in any way materially and adversely affect the rights
of Buyer or Sellers thereunder or the right of Buyer to conduct all or any
part of the Business in the manner and on the terms presently enjoyed by
Sellers. If such consent is not obtained, Sellers shall, at Buyer's expense,
cooperate with Buyer in any reasonable arrangement consistent with Sellers'
liquidation plan designed (a) to provide Buyer the benefits under any such
Contract, including, without limitation, (i) compliance by Sellers on Buyer's
behalf and at Buyer's expense with any such Contract and (ii) enforcement for
the benefit of Buyer of any and all rights of Sellers against a third party
thereto arising out of the breach or cancellation by such third party or
otherwise, and (b) to enable Sellers consistent with Sellers' liquidation plan
to meet their obligations, if any, under any such Contract, or to limit, to
the greatest extent reasonably possible, any liability of Sellers arising from
their failure to perform any such Contract.
3.3. Payment of Taxes and Fees. Buyer shall pay and be responsible for all
transfer, sales, stamp, registration, documentary or other similar Taxes
payable in connection with the transactions contemplated hereby ("Transfer
Taxes") and will prepare and file any Tax Returns and other filings relating
thereto.
3.4. Notices of Sale. Sellers (as reasonably requested by Buyer) will, from
time to time, execute notices (or powers of attorney authorizing Buyer to
execute such notices on Sellers' behalf) which have been prepared by Buyer for
delivery to the other party under each of the Financing Contracts sold,
transferred, assigned, delivered and conveyed to Buyer pursuant to this
Agreement advising such other party that such Financing Contracts have been
sold to Buyer and directing such other party to send to Buyer all future
payments on account, notices and correspondence relating to the foregoing.
ARTICLE IV
Representations of Sellers
Sellers, jointly and severally, represent and warrant to Buyer as follows
(none of such representations and warranties, other than those set forth in
Section 4.13, shall survive the Closing):
4.1. Organization, Good Standing, Power, Etc. Each Seller (a) is a
corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation; (b) is qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of any of the Acquired Assets or the nature of the
Business makes such qualification necessary; and (c) has all requisite
corporate power and authority (i) to own or lease and operate the Acquired
Assets and carry on the Business as presently being conducted and (ii) to
execute, deliver and perform this Agreement and all Ancillary Documents to
which such Seller may be a party, and to consummate the transactions
contemplated hereby and thereby. Parent has no Subsidiaries other than the
Operating Subsidiaries.
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4.2. Authorization of Agreement. Each Seller has taken all necessary
corporate action (including, without limitation, obtaining the approval of its
Board of Directors and any consent of stockholders required by Law or by its
Articles of Incorporation or By-laws), to authorize the execution, delivery
and performance of this Agreement and the Ancillary Documents to which such
Seller may be a party and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been, and each of the Ancillary
Documents to which such Seller may be a party has been or will be, duly and
validly authorized, executed and delivered by such Seller and constitutes, and
each of the Ancillary Documents constitutes or will upon execution and
delivery constitute the legal, valid and binding obligation of such Seller
enforceable against such Seller in accordance with their terms, except to the
extent that such enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors rights
generally and (b) is subject to general principles of equity.
4.3. Charter Documents and Corporate Records. Parent has previously provided
Buyer with true and complete copies of the Certificate or Articles of
Incorporation (certified by the Secretary of State of its state of
incorporation) and Bylaws (certified by a duly authorized secretary or
assistant secretary) of Parent and each Operating Subsidiary, each as amended
and in effect on the date hereof, together with certified copies of
resolutions of its Board of Directors and stockholders approving and
authorizing this Agreement and the Ancillary Documents and the consummation of
the transactions contemplated hereby and thereby.
4.4. No Violations. Except as set forth in Section 4.4 of the Disclosure
Schedule, the execution, delivery and performance of this Agreement and any
Ancillary Document by Sellers and consummation by Sellers of the transactions
contemplated hereby and thereby will not, with or without the giving of notice
or the lapse of time, or both, (a) conflict with any provision of the
Certificate or Articles of Incorporation or Bylaws of any Seller, (b) conflict
with, or result in any violation of, the terms of any Law or Order to which
the Acquired Assets or the Business are subject or from which the Acquired
Assets or the Business derive benefit; or (c) result in the creation or
imposition of any Lien upon the Acquired Assets or any portion thereof.
4.5. Governmental and Other Consents. Except as set forth in Section 4.5 of
the Disclosure Schedule, no consent, authorization or approval of, or
exemption by, or filing with, any Governmental Entity or any other third party
is required in connection with the execution, delivery and performance by any
Seller of this Agreement or any Ancillary Document to which such Seller may be
a party or the consummation of the transactions contemplated hereby or thereby
or for the ownership and use by Buyer of the Acquired Assets after the Closing
in the same manner as presently conducted.
4.6. Compliance with Laws. Except as set forth in Section 4.6 of the
Disclosure Schedule, (i) each Seller is in compliance with all Laws applicable
to its Business, including but not limited to laws pertaining to usury,
installment or conditional sales and sales financing and Environmental
Matters, (ii) each Seller has had at all times all Permits required to conduct
the Business and has conducted the Business and has owned and operated its
properties at all times in compliance with all Laws, including Environmental
Laws, and (iii) no Seller has received any notice of violation of any Law nor,
to any Seller's knowledge, is any such notice pending or threatened. Except as
set forth in Section 4.6 of the Disclosure Schedule, no Seller is subject to
any judgment, writ, decree, injunction or order of any federal, foreign, state
or local court or Governmental Entity relating to the acquisition, collection
or administration of any Financing Contracts or the disposition of any
Equipment or, in either case, any transactions or activities incidental
thereto.
4.7. Financial Statements. Parent has previously furnished Buyer with true
and complete copies of its (a) Annual Reports on Form 10-K for the fiscal
years ended June 30, 1996 and June 30, 1997, as filed with the Securities and
Exchange Commission (the "Commission"), (b) Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, as filed with the Commission, (c) proxy
statements related to all meetings of its stockholders (whether annual or
special) held during Parent's last two fiscal years, and (d) all other reports
or registration statements filed by Parent with the Commission since June 30,
1996, except for preliminary material (in the case of clauses (c) and (d)
above) and except for registration statements on Form S-8 relating to employee
benefit plans (clauses (a) through (d) being referred to herein collectively
as the "SEC Reports"). As of their
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respective dates, the SEC Reports complied as to form with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such SEC Reports. As of
their respective dates, the SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements
of Parent included in the SEC Reports comply as to form with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto. The financial statements included in the SEC
Reports: (i) have been prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto); (ii) present fairly the financial
position of Parent and its Subsidiaries as at the dates thereof and the
results of their operations and cash flows for the periods then ended subject,
in the case of the unaudited interim financial statements, to normal year-end
audit adjustments, any other adjustments described therein and the fact that
certain information and notes have been condensed or omitted in accordance
with the Exchange Act and the rules promulgated thereunder; and (iii) are in
accordance with the books of account and records of Parent and its
Subsidiaries.
4.8. Absence of Changes. Except as set forth in Section 4.8 of the
Disclosure Schedule and except as otherwise expressly contemplated by this
Agreement or the Ancillary Documents, since June 30, 1997, the Business has
been conducted in the ordinary course, consistent with past practice and there
has not been (i) any Material Adverse Effect; (ii) any sale, assignment or
transfer of any tangible or intangible assets of the Business except in the
ordinary course of business; (iii) any change in the manner of business or
operations of the Business; (iv) any transaction entered into by the Business
other than in the ordinary course of business; or (v) any agreement or
commitment (contingent or otherwise) by any Seller to do any of the foregoing.
4.9. Absence of Undisclosed Liabilities. Sellers have no liabilities or
obligations of any kind whatsoever (whether or not accrued, contingent or
absolute, asserted or unasserted, and whether or not such liabilities or
obligations would be required to be reflected on a balance sheet prepared in
accordance with GAAP) other than: (a) liabilities and obligations set forth in
Section 4.9 of the Disclosure Schedule, (b) liabilities and obligations
reserved against in full on, or disclosed and quantified in full in the
footnotes to, the Balance Sheet, and (c) liabilities and obligations incurred
in the ordinary course of business consistent with past practice since the
date of the Balance Sheet.
4.10. Employees, Labor Relations, Etc. (a) Section 4.10(a) of the Disclosure
Schedule sets forth the name and title of each Person employed by Sellers as
of the date hereof, including those on permitted leaves of absence
("Employees"), the aggregate annual compensation (including salary, bonuses
and commissions) currently paid by Sellers to that Person and, to the best
knowledge of Sellers, each such Person's home address, including zip code.
(b) Except as set forth in Section 4.10(b) of the Disclosure Schedule, none
of Sellers is now nor ever has been a party to or bound by any collective
bargaining agreement.
(c) Sellers have not engaged in any unfair labor practice or discriminated
on the basis of race, age, sex or otherwise in its employment conditions or
practices with respect to the Employees or former employees. Except as set
forth in Section 4.10(c) of the Disclosure Schedule, there are no existing, or
to any Seller's knowledge, threatened claims, demands, actions, suits,
proceedings, arbitrations, audits, inquiries, disputes or grievances relating
to any Employee or former employee, and there are no pending or, to any
Seller's knowledge, threatened representation questions respecting any
Employee or former employee.
(d) Each Seller (i) is in compliance with all applicable Laws respecting
employment, employment practices, terms and conditions of employment and wages
and hours, in each case, with respect to Employees or former employees,
including, but not limited to, the Consolidated Omnibus Budget Reconciliation
Act; (ii) has withheld all amounts required by Law or by agreement to be
withheld from the wages, salaries and other payments to Employees or former
employees in connection with the Business; (iii) is not liable for any arrears
of wages or any Taxes or any penalty for failure to comply with any of the
foregoing; and (iv) except as set forth in Section
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4.10(d) of the Disclosure Schedule, is not liable for any past due payment to
any trust or other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, social security or other
benefits for Employees or former employees in connection with the Business.
4.11. Employee Benefit Plans, Etc. (a) (i) (A) Sellers have performed all
obligations required to be performed by them under, and are not in default
under or in violation of, any Benefit Plan or Employee Agreement with respect
to which any Seller has, or may have, any liability (collectively, the
"Company Benefit Plans"), and are in compliance with, and each Company Benefit
Plan and Employee Agreement has been operated in accordance with its
provisions and in compliance with, applicable Laws, including, without
limitation, ERISA, the Code and the rules and regulations promulgated
thereunder; (B) no "prohibited transaction," within the meaning of Section
4975 of the Code or Section 406 of ERISA, has occurred with respect to any
Company Benefit Plan; (C) there is no action, proceeding, arbitration, suit or
claim pending, or to any Seller's knowledge, threatened or anticipated (other
than routine claims for benefits) against any Company Benefit Plan or against
the assets of any Company Benefit Plan; (D) no event or transaction has
occurred with respect to any Company Benefit Plan that would result in the
imposition of a tax under any of Sections 4972, 4979 or 4980B of the Code or
similar excise tax as a result of the operation of the Company Benefit Plans;
and (E) each Company Benefit Plan can be amended, terminated or otherwise
discontinued without liability to any Seller, Buyer or any of their
Affiliates.
(ii) Any Company Benefit Plan maintained by Sellers which is intended to be
qualified under Section 401(a) of the Code is and has since its inception
always been qualified under Section 401(a) of the Code. No circumstances exist
which could adversely affect this qualification. None of the Company Benefit
Plans is a Pension Plan.
(b) No Seller has any ERISA Affiliates (other than another Seller).
4.12. Tax Matters. Except as set forth in Section 4.12 of the Disclosure
Schedule, (i) all Income Tax Returns required to be filed by Sellers have been
filed in a timely manner, (ii) all such Income Tax Returns are correct and
complete, (iii) all Income Taxes required to be paid by Sellers, whether or
not shown to be due on such Income Tax Returns have been timely paid in full,
(iv) no deficiency for any Income Taxes has been assessed by any taxing
authority against Sellers which remains unpaid, (v) there are no pending
written proposed deficiencies or other written claims for Income Taxes
received by Sellers, (vi) no Income Tax Returns with respect to the Acquired
Assets or Sellers currently are the subject of an audit by any taxing
authority, (vii) no Seller currently is a beneficiary of any extension of time
within which to file any Income Tax Return, (viii) no Seller has waived any
statute of limitations in respect of Income Taxes or agreed to any extension
of time with respect to an Income Tax assessment or deficiency, (ix) each
Seller has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party, and (x) none of the
Sellers (A) has been a member of an affiliated group filing a consolidated
federal Income Tax Return (other than a group the common parent of which was
Parent) or (B) has any liability for Taxes of any Person (other than any
member of an affiliated group the common parent of which was Parent) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law), or as a transferee or successor, by contract or otherwise.
The accruals and reserves for Income Taxes reflected on the Balance Sheet are
adequate in all respects to cover any liability of Sellers for Income Taxes
through the date of the Balance Sheet.
4.13. Title to Properties; Absence of Liens, Etc. Except as set forth in
Section 4.13 of the Disclosure Schedule, Sellers have good and marketable
title to all the properties and assets included in the Acquired Assets, free
and clear of all Liens except for Permitted Liens. This representation and
warranty shall survive the Closing.
4.14. Litigation and Orders. Except as set forth in Section 4.14 of the
Disclosure Schedule, as of the date hereof:
(a) There is no Litigation pending or, to the knowledge of any Seller,
threatened against, affecting or involving the Business or any of the
Acquired Assets, or which seeks to prevent or challenge the
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transactions contemplated hereby, nor to the knowledge of any Seller is
there any basis for any such Litigation.
(b) There is not in existence any Order requiring any Seller or any
officer, director or employee of such to take any action of any kind with
respect to the Business or the Acquired Assets or to which any Seller or
any officer, director or employee of such is a party or by which any of
them is bound affecting the Business or the Acquired Assets.
(c) No Seller nor, to Parent's knowledge after due inquiry, any officer
or director nor, to Parent's knowledge, any employee (while employed by any
Seller) of Sellers has been permanently or temporarily enjoined or barred
by any Order from engaging in or continuing any conduct or practice in
connection with the Business.
4.15. Broker. Sellers, jointly and severally, represent and warrant that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Sellers other
than amounts payable to Rodman & Renshaw in connection with the fairness
opinion referred to in Section 2.8.
4.16. Financing Contracts. Section 2.1(a) of the Disclosure Schedule sets
forth a list of all Financing Contracts and Credit Enhancements and the Net
Book Value, tax basis and Yield of each Financing Contract as of a date not
earlier than 5 Business Days prior to the date hereof. Except as set forth in
Section 4.16 of the Disclosure Schedule, (i) each Financing Contract and
Credit Enhancement is in full force and effect and is valid, binding and
enforceable by Seller against the Obligor thereunder in accordance with its
written terms; (ii) each Financing Contract and Credit Enhancement constitutes
and arose out of a bona fide business transaction entered into in the ordinary
course of business; and (iii) neither the billing and collection nor the
enforcement of any Financing Contract or Credit Enhancement in accordance with
the terms thereof will result in the violation of any Laws.
4.17. State Takeover Statutes. No state takeover statute or similar statute
or regulation, including Section 203 of the Delaware General Corporation Law,
imposes restrictions affecting this Agreement or the transactions contemplated
hereby.
4.18. Powers of Attorney. Except as set forth in Section 4.18 of the
Disclosure Schedule, there are no general or special powers of attorney
outstanding with respect to the Acquired Assets or the Business.
4.19. Books and Records. The books of account and other financial records to
be transferred to Buyer pursuant hereto are complete and correct, are
maintained in accordance with all applicable Laws, and are accurately
reflected in the SEC Reports. Parent has provided to Buyer and its
representatives true and complete copies of or access to all minute books or
corporate records of each Seller.
4.20. Entire Business. Except for the Excluded Assets and the Retained
Liabilities, the Acquired Assets include all assets and properties which are
used or held for use in connection with the conduct and operation of the
Business.
4.21. No Breaches or Defaults. Except as set forth in Section 4.21 of the
Disclosure Schedule, (i) no Seller, and, to the knowledge of Sellers, no other
party thereto, is in breach of or in default under any of the New Headquarters
Lease, the Transferred Office Leases and the Contracts listed in Section 8.6
of the Disclosure Schedule (all of the foregoing being referred to as the
"Specified Contracts") and no event has occurred which, with notice and/or
lapse of time, would constitute a default by such Seller or, to the knowledge
of Sellers, any other party thereto under any Specified Contract; (ii) no
Seller has received any notice from or given any notice to any other party
indicating that such Seller or such other party, as the case may be, is
presently in default under or in breach or violation of any Specified
Contract; and (iii) each Specified Contract is in full force and effect and is
valid, binding and enforceable against the applicable Seller and, to the
knowledge of Sellers, each other party thereto in accordance with its terms.
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ARTICLE V
Representations of Buyer
Buyer represents and warrants to Sellers as follows:
5.1. Organization and Standing of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite power and authority to execute, deliver and
perform this Agreement and all Ancillary Documents to which Buyer may be a
party and to consummate the transactions contemplated hereby and thereby.
5.2. Authorization of Agreement. Buyer has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the Ancillary Documents to which Buyer may be a party and the consummation
of the transactions contemplated hereby and thereby. This Agreement has been,
and each of the Ancillary Documents to which Buyer may be a party has been or
will be, duly and validly authorized, executed and delivered by Buyer and
constitutes, and each of the Ancillary Documents constitutes or will upon
execution and delivery constitute, the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with their terms.
5.3. No Violations. The execution, delivery and performance of this Agreement
and any Ancillary Document by Buyer and consummation by Buyer of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (a) conflict with any provision
of Buyer's Certificate of Incorporation or Bylaws or (b) conflict with any Law
or Order to which Buyer is subject which conflict could materially adversely
affect the ability of Buyer to consummate the transactions contemplated hereby.
5.4. Governmental and Other Consents. Except for consent under the HSR Act,
no consent, authorization or approval of, or exemption by, or filing with, any
Governmental Entity or any other third party is required in connection with the
execution, delivery and performance by Buyer of this Agreement or any Ancillary
Document to which it may be a party or the consummation of the transactions
contemplated hereby or thereby.
ARTICLE VI
Between Signing and Closing
6.1. Commercially Reasonable Efforts; Cooperation by Parties. (a) In addition
to all other obligations prescribed in this Agreement and subject to the terms
and conditions hereof, each of the parties hereto shall continue to cooperate
with each other and use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable Law, to ensure that the conditions set forth in
Articles VII and VIII are satisfied and to consummate and make effective the
transactions contemplated by this Agreement, including (i) filing as soon as
practicable notifications under the HSR Act in connection with this Agreement
and the transactions contemplated hereby, and responding as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice for additional information or
documentation and responding as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters and (ii) obtaining all consents,
approvals, transfers, permissions, waivers, orders, licenses, registrations or
authorizations of all third parties which are necessary or advisable to
consummate and make effective the transactions contemplated by this Agreement,
to transfer the Acquired Assets to Buyer.
(b) If any court, domestic or foreign, having jurisdiction over any party
issues or otherwise promulgates any injunction, decree or similar order prior
to the Closing which prohibits the consummation of the transactions
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contemplated hereby, the parties will use commercially reasonable efforts to
have such injunction dissolved or otherwise eliminated as promptly as possible
and, prior to or after the Closing, to pursue the underlying Litigation
diligently and in good faith.
6.2. Access and Investigations. During the period from the date of this
Agreement to the Closing Date, Sellers shall give or cause to be given to
Buyer or its representatives and agents reasonable access during normal
business hours to all the premises where the Business of Sellers is conducted
in regard of the Acquired Assets and Assumed Liabilities, all employees of
Sellers and all Documents (wherever located) of Sellers relating to the
Acquired Assets and Assumed Liabilities including all company and accounting
books and records, all financial records and statements, all Tax Returns and
Tax records and all records pertaining to the Business, any Financing Contract
or Equipment or any other Acquired Assets and Assumed Liabilities. Sellers
agree that no investigation by Buyer or its representatives or agents shall
affect or limit the scope of the representations and warranties of Sellers
contained herewith or limit liability for breach of any such representation or
warranty.
6.3. Conduct of Business. (a) During the period from the date of this
Agreement until the Closing Date, except as Buyer may otherwise consent to in
writing, Sellers shall:
(i) except as expressly contemplated hereby, operate the Business of
Sellers only in the usual, regular and ordinary course and in accordance
with past practices;
(ii) use their commercially reasonable efforts to preserve Sellers'
business relationships with clients, lenders, suppliers, customers and
others having significant dealings with the Business, and preserve the
goodwill and ongoing operations of the Business;
(iii) maintain and keep Sellers' properties and equipment in good repair,
working order and condition, ordinary wear and tear excepted; and
(iv) use their commercially reasonable efforts to maintain insurance
coverages and all of the books and records of Sellers in the usual, regular
and ordinary manner on a basis consistent with past practices.
(b) During the period from the date of this Agreement until the Closing
Date, except as Buyer may otherwise consent to in writing, Sellers shall not,
directly or indirectly:
(i) enter into any Financing Contract with a Yield of less than 9%;
(ii) enter into any Financing Contract which, when adding the original
Equipment cost of such Financing Contract to the Net Book Value of all
Financing Contracts with the same Obligor (as reflected on the books and
records of Sellers) would exceed $1,000,000;
(iii) sell or securitize (except for substitutions and transfers required
by the terms of this Agreement) any Financing Contracts;
(iv) acquire, by purchase or otherwise, any material assets;
(v) modify, amend or waive the terms of any Financing Contract or
Scheduled Contract; provided that Buyer's consent to modification or
amendment of the payment terms of a Financing Contract shall not be
required until the aggregate contractual rents of all Financing Contracts
so modified or amended, determined prior to such modification or amendment,
exceeds $250,000;
(vi) subject any of the Acquired Assets to any Lien, other than any
Financing Contract subjected to a Lien in the ordinary course of business
pursuant to the existing credit facilities of Sellers described in Section
2.7(d) of this Agreement;
(vii) sell, lease, transfer, assign or otherwise dispose of any of its
assets, except for sales of Equipment pursuant to any purchase option under
a Financing Contract or sales of Equipment to third parties after
expiration or termination of the Financing Contract to which such Equipment
was subject, in each case made in the ordinary course of business,
consistent with past practice, provided that Parent may (A) consummate the
transactions contemplated by Section 8.10 of this Agreement and (B)
terminate the Current Headquarters Lease at a cost to Parent not to exceed
the amount referred to in Section 6.3(b)(vii) of the Disclosure Schedule;
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(viii) transfer, grant, amend or knowingly terminate any of its rights
under any Intellectual Property;
(ix) enter into any transaction or agreement of any kind with any of
Parent's Affiliates, including the making of any loans, advances or
investments to or in such entity other than transfers of Financing
Contracts by any other Seller to Parent in connection with the sale
contemplated by Section 8.10 of this Agreement and other than (A) the
noncompetition agreements dated as of the date hereof between Buyer and
each of the Chairman and President of the Parent and (B) transactions among
Sellers in the ordinary course of business consistent with past practice;
(x) amend or modify the certificate or articles of incorporation or
bylaws of any Seller;
(xi) declare, set aside or pay any dividend or other distribution in
respect of its capital stock or purchase or redeem, directly or indirectly,
any shares of its capital stock, except that (A) Parent may declare post-
Closing distributions to its stockholders of cash amounts to be received by
Sellers under this Agreement and (B) Sellers may declare and pay cash
dividends to other Sellers;
(xii) create any new Subsidiaries;
(xiii) enter any transaction, take any action, or by inaction knowingly
permit any event to occur, that would result in any of the representations
and warranties of Sellers contained herein not being true and correct in
all material respects immediately after the occurrence of such transaction,
action or event or on the Closing Date;
(xiv) grant to any Employee any increase in compensation in any form
other than previously scheduled amounts in the ordinary course of business
consistent with past practice, or enter into, vary the terms of, or
terminate any Employee Agreement or establish, amend or terminate any
Benefit Plan, other than as required under the terms of any existing
Employee Agreement or by Law, or hire any new employees;
(xv) enter into, agree to enter into or acquire any Financing Contract of
the type described in Part B of Section 8.10 of the Disclosure Schedule;
(xvi) settle or agree to settle any Litigation relating to the
transactions contemplated hereby without the prior written consent of
Buyer, which consent shall not be unreasonably withheld; or
(xvii) agree or otherwise commit to take any of the actions set forth in
the foregoing subparagraphs (i) through (xvi).
6.4. Information Statement. Parent and Buyer shall cooperate and promptly
prepare, and Parent shall file with the Commission as soon as practicable an
Information Statement under the Exchange Act with respect to the transactions
contemplated herein (the "Information Statement"). Parent will cause the
Information Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Parent shall use commercially reasonable efforts, and Buyer will
cooperate with Parent, to have the Information Statement cleared by the
Commission as promptly as practicable and Parent shall mail the Information
Statement to its stockholders promptly thereafter. Parent shall, as promptly as
practicable, provide copies of any written comments received from the
Commission with respect to the Information Statement to Buyer and advise Buyer
of any oral comments with respect to the Information Statement received from
the Commission. Parent agrees that none of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the
Information Statement and each amendment or supplement thereto, at the time of
mailing thereof, will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Buyer agrees that none of the information supplied or to be
supplied by Buyer for inclusion or incorporation by reference in the
Information Statement and each amendment or supplement thereto, at the time of
mailing thereof, will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. For purposes of the foregoing, it is understood and agreed that
information concerning or related to Parent shall be deemed to have been
supplied by Parent and information concerning or related to Buyer shall be
deemed to have been supplied by Buyer. No amendment or supplement
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to the Information Statement will be made by Parent without the approval of
Buyer, unless Parent's counsel advises that such amendment or supplement is
required. Parent will advise Buyer, promptly after it receives notice thereof,
of (i) the time when the Information Statement has been cleared by the
Commission, (ii) any comments by the Commission with respect to the
Information Statement and (iii) any requests by the Commission for additional
information.
6.5. Required Notices. At all times prior to the Closing Date, Sellers shall
promptly give written notice to Buyer of (i) any facts or circumstances of
which Sellers have knowledge or the occurrence of any event or the failure of
any event to occur of which Sellers have knowledge, which will, or could
reasonably be expected to, result in (A) a Material Adverse Effect or (B) a
breach of any representation or warranty made by Sellers in this Agreement or
in any Ancillary Document in any material respects; (ii) any failure by
Sellers to comply in all material respects with any covenant, condition or
agreement in this Agreement; (iii) any written complaints, investigations or
hearings (or written communications indicating the same may be contemplated)
of any Governmental Entity with respect to this Agreement, the Business, the
Acquired Assets, the Assumed Liabilities or the transactions contemplated by
this Agreement or the Ancillary Documents and (iv) the institution or, to
Sellers' knowledge, the threat of institution of any Litigation or similar
action with respect to this Agreement, the Business, the Acquired Assets, the
Assumed Liabilities or the transactions contemplated by this Agreement or the
Ancillary Documents other than collection efforts in the ordinary course of
business, provided that, in the case of such collection efforts, Sellers shall
not initiate any Litigation or similar action without first providing to Buyer
such written notice.
6.6. Employee Matters. (a) Buyer shall offer employment beginning as of the
Closing to all employees of Seller who are actively employed (including those
employees who are on short-term disability, but excluding those employees who
are on long-term disability) by Sellers on the Closing Date other than the
President and the Chairman of Parent ("Scheduled Employees"). Such offer of
employment shall be for substantially similar positions and at substantially
similar salaries as set forth in Section 4.10(a) of the Disclosure Schedule;
provided, however, that neither Buyer nor its Affiliates shall,
notwithstanding the foregoing, be obligated to continue any employment
relationship after the Closing with any employee for any specific period of
time or on any specific terms. On the Closing Date, Buyer shall use its
reasonable efforts to provide those Scheduled Employees who have accepted
employment with Buyer with benefits which are at least generally consistent
with those benefits offered to similarly situated employees of Buyer. To the
extent any employee benefit plan, program or policy of Buyer or its Affiliates
is made available to such employees: (i) service with Sellers by any such
employee prior to the Closing Date shall be credited for eligibility and
vesting purposes under such plan, program or policy, but not for benefit
accrual or entitlement purposes; and (ii) with respect to any welfare benefit
plans to which such employees may become eligible, Buyer shall cause such
plans to provide credit for any co-payments or deductibles made or borne by
such employees and waive all pre-existing condition exclusions, other than, to
the extent permitted by applicable Law, exclusions that were applicable under
the comparable welfare plans maintained by Sellers for their employees prior
to the Closing Date.
(b) Effective as of the Closing, Buyer shall either (i) provide for
extension of Sellers' health care plan in effect as of the date hereof
provided by NYLCare Health Plans, Inc. ("Sellers' Health Plan") for purposes
of providing "continuation coverage" under Section 601 et seq. of ERISA and
Section 4980B of the Code ("COBRA") for (A) those former employees of Sellers
being provided continuation coverage as of the Closing Date and their
qualified beneficiaries (as defined in COBRA), (B) those Scheduled Employees
who are offered but do not accept employment with Buyer and their qualified
beneficiaries, and (C) the President and Chairman of Parent and their
qualified beneficiaries (collectively, the "Covered Employees"), or (ii) offer
a health insurance policy for purposes of providing such continuation
coverage, which policy shall provide coverage comparable to Sellers' Health
Plan and shall waive all pre-existing condition exclusions. Each Covered
Employee shall bear the cost of such coverage in the amount that such Covered
Employee would have paid if he or she had been eligible for such coverage
under the Sellers' Health Plan immediately prior to the Closing (the "COBRA
premium") and Buyer shall be liable only for payment of the amount in respect
of such coverage that is greater than the COBRA premium.
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6.7. No Shop. Prior to the Closing Date, (i) Sellers shall not, directly or
indirectly, and Sellers shall direct and cause their officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it) not to, initiate,
solicit or encourage any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of
the assets or any equity securities of, Sellers (any such proposal or offer
being hereinafter referred to as an "Alternative Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any Person relating to an Alternative Proposal,
or release any third party from any obligations under any existing standstill
agreement or arrangement relating to any Alternative Proposal, or otherwise
facilitate any effort or attempt to make or implement an Alternative Proposal;
(ii) Sellers will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and (iii) Sellers will notify Buyer
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, Sellers.
6.8. Lease Swaps. Prior to the Closing Date, Sellers shall take, at Buyer's
expense, all actions that Buyer may reasonably request to have any Financing
Contracts which are held by a Securitization vehicle and which are described
in Section 8.10 of the Disclosure Schedule transferred to Parent and replaced
with Financing Contracts of a type not described in such Section of the
Disclosure Schedule; provided, however, that if this Agreement shall be
terminated prior to the Closing as a result of a breach of this Agreement by
Sellers, Sellers shall reimburse Buyer for all such expenses reasonably
incurred by Buyer.
ARTICLE VII
Conditions to Sellers' Obligations
The obligation of Sellers to effect the transactions contemplated hereby
shall be subject to the satisfaction or written waiver on or before the
Closing Date, of each of the following conditions:
7.1. Representations and Warranties True. The representations and warranties
of Buyer contained herein or in any Ancillary Document shall be true, complete
and accurate in all material respects on and as of the Closing Date, with the
same force and effect as though made on and as of the Closing Date, except for
changes expressly contemplated by this Agreement or the Ancillary Documents,
as the case may be, and except that any representation and warranty made as of
a specified date shall have been true, complete and accurate as of such date.
7.2. Performance of Agreements. Buyer shall have performed and complied with
all of its agreements and covenants contained herein or in any Ancillary
Document to which it is a party to be performed or complied with by it on or
prior to the Closing Date.
7.3. Deliveries of Buyer. Buyer shall have paid the Purchase Price in
accordance with Section 2.5 by wire transfer of immediately available funds
and shall have executed and delivered an instrument or instruments consistent
with the terms hereof and reasonably satisfactory in form and substance to
Sellers and their counsel evidencing Buyer's assumption of the Assumed
Liabilities.
7.4. Officer's Certificate. Sellers shall have received a certificate from
an executive officer of Buyer, dated as of the Closing Date, reasonably
satisfactory in form and substance to Sellers and their counsel, certifying as
to the satisfaction of the conditions specified in Sections 7.1 and 7.2.
7.5. No Injunction, Etc. No Law shall have been adopted or promulgated and
no preliminary or permanent injunction or other order issued by any federal,
state or local court of competent jurisdiction, domestic
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or foreign, or by any Governmental Entity shall be in effect, the enforcement
of which would restrain, enjoin, make illegal or otherwise prohibit the
transactions contemplated hereby.
7.6. HSR Act. Any applicable waiting periods (and any extension thereof)
under the HSR Act relating to the transactions contemplated hereby shall have
expired or been terminated.
7.7. Information Statement. The Information Statement shall have been cleared
by the Commission and mailed by Parent to each of its stockholders and at least
20 calendar days shall have passed since the Information Statement was first so
mailed.
7.8. D&O Insurance. Parent shall have obtained director and officer liability
insurance in substantially the form set forth in Section 7.8 of the Disclosure
Schedule and such insurance shall be in full force and effect.
ARTICLE VIII
Conditions to Buyer's Obligation
The obligation of Buyer to effect the transactions contemplated hereby shall
be subject to the satisfaction or written waiver on or before the Closing Date,
of each of the following conditions:
8.1. Representations and Warranties True. The representations and warranties
of Sellers contained herein or in any Ancillary Document shall be true,
complete and accurate on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date, except (i) for changes
expressly contemplated by this Agreement or the Ancillary Documents, as the
case may be, (ii) that any representation and warranty made as of a specified
date shall have been true, complete and accurate as of such date, and (iii) for
any failures to be true, complete and accurate which do not, individually or in
the aggregate, have a Material Adverse Effect.
8.2. Performance of Agreements. Sellers shall have performed and complied
with all of their agreements and covenants contained herein or in any Ancillary
Document to which they are a party to be performed or complied with by them on
or prior to the Closing Date.
8.3. Deliveries of Seller. Sellers shall have executed and delivered, or
caused to be delivered, to Buyer such deeds, bills of sale, endorsements,
assignments, licenses and other instruments and documents reasonably
satisfactory in form and substance to Buyer and its counsel as shall be
reasonably necessary to vest in Buyer as of the Closing Date good and
marketable title to the Acquired Assets free and clear of any Liens except
Permitted Liens. Simultaneously with such delivery, Sellers shall have taken
all additional steps as may reasonably be necessary to put Buyer in possession
and operating control of the Acquired Assets.
8.4. Officer's Certificate. Buyer shall have received a certificate from an
executive officer of Parent, dated as of the Closing Date, reasonably
satisfactory in form and substance to Buyer and its counsel, certifying as to
the satisfaction of the conditions specified in Sections 8.1 and 8.2 hereof.
8.5. No Injunction, Proceeding or Litigation. No action or proceeding before
any court or other Governmental Entity shall have been commenced and be pending
by any Person or any Governmental Entity against any of the parties hereto or
any of their Affiliates, associates, officers or directors (a) seeking to
restrain, enjoin, prevent, materially delay or in any material respect change
the transactions contemplated hereby, (b) seeking civil penalties, fines or
material damages in connection with any such transactions, (c) which, if
adversely decided, would impair Buyer's ability to consummate the transactions
contemplate hereby or own the Acquired Assets, or (d) which is reasonably
likely to materially impair Buyer's interest in the Acquired Assets or to
compel Buyer or its Affiliates to dispose of, discontinue, license, hold
separate or materially restrict the operations of the business of Buyer or its
Affiliates in connection with or as a result of the consummation of the
transactions contemplated hereby. No Law shall have been adopted or promulgated
and no preliminary or
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permanent injunction or other order issued by any federal, state or local
court of competent jurisdiction, domestic or foreign, or by any Governmental
Entity, shall be in effect, the enforcement of which would, in either case,
(i) restrain, enjoin, make illegal or otherwise prohibit the transactions
contemplated hereby, (ii) have a Material Adverse Effect (other than Laws of
general applicability or applicable to the industry of the Business as a whole
and not directed at either the parties hereto or the transactions contemplated
hereby), (iii) impair Buyer's ability to consummate the transactions
contemplated hereby or by the Ancillary Documents or own the Acquired Assets,
or (iv) compel Buyer or its Affiliates to dispose of, discontinue, license,
hold separate, or materially restrict the operations of, the business of Buyer
or its Affiliates in connection with or as a result of the consummation of the
transactions contemplated hereby.
8.6. Approvals and Consents. All consents, approvals, orders, or
authorizations of, registrations or filings with, declarations of, or
exemptions or waivers by, any Governmental Entity or any other Person,
reasonably satisfactory in form and substance to Buyer and it counsel, which
are required for the consummation of the transactions contemplated hereby or
for preventing the termination of any material right, privilege, or Contract
of any Seller or any material loss or disadvantage to Buyer upon the
consummation of the transactions contemplated hereby, shall have been
obtained, made or filed, as the case may be. Without limiting the generality
of the foregoing, Sellers shall have received the consents in form and
substance reasonably satisfactory to Buyer pursuant to which (i) the holders
of the debt obligations described in Section 2.7 grant all necessary consents
for treatment of such debt obligations as contemplated by Section 2.7, among
other things, and confirm the outstanding amounts of such obligations and (ii)
the counterparties to the New Headquarters Lease, the Transferred Office
Leases and the Contracts listed in Section 8.6 of the Disclosure Schedule (A)
consent to the transfer and assignment of such leases and agreements to Buyer
and (B) confirm the amount of monetary obligations of the applicable Seller
under each such agreement or lease.
8.7. No Material Adverse Effect. From the date of this Agreement through the
Closing Date, there shall not have occurred any change, individually or
together with other changes, that has had, or would reasonably be expected to
have, a Material Adverse Effect.
8.8. Financing Contracts. The Financing Contracts shall, as Buyer may
reasonably determine, as of the Closing Date (or as of a date determined by
Buyer which is not earlier than 30 days prior to the Closing Date), have an
aggregate Net Book Value equal to or greater than 90% of the Net Book Value of
such assets at June 30, 1997.
8.9. Employees. As of the Closing Date, Sellers shall have terminated the
employment of all Scheduled Employees.
8.10. Certain Leases. Sellers shall have sold, assigned or otherwise
transferred to a third party, on a non-recourse basis, those Financing
Contracts described in Section 8.10 of the Disclosure Schedule for aggregate
cash proceeds not less than 90% of the Net Book Value thereof (provided that
Sellers shall have used commercially reasonable efforts to maximize such
proceeds), and Buyer shall be reasonably satisfied that Sellers no longer own
any such Financing Contracts as of the Closing Date.
8.11. D&O Insurance. Parent shall have obtained director and officer
liability insurance in substantially the form set forth in Section 7.8 of the
Disclosure Schedule and such insurance shall be in full force and effect.
8.12. Lease Sublet. Parent shall have either (a) taken occupation of the
premises subject to the New Headquarters Lease prior to Closing or (b) entered
into a sublease (after having obtained the consent of the prime lessor, if
such consent is necessary) with Buyer for Parent's current executive offices
at 3000 Dundee Road, Northbrook, Illinois, in form and substance reasonably
acceptable to Buyer, pursuant to which Buyer shall sublease such offices from
Parent from the Closing until the transfer of the Business to the location of
the property leased under the New Headquarters Lease.
8.13. HSR Act. Any applicable waiting periods (and any extensions thereof)
under the HSR Act relating to the transactions contemplated hereby shall have
expired or been terminated.
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8.14. Information Statement. The Information Statement shall have been
cleared by the Commission and mailed by Parent to each of its stockholders and
at least 20 calendar days shall have passed since the Information Statement
was first so mailed.
8.15. Change of Sellers' Corporate Names. Sellers shall cease using the
Tradenames from and as of the Closing Date. On the Closing Date, each Seller,
as necessary, shall file with the appropriate authorities an amendment to its
Articles of Incorporation changing its name to a name that (i) does not
include "Trans Leasing" or "LeaseCard" or any variations thereof or any other
mark or name confusingly similar thereto and (ii) does not otherwise imply the
continuation of the Business of Sellers after the Closing Date.
8.16. Tax Certifications. Each Seller shall have delivered to Buyer (a) a
certification described in Treasury Regulation Section 1.1445-2(b)(2)(i) that
is in the form set forth in Treasury Regulation Section 1.1445-
2(b)(2)(iii)(B), and (b) an executed New Jersey Form ST-40.
8.17. Disclosure Supplement. At Closing, Sellers will supplement or amend
the Disclosure Schedule to include information obtained by Sellers after the
date of this Agreement which would have been required to be set forth or
described on the Disclosure Schedule had it been known on the date of this
Agreement or which is necessary to complete or correct the Disclosure Schedule
and Sellers shall deliver to Buyer the Closing Schedule. For purposes of
determining the accuracy of the representations and warranties of Sellers
contained in Article IV in order to determine the fulfillment of the
conditions set forth in this Article VIII, the Disclosure Schedule delivered
by Sellers shall be deemed to include only that information contained therein
on the date of this Agreement and shall be deemed to exclude any information
contained in any subsequent supplement or amendment thereto.
ARTICLE IX
Post-Closing Agreements
9.1. Non-Competition. (a) In consideration of the benefits to Sellers
hereunder and in order to induce Buyer to enter into this Agreement, from the
Closing Date until the fifth anniversary of the Closing Date, none of Sellers
or any Subsidiary of Sellers shall (directly or indirectly), unless acting in
accordance with the prior written consent of Buyer, which consent may be
withheld in Buyer's sole and absolute discretion, (i) own, manage, operate,
join, control, finance, participate or cause participation in the ownership,
management, operation, control or financing of, or be connected as a
principal, agent, representative, consultant, investor, owner, partner,
manager, joint venturer or otherwise with, or permit any Seller's or any
Subsidiary's name to be used by or in connection with, any business or
enterprise engaged in the leasing and/or financing business anywhere in the
United States or (ii) solicit, encourage, entice or induce any Person who is
an Employee at any time on or after the date hereof to terminate his or her
relationship with the Business or the Buyer.
(b) The parties hereto agree that the duration and area and/or scope for
which the covenant not to compete set forth in Section 9.1(a) is to be
effective are reasonable. In the event that any court determines that the time
period or the area, or both of them, are unreasonable and that such covenant
is to that extent unenforceable, the parties hereto agree that the restriction
shall remain in full force and effect for the greatest time period and in the
greatest area that would not render it unenforceable.
(c) From and after the Closing Date, Sellers shall not disclose, Sellers
shall cause their Subsidiaries not to disclose, and Sellers shall use
commercially reasonable efforts, and cause their Subsidiaries to use
commercially reasonable efforts, not to allow any of their respective
officers, directors or employees to disclose, to third parties, and Sellers
shall not, and Sellers shall cause each of their Subsidiaries not to, use for
their own account or allow any of such Persons to use for its own account, any
information with respect to the Business (including, without limitation, trade
"know-how", secrets, consultant contracts, customer lists, subscription lists,
pricing policies, operational methods, marketing plans or strategies, and
product development techniques or plans of the Business known to Sellers, and
of their Affiliates or any of such Persons heretofore or hereafter), except
(i) to the extent
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that such information is or shall have become generally available to the public
without breach of this Agreement, or (ii) if required to be disclosed by Law or
by a final, non-appealable order of a court of competent jurisdiction.
(d) Sellers acknowledge and agree that, if they or any of their Subsidiaries
breach any provision of this Section 9.1, any remedy at law would be inadequate
and that Buyer, in addition to seeking monetary damages in connection with any
such breach, shall be entitled to specific performance, injunctive and other
equitable relief in the form of preliminary and permanent injunctions (without
bond or other security) upon any breach of any such covenant to prevent or
restrain a breach of this Section 9.1 or to enforce the provisions of this
Section 9.1.
9.2. Further Assurances. Sellers will, whenever and as often as reasonably
requested to do so by Buyer, execute, acknowledge and deliver any and all such
assignments, transfers and any instruments of further assurance, approvals and
consents as are necessary or proper in order to complete, ensure and perfect
the sale, transfer and conveyance to Buyer of the Acquired Assets in accordance
with the provisions of this Agreement and the consummation of the other
transactions contemplated hereby.
9.3. Mail; Payments. (a) Sellers authorize and empower Buyer on and after the
Closing Date to receive and open the mail and other communications received by
Buyer relating to the Acquired Assets and Assumed Liabilities and to deal with
the contents of such communications in any proper manner. Sellers shall
promptly deliver to Buyer any mail or other communication received by them
after the Closing Date pertaining to the Acquired Assets and Assumed
Liabilities and Buyer shall promptly deliver to Sellers any mail or other
communication received by it after the Closing Date pertaining to the Excluded
Assets and Retained Liabilities.
(b) Each of the parties hereto agrees promptly to pay or deliver to the other
party any monies or checks which have been mistakenly sent by customers to it
and which should properly have been sent to such other party (including,
without limitation, any payments in respect of Financing Contracts transferred
to Buyer pursuant to this Agreement).
(c) Sellers agree that Buyer has the right and authority to endorse, without
recourse, the name of Sellers or any of their Affiliates, as the case may be,
on any check or other evidence of indebtedness received by Buyer in respect of
the Acquired Assets and Assumed Liabilities and Sellers and their Affiliates
shall furnish Buyer such further evidence of this authority as Buyer may
reasonably request.
9.4. Rights of Enforcement and Settlement. (a) From and after the Closing,
Buyer shall have complete control over the payment, settlement or other
disposition of, or any dispute involving the Acquired Assets and the Assumed
Liabilities and the right to commence, conduct and control all negotiations and
proceedings with respect thereto, and Sellers shall notify Buyer promptly of
any claim made with respect to any of the Acquired Assets or Assumed
Liabilities and shall not, without Buyer's prior written consent, voluntarily
pay, settle or offer to settle, or consent to any compromise or admit liability
with respect to, any of the foregoing. To the extent practicable, Sellers shall
cooperate with Buyer in any reasonable manner requested by Buyer in connection
with any negotiations or proceedings involving any of the Acquired Assets or
Assumed Liabilities.
(b) From and after the Closing, Buyer shall notify Sellers promptly of any
claim made with respect to any of the Excluded Assets or Retained Liabilities
and shall not, without Sellers' prior written consent, voluntarily pay, settle
or offer to settle, or consent to any compromise or admit liability with
respect to, any of the foregoing.
9.5. Records. (a) All customer and supplier lists, sale and purchase records,
price lists, catalogues, sales literature, publicity material, ledgers,
invoices, accounting and other books and records of Sellers (whether in
document form or contained within computer maintained databases or recorded in
any other manner) relating to the Acquired Assets and Assumed Liabilities or
necessary for Buyer to enforce its rights and satisfy its obligations under the
Acquired Assets and Assumed Liabilities shall be delivered to Buyer on Closing
and shall thereafter be retained by Buyer and shall be preserved for a period
of five years from Closing or such longer period as may be required by Law and
shall at all reasonable times during usual business hours during such
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period be open for inspection (for the purposes of preparing Sellers'
accounting and taxation returns) by Sellers and their agents who may at
Sellers' expense take copies therefrom for such purposes.
(b) Any books, records, information or other data relating in any manner to
the Acquired Assets and Assumed Liabilities which are retained by Sellers
shall be preserved for a period of five years from Closing or such longer
period as may be required by Law and shall during business hours during such
period be open for inspection for such purposes by Buyer and its agents who at
Buyer's expense may take copies therefrom for such purposes.
9.6. Tax Matters.
(a) Preparation and Filing Returns. Buyer shall cause to be timely prepared,
or at Buyer's request, Sellers shall cause to be timely prepared, all Income
Tax Returns of Sellers for taxable periods ending on or before June 30, 1998.
Sellers shall timely file all such Income Tax Returns. At least 15 days prior
to the earlier of the due date (including extensions) of such Income Tax
Returns and the date Buyer proposes that such Income Tax Returns be filed by
Sellers, Buyer shall submit such Income Tax Returns to Sellers for their
review and comment. If Sellers disagree with any aspect of such Income Tax
Returns, Buyer and Sellers will attempt in good faith to resolve such dispute.
If any such dispute cannot be resolved prior to the due date (including
extensions) of the Income Tax Return, the Income Tax Return shall be filed, to
the extent permitted by law, in the manner determined by Buyer. Sellers shall
not cause any Income Tax Return filed pursuant to this paragraph (a) to be
amended without Buyer's written consent.
(b) Payment of Tax. Buyer shall be responsible for payment of (i) all unpaid
Income Taxes of Sellers for the taxable period ending on June 30, 1997, and
(ii) either (A) if (1) all employee and director options and warrants shall
have been exercised by June 30, 1998 and (2) Sellers' taxable income for the
period beginning on the day after the Closing Date and ending on June 30, 1998
consists solely of income and gain derived from Permitted Investments (the
conditions described in clauses (1) and (2) are referred to herein as the
"Payment Conditions"), all unpaid Income Taxes of Sellers for the taxable
period ending on June 30, 1998 (or, if earlier, for the taxable period ending
on completion of Sellers' liquidation plan), or (B) if the Payment Conditions
shall not have been satisfied, all unpaid Income Taxes of Sellers for the
portion of the taxable period beginning on July 1, 1997 and ending on the
Closing Date (the "Pre-Closing Period"), provided that in the case of clause
(B), Buyer's liability for any unpaid Income Tax of Sellers for the Pre-
Closing Period shall not exceed the total amount of such Income Tax which is
due and payable for the entire taxable period beginning on July 1, 1997 and
ending on June 30, 1998. For purposes of this paragraph (b), the amount of
Sellers' Income Taxes which are attributable to the Pre-Closing Period shall
be determined based on a closing of the books method, without regard to the
economic performance requirement of Section 461(h) of the Code, as if the Pre-
Closing Period constituted a taxable period ending on the Closing Date,
provided, however, that franchise taxes shall be apportioned to the Pre-
Closing Period based on the number of days in the Pre-Closing Period as
compared to the number of days in the entire taxable period beginning on July
1, 1997. Any amounts owed by Buyer pursuant to this paragraph (b) shall be
paid by Buyer to the applicable Governmental Entity on behalf of Sellers one
business day prior to the date on which Sellers are required to cause to be
paid the related Income Tax liability.
(c) Refunds. Sellers shall promptly pay to Buyer any refunds or credits of
Income Taxes (including interest thereon) which are received by Sellers and
are attributable to Income Taxes paid by Buyer pursuant to paragraph (b) of
this Section 9.6, and Sellers shall use their reasonable best efforts to
obtain any such refunds.
(d) Audits. Sellers shall promptly notify Buyer in writing of any audit or
judicial or administrative proceeding with respect to Income Taxes for any
taxable period ending on or prior to June 30, 1998. Buyer shall control the
conduct of any such audit or proceeding with respect to the taxable periods
ending on June 30, 1997 and on June 30, 1998. In the case of any such audit or
proceeding with respect to any taxable period ending before June 30, 1997,
Buyer shall control the conduct of such audit or proceeding to the extent that
it involves any issues the resolution of which could have an effect on Buyer's
liability for Sellers' Income Taxes pursuant to paragraph (b) of this Section
9.6, provided, however, that Buyer shall not settle or compromise any such
issue
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which would result in a material Income Tax liability for which Sellers would
be liable under this Agreement without Sellers' consent, which consent shall
not be unreasonably withheld. Sellers shall cooperate with Buyer's conduct of
any such audit or proceeding, including, without limitation, by executing
powers of attorney and such other documents as are necessary for Buyer to
defend and prosecute such audit or proceeding.
(e) Cooperation. After the Closing Date, Buyer and Sellers shall (and shall
cause their respective Affiliates to) reasonably cooperate in the filing of Tax
Returns and the preparation for any audit of, or administrative or judicial
proceeding regarding, any Tax Returns and payments in respect thereof. Buyer
and Sellers shall (and shall cause their respective Affiliates) to promptly
notify the other in writing upon receipt of any notice of any pending or
threatened Tax audits or assessments which may affect the other's Tax
liabilities. At Buyer's request, Sellers shall provide Buyer with copies of all
Income Tax Returns and all workpapers and other documents relating to such
Income Tax Returns.
9.7. Change of Sellers' Corporate Names. Each Seller shall, within 30 days
after the Closing, file in all jurisdictions in which it is qualified to do
business, all documents necessary to reflect such change in its corporate name
or, in the alternative, to terminate its qualifications therein. Each Seller
shall also provide all such consents as Buyer reasonably may request to allow
Buyer or its Affiliates to qualify to do business under one or more of the
Tradenames and shall take such other action as Buyer or its legal counsel shall
reasonably request to protect the rights of Buyer in the Tradenames.
9.8. Costs and Expenses. Buyer shall pay or reimburse Sellers for all
reasonable out-of-pocket costs and expenses incurred by Sellers following the
Closing Date; provided that Sellers shall use their commercially reasonable
efforts to wind up their affairs in as short a period following the Closing as
is reasonably practicable; and provided further that (a) such costs and
expenses shall only include those required to be paid by Sellers to
unaffiliated third parties such as accountants, lawyers and Governmental
Entities in order for Sellers to maintain their corporate existence and good
standing, wind up their affairs, and, in the case of Parent, to terminate its
reporting obligations under the Exchange Act and cause its securities to be
delisted from NASDAQ, and shall not include any other expenses, including,
without limitation, salaries or benefits payable to any employees of Sellers,
any lease or other payments for office space or any other overhead expenses of
any Seller; (b) Sellers agree to use their commercially reasonable efforts to
minimize the amount of all such costs and expenses, including, in the case of
Parent, using its commercially reasonable efforts to terminate its reporting
obligations under the Exchange Act as promptly as possible following the
Closing and causing its securities to be delisted from NASDAQ; and (c) the
aggregate maximum amount of costs and expenses for which Buyer shall be
obligated to pay or reimburse Sellers pursuant to this Section 9.8 shall be
$500,000.
9.9. D&O Policy. None of Parent nor any of its officers or directors shall
modify, amend or waive any provision of the director and officers liability
insurance policy referred to in Section 7.8 hereof, or take any action that
would, or would reasonably be likely to, cause such policy to cease to be in
full force and effect.
9.10. Indemnification by Buyer. (a) From and after the Closing, Buyer shall
indemnify and hold harmless (i) those individuals who are directors and/or
officers of the Sellers as of the Closing Date ("D&O Indemnitees") from and
against any and all Losses incurred by any of them arising out of, relating to
or resulting from claims against any of the D&O Indemnitees arising after the
Closing Date which relate to: (A) actions taken by the D&O Indemnitees prior to
the Closing Date in their capacities as directors or officers of any of
Sellers; or (B) actions taken by the D&O Indemnitees after the Closing Date to
liquidate and wind up the affairs of Sellers and (ii) the stockholders of
Parent (the "Stockholder Indemnitees" and, together with the D&O Indemnitees,
the "Indemnitees") from and against any and all Losses incurred by any of them
arising out of, relating to or resulting from claims against any of the
Stockholder Indemnitees arising after the Closing Date which relate to actions
after the Closing Date to liquidate and wind up the affairs of the Sellers;
provided that no Indemnitee shall be entitled to recover any amount for
indemnification claims under this Section 9.10 if such Indemnitee has not given
the Buyer a Notice with respect to such claim prior to the fifth anniversary of
the Closing Date.
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(b) Notwithstanding any other provisions of this Section 9.10, (i) Buyer's
maximum aggregate liability to and on behalf of all Indemnitees pursuant to
this Section 9.10 shall not exceed $5 million and (ii) Buyer shall have no
liability to any Indemnitee pursuant to this Section 9.10 (x) except to the
extent the directors and officers insurance policy referred to in Section 7.8
either does not provide coverage in respect of the event giving rise to such
indemnification claim or such coverage has been exhausted and (y) with respect
to any Losses attributable to an Excluded Asset.
(c) Promptly after receipt by an Indemnitee of written notice of the
assertion of a claim or the commencement of any action, litigation or
proceeding by any third party (a "Third Party Claim") with respect to any
matter for which indemnification is or may be owing pursuant to this Section
9.10, the Indemnitee shall give written notice thereof (the "Notice") to the
Buyer and shall thereafter use commercially reasonable efforts to keep the
Buyer fully informed with respect thereto. The Buyer shall have the right, at
its option and at its own expense, to take control of the defense, negotiation
and/or settlement of any Third Party Claim. The Indemnitee shall have the
right to participate in the defense, negotiation and/or settlement of any such
Third Party Claim with counsel of its own choosing; provided that, after
notice from the Buyer to the Indemnitee of the Buyer's election to take
control of the defense, negotiation and/or settlement of any Third Party Claim
with counsel reasonably satisfactory to the Indemnitee, the Buyer shall not be
liable to the Indemnitee for any subsequent fees or disbursements of separate
counsel incurred by the Indemnitee in connection with the defense, negotiation
and/or settlement thereof. If the Buyer fails or refuses to undertake the
defense of any such Third Party Claim within 60 days after delivery of the
Notice, the Indemnitee shall have the right to take exclusive control of the
defense, negotiation and/or settlement of such Third Party Claim at the
Buyer's expense.
(d) Notwithstanding any other provisions of this Section 9.10, (i) Buyer
shall not be obligated to indemnify any Indemnitee for any Losses arising out
of, relating to, or resulting from, the gross negligence, willful misconduct
or knowing violation of law of such Indemnitee and (ii) Buyer shall not be
obligated to indemnify any D&O Indemnitee unless prior to the Closing Date
Buyer shall have received a written agreement from such D&O Indemnitee, in
form and substance reasonably satisfactory to Buyer, pursuant to which such
Indemnitee agrees (A) not to initiate or encourage any claims against any
Seller after the Closing, (B) to unconditionally release Buyer and its
Affiliates from any claims the D&O Indemnitee may have against any of them,
whether arising prior to, on or after the Closing (other than pursuant to the
noncompetition agreements referred to in Section 6.3(b)(ix)), (C) to cooperate
with Buyer in resolving any Third Party Claims, (D) not to issue any public
statements or make, or permit any other Person to make, any filings with any
Governmental Entities after the Closing without the prior written consent of
Buyer, which consent shall not be unreasonably withheld (unless the D&O
Indemnitee has been advised by counsel that he is legally required to take
such action, in which case the D&O Indemnitee's obligation shall be to consult
with Buyer prior to such filing), (E) not to seek indemnification for any
claim pursuant to this Section 9.10 unless and until he has first sought
coverage for such claim under the directors and officers insurance policy
referred to in Section 8.11 and, despite his commercially reasonable efforts,
such coverage has been denied or is otherwise unavailable and (F) not to seek
indemnification hereunder for any claims that such Indemnitee may have against
Parent or any of its Affiliates.
ARTICLE X
Termination Prior to Closing
10.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of Buyer on the one hand and Sellers on
the other hand;
(b) by written notice given by Sellers to Buyer or Buyer to Sellers, if
the Closing shall not have occurred on or before January 31, 1998; provided
that the party electing so to terminate this Agreement shall have performed
and complied with all of the covenants and agreements on its part set forth
in this Agreement and the Ancillary Documents;
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(c) by written notice given by either Sellers to Buyer or Buyer to
Sellers, if any court of competent jurisdiction or Governmental Entity
shall have issued an injunction, order, decree or ruling or taken any other
action, restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby (which the party seeking to terminate this Agreement
shall have used commercially reasonable efforts to have lifted or
reversed), and such order, decree, ruling or other action shall have become
final and non-appealable; or
(d) by written notice given by either Sellers to Buyer or Buyer to
Sellers, if there shall have been a breach by Sellers or Buyer, as the case
may be, of such party's representations, warranties, covenants or
agreements contained herein which breach would entitle Buyer on the one
hand, or Sellers, on the other hand, to decline to consummate the
transactions contemplated hereby pursuant to Article VII or VIII, as the
case may be, if the non-terminating party fails to cure such breach within
10 Business Days following the notification thereof by the terminating
party or if an event occurs which renders impracticable with the use of
commercially reasonable efforts compliance with or satisfaction of any of
the conditions to its respective obligations hereunder.
10.2. Effect on Obligations. Termination of this Agreement pursuant to this
Article X shall terminate all obligations of the parties hereunder; provided,
however, that termination pursuant to Section 10.1 (other than subparagraph
(a) thereof) shall not relieve any defaulting or breaching party or parties
from any liability to the other parties hereto except that, in the case of a
termination of this Agreement pursuant to Section 10.1(b) or 10.1(c), no party
shall have any liability or obligation to any other party with respect to any
breach of its representations and warranties except to the extent any such
breach was willful or knowing.
ARTICLE XI
Miscellaneous
11.1. Fees and Expenses. Subject to Section 9.8, whether or not the
transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
by this Agreement shall be paid by the party incurring such expenses, except
that (a) the filing fee in connection with the HSR Act filing, (b) the filing
fee in connection with the filing of the Information Statement with the
Commission and (c) the expenses incurred in connection with printing and
mailing the Information Statement, shall be paid or reimbursed by Buyer.
11.2. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
11.3. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other party; provided, however, that Buyer may, without the prior
written approval of any Seller, assign any or all of its rights, interests and
obligations hereunder to one or more of its Affiliates and upon any such
assignment Buyer shall be released of its obligations hereunder as long as in
connection with such assignment Buyer unconditionally guarantees all of the
assignee's obligations hereunder.
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11.4. Notice. Any notice required by this Agreement (a) must be in writing;
(b) must be delivered by hand or sent by first class mail (return receipt
requested), telecopy, or nationally recognized messenger service (e.g.,
Federal Express, UPS); (c) will be effective on the day actually received and
(d) shall be sent to the party to be notified at the address stated below:
If to Buyer:
General Electric Capital Corporation--VFS
55 Federal Road
Danbury, Connecticut 06810
Attention: Chief Financial Officer and General Counsel
Fax: (203) 731-6275
If to any Seller:
Trans Leasing International, Inc.
3000 Dundee Road
Northbrook, Illinois 60062
Attention: President
Fax: (847) 272-1000
Any party may change the address to which notice is to be sent by providing
notice in the manner specified above.
11.5. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement or to a breach hereof, including, without
limitation, its interpretation, performance or termination, shall be finally
resolved by arbitration. The arbitration shall be in accordance with the rules
of the American Arbitration Association which shall administer the arbitration
and act as appointing authority. The arbitration, including, without
limitation, the rendering of the award, shall take place in Chicago, Illinois
and shall be the exclusive forum for resolving such dispute, controversy or
claim. The decision of the arbitrators shall be final and binding upon the
parties to this Agreement, and the expense of the arbitration (including,
without limitation, the award of attorneys' fees to the prevailing party)
shall be paid as the arbitrators determine. The decision of the arbitrators
shall be executory, and judgment thereon may be entered by any court of
competent jurisdiction. Application may be made to any court for a judicial
acceptance of the award or order of enforcement. Notwithstanding the
foregoing, each party will have the right to institute judicial proceedings
against the other party or anyone acting by, through or under such other party
in order to enforce the instituting party's rights hereunder through specific
performance, injunction or similar equitable relief. For this purpose, each of
the parties hereto irrevocably and unconditionally (a) agrees that any suit
arising out of this Agreement may be brought and adjudicated in the U.S.
District Court for the Northern District of Illinois located in Chicago,
Illinois, or, if such court will not accept jurisdiction, in any court of
competent civil jurisdiction sitting in Chicago, Illinois, (b) submits to the
non-exclusive jurisdiction of any such court for the purposes of any such suit
and (c) waives and agrees not to assert by way of motion, as a defense or
otherwise in any such suit, any claim that it is not subject to the
jurisdiction of the above courts, that such suit is brought in an inconvenient
forum or that the venue of such suit is improper. Each of the parties hereto
also irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers in a manner permitted by the notice
provisions hereof. Nothing in this Section 11.5 shall prevent any party from
joining the other party as a third party defendant or in a cross-claim in any
action in which such party is involved.
11.6. Public Announcements. No party hereto shall make any public
statements, including, without limitation, any press releases, with respect to
this Agreement and the transactions contemplated hereby without the prior
consent of the other party, which consent shall not be unreasonably withheld,
except as may be required by Law or applicable stock exchange rules (in which
case the party making such public announcement shall first have consulted with
the other party).
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11.7. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under such
applicable Law, but, if any provision of this Agreement shall be held to be
prohibited or invalid in any jurisdiction, the remaining provisions of this
Agreement shall remain in full force and effect and any such prohibited or
invalid provision shall remain in effect in any jurisdiction in which it is
not prohibited or invalid. Should any prohibition or invalidity materially
alter the nature of the transactions contemplated herein, the parties will
confer in good faith to create a replacement provision that is not prohibited
or invalid.
11.8. Governing Law. This Agreement shall be construed in accordance with
and governed by the Laws of the State of New York applicable to agreements to
be performed entirely within that State, without regard to its conflict of
laws rules.
11.9. Entire Agreement. This Agreement and the schedules, exhibits and
annexes hereto constitute the entire agreement between the parties with
respect to the subject matter hereof, and supersede all proposals, oral or
written, all previous negotiations, and all other communications between the
parties with regard to the subject matter hereof.
11.10. Modification and Waiver. No amendment, modification or alteration of
the terms or provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by Parent, on its own behalf and on
behalf the other Sellers, and Buyer. Any of the terms or provisions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits of such waived terms or provisions. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver
of any other provision hereof (whether or not similar). No delay on the part
of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof.
11.11. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
In witness whereof, each of the parties hereto has caused this Agreement to
be duly executed on its behalf as of the date first above written.
General Electric Capital Corporation
By: _________________________________
Name:
Title:
Trans Leasing International, Inc.
By: _________________________________
Name:
Title:
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<PAGE>
Trans Leasing Insurance Services,
Inc.
By: _________________________________
Name:
Title:
Leasecard Auto Group, Inc.
By: _________________________________
Name:
Title:
Nuvotron, Inc.
By: _________________________________
Name:
Title:
TL Lease Funding Corp. III
By: _________________________________
Name:
Title:
TL Lease Funding Corp. IV
By: _________________________________
Name:
Title:
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<PAGE>
ANNEX B
PLAN OF LIQUIDATION AND DISSOLUTION
OF
TRANS LEASING INTERNATIONAL, INC.
This Plan of Liquidation and Dissolution (the "Plan") is for the purpose of
effecting the complete liquidation and dissolution of Trans Leasing
International, Inc., a Delaware corporation (the "Company"), in accordance
with and pursuant to the provisions of the Delaware General Corporation Law
and Section 331 of the Internal Revenue Code of 1986, as amended, in
substantially the following manner:
1. Effective Date. The Plan shall be effective on the date (the "Effective
Date"), after it is adopted and approved by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock, $.01 par
value, of the Company ("Common Stock") entitled to vote thereon, on which the
Company's business and substantially all of its assets are sold pursuant to
the Asset Purchase Agreement (the "Asset Purchase Agreement") by and among
General Electric Capital Corporation, the Company and certain of the Company's
subsidiaries.
2. Cessation of Business. After the Effective Date, the Company shall not
engage in any business activities except for the purposes of (i) preserving
the values of its assets, (ii) winding-up its business affairs, including,
without limitation, the consummation of a sale or sales in one or a series of
transactions of the remaining assets of the Company, and (iii) making the
Liquidation Distribution (as hereinafter defined) in accordance with the Plan.
The Board of Directors of the Company (the "Board") and, at their pleasure,
the officers, shall continue in office solely for these purposes.
3. Dissolution. As promptly as practicable after the Effective Date and upon
filing of a Certificate of Dissolution with the Secretary of State of the
State of Delaware the Company shall be dissolved in accordance with the
Delaware General Corporation Law.
4. Liquidation of Assets. The Company shall collect, sell, exchange or
otherwise dispose of all of its property and assets in one or more
transactions, including the transactions provided for in the Asset Purchase
Agreement, upon such terms and conditions and for such consideration, which
may consist in whole or in part of money or other property, as the Board deems
expedient and in the best interests of the Company and the holders of the
Common Stock (the "Stockholders"). In connection with such collection, sale,
exchange and other disposition, the Company shall marshall its assets and
collect or make provision for the collection of all accounts receivable, debts
and claims owing to the Company. The Company shall have continuing authority
to sell, lease, exchange or otherwise convert to cash all or any part of its
assets in accordance with the terms and provisions of this Plan, and to make
such arrangements with respect to employee compensation as may be advisable,
including without limitation arranging for payment of compensation in
connection with the surrender or cancellation of any options outstanding under
the Company's stock option plans.
5. Payment of Debts. The Company shall pay or make provision for the payment
of all known or ascertainable liabilities of the Company, including all
amounts estimated by the Board to be necessary for the payment of estimated
expenses, taxes, and contingent liabilities (including expenses of
dissolution, liquidation, and termination of existence, and the Liquidation
Distribution), all as provided pursuant to Section 281 of the Delaware General
Corporation Law.
6. Liquidating Distribution. The Company shall distribute pro rata to the
Stockholders all its remaining property and assets, if any, including the
proceeds of any sale, exchange or disposition, except such property or, assets
as are required for paying or making provision for the claims and obligations
of the Company (the "Liquidating Distribution"), The Liquidating Distribution
may occur all at one time or in a series of distributions and may be in cash
or in kind, in such manner, and at such time or times before and/or after the
Record Date (as
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<PAGE>
defined below), as the Board, in its absolute discretion, may determine. If and
to the extent deemed necessary, appropriate or desirable by the Board, in its
absolute discretion, the Company may establish and set aside a reasonable
amount (the "Contingency Reserve") to satisfy claims against the Company (other
than claims of a Stockholder in its capacity as such) and all expenses of the
sales of the Company's property and assets, of the collection and defense of
the Company's property and assets, and of the liquidation and dissolution
provided for in this Plan. The Contingency Reserve may consist of cash or
property.
7. Redemption and Cancellation of Common Stock. The Liquidating Distribution
shall be in complete redemption and cancellation of all of the outstanding
Common Stock of the Company. The Company shall close its stock transfer books
at the close of business on the record date fixed by the Board for the first or
any subsequent installment of any Liquidating Distribution as the Board in its
absolute discretion, may determine (the "Record Date"), and thereafter
certificates representing Common Stock shall not be assignable or transferable
on the books of the Company except by will, intestate succession or operation
of law. The Stockholders shall surrender stock certificates (or, if so required
by the Board in its absolute discretion, furnish indemnity bonds in case of
lost or destroyed certificates) as a condition to their receipt of any
Liquidating Distribution immediately following the Record Date.
8. Missing Stockholders. If any Liquidating Distribution to a Stockholder
cannot be made, whether because the Stockholder cannot be located, has not
surrendered a certificate evidencing the Common Stock as required hereunder or
for any other reason, then the distribution to which such Stockholder is
entitled shall (unless transferred to the Trust established pursuant to Section
11 hereof) be transferred to and deposited with the state official authorized
by the laws of the State of Delaware to receive the proceeds of such
distribution; such transfer shall comply in all respects with the laws of the
State of Delaware. The proceeds of such distribution shall thereafter be held
solely for the benefit of and for ultimate distribution to such Stockholder as
the sole equitable owner thereof and shall escheat to the State of Delaware or
be treated as abandoned property in accordance with the laws of the State of
Delaware. In no event shall the proceeds of any such distribution revert to or
become the property of the Company.
9. Amendments. Notwithstanding adoption of the Plan by the Company's
Stockholders, the Board may modify or amend the Plan and, prior to the filing
of a certificate of dissolution with the State of Delaware, may abandon the
Plan, without further action by the Stockholders to the extent permitted by
Delaware law.
10. Indemnification. The Company shall continue to indemnify its officers,
directors, employees and agents in accordance with its Certificate of
Incorporation and Bylaws and any contractual arrangements for actions taken in
connection with this Plan and the winding up of the affairs of the Company and
shall indemnify any liquidating trustees and their agents on similar terms. The
Company's obligation to indemnify such persons may be satisfied out of the
assets of the Trust (as defined below). The Board and the trustees, in their
absolute discretion, are authorized to obtain and maintain insurance for the
benefit of such officers, directors, employee, agents and trustees to the
extent permitted by law.
11. Liquidating Trust. If necessary for any reason to complete the
liquidation and distribution of the Company's assets to the Stockholders, the
Board may at any time transfer to a liquidating trust (the "Trust") any
remaining assets of the Company which are held as a reserve for contingent
liabilities. The Trust, if any, will succeed to all of the then remaining
assets of the Company, including such reserve, and any liabilities of the
Company. The sole purpose of the Trust will be to liquidate on terms
satisfactory to the liquidating trustee(s) and to distribute the assets
formerly owned by the Company, if any, after paying any remaining liabilities
of the Company to the Stockholders.
The Board is authorized to appoint one or more individuals or corporate
persons to act as trustee or trustees of the Trust and to cause to enter into a
liquidating trust agreement with such trustee or trustees on such terms and
conditions as the Board determines. Adoption of the Plan will constitute the
approval of the Stockholders of any such appointment and liquidating trust
agreement.
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<PAGE>
12. Costs. The Board is authorized, empowered and directed to pay all legal,
accounting, printing, appraisal and other fees and expenses of persons
rendering services to the Company in connection with the sale of its assets,
the Plan, and, if appointed, such expenses of a liquidating trustee or
trustees.
13. Authorization. Adoption of the Plan by the Stockholders shall constitute
full and complete authority to the proper officers of the Company, without
further Stockholder action (except for any further Stockholder or Board
approval required by law), to do and perform any and all acts and to make,
execute and deliver any and all agreements, conveyances, assignments,
transfers, certificates and other documents of every kind and character which
such officers deem necessary or appropriate to carry out the provisions of the
Plan.
14. Power of Board of Directors. The Board and, if authorized by the Board,
the officers, shall have authority to do or authorize any and all acts and
things as provided for in the Plan and any and all such further acts and things
as they may consider desirable to carry out the purposes of the Plan, including
the execution and filing of all such certificates, documents, information
returns, tax returns, and other documents which may be necessary or appropriate
to implement the Plan. The Board, to the extent permitted by law, may authorize
such variations from or amendments to the provisions of the Plan as may be
necessary or appropriate to effectuate the complete liquidation and dissolution
of the Company, and the distribution of its assets, if any, to its Stockholders
in accordance with the Delaware General Corporation Law. The death,
resignation, or other disability of any director or officer of the Company
shall not impair the authority of the surviving or remaining directors or
officer(s) to exercise any of the powers provided for in the Plan, Upon such
death, resignation, or other disability, the surviving or remaining directors,
or if there be none, to the extent permitted by law, the surviving or remaining
officer(s) shall have authority to fill the vacancy or vacancies so created,
but the failure to fill such vacancy or vacancies shall not impair the
authority of the surviving or remaining directors or officer(s) to exercise any
of the powers provided for in the Plan. In connection with and for the purpose
of implementing and assuring completion of this Plan, the Company may, in the
absolute discretion of the Board, pay to the Company's officers, directors and
employees, or any of them, compensation or additional compensation above their
regular compensation, in money or other property, in recognition of the
extraordinary efforts they, or any of them, will be required to undertake, or
actually undertake, in connection with the successful implementation of this
Plan. Adoption of this Plan by holders of a majority of the outstanding Common
Stock shall constitute the approval of the Stockholders of the payment of any
such compensation.
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<PAGE>
ANNEX C
August 27, 1997
Board of Directors
Trans Leasing International
3000 Dundee Road
Northbrook, IL 60062
Gentlemen:
We understand that Trans Leasing International, Inc., a Delaware corporation
("Trans Leasing" or the "Company"), and Trans Leasing Insurance Services,
Inc., an Illinois corporation, Leasecard Auto Group, Inc., a Delaware
corporation, Nuvotron, Inc., a Delaware corporation, TL Lease Funding Corp.
III, a Delaware corporation, and TL Lease Funding Corp. IV, a Delaware
corporation, each a wholly-owned subsidiary of the Company (collectively with
the Company, the "Sellers") intend, subject to approval by Trans Leasing's
Board of Directors, to enter into an Asset Purchase Agreement substantially in
the form delivered to us on August 22, 1997 (the "Asset Purchase Agreement")
with General Electric Capital Corp., a Delaware corporation (the "Buyer"),
relating to the proposed acquisition by Buyer of substantially all the assets
of the Sellers (the "Acquisition").
You have asked for our opinion, as investment bankers, as to whether the sum
of $10.00 per share, is fair to such stockholders from a financial point of
view.
Rodman & Renshaw, Inc., as part of its investment banking business, is
regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. In July 1996, Rodman &
Renshaw, Inc. performed financial advisory services for FluoroScan Imaging
Systems, Inc. of which Mr. Larry S. Grossman was then CEO. We have acted as
financial advisor to the Board of Directors of Trans Leasing in connection
with the Acquisition and have received fees for financial advisory services
upon execution of our financial advisory engagement with the Company and will
receive additional fees for our financial advisory services upon the delivery
of this opinion.
In arriving at the opinion set forth below, with respect to Trans Leasing,
we have, among other things: (a) reviewed, from a financial point of view, the
Asset Purchase Agreement; (b) studied the Company's Annual Reports to
Stockholders and Annual Reports on Form 10-K for the years ended June 30, 1995
and 1996 and its interim reports on Forms 10-Q and 8-K since June 30, 1996;
(c) reviewed Trans Leasing's consolidated Balance Sheet dated June 30, 1997
and a Statement of Operations for the year ended June 30, 1997 provided by
senior management of Trans Leasing; (d) reviewed financial forecasts prepared
by senior management of Trans Leasing; (e) reviewed certain publicly available
financial and operating data relating to the Sellers' business and prospects,
which historical information and data the senior management of Trans Leasing
has represented to us as fairly represents the financial condition and
operating results of the Sellers as of the dates presented; (f) discussed
certain financial information and the business and prospects of the Sellers
with Trans Leasing's senior management; (g) reviewed the reported historical
and recent market prices and trading volumes of the Trans Leasing Common
Stock; (h) compared the financial, operating and stock price performance of
Trans Leasing with certain other companies deemed comparable; (i) reviewed the
financial terms, to the extent publicly available, of certain other
acquisition transactions deemed comparable; and (j) made such other analyses
and examinations as we deemed necessary or appropriate. We also have taken
into account our assessment of economic, market and financial conditions
generally and within the industry in which Trans Leasing is engaged.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to us by
Trans Leasing or obtained by us from other sources, and we have relied upon
the representations of senior management of Trans Leasing that they are
unaware of
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any information or facts that would make the information provided to us
incomplete or misleading. We have not independently verified such information,
undertaken an independent appraisal of the assets or liabilities (contingent
or otherwise) of Trans Leasing or have been furnished with any such
appraisals. In addition, we have relied on representations from senior
management of Trans Leasing (a) that the distribution to be made to each
holder of Common Stock of Trans Leasing will be made as promptly after closing
as is practicable; and (b) that the Common Stock of Trans Leasing will
continue to be traded in the over-the-counter market and reported in NASDAQ
National Market until such distribution. With respect to the available
financial forecasts of the Sellers which we have reviewed, we have relied on
the representations of the senior management of Trans Leasing that such
available forecasts are reasonable, reflect the best currently available
estimates and judgments of senior management of Trans Leasing as to the future
financial position of the Sellers and that: (a) as to the respective
forecasts, they are unaware of any facts that would make such information
incomplete, in any material respect, or misleading; and (b) there have been no
material adverse developments in the business (financial or otherwise) or
prospects of the Sellers, since June 30, 1997.
Our opinion is necessarily based on economic, market and other conditions as
they exist, and the information made available to us, as of the date hereof.
We disclaim any undertaking or obligation to advise any person of any change
in any fact or matter affecting our opinion that may come or be brought to our
attention after the date of this opinion. In the performance of our financial
advisory services, we were not authorized to solicit, and did not solicit,
interest from any party with respect to the acquisition of Trans Leasing or
any of its assets. No other limitations were imposed upon us by Trans Leasing
with respect to the investigations to be made or procedures to be followed by
us in rendering our opinion.
The opinion expressed herein does not constitute a recommendation as to any
action the Board of Directors of Trans Leasing or any stockholder of Trans
Leasing should take in connection with the Acquisition. Further, we express no
opinion herein as to the structure, terms or effect of any other aspect of the
Acquisition, including, without limitation, the tax consequences thereof.
It is understood that this letter is for the information of the Board of
Directors of Trans Leasing in connection with its evaluation of the fairness,
from a financial point of view, as of the date hereof, of the distribution to
be made to the holders of Trans Leasing Common Stock pursuant to the
Acquisition and for inclusion in the Information Statement (as defined in the
Asset Purchase Agreement). Without limiting the foregoing, in rendering this
opinion, we have not been engaged to act as an agent or fiduciary for Trans
Leasing's common stockholders or any other third party.
Based on and subject to the foregoing, we are of the opinion that the sum of
$10.00 per share, is fair from a financial point of view.
Very truly yours,
Rodman & Renshaw, Inc.
By: _________________________________
Julia S. Heckman
Senior Managing Director
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