SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 8, 1999
BALDWIN PIANO & ORGAN COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 0-14903 31-1091812
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
4680 Parkway Drive, Mason, Ohio 45040-5301
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 754-4500
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 8, 1999, Baldwin Piano & Organ Company, a Delaware
corporation ("Baldwin"), executed a Stock Purchase Agreement with Deutsche
Financial Services Corporation (the "Stock Purchase Agreement"). Pursuant to the
Stock Purchase Agreement, Deutsche Financial Services Corporation has agreed to
purchase for cash all of the outstanding stock of two subsidiaries of Baldwin
that are engaged in the retail finance business, Keyboard Acceptance Corporation
and Signature Leasing Company. The purchase price was determined by negotiations
among the parties.
On December 8, 1999, Baldwin issued a press release relating to the
Stock Purchase Agreement ("Baldwin Press Release"). A copy of the Stock Purchase
Agreement and the Baldwin Press Release are attached hereto as Exhibits 99.1 and
99.2 respectively, and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit 99.1 - Stock Purchase Agreement, dated December 8, 1999.
Exhibit 99.2 - Press Release of the Registrant, dated December 8, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALDWIN PIANO & ORGAN COMPANY
(Registrant)
Date December 9, 1999 /s/ Duane D. Kimble
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Name: Duane D. Kimble
Title: Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit 99.1 - Stock Purchase Agreement, dated December 8, 1999.
Exhibit 99.2 - Press release of the Registrant, dated December 8, 1999.
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STOCK PURCHASE AGREEMENT
dated as of December 8, 1999
by and between
BALDWIN PIANO & ORGAN COMPANY
and
DEUTSCHE FINANCIAL SERVICES CORPORATION
with respect to all
outstanding capital stock of
KEYBOARD ACCEPTANCE CORPORATION
and
SIGNATURE LEASING COMPANY
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<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale
1.02 Purchase Price
1.03 Closing
1.04 Post-Closing Adjustments
1.05 Closing Balance Sheets
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
2.01 Corporate Existence of Seller
2.02 Authority
2.03 Corporate Existence of KAC and SLC
2.04 Capital Stock
2.05 Subsidiaries
2.06 No Conflicts
2.07 Governmental Approvals and Filings
2.08 Books and Records
2.09 Financial Statements and Condition
2.10 Taxes
2.11 Legal Proceedings
2.12 Compliance With Laws and Orders
2.13 Contracts
2.14 Licenses
2.15 Insurance
2.16 Affiliate Transactions
2.17 Labor Relations
2.18 Brokers
2.19 Best Efforts to Close
2.20 Year 2000 Compliance
2.21 Environmental Matters
2.22 Receivables
2.23 Ownership of Assets and Properties
2.24 Transition Services/MIS Services
2.25 Employees and Employee Benefits
2.26 No Other Representations
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Corporate Existence
3.02 Authority
3.03 No Conflicts
3.04 Governmental Approvals and Filings
3.05 Legal Proceedings
3.06 Purchase for Investment
3.07 Brokers
3.08 Financing
3.09 Best Efforts to Close
3.10 Employees and Employee Benefits
3.11 No Other Representations
ARTICLE IV
COVENANTS OF SELLER
4.01 Regulatory and Other Approvals
4.02 HSR Filings
4.03 Access by Purchaser
4.04 Conduct of Business
4.05 Fulfillment of Conditions
4.06 Notice of Changes
4.07 Transition Services Coverage
ARTICLE V
COVENANTS OF PURCHASER
5.01 Regulatory and Other Approvals
5.02 HSR Filings
5.03 Fulfillment of Conditions
5.04 Stay Bonuses/Severance
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01 Representations and Warranties
6.02 Performance
6.03 Officers' Certificates
6.04 Orders and Laws
6.05 Regulatory Consents and Approvals
6.06 Third Party Consents
6.07 Operative Agreements
6.08 Opinions of Counsel
6.09 Release of Security Interest and Lien Upon Stock of KAC
6.10 Termination of Certain Agreements
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
7.01 Representations and Warranties
7.02 Performance
7.03 Officers' Certificates
7.04 Orders and Laws
7.05 Regulatory Consents and Approvals
7.06 Third Party Consents
7.07 Operative Agreements
7.08 Release of Guaranties
7.09 Release of Security Interest and Lien on Stock of KAC
7.10 Amendments to Certain Agreements
7.11 Opinion of Counsel
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
8.01 Survival of Representations, Warranties, Covenants and Agreements
ARTICLE IX
INDEMNIFICATION
9.01 Tax Indemnification
9.02 Indemnification by the Seller
9.03 Indemnification by Purchaser
9.04 Indemnification Procedures
9.05 Limitations
ARTICLE X
TERMINATION
10.01 Termination
10.02 Effect of Termination
ARTICLE XI
TRANSITION PROCEDURES
11.01 Term; Services
11.02 Compensation and Payment
11.03 Relationship of Parties
ARTICLE XII
DEFINITIONS
12.01 Definitions
ARTICLE XIII
MISCELLANEOUS
13.01 Notices
13.02 Entire Agreement
13.03 Expenses
13.04 Public Announcements
13.05 Confidentiality
13.06 Further Assurances; Post-Closing Cooperation
13.07 Waiver
13.08 Amendment
13.09 No Third Party Beneficiary
13.10 No Assignment; Binding Effect
13.11 Headings
13.12 Invalid Provisions
13.13 Governing Law
13.14 Counterparts
13.15 Non-Compete
13.16 Non-Solicitation
<PAGE>
EXHIBITS
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EXHIBIT A OFFICER'S CERTIFICATE OF SELLER
EXHIBIT B SECRETARY'S CERTIFICATE OF SELLER
EXHIBIT C-1 FORM OF OPINION OF CADWALADER, WICKERSHAM & TAFT, COUNSEL TO
SELLER
EXHIBIT C-2 FORM OF OPINION OF GRAYDON, HEAD & RITCHEY, COUNSEL TO SELLER
EXHIBIT D OFFICER'S CERTIFICATE OF PURCHASER
EXHIBIT E SECRETARY'S CERTIFICATE OF PURCHASER
EXHIBIT F-1 FORM OF OPINION OF COUNSEL TO PURCHASER
EXHIBIT F-2 FORM OF OPINION OF NEVADA COUNSEL TO PURCHASER
EXHIBIT G FORM OF BALDWIN RETAIL STORE FINANCE AGREEMENT
EXHIBIT H FORM OF REPOSSESSION AND SALE AGREEMENT
EXHIBIT I FORM OF TAX ALLOCATION AGREEMENT
EXHIBIT J BALDWIN ACCOUNTS RECEIVABLE PURCHASE AGREEMENT AND PROMISSORY
NOTE
<PAGE>
This STOCK PURCHASE AGREEMENT dated as of December 8, 1999 is made
and entered into by and between DEUTSCHE FINANCIAL SERVICES CORPORATION, a
Nevada corporation ("Purchaser"), and BALDWIN PIANO & ORGAN COMPANY, a Delaware
corporation ("Seller"). Capitalized terms not otherwise defined herein have the
meanings set forth in Section 12.01.
WHEREAS, Seller owns one hundred (100) shares of common stock, par
value $.01 per share, of KEYBOARD ACCEPTANCE CORPORATION, a Delaware corporation
("KAC"), constituting all issued and outstanding shares of capital stock of KAC
(such shares being referred to herein as the "KAC Shares");
WHEREAS, Seller owns one hundred (100) shares of common stock,
without par value, of SIGNATURE LEASING COMPANY, an Ohio corporation ("SLC")
(the business conducted by KAC and SLC being referred to herein as the
"Businesses"), constituting all issued and outstanding shares of capital stock
of SLC (such shares being referred to herein as the "SLC Shares") (collectively,
the KAC Shares and the SLC Shares referred to herein as the "Shares"); and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
the Shares on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale. Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, all of the right, title and interest
of Seller in and to the Shares at the Closing on the terms and subject to the
conditions set forth in this Agreement.
1.02 Purchase Price. The aggregate consideration to be paid by
Purchaser for the Shares is U.S. $25,304,025 (the "Estimated Purchase Price"),
adjusted by the Post-Closing Adjustment (as defined in Section 1.04), if any, in
accordance with Section 1.04. The Estimated Purchase Price, as adjusted by the
Post-Closing Adjustment, will be referred to herein as the "Purchase Price". The
Estimated Purchase Price shall be payable in cash in the manner and at the times
set forth in Section 1.03.
1.03 Closing. (a) The Closing will take place at the offices of
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, or at
such other place as Purchaser and Seller mutually agree, at 10:00 A.M. local
time, on the Closing Date. At the Closing, Purchaser will pay the Estimated
Purchase Price by wire transfer of immediately available funds to such account
as Seller may reasonably direct by written notice delivered to Purchaser by
Seller at least one (1) Business Day prior to the Closing Date. Simultaneously,
Seller will assign and transfer to Purchaser good and valid title in and to the
Shares, free and clear of all Liens, by delivering to Purchaser certificates
representing the Shares, duly endorsed in blank or accompanied by duly executed
stock powers endorsed in blank. At the Closing, there shall also be delivered to
Seller and Purchaser the opinions, certificates and other documents specified in
Articles VI and VII.
1.04 Post-Closing Adjustments. The Estimated Purchase Price is based
on KAC and SLC having stockholder's equity on the Closing Date, prepared and
presented in accordance with GAAP, as applied on a consistent basis in
accordance with past practices, in the aggregate of $13,304,025, the amount
shown on the September 30, 1999 Financial Statements attached hereto on Section
2.09(a) of the Disclosure Schedule, after giving effect to the adjustments on
Section 2.09(a) of the Disclosure Schedule (the "Target Stockholder's Equity").
The Estimated Purchase Price of $25,304,025 is computed by adding $12,000,000 to
the Target Stockholder's Equity. Any difference between the Target Stockholder's
Equity and the Stockholder's Equity (as defined in Section 1.05) shall be an
adjustment to the Estimated Purchase Price (the "Post-Closing Adjustment"). The
"Purchase Price" shall be the Estimated Purchase Price adjusted by the
Post-Closing Adjustment, in the following manner: in the event that the
Stockholder's Equity is greater than the Target Stockholder's Equity, the
Purchase Price shall be equal to the Estimated Purchase Price plus the
Post-Closing Adjustment, and the Purchaser shall pay the amount of the
Post-Closing Adjustment to Seller in cash, and in the event that the
Stockholder's Equity is less than the Target Stockholder's Equity, the Purchase
Price shall be equal to the Estimated Purchase Price minus the Post-Closing
Adjustment, and the Seller shall pay the amount of the Post-Closing Adjustment
to the Purchaser in cash, in each case in accordance with the provisions of
Section 1.05 of this Agreement. Any such payments shall be made within five
Business Days following agreement by Purchaser and Seller on the Stockholder's
Equity Calculation Statement (as defined in Section 1.05), in accordance with
Section 1.05. Purchaser and Seller agree that Seller shall cause KAC and/or SLC
to declare a dividend, prior to the Closing, in order to reduce Stockholder's
Equity to an amount approximately equal to Target Stockholder's Equity.
1.05 Closing Balance Sheets. (a) As soon as practicable following
the Closing Date, Seller shall cause to be prepared the balance sheets of KAC
and SLC as of the Closing Date (the "Closing Balance Sheets"). Within sixty (60)
days following the Closing Date, Seller shall deliver the Closing Balance Sheets
to the Purchaser, accompanied by (i) a certificate of an executive officer of
Seller to the effect that (except with respect to adjustments required by this
Agreement) the Closing Balance Sheets have been prepared and presented in
accordance with GAAP, as applied on a consistent basis in accordance with past
practices, and fairly present the financial position of KAC and SLC,
respectively, as of the Closing Date; and (ii) a statement documenting the
calculation of the aggregate of KAC and SLC's stockholder's equity as of the
Closing Date, prepared and presented in accordance with GAAP, as applied on a
consistent basis in accordance with past practices ("Stockholder's Equity" and
"Stockholder's Equity Calculation Statement"). The Closing Balance Sheets and
Stockholder's Equity Calculation Statement shall be audited by Deloitte &
Touche, independent public accountants of Seller ("Seller's Auditor"), and
reviewed by KPMG Peat Marwick, independent public accountants of Purchaser
("Purchaser's Auditor"), who will be afforded full access to all books and
records of KAC and SLC and workpapers used or created by (i) Seller in preparing
the Closing Date Balance sheets and Stockholder's Equity Calculation Statement
and (ii) Seller's Auditor in its audit. Seller's Auditor will issue a report to
Purchaser and Seller within ninety (90) days of the Closing Date concerning
their audit and stating that the Closing Balance Sheets have been prepared in
accordance with GAAP, it being understood that the report of Seller's Auditor
must be unqualified.
(b) Within twenty (20) Business Days following the date on which the
report of Seller's Auditor is delivered pursuant to Section 1.05(a), Purchaser
and Seller will attempt to mutually agree on the Post-Closing Adjustment. If
there is no agreement within twenty (20) Business Days of delivery of the report
of Seller's Auditor, Purchaser shall give notice to Seller as to whether or not
Purchaser's Auditor concurs with Seller's Auditor's report (such notice to
contain Purchaser's Auditor's comments and exceptions to the Closing Balance
Sheets and the Stockholder's Equity Calculation Statement). If Purchaser gives
notice that Purchaser's Auditor does not concur with Seller's Auditor's report,
then within twenty (20) Business Days following the date of such notice, the
dispute shall be submitted to the independent auditing firm Arthur Andersen, for
the purpose of resolving all remaining unresolved issues with respect to the
Closing Balance Sheets and the Stockholder's Equity Calculation Statement.
(c) Within ten (10) days following such retention of Arthur
Andersen, Seller shall cause Seller's Auditor, and Purchaser shall cause
Purchaser's Auditor to present the issue or issues that must be resolved with
respect to the Closing Balance Sheets and the Stockholder's Equity Calculation
Statement and the calculation of the Purchase Price.
(d) Seller and Purchaser shall use their best efforts to cause
Arthur Andersen to render its decision as soon as is reasonably practical,
including, without limitation, prompt compliance with all reasonable requests by
Arthur Andersen for information, papers, books, records and the like; provided
that Seller and Purchaser agree that the purpose of retention of Arthur Andersen
shall not include the conduct of its own independent audit of the Closing
Balance Sheets and the Stockholder's Equity Calculation Statement, but rather
shall be limited to resolving the issues presented to it and matters related
thereto. All decisions of Arthur Andersen respect to the Closing Balance Sheets
and the Stockholder's Equity Calculation Statement shall be final and binding
upon both Seller and Purchaser.
(e) Purchaser and Seller shall bear all fees, costs, disbursements
and other expenses of their own respective auditor associated with performance
of their respective functions pursuant to this Section 1.05. All fees, costs,
disbursements and other expenses of Arthur Andersen which are incurred pursuant
hereto shall be shared equally by Seller and Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
2.01. Corporate Existence of Seller. Seller is a corporation validly
existing and in good standing under the Laws of the State of Delaware. Seller
has full corporate power and authority to execute and deliver this Agreement and
the Operative Agreements to which it is a party and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares.
2.02. Authority. The execution and delivery by Seller of this
Agreement and the Operative Agreements to which it is a party, and the
performance by Seller of its obligations hereunder and thereunder, have been
duly and validly authorized by the board of directors of Seller, no other
corporate action on the part of Seller or its stockholders being necessary. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes, and upon the execution and delivery by Seller of the Operative
Agreements to which it is a party, such Operative Agreements will constitute,
legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their terms.
2.03. Corporate Existence of KAC and SLC. (a) KAC is a corporation
validly existing and in good standing under the Laws of the State of Delaware,
and has full corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets and Properties. KAC is
duly qualified, licensed or admitted to do the type of business in which it is
engaged and is in good standing in those jurisdictions specified in Section
2.03(a) of the Disclosure Schedule, which are the only jurisdictions in which
the ownership, use or leasing of its Assets and Properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for those jurisdictions in which the adverse effects of all
such failures by KAC to be qualified, licensed or admitted and in good standing
could not in the aggregate reasonably be expected to have a Material Adverse
Effect. Seller has prior to the execution of this Agreement delivered to
Purchaser true and complete copies of the certificate of incorporation and
bylaws of KAC, as in effect on the date hereof.
(b) SLC is a corporation validly existing and in good standing
under the Laws of the State of Ohio, and has full corporate power and authority
to conduct its business as and to the extent now conducted and to own, use and
lease its Assets and Properties. SLC is duly qualified, licensed or admitted to
do the type of business in which it is engaged and is in good standing in those
jurisdictions specified in Section 2.03(b) of the Disclosure Schedule, which are
the only jurisdictions in which the ownership, use or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for those jurisdictions in which the
adverse effects of all such failures by SLC to be qualified, licensed or
admitted and in good standing could not in the aggregate reasonably be expected
to have a Material Adverse Effect. Seller has prior to the execution of this
Agreement delivered to Purchaser true and complete copies of the articles of
incorporation and code of regulations of SLC, as in effect on the date hereof.
2.04 Capital Stock. (a) The authorized capital stock of KAC
consists solely of Ten Thousand (10,000) shares of KAC Common Stock, of which
only the KAC Shares have been issued. The KAC Shares are duly authorized,
validly issued, outstanding, fully paid and nonassessable. Except as set forth
in Section 2.04(a) of the Disclosure Schedule, Seller owns the KAC Shares,
beneficially and of record, free and clear of all Liens. There are no
outstanding Options, warrants, calls, contracts, demands, commitments,
convertible securities, or other agreements or arrangements of any character or
nature whatsoever under which Seller or KAC is or may become obligated to issue,
assign or transfer any shares of KAC. The delivery of a certificate or
certificates at the Closing representing the KAC Shares in the manner provided
in Section 1.03 will transfer to Purchaser good and valid title to the KAC
Shares, free and clear of all Liens other than Liens created or suffered to
exist by Purchaser.
(b) The authorized capital stock of SLC consists solely of Eight
Hundred Fifty (850) shares of SLC Common Stock, of which only the SLC Shares
have been issued. The SLC Shares are duly authorized, validly issued,
outstanding, fully paid and nonassessable. Except as set forth in Section
2.04(b) of the Disclosure Schedule, Seller owns the SLC Shares, beneficially and
of record, free and clear of all Liens. There are no outstanding Options,
warrants, calls, contracts, demands, commitments, convertible securities, or
other agreements or arrangements of any character or nature whatsoever under
which Seller or SLC is or may become obligated to issue, assign or transfer any
shares of SLC. The delivery of a certificate or certificates at the Closing
representing the SLC Shares in the manner provided in Section 1.03 will transfer
to Purchaser good and valid title to the SLC Shares, free and clear of all Liens
other than Liens created or suffered to exist by Purchaser.
2.05 Subsidiaries. KAC and SLC have no subsidiaries. KAC and SLC
have no interest, direct or indirect, and have no commitment to purchase any
interest, direct or indirect, in any other corporation or in any partnership,
joint venture or other business enterprise or entity.
2.06 No Conflicts. The execution and delivery by Seller of this
Agreement does not, and the execution and delivery by Seller of the Operative
Agreements to which it is a party, the performance by Seller of its obligations
under this Agreement and such Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
certificate of incorporation or bylaws of Seller or KAC or the articles of
incorporation or code of regulations of SLC;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.07 of the
Disclosure Schedule, conflict with or result in a violation or breach of any Law
or Order applicable to Seller or the Businesses or any of their respective
Assets and Properties (other than such conflicts, violations or breaches (i)
which could not in the aggregate reasonably be expected to materially adversely
affect the validity or enforceability of this Agreement or any of such Operative
Agreements or to have a Material Adverse Effect or (ii) as would occur solely as
a result of the identity or the legal or regulatory status of Purchaser or any
of its Affiliates); or
(c) except as disclosed in Section 2.06(c) of the Disclosure
Schedule, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Seller or the Businesses to obtain any consent, approval or action
of, make any filing with or give any notice to any Person as a result or under
the terms of, or (iv) result in the creation or imposition of any Lien upon
Seller or the Businesses or any of their respective Assets and Properties under,
any Contract or License to which Seller or the Businesses is a party or by which
any of their respective Assets and Properties is bound and which, individually
or in the aggregate with other such Contracts and Licenses, is material to the
validity or enforceability of this Agreement or any of such Operative Agreements
or will cause a Material Adverse Effect.
2.07 Governmental Approvals and Filings. Except as disclosed in
Section 2.07 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Seller or the Businesses is required in connection with the execution, delivery
and performance of this Agreement or any of the Operative Agreements to which it
is a party or the consummation of the transactions contemplated hereby or
thereby, except (i) where the failure to obtain any such consent, approval or
action, to make any such filing or to give any such notice could not reasonably
be expected to materially adversely affect the validity or enforceability of
this Agreement or any of such Operative Agreements or to have a Material Adverse
Effect and (ii) those as would be required solely as a result of the identity or
the legal or regulatory status of Purchaser or any of its Affiliates.
2.08 Books and Records. The minute books and other similar records
of KAC and SLC as made available to Purchaser prior to the execution of this
Agreement contain a true and complete record, in all material respects, of all
action taken at all meetings and by all written consents in lieu of meetings of
the stockholders, the boards of directors and committees of the boards of
directors of KAC and SLC.
2.09 Financial Statements and Condition. (a) Prior to the
execution of this Agreement, Seller has delivered to Purchaser true and
complete copies of the following financial statements:
(i) the audited balance sheets of the Seller and its
consolidated subsidiaries as of December 31, 1996, 1997 and 1998, and the
related audited consolidated statements of operations, stockholders'
equity and cash flows for each of the fiscal years then ended, together
with a true and correct copy of the report on such audited information by
Deloitte & Touche (the "Financial Statements");
(ii) the unaudited balance sheet of the Seller and its
consolidated subsidiaries as of June 30, 1999, and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows
for the portion of the fiscal year then ended (the "Unaudited Financial
Statements"); and
(iii) the pro forma, unaudited balance sheets of KAC and
SLC, taken as a whole, as of September 30, 1999 and the pro forma,
unaudited statements of operations for KAC and SLC, taken as a whole, for
the 9 months ended September 30, 1999 (the "Pro Forma Financial
Statements").
All such financial statements were prepared in accordance with GAAP
(except in the case of the Financial Statements, as set forth in the notes
thereto, and in the case of the Pro Forma Financial Statements as set forth in
Section 2.09(a) of the Disclosure Schedule, to which certain adjustments set
forth thereon have been made) and fairly present in all material respects the
consolidated financial condition and results of operations of the Seller and its
consolidated subsidiaries (or in the case of the Pro Forma Financial Statements,
KAC and SLC) as of the respective dates thereof and for the respective periods
covered thereby except, in the case of the Unaudited Financial Statements and
the Pro Forma Financial Statements, for the absence of footnotes and normal
year-end adjustments which an audit would reveal.
(b) Except for the execution and delivery of this Agreement and
the transactions to take place pursuant hereto on or prior to the Closing Date,
since the Unaudited Financial Statement Date there has not been any Material
Adverse Effect, other than those occurring as a result of general economic or
financial conditions or other developments which are not unique to the
Businesses but also affect other Persons who participate or are engaged in the
lines of business in which Seller and the Businesses participate or are engaged.
(c) Since the Unaudited Financial Statement Date, except as
disclosed in Section 2.09(c) of the Disclosure Schedule or any other Section of
the Disclosure Schedule, neither KAC nor SLC has incurred any Liabilities which
in the aggregate, other than liabilities incurred in the ordinary course of
business, exceed $50,000.
2.10 Taxes. (a) The Seller has duly filed, been included in, or will
file on a timely basis (taking into account any extensions of time for filing)
all material Tax Returns required to be filed on or before the Closing Date by
or on behalf of KAC and SLC. KAC and SLC have, or Seller on behalf of KAC and
SLC has, timely paid, or made adequate provision by a tax accrual or tax reserve
for, all material Taxes of KAC and SLC shown as due and payable on such material
Tax Returns.
(b) Seller, KAC or SLC have not been notified of the filing of any
Liens for Taxes upon the respective Assets and Properties of KAC or SLC except
Liens for current Taxes not yet due and payable or Liens imposed for a
nonpayment of Taxes disclosed on Section 2.10(b) of the Disclosure Schedule
which are currently being contested in good faith by the Seller or KAC or SLC.
2.11 Legal Proceedings. Except as disclosed in Section 2.11 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the
Knowledge of either KAC or SLC, threatened against, relating to or affecting KAC
or SLC or any of their respective Assets and Properties.
(b) there are no Actions or Proceedings pending or, to the
Knowledge of Seller, threatened against, relating to or affecting Seller or any
of its respective Assets and Properties which (i) could reasonably be expected
to result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements, or (ii) could
reasonably be expected, individually or in the aggregate with other such Actions
or Proceedings, to cause a Material Adverse Effect;
(c) there are no Orders outstanding against KAC or SLC.
2.12 Compliance With Laws and Orders. Except as disclosed in
Section 2.12 of the Disclosure Schedule, neither KAC nor SLC is in violation of
or in default under any Law or Order applicable to KAC or SLC or any of their
respective Assets and Properties, the effect of which, individually or in the
aggregate with other such violations and defaults, could reasonably be expected
to cause a Material Adverse Effect.
2.13 Contracts. (a) Section 2.13(a) of the Disclosure Schedule
(with paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto, have been delivered
to Purchaser prior to the execution of this Agreement), to which KAC or SLC are
a party or by which any of their respective Assets and Properties is bound:
(i) all Contracts providing for a commitment of employment
or consultation services for a specified or unspecified term, the name,
position and rate of compensation of each Person party to such a Contract
and the expiration date of each such Contract;
(ii) all Contracts with any Person containing any provision
or covenant prohibiting or materially limiting the ability of the
Businesses to engage in any business activity or compete with any Person
or prohibiting or materially limiting the ability of any Person to compete
with the Businesses;
(iii) all material partnership, joint venture,
shareholders' or other similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of KAC or SLC
in excess of $100,000 (other than Indebtedness owing to the Businesses);
(v) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchisees which
require the payment, pursuant to the terms of any such Contract, by or to
the Businesses of more than $100,000;
(vi) all Contracts relating to (A) the future disposition
or acquisition of any Assets and Properties individually or in the
aggregate which require the payment of more than $100,000, other than
dispositions or acquisitions in the ordinary course of business, and (B)
any Business Combination;
(vii) all Contracts between or among KAC or SLC, on the one
hand, and Seller, any officer, director or Affiliate of Seller (other than
KAC or SLC), on the other hand, and requiring annual payments by or to KAC
or SLC exceeding $100,000; and
(viii) all other Contracts that (A) require the payment,
pursuant to the terms of any such Contract, by or to the Businesses of
more than $100,000 and (B) cannot be terminated within sixty (60) calendar
days after giving notice of termination without resulting in any material
cost or penalty to the Businesses.
(b) Each Contract required to be disclosed in Section 2.13(a) of
the Disclosure Schedule is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of KAC or
SLC and, to the Knowledge of Seller, KAC or SLC of each other party thereto; and
except as disclosed in Section 2.13(b) of the Disclosure Schedule neither KAC,
SLC nor, to the Knowledge of Seller, any other party to such Contract is in
violation or breach of or default under any such Contract (or with notice or
lapse of time or both, would be in violation or breach of or default under any
such Contract), the effect of which, individually or in the aggregate, could
reasonably be expected to cause a Material Adverse Effect.
2.14 Licenses. Section 2.14 of the Disclosure Schedule contains a
true and complete list of all Licenses which are used in or by the Businesses
and individually or in the aggregate with other such Licenses are material to
the Business or Condition of KAC or SLC, respectively. Prior to the execution of
this Agreement, Seller has delivered to Purchaser true and complete copies of
all such Licenses. Except as disclosed in Section 2.14 of the Disclosure
Schedule, each such License is in full force and effect.
2.15 Insurance. Section 2.15 of the Disclosure Schedule contains a
true and complete list of all material insurance policies currently in effect
that insure the business, operations or employees of the Businesses or affect or
relate to the ownership, use or operation of any of the Assets and Properties of
KAC or SLC and that have been issued to the Seller for the benefit of the
Businesses. The insurance coverage provided by the policies described in the
preceding sentence will terminate and lapse by reason of the transactions
contemplated by this Agreement. Each policy referred to in the first sentence of
this paragraph is valid and binding and in full force and effect, no premiums
due thereunder have not been paid and neither the Seller, KAC nor SLC has
received any notice of cancellation or termination in respect of any such policy
or is in default thereunder in any material respect.
2.16 Affiliate Transactions. Except as disclosed in Section 2.16 of
the Disclosure Schedule, as of the date of this Agreement, (i) there is no
Indebtedness between KAC or SLC, on the one hand, and Seller, any officer,
director or Affiliate of Seller (other than KAC or SLC), on the other, (ii)
neither Seller nor any such officer, director or Affiliate provides or causes to
be provided any assets, services or facilities to the Businesses which are
individually or in the aggregate necessary to conduct the Businesses and (iii)
neither KAC nor SLC provides or causes to be provided any assets, services or
facilities to Seller or any such officer, director or Affiliate which are
individually or in the aggregate necessary to conduct the business of the Seller
as it is presently conducted.
2.17 Labor Relations. Neither KAC nor SLC has any employees.
Section 2.17 of the Disclosure Schedule contains a list of all employees of the
Seller who perform work on behalf of the Businesses. Other than the agreements
listed on Section 2.17 of the Disclosure Schedule, there are no other contracts
or arrangements between KAC and/or SLC and such employees.
2.18 Brokers. Except for Lehman Brothers, whose fees, commissions
and expenses are the sole responsibility of Seller, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Seller directly with Purchaser without the intervention of any Person on behalf
of Seller in such manner as to give rise to any valid claim by any Person
against Purchaser or the Businesses for a finder's fee, brokerage commission or
similar payment.
2.19 Best Efforts to Close. The Seller will use its best efforts to
close, as soon as possible, the transactions contemplated by Section 1.03 of
this Agreement.
2.20 Year 2000 Compliance. The computer software, computer
firmware, computer hardware (whether general or specific purpose), and other
similar or related items of automated, computerized, and /or software system(s)
that are used or relied on by KAC and SLC in the conduct of their business
(collectively, "Information Technology") are designed or have been modified to
be used prior to, during, and after the calendar year 2000 AD, and the
Information Technology used during each such time period will actively receive,
provide and process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into and between the twentieth and twenty first
centuries, including the years 1999 and 2000, and leap year calculations and
will not malfunction, cease to function, or provide invalid or incorrect results
as a result of date/time data, to the extent that other Information Technology,
used in combination with the Information Technology of the Seller, properly
exchanges date/time data with it.
2.21 Environmental Matters. KAC and SLC are in material compliance
with all applicable environmental laws, rules, regulations and standards
promulgated, adopted or enforced by the Environmental Protection Agency or any
comparable state or local agency.
2.22 Receivables. The word "Receivables" as used herein shall mean
all loans, installment sales contracts, credit or financing agreements, leases
and other obligations or rights to payments owed to KAC or SLC. All of the
Receivables in existence as of the Closing Date, together with any instruments
or agreements securing or supporting the same, will (i) have been made for
valuable consideration, (ii) constitute valid obligations of the persons shown
as indebted thereon or obligated in respect thereof, (iii) be legally
enforceable in all material respects according to their terms (except as
affected by bankruptcy or insolvency laws), (iv) not be subject in any respect
to any valid defense or right of offset or similar claim, (v) comply in all
material respects with all applicable laws, rules and regulations, and (vi)
include or represent valid enforceable first liens on the personal property sold
or leased thereunder.
2.23 Ownership of Assets and Properties. Except as otherwise set
forth in Section 2.23 of the Disclosure Schedule, KAC and SLC have good title to
all of the Assets and Properties reflected in the Pro Forma Financial Statements
or acquired subsequent thereto, subject to no liens except statutory liens for
amounts not yet delinquent or which have been contested in good faith.
2.24 Transition Services/MIS Services. The MIS Services and
Transition Services provided by Seller shall be performed in a lawful, accurate,
and workmanlike manner. All Software and Hardware used in connection with the
MIS Services and Transition Services provided by Seller are fit for the purpose
of providing such services.
2.25 Employees and Employee Benefits.
(a) Neither KAC nor SLC has any employees, and neither KAC nor SLC
sponsors, maintains, or contributes to any employee benefit plans (within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")).
(b) Certain employees of Seller are employed in connection with
the Businesses, and, as employees of Seller, are or may become entitled to
benefits under employee benefit plans maintained by Seller in which they
participate ("Seller Plans"). Seller has furnished or made available to
Purchaser copies of the Seller Plans (and, if applicable, related trust
agreements) and all amendments thereto together with, where applicable, each
Seller Plan's summary plan description and any summaries of material
modifications thereto. No such Seller Plan is a "multiemployer plan" as defined
for purposes of and subject to Subtitle E of Title IV of ERISA (a "Multiemployer
Plan"), or is otherwise subject to Title IV of ERISA.
(c) Neither Seller, nor any entity aggregated with Seller under
Section 414(b) or (c) of the Code or Section 4001 of ERISA, except as could not
be reasonably expected to have a Material Adverse Effect on the Business or
Condition of Seller, KAC or SLC, has incurred (i) any liability under Title IV
of ERISA arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(ii) any liability, under Section 412 of the Code or otherwise, with respect to
any Seller Plan, that in either case would become a liability of Purchaser after
the Closing Date (other than the liabilities pursuant to the documents listed on
Section 2.13(a) of the Disclosure Schedule).
(d) Each Seller Plan is in substantial compliance with all
applicable laws, including ERISA, and each Seller Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to be
so qualified and, to the Knowledge of Seller, no event has occurred since the
date of such determination that would adversely affect such qualification.
2.26 No Other Representations. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent of each party
hereto that Seller is making no representation or warranty whatsoever, express
or implied, except those representations and warranties contained in this
Article II and in any certificate delivered pursuant to Section 6.03.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 Corporate Existence. Purchaser is a corporation validly
existing and in good standing under the Laws of the State of Nevada. Purchaser
has full corporate power and authority to execute and deliver this Agreement and
the Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.
3.02 Authority. The execution and delivery by Purchaser of this
Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by the board of directors of Purchaser, no other
corporate action on the part of Purchaser or its stockholders being necessary.
This Agreement has been duly and validly executed and delivered by Purchaser and
constitutes, and upon the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, such Operative Agreements will constitute,
legal, valid and binding obligations of Purchaser enforceable against Purchaser
in accordance with their terms.
3.03 No Conflicts. The execution and delivery by Purchaser of this
Agreement does not, and the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, the performance by Purchaser of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
certificate or articles of incorporation or by-laws or other comparable
corporate charter document of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 3.04 of the
Disclosure Schedule, conflict with or result in a violation or breach of any Law
or Order applicable to Purchaser or any of its Assets and Properties; or
(c) except as disclosed in Section 3.03 of the Disclosure
Schedule, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under, or
a right to accelerate with respect to, (iii) require Purchaser to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, or (iv) result in the creation or
imposition of any Lien upon Purchaser or any of its Assets or Properties under,
any Contract or License to which Purchaser or any of its Affiliates is a party
or by which any of its Assets and Properties is bound.
3.04 Governmental Approvals and Filings. Except as disclosed in
Section 3.04 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Purchaser is required in connection with the execution, delivery and performance
of this Agreement or the Operative Agreements to which it is a party or the
consummation of the transactions contemplated hereby or thereby.
3.05 Legal Proceedings. There are no Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be expected
to result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements.
3.06 Purchase for Investment. The Shares will be acquired by
Purchaser (or, if applicable, its assignee pursuant to Section 13.10) for its
own account for the purpose of investment, and not with a view to the
distribution thereof.
3.07 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser directly
with Seller without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against Seller or
the Businesses for a finder's fee, brokerage commission or similar payment.
3.08 Financing. Purchaser has sufficient cash (and has provided
Seller with evidence thereof) to pay the Purchase Price and to make all other
necessary payments of fees and expenses in connection with the transactions
contemplated by this Agreement and the Operative Agreements.
3.09 Best Efforts to Close. The Purchaser will use its best efforts
to close, as soon as possible, the transactions contemplated by Section 1.03 of
this Agreement.
3.10 Employees and Employee Benefits.
(a) Prior to the Closing but effective as of 11:59 p.m., on the
day immediately preceding the Closing Date, Purchaser shall offer employment to
all employees listed on Section 2.17 of the Disclosure Schedule, except for the
part-time employees listed on Section 3.10(a) of the Disclosure Schedule, on
terms and conditions to be established by Purchaser, but which shall be no less
favorable to each Transferred Employee than the terms of employment currently
maintained by Seller (any such employee who accepts such offer and becomes an
employee of Purchaser, a "Transferred Employee"). In addition, the Purchaser
shall (i) honor all accrued but unused vacation entitlement of the Transferred
Employees for the calendar year in which the Closing occurs, (ii) on an annual
basis, provide to each Transferred Employee a number of annual vacation days
that is equal to or greater than the number of annual vacation days to which
such Transferred Employee was entitled for the calendar year in which the
Closing occurs, and (iii) be responsible for severance payments to the
Transferred Employees, in accordance with Section 5.04 of this Agreement.
(b) The Purchaser and Seller agree, that until January 1, 2000 (or
such earlier date as the Purchaser shall select), the Seller will pay for and
the Transferred Employees will be covered by health insurance and dental benefit
plans offered by the Seller. Within thirty (30) days after January 1, 2000 (or
such earlier date as the Purchaser shall select), the Purchaser shall reimburse
Seller for all costs incurred by Seller attributable to such coverage of
Transferred Employees after the Closing Date.
(c) As of January 1, 2000 (or such earlier date as the Purchaser
shall select), Purchaser shall provide a benefits package, including but not
limited to health and dental benefit insurance coverage, to all of the
Transferred Employees who become employed by Purchaser as of the Closing Date,
on terms no less favorable to such Transferred Employees than the benefits
package, including but not limited to the health and dental benefit insurance
plans, currently maintained by Seller. Purchaser shall ensure that all
preexisting condition limitations for all such Transferred Employees covered by
the Seller's health benefit insurance plans as of the Closing Date are waived.
(d) Purchaser shall give past service credit to any Transferred
Employee for eligibility and vesting (if applicable) under its employee benefit
plans that, on or after the Closing Date, provide coverage to any of the
Transferred Employees.
(e) The Purchaser shall not assume any liabilities or obligations
of the Seller under the Seller Plans, including, without limitation, pursuant to
this Agreement.
3.11 No Other Representations. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent of each party
hereto that Purchaser is making no representation or warranty whatsoever,
express or implied, except those representations and warranties contained in
this Article III and in any certificate delivered pursuant to Section 7.03.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times from
and after the date hereof until the Closing, Seller will comply with all
covenants and provisions of this Article IV, except to the extent Purchaser may
otherwise consent in writing.
4.01 Regulatory and Other Approvals. Seller will, and will cause
KAC or SLC to, (a) take all commercially reasonable steps necessary or
desirable, and proceed diligently and in good faith and use all commercially
reasonable efforts, as promptly as practicable to obtain all consents, approvals
or actions of, to make all filings with and to give all notices to Governmental
or Regulatory Authorities or any other Person required of Seller or the
Businesses to consummate the transactions contemplated hereby and by the
Operative Agreements, including without limitation those described in Sections
2.06(c) and 2.07 of the Disclosure Schedule, (b) provide such other information
and communications to such Governmental or Regulatory Authorities or other
Persons as such Governmental or Regulatory Authorities or other Persons may
reasonably request and (c) provide reasonable cooperation to Purchaser in
obtaining all consents, approvals or actions of, making all filings with and
giving all notices to Governmental or Regulatory Authorities or other Persons
required of Purchaser to consummate the transactions contemplated hereby and by
the Operative Agreements. Seller will provide prompt notification to Purchaser
when any such consent, approval, action, filing or notice referred to in clause
(a) above is obtained, taken, made or given, as applicable, and will advise
Purchaser of any communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
4.02 HSR Filings. In addition to and not in limitation of Seller's
covenants contained in Section 4.01, Seller will (a) take promptly all actions
necessary to make the filings required of Seller or its Affiliates under the HSR
Act, (b) comply at the earliest practicable date with any request for additional
information received by Seller or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (c) cooperate with Purchaser in connection with Purchaser's
filing under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general.
4.03 Access by Purchaser. Seller will, and will cause KAC or SLC to,
(a) provide Purchaser and its Representatives with access, upon reasonable prior
notice and during normal business hours, to all officers, employees, agents and
accountants of KAC and/or SLC and their Assets and Properties or who are
material to the Businesses and the Books and Records, but only to the extent
that such access does not unreasonably interfere with the business and
operations of the Seller or the Businesses, and (b) furnish Purchaser and such
other Persons with all such information and data (including without limitation
copies of Contracts and other Books and Records) concerning the business and
operations of the Businesses as Purchaser or any of such other Persons
reasonably may request in connection with such investigation, except to the
extent that furnishing any such information or data would violate any Law,
Order, Contract or License applicable to Seller and the Businesses or by which
any of their respective Assets and Properties is bound.
4.04 Conduct of Business. Seller will cause KAC and SLC to conduct
the Businesses only in the ordinary course. Without limiting the generality of
the foregoing, Seller will cause the Businesses to use commercially reasonable
efforts, to the extent the officers of Seller believe such action to be in the
best interests of the Businesses, to (a) preserve intact the present business
organization and reputation of the Businesses (b) keep available (subject to
dismissals and retirements in the ordinary course of business) the services of
the key officers and employees of KAC and SLC that conduct business for the
Businesses in all material respects, (c) maintain the Assets and Properties of
the Businesses in good working order and condition, ordinary wear and tear
excepted, and (d) maintain the good will of key customers and suppliers of the
Businesses; provided, however, that Seller, KAC or SLC shall not be required to
incur any obligations, expend any amounts or take any actions out of the
ordinary course of business with respect to the foregoing. Without limiting the
generality of the foregoing, prior to the Closing, KAC and SLC will not, without
Purchaser's prior written approval: (i) change their respective certificates of
incorporation or by-laws or merge or consolidate or obligate themselves to do so
with or into any other entity, (ii) enter into any contract, agreement,
commitment or other understanding or arrangement, except for those of the type
which would not have to be listed or described on Section 2.13(a) of the
Disclosure Schedule, (iii) declare or pay any dividends on or make any other
distributions in respect of any Shares after the date hereof and on or prior to
the Closing Date, or (iv) implement any increase or improvement in base
compensation, bonuses of any kind, or benefits under any employee benefits plan.
4.05 Fulfillment of Conditions. Seller will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of Purchaser contained in this
Agreement and will not, and will not permit KAC or SLC to, take or fail to take
any action that could reasonably be expected to result in the nonfulfillment of
any such condition.
4.06 Notice of Changes. Seller shall give Purchaser prompt written
notice of any changes in any of the information contained in the representations
and warranties contained in this Agreement or the schedules hereto, which occur
prior to Closing.
4.07 Transition Services Coverage. Seller will use reasonable
efforts to cooperate with the Purchaser in an effort to obtain reasonable
insurance coverage, at Seller's own reasonable expense, which may consist of a
blanket fidelity bond and an errors and omissions policy, with reasonable
minimum coverage amounts, such coverage to be with responsible companies, on all
officers, employees, or other persons acting in any capacity with regard to the
MIS Services and Transition Services to handle funds, documents, and papers
related to KAC or SLC. Said fidelity bond and policy shall insure KAC and SLC
against losses including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. Nothing contained in this section
shall diminish or relieve the Seller from its duties or obligations as set forth
in this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times from
and after the date hereof until the Closing and, in the case of Section 5.03,
thereafter, Purchaser will comply with all covenants and provisions of this
Article V, except to the extent Seller may otherwise consent in writing.
5.01 Regulatory and Other Approvals. Purchaser will (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Authorities or any
other Person required of Purchaser to consummate the transactions contemplated
hereby and by the Operative Agreements, including without limitation those
described in Sections 3.03 and 3.04 of the Disclosure Schedule, (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other Persons as such Governmental or Regulatory Authorities or
other Persons may reasonably request and (c) provide reasonable cooperation to
Seller, KAC and SLC in obtaining all consents, approvals or actions of, making
all filings with and giving all notices to Governmental or Regulatory
Authorities or other Persons required of Seller, KAC, SLC or the Businesses to
consummate the transactions contemplated hereby and by the Operative Agreements.
Purchaser will provide prompt notification to Seller when any such consent,
approval, action, filing or notice referred to in clause (a) above is obtained,
taken, made or given, as applicable, and will advise Seller of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
5.02 HSR Filings. In addition to and without limiting Purchaser's
covenants contained in Section 5.01, Purchaser will (i) take promptly all
actions necessary to make the filings required of Purchaser or its Affiliates
under the HSR Act, (ii) comply at the earliest practicable date with any request
for additional information received by Purchaser or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
pursuant to the HSR Act and (iii) cooperate with Seller in connection with
Seller's filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the Federal Trade Commission or the Antitrust
Division of the Department of Justice or state attorneys general.
5.03 Fulfillment of Conditions. Purchaser will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the obligations of Seller contained
in this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
5.04 Stay Bonuses/Severance. The Purchaser acknowledges that KAC
and/or SLC have entered into Stay Bonus Agreements and letter agreements with
certain employees of Seller and have adopted employee severance policies,
pursuant to which payments will be made after the Closing Date, as described in
Section 2.17 of the Disclosure Schedule. Purchaser agrees to cause KAC and/or
SLC to make the payments pursuant to the Stay Bonus Agreements, letter
agreements and severance policies in accordance with the terms of such Stay
Bonus Agreements, letter agreements and severance policies on Section 2.17 of
the Disclosure Schedule; provided, however, that after one year has passed since
the Closing Date, the Transferred Employees will not be covered under the
severance policy listed as item 12 on Section 2.17 of the Disclosure Schedule,
and such Transferred Employees will then be covered under the severance policy
as then provided for by KAC and/or SLC.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Purchaser in its sole
discretion):
6.01 Representations and Warranties. The representations and
warranties made by Seller in this Agreement, taken as a whole, shall be true and
correct, on and as of the Closing Date as though made on and as of the Closing
Date.
6.02 Performance. Seller shall have performed and complied with, in
all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Seller.
6.03 Officers' Certificates. Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and executed by the Chairman of
the Board, the President or any Executive Vice President of Seller,
substantially in the form and to the effect of Exhibit A hereto, and a
certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of Seller, substantially in the form and to the effect of
Exhibit B hereto.
6.04 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
6.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and Seller to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby, and to enable KAC and SLC to conduct the
Businesses on and after the Closing Date, (in a manner consistent with the
manner in which the Businesses have been conducted prior to the Closing Date),
shall have been duly obtained, made or given and shall be in full force and
effect, and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements,
including under the HSR Act, shall have occurred.
6.06 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Section 6.06 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect.
6.07 Operative Agreements. The Baldwin Retail Store Finance
Agreement, the Repossession and Sale Agreement, the Tax Allocation Agreement
and the Baldwin Accounts Receivable Purchase Agreement and Promissory Note
shall have been executed and delivered to Purchaser.
6.08 Opinions of Counsel. (a) Purchaser shall have received the
opinion of Cadwalader, Wickersham & Taft, special counsel to Seller and KAC,
dated the Closing Date, substantially in the form and to the effect of Exhibit
C-1 hereto.
(b) Purchaser shall have received the opinion of Graydon, Head and
Ritchey, counsel to SLC, date the Closing Date, substantially in the form of
Exhibit C-2 hereto.
6.09 Release of Security Interest and Lien Upon Stock of KAC.
Seller shall have received an unconditional release of the security interest and
lien upon the Seller's right, title and interest in and to all issued and
outstanding capital stock of KAC at any time owned by Seller that was assigned
and pledged by Seller pursuant to the Purchase and Administration Agreement and
certificates evidencing such assignment and pledge shall be returned to Seller.
6.10 Termination of Certain Agreements. Agreements terminating the
Purchase and Administration Agreement and Retail Accounts Receivable Purchase
Agreement shall have been executed, to the satisfaction of Seller. All
Receivables which had been sold, transferred, and assigned pursuant to the
Purchase and Administration Agreement and/or Retail Accounts Receivable Purchase
Agreement and are currently held by or in the control of a party to either of
those agreements shall be transferred back to KAC or SLC, with no additional
cost, fee, or penalty or other payment made or owed by KAC or SLC. The Seller
shall execute an agreement terminating the National City Revolver, to the
satisfaction of Seller. All Receivables which had been sold, transferred, and
assigned pursuant to the National City Revolver and are currently held by or in
the control of a party to the National City Revolver shall be transferred back
to KAC or SLC free of any liens or security interests, with no additional cost,
fee, or penalty or other payment made or owed by KAC or SLC.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the fulfillment,
at or before the Closing, of each of the following conditions (all or any of
which may be waived in whole or in part by Seller in its sole discretion):
7.01 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement, taken as a whole, shall be true
and correct in all material respects on and as of the Closing Date, as though
made on and as of the Closing Date.
7.02 Performance. Purchaser shall have performed and complied with,
in all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at or before the
Closing.
7.03 Officers' Certificates. Purchaser shall have delivered to
Seller a certificate, dated the Closing Date and executed by the Chairman of the
Board, the President or any Executive or Senior Vice President of Purchaser,
substantially in the form and to the effect of Exhibit D hereto, and a
certificate, dated the Closing Date and executed by the Secretary or Assistant
Secretary of Purchaser, substantially in the form and to the effect of Exhibit E
hereto.
7.04 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
7.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Seller and Purchaser to perform their obligations under this
Agreement and the Operative Agreements and to consummate the transactions
contemplated hereby and thereby shall have been duly obtained, made or given and
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements, including under the HSR Act, shall have occurred.
7.06 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Section 7.06 of the Disclosure Schedule shall have been
obtained and shall be in full force and effect.
7.07 Operative Agreements. The Baldwin Retail Store Finance
Agreement, the Repossession and Sale Agreement, the Tax Allocation Agreement
and the Baldwin Accounts Receivable Purchase Agreement and Promissory Note
shall have been executed and delivered to Seller.
7.08 Release of Guaranties. Seller shall have received
unconditional releases of any subsidiary guaranty and subsidiary security
agreement of SLC, under the Fifth Third Credit Agreement and the Fifth Third
Term Loan Agreement. Seller shall have received unconditional releases of any
guaranty of Seller under the Purchase and Administration Agreement and National
City Revolver.
7.09 Release of Security Interest and Lien on Stock of KAC. Seller
shall have received an unconditional release of the security interest and lien
upon all of Seller's right, title and interest in and to all issued and
outstanding capital stock of KAC at any time owned by Seller, together with all
proceeds thereof, that was assigned and pledged by Seller pursuant to the
Purchase and Administration Agreement, and certificates evidencing such stock
shall have been returned to Seller.
7.10 Amendments to Certain Agreements. At the Seller's option,
amendments to or agreements terminating the Fifth Third Credit Agreement and
Fifth Third Term Loan Agreement shall have been executed, to the satisfaction of
Seller. The Seller shall execute agreements terminating the Purchase and
Administration Agreement, Retail Accounts Receivable Purchase Agreement and
National City Revolver, to the satisfaction of Seller.
7.11 Opinion of Counsel. Seller shall have received the opinions of
Richard C. Goldman, Senior Vice President and Chief Legal Officer of the
Purchaser and of Nevada counsel to Purchaser, such Nevada counsel to be
reasonably satisfactory to Seller, both dated the Closing Date, substantially in
the form and to the effect of Exhibits F-1 and F-2 hereto.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
8.01 Survival of Representations, Warranties, Covenants and
Agreements. The representations and warranties contained in this Agreement shall
survive for a period of five years following the Closing, other than (i) those
representations, warranties and covenants contained in the Tax Allocation
Agreement and Section 2.10 of this Agreement, which shall not survive the
Closing and (ii) those representations and warranties contained in Sections 2.04
and 2.14 hereto, which shall survive indefinitely; and there shall be no
liability in respect thereof, subsequent to the respective date of survival,
whether such liability has accrued prior to the Closing Date or after the
Closing Date, on the part of either party or its Representatives and Affiliates.
This Section 8.01 shall not limit in any way the survival and enforceability of
any covenant or agreement of the parties hereto which by its terms contemplates
performance after the Closing Date, which shall survive for the respective
periods set forth therein.
ARTICLE IX
INDEMNIFICATION
9.01 Tax Indemnification. All matters regarding any indemnification
for Taxes, and certain other Tax-related matters, are covered in the Tax
Allocation Agreement, which shall control with respect to Tax matters in the
event of any conflict with this Agreement.
9.02 Indemnification by the Seller. (a) Subject to the other terms
and conditions of this Agreement (including, without limitation, Section
9.02(b)), the Seller shall defend and hold Purchaser and Purchaser's
Representatives (the "Purchaser Indemnified Parties") harmless from and against
any and all Losses directly or indirectly based upon, arising out of, resulting
from or relating to:
(i) any breach of any representation or warranty of
Seller contained in this Agreement;
(ii) any breach of any agreement, covenant or obligation
of Seller set forth in this Agreement;
(iii) any and all losses, damages, debts, liabilities or
obligations of KAC and SLC, direct, indirect or fixed, which exist at or
as of the Closing Date or which arise after the Closing Date but which are
based upon or arise from any act, omission, transaction, state of facts or
other conditions which occurred or existed on or before the Closing Date,
whether or not then known, due or payable, except to the extent reflected
or reserved against on the Closing Balance Sheets or for which any payment
will be made pursuant to Section 5.04 hereof.
(iv) notwithstanding the prior sub-paragraph or any other
provision of this Agreement, any failure of KAC or SLC to have all
necessary licenses, notices, registrations and qualifications to conduct
business or otherwise, irrespective of the disclosure made in this
Agreement or in any Section of the Disclosure Schedule hereto,
irrespective of whether such failure is actually known by Purchaser.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the Seller's obligation to indemnify, defend and hold the Purchaser
Indemnified Parties harmless shall be limited as follows:
(i) No amounts of indemnity shall be payable pursuant to Section
9.02(a) unless and until the aggregate of all Losses suffered by Purchaser
Indemnified Parties shall exceed $250,000 in the aggregate, and then only
to the extent of any such excess (other than any amount of indemnity
payable due to a breach of any representation or warranty contained in
Section 2.02, for which the preceding sentence shall not apply);
(ii) In no event shall the aggregate amount of indemnity required to
be paid by the Seller to all Purchaser Indemnified Parties pursuant to
Section 9.02(a) exceed $3,000,000, for any breach of a representation or
warranty contained in Section 2.20 or Section 2.24;
(iii) No claim may be asserted nor may any action be commenced
against any Seller pursuant to Section 9.02(a) unless written notice of
such claim or action is received by the Seller describing in detail the
facts and circumstances with respect to the subject matter of such claim
or action on or prior to the date on which the representation or warranty
on which such claim or action is based ceases to survive as set forth in
Section 8.01, irrespective of whether the subject matter of such claim or
action shall have occurred before or after such date;
(iv) For purposes of computing the aggregate amount of claims
against the Seller, the amount of each claim by a Purchaser Indemnified
Party shall be deemed to be an amount net of, and any payments by the
Seller pursuant to Section 9.02(a) shall be limited to, the amount of
Losses that remain after deducting therefrom any insurance proceeds and
any indemnity, contributions or other similar payment received by any
third party with respect thereto;
(v) No amount of indemnity shall be payable pursuant to Section
9.02(a) with respect to any Loss resulting from a misrepresentation,
breach of warranty or breach of a covenant or agreement that is disclosed
in a written notice, setting forth in reasonable detail the specific facts
and circumstances pertaining thereto, delivered by Seller to Purchaser
after the date of this Agreement and at or prior to the Closing, if
Purchaser nevertheless elects to close (regardless of whether Purchaser
waives such breach in writing or otherwise);
(vi) No amount of indemnity shall be payable pursuant to Section
9.02(a) with respect to the portion of any Loss as to which the Purchaser
Indemnified Party had a reasonable opportunity, but failed in good faith
to mitigate its Loss, including, without limitation, its failure to use
commercially reasonable efforts to recover under a policy of insurance or
under a contractual right of set-off or indemnity; and
(vii) No amount of indemnity shall be payable pursuant to Section
9.02(a) with respect to any Loss, to the extent it arises solely from or
was caused solely by actions taken by Purchaser or any of its Affiliates
after the Closing.
9.03 Indemnification by Purchaser. (a) Subject to the other terms
and conditions of this Agreement (including, without limitation, Section
9.03(b)), Purchaser shall indemnify, defend and hold each of the Seller and each
of the Seller's Representatives (the "Seller Indemnified Parties") harmless from
and against any and all Losses directly or indirectly based upon, arising out
of, resulting from or relating to:
(i) any breach of any representation or warranty of
Purchaser contained in this Agreement;
(ii) any breach of any agreement, covenant or obligation of
Purchaser set forth in this Agreement;
(iii) the operation of KAC and/or SLC on and after the
Closing Date.
(b) Notwithstanding anything contained in Section 9.03(a) to the
contrary, Purchaser's obligation to indemnify, defend and hold the Seller
Indemnified Parties harmless shall be limited as follows:
(i) No amounts of indemnity shall be payable pursuant to
Section 9.03(a) unless and until the aggregate of all Losses suffered by
Seller Indemnified Parties shall exceed $250,000 in the aggregate, and
then only to the extent of any such excess (other than any amount of
indemnity payable due to a breach of any representation or warranty
contained in Section 3.02, for which the preceding sentence shall not
apply);
(ii) No claim may be asserted nor may any action be
commenced against Purchaser pursuant to Section 9.03(a) unless written
notice of such claim or action is received by Purchaser describing in
detail the facts and circumstances with respect to the subject matter of
such claim or action on or prior to the date on which the representation
or warranty on which such claim or action is based ceases to survive as
set forth in Section 8.01, irrespective of whether the subject matter of
such claim or action shall have occurred before or after such date;
(iii) For purposes of computing the aggregate amount of
claims against Purchaser, the amount of each claim by a Seller Indemnified
Party shall be deemed to be an amount net of, and any payments by
Purchaser pursuant to Section 9.03(a) shall be limited to, the amount of
Losses that remain after deducting therefrom, any insurance proceeds and
any indemnity, contributions or other similar payment received by any
third party with respect thereto;
(iv) No amount of indemnity shall be payable pursuant to
Section 9.03(a) with respect to any Loss resulting from a
misrepresentation, breach of warranty or breach of covenant or agreement
that is disclosed in a written notice, setting forth in reasonable detail
the specific facts and circumstances pertaining thereto, delivered by
Purchaser to the Seller after the date of this Agreement and at or prior
to the Closing, if the Seller nevertheless elects to close (regardless of
whether the Seller waives such breach in writing or otherwise);
(v) No amount of indemnity shall be payable pursuant to
Section 9.03(a) with respect to the portion of any Loss as to which the
Seller Indemnified Party had a reasonable opportunity, but failed in good
faith to mitigate its Loss, including, without limitation, its failure to
use commercially reasonable efforts to recover under a policy of insurance
or under a contractual right of set-off or indemnity; and
(vi) No amount of indemnity shall be payable pursuant to
Section 9.03(a) with respect to any Loss to the extent it arises solely
from or was caused solely by actions taken by the Seller or any of their
Affiliates after the Closing.
9.04 Indemnification Procedures. (a) Any Seller Indemnified Party
or Purchaser Indemnified Party (each, an "Indemnified Party") seeking
indemnification hereunder shall give to the party obligated to provide
indemnification hereunder (the "Indemnitor") written notice of any claim or
matter which gives rise to a claim for indemnification hereunder, promptly upon
becoming aware of a fact, condition or event for which indemnification is
provided under this Article IX, but in any event within thirty (30) days after
such Person has actual knowledge of the facts constituting the basis for
indemnification; provided, however, that the failure of an Indemnified Party to
give such notice shall not relieve any Indemnitor of its obligations under this
Agreement, except to the extent that such failure materially prejudices the
rights of any such Indemnitor.
(b) The Indemnitor shall have the right to control and direct,
through counsel of its own choosing, the defense or settlement of any claim,
action, suit or proceeding brought by a Person who is not a party or an
Affiliate of a party to this Agreement (a "Third Party Claim"). The Indemnified
Party may participate in such defense, but in such case the expenses of the
Indemnified Party shall be paid by the Indemnified Party; provided, however,
that the Indemnified Party shall have the right to employ, at Indemnitor's
expense, one counsel of its choice to represent the Indemnified Party, if, in
the written opinion of counsel to the Indemnified Party reasonably satisfactory
to the Indemnitor, there exists any actual or potential conflict of interest
between the Indemnitor and the Indemnified Party. The Indemnified Party shall
provide the Indemnitor with access to its records and personnel relating to any
Third Party Claim during normal business hours and shall otherwise cooperate
fully with the Indemnitor in the defense or settlement thereof, and the
Indemnitor shall reimburse the Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If the Indemnitor elects to
direct the defense of a Third Party Claim, then the Indemnified Party shall not
pay, permit to be paid, or settle any part of any claim or demand arising from
such asserted liability, unless the Indemnitor consents in writing to such
payment or unless the Indemnitor, subject to the last sentence of this Section
9.04(b), withdraws from the defense of such asserted liability, or unless a
final judgment from which no appeal may be taken by or on behalf of the
Indemnitor is entered against the Indemnified Party for such liability. The
Indemnitor will not settle any claim without the consent of the Indemnified
Party (such consent not to be unreasonably withheld) if such settlement would
involve the imposition of equitable remedies or impose material obligations on
the Indemnified Party other than financial obligations for which the Indemnified
Party will be indemnified hereunder. If the Indemnitor shall fail to defend, or
if, after commencing or undertaking any such defense, fails to prosecute or
withdraws from the defense of a Third Party Claim, then the Indemnified Party
shall have the right to undertake the defense or settlement thereof, at the
Indemnitor's expense. If the Indemnified Party assumes the defense of any such
claim or proceeding pursuant to this Section 9.04(b) and proposes to settle such
claim or proceeding prior to a final judgment thereon or to forego appeal with
respect thereto, then the Indemnified Party shall give the Indemnitor prompt
written notice thereof, and the Indemnitor shall have the right to participate
in the settlement or assume or reassume the defense of such claim or proceeding.
9.05 Limitations. (a) In any claim for indemnification under this
Agreement, the Indemnitor shall not be required to indemnify any Person for
special, exemplary or consequential damages, including without limitation loss
of profit or revenue, interference with operations, or loss of tenants, lenders,
investors or Purchasers or inability to operate the Businesses.
(b) After the Closing, except for remedies that cannot be waived
as a matter of law, the enforcement of the indemnification provisions of this
Article IX shall be the exclusive remedy of the parties for any breach of any
warranty, representation or covenant contained in this Agreement; provided,
however, that such exclusivity shall not limit or restrict a party's ability to
obtain specific performance or injunctive relief.
(c) In any case where an Indemnified Party recovers from third
Persons any amount in respect of a matter with respect to which an Indemnitor
has indemnified it pursuant to this Agreement, such Indemnified Party shall
promptly pay over to the Indemnitor the amount so recovered (after deducting
therefrom the full amount of the expenses incurred by it in procuring such
recovery), but not in excess of the sum of (i) any amount previously so paid by
the Indemnitor to or on behalf of the Indemnified Party in respect of such
matter, and (ii) any amount expended by the Indemnitor in pursuing or defending
any claim arising out of such matter.
(d) The obligations of an Indemnitor in respect of a claim for
indemnification under this Agreement shall be limited to the taking of such
reasonable actions as are necessary under the circumstances giving rise to such
claim, and an Indemnitor shall in no event be required to take more extensive
actions than would be required under Laws then in effect, applicable and
enforceable.
ARTICLE X
TERMINATION
10.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Seller and Purchaser;
(b) at any time before the Closing, by Seller or Purchaser, in the
event that any Order or Law becomes effective restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements,
upon notification of the non-terminating party by the terminating party; or
(c) at any time after February 1, 2000 by Seller or Purchaser upon
notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party.
10.02 Effect of Termination. If this Agreement is validly
terminated pursuant to Section 10.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Seller or
Purchaser (or any of their respective Representatives or Affiliates), except as
provided in the next succeeding sentence and except that the provisions with
respect to expenses in Section 13.03 and confidentiality in Section 13.05 will
continue to apply following any such termination. Notwithstanding any other
provision in this Agreement to the contrary, upon termination of this Agreement
pursuant to Section 10.01(b) or (c), Seller will remain liable to Purchaser for
any willful breach of Section 4.05 of this Agreement by Seller existing at the
time of such termination, and Purchaser will remain liable to Seller for any
willful breach of Section 5.03 of this Agreement by Purchaser existing at the
time of such termination, and Seller or Purchaser may seek such remedies,
including damages and attorneys' fees, against the other with respect to any
such willful breach as are provided in this Agreement or as are otherwise
available at Law or in equity.
ARTICLE XI
TRANSITION PROCEDURES
11.01 Term; Services. (a) For a period of twelve months commencing
on the Closing Date, in order to maintain the accounts of the Businesses, the
Seller will (i) allow the Businesses to use its computer, data processing and
information systems ("MIS Services"), (ii) provide information systems support,
(iii) provide office space (in sufficient quantity to adequately maintain the
accounts of the Businesses and consistent with existing square footage being
utilized of approximately 5,500 square feet) and access to business equipment,
and (iv) provide limited accounting support similar to that provided during the
ninety day period prior to the date of execution of this Agreement, all in a
commercially reasonable manner in the ordinary course of business and consistent
with practices employed by the Businesses on the date hereof (collectively, the
"Transition Services"). This agreement to provide Transition Services under
Article XI may be terminated by the Purchaser prior to the end of the twelve
month term, on thirty (30) days prior written notice to Seller.
(b) Purchaser is contracting for use of Seller's Transition
Services on as "as-is" basis, and Seller shall not be required to increase
personnel levels or acquire additional equipment, computer hardware, computer
software, office supplies or other materials or make other equipment
modifications or acquisitions from that used in providing Transition Services to
the Businesses immediately prior to the Closing Date. The resources of Seller
that are required to be devoted to performance of Transition Services shall not
exceed the level of those resources devoted to providing services to the
Businesses on the date of this Agreement, minus any such resources that are
transferred to the Businesses and the Purchaser at the Closing Date.
(c) Seller will be responsible for any routine upkeep required to
keep the MIS Services or any of the other Transition Services running in
accordance with past practices of Seller. Any incremental expense incurred on
the existing system to allow the Businesses to continue to use the MIS Services
or any of the other Transition Services will be charged to the Businesses at the
actual out-of-pocket costs to Seller.
(d) All data, documents, material and information ("Data") arising
after the Closing Date relating to the Businesses and Purchaser's operation
thereof will remain the property of the Businesses. It will be the
responsibility of the Businesses to transmit all Data necessary for Seller to
perform the MIS Services. Seller shall have no responsibility or liability for
any delay, damage or loss resulting from transportation or transmission of the
Data. Upon termination of this agreement under Article XI to provide Transition
Services, Seller will cooperate and assist the Businesses (excluding any
obligation to make out-of-pocket expenditures) in transferring the Data to the
Businesses and will delete the Data from the MIS System; provided, however, that
Seller will keep a tape medium copy of the Data for its records.
(e) All software, systems, programs and modules ("Software"), as
listed on Section 11.01(e) of the Disclosure Schedule, and all equipment
("Hardware") associated with the MIS Services or any of the other Transition
Services shall remain the property of Seller, except for certain Software that
is used exclusively by KAC and SLC, which will be transferred by the Seller to
KAC and SLC, respectively, as of the Closing. Purchaser and the Businesses are
not granted any rights in or to such Software or Hardware other than the limited
access granted during the term of this agreement under Article XI for Transition
Services.
(f) Purchaser agrees that (i) Purchaser will not and will cause
the Businesses not to provide access to the MIS Services or any of the other
Transition Services to any person other than KAC, SLC or employees or agents
thereof, (ii) Purchaser will not and will cause the Businesses not to provide
access to the MIS Services or any of the other Transition Services to any
employees or agents of Purchaser or the Businesses except those conducting the
business previously conducted by the Businesses, and (iii) no employee or agent
of Purchaser or the Businesses will access, copy or utilize any Data of Seller.
Seller will perform routine backup procedures of the MIS Services or any of the
other Transition Services in accordance with past practices.
11.02 Compensation and Payment. (a) Purchaser shall cause the
Businesses to pay to Seller for the Transition Services the aggregate sum per
month of $90,000, plus reasonable out-of-pocket expenses for outside legal,
collection, banking and travel and entertainment which is directly related to
KAC and SLC, and such out-of-pocket expenses will be limited to $10,000 per
month, unless prior written consent of the Purchaser is given for a greater
amount. Such payment for Transition Services shall be made to Seller within
fifteen (15) business days after the end of each month for which such Transition
Services are performed. If Purchaser terminates this agreement to provide
Transition Services under Article XI, pursuant to the termination provisions of
Section 11.01, Purchaser shall continue to be required to pay to Seller the
compensation for Transition Services provided by Seller for any monthly service
until the date of termination, and on a pro rata basis for any period of service
that is less than one month. Notwithstanding the thirty day notice provision of
Section 11.01, no compensation will be owed by Purchaser to Seller under this
Section 11.02 in the event that no actual Transition Services are performed by
Seller.
11.03 Relationship of Parties. (a) Seller is and shall remain at all
times an independent contractor of the Businesses in the performance of all
Transition Services, and any persons employed by Seller to perform such
Transition Services shall be and remain employees solely of Seller and subject
only to the supervision of Seller supervisory personnel. Nothing contained
herein shall be deemed or construed as creating any partnership or joint venture
between the Seller and the Purchaser or the Businesses.
(b) Purchaser agrees that from the Closing Date until the
completion of the Transition Services, except as contemplated by this Article XI
or to the extent that Seller shall otherwise consent in writing, it will not
take and will cause the Businesses not to take any action which would materially
and adversely affect the ability of Seller to perform its duties under this
Article XI.
(c) If because of any occurrence or condition beyond the
reasonable control of Seller, Seller is unable to carry out any of its
obligations under this Article XI, and if Seller promptly gives to Purchaser at
the beginning of the period of Force Majeure or soon thereafter as is practical
under the circumstances written notice of such cause, then in such event, Seller
shall be at liberty to suspend performance by both parties under this Article XI
during the continuance of the events or conditions causing delay, or prevention,
and no liability for damage shall attach to either party for such suspension.
Seller shall take all reasonable measures to resume performance under this
Article XI at the earliest possible time, except Seller reserves the right to
settle strikes on its own decision. The term "Force Majeure" shall include
without limitation, acts of God; acts of the public enemy; insurrections, riots,
labor disputes, labor or material shortages, fires, explosions, floods, weather
conditions, breakdown or damage to equipment or facilities not resulting from
lack of due diligence on the part of the parties to this Agreement or their
agents, subcontractors' embargoes, orders or acts of civil or military
authority, requirements of any government and other causes of similar nature
which wholly or partly prevent the performance of the Transition Services under
Article XI.
ARTICLE XII
DEFINITIONS
12.01.Definitions.
(a) As used in this Agreement, the following defined terms shall
have the meanings indicated below:
Actions or Proceedings: means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
Affiliate: means any Person that directly, or indirectly through one
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning
more than fifty (50%) of the voting securities of a second Person shall be
deemed to control that second Person.
Agreement: means this Stock Purchase Agreement and the Exhibits and
the Disclosure Schedule hereto and the certificates delivered in accordance with
Sections 6.03 and 7.03, as the same shall be amended from time to time.
Assets and Properties: of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, and wherever situated), operated, owned
or leased by such Person.
Baldwin Accounts Receivable Purchase Agreement and Promissory Note:
means the agreement between Seller, Purchaser, KAC and SLC, dated as of the
Closing Date, in the form of Exhibit J hereto.
Baldwin Retail Store Finance Agreement: means the agreement between
Seller, KAC and SLC, dated as of the Closing Date, in the form of Exhibit G
hereto.
Books and Records: means all files, documents, instruments, papers,
books and records relating to the Business or Condition of the Businesses,
including, without limitation, financial statements, Tax Returns, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs, retrieval programs and operating
data.
Business Combination: means with respect to any Person any merger,
consolidation or combination to which such Person is a party, any sale,
dividend, split or other disposition of capital stock or other equity interests
of such Person or any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such Person.
Business Day: means a day other than Saturday, Sunday or any day on
which banks located in the State of Ohio and the State of Missouri are
authorized or obligated to close.
Businesses: has the meaning ascribed to it in the preamble.
Business or Condition: means the business, assets, financial
condition or results of operations.
Closing: means the closing of the transactions contemplated by
Section 1.03.
Closing Date: means (a) the fifth Business Day after the day on
which the last of the consents, approvals, actions, filings, notices or waiting
periods described in or related to the filings described in Sections 6.05
through 6.07 and Sections 7.05 through 7.10 have been obtained, made or given or
have expired, as applicable, or (b) such other date as Purchaser and Seller
mutually agree upon in writing.
Closing Balance Sheets: has the meaning ascribed to it in Section
1.05.
Code: means the Internal Revenue Code of 1986, as amended.
Contract: means any agreement, lease, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract.
Data: has the meaning ascribed to it in Section 11.01(d).
Disclosure Schedule: means the record delivered to Purchaser by
Seller herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Seller pursuant to this Agreement.
ERISA: has the meaning ascribed to it in Section 2.25(a).
Estimated Purchase Price: has the meaning ascribed to it in Section
1.02.
Fifth Third Credit Agreement: shall mean the Credit Agreement by and
between Seller and Fifth Third Bank, as Agent, and Fifth Third Bank and NBD
Bank, N.A., as Lenders, dated October 16, 1997, as amended.
Fifth Third Term Loan Agreement: shall mean the Term Loan Agreement
between Seller, Fifth Third Bank, as Agent, and Fifth Third Bank and NBD Bank,
N.A., as Lenders, dated May 15, 1998, as amended.
Financial Statements: has the meaning ascribed to it in Section
2.09(a)(i).
Force Majeure: has the meaning ascribed to it in Section 11.03(c).
GAAP: means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
Governmental or Regulatory Authority: means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
Hardware: has the meaning ascribed to it in Section 11.01(e).
HSR Act: means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
Indebtedness: of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
Indemnified Party: has the meaning ascribed to it in Section
9.04(a).
Indemnitor: has the meaning ascribed to it in Section 9.04(a).
Information Technology: has the meaning ascribed to it in Section
2.20.
KAC: has the meaning ascribed to it in the preamble.
KAC Common Stock: means the common stock, par value $.01 per share,
of KAC.
KAC Shares: has the meaning ascribed to it in the preamble.
Knowledge of Seller: means the actual knowledge of the officers of
Seller.
Laws: means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
Liabilities: means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
Licenses: means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
Liens: means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance.
Loss: means any and all costs, obligations, liabilities, settlement
payments, awards, judgments, damages, fines, penalties, deficiencies, losses and
expenses or other charges (including without limitation interest, court costs,
reasonable fees of attorneys, accountants and other experts or other reasonable
expenses of litigation or other proceedings or of any claim, default or
assessment).
Material Adverse Effect: means any effect on KAC or SLC that is
either individually or in the aggregate materially adverse to the business,
assets, financial condition or results of operations of the Businesses, taken as
a whole.
MIS Services: has the meaning ascribed to it in Section 11.01(a).
Multiemployer Plan: has the meaning ascribed to it in Section
2.25(b).
National City Revolver: shall mean the Revolving Line of Credit
between National City Bank and SLC, dated as of July 20, 1999, as amended, along
with the Master Assignment Agreement between National City Bank and SLC, dated
July 20, 1999, as amended, and the Amendment to and Conversion of Note and
Security Agreement to an Assignment Agreement between National City Bank and
SLC, dated July 20, 1999, as amended.
Operative Agreements: means the Baldwin Retail Store Finance
Agreement, the Repossession and Sale Agreement, the Tax Allocation Agreement,
the Baldwin Accounts Receivable Purchase Agreement and Promissory Note and any
support or other agreements to be entered into in connection with the
transactions contemplated by this Agreement.
Option: with respect to any Person means any security, right,
subscription, warrant, option, or other Contract that gives the right to
purchase or otherwise receive or be issued any shares of capital stock of such
Person or any security of any kind convertible into or exchangeable or
exercisable for any shares of capital stock of such Person.
Order: means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
Person: means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
Post-Closing Adjustment: has the meaning ascribed to it in Section
1.04.
Pro Forma Financial Statements: has the meaning ascribed to it in
Section 2.09(a)(iii).
Purchase and Administration Agreement: shall mean the Second Amended
and Restated Purchase and Administration Agreement, as amended, between Retailer
Funding Corporation, Keyboard Acceptance Corporation and Seller, dated March 20,
1998, to which General Electric Capital Corporation and Edison Asset
Securitization, LLC have joined as consenting parties.
Purchase Price: has the meaning ascribed to it in Section 1.02.
Purchaser's Auditor: has the meaning ascribed to it in Section 1.05.
Purchaser: has the meaning ascribed to it in the preamble.
Purchaser Indemnified Parties: has the meaning ascribed to it in
Section 9.02(a).
Receivables: has the meaning ascribed to it in Section 2.24.
Repossession and Sale Agreement: means the Repossession and Sale
Agreement between Seller, Purchaser, KAC and SLC, dated as of the Closing Date,
in the form attached hereto as Exhibit H.
Representatives: shall mean any officer, director, principal, agent,
manager, employee, counsel, consultant, financial advisor, accountant,
independent auditor or other representative of a person.
Retail Accounts Receivable Purchase Agreement: shall mean the Retail
Accounts Receivable Purchase Agreement between Seller, The Wurlitzer Company,
and BPO Finance Company (now known as KAC), dated October 1, 1990.
Seller: has the meaning ascribed to it in the preamble.
Seller's Auditor: has the meaning ascribed to it in Section 1.05.
Seller Indemnified Parties: has the meaning ascribed to it in
Section 9.03(a).
Seller Plans: has the meaning ascribed to it in Section 2.25(b).
Shares: has the meaning ascribed to it in the preamble.
SLC: has the meaning ascribed to it in the preamble.
SLC Common Stock: means the Common Stock, without par value, of SLC.
SLC Shares: has the meaning ascribed to it in the preamble.
Software: has the meaning ascribed to it in Section 11.01(e).
Stay Bonus Agreements: are agreements between KAC and/or SLC with
certain employees of KAC and/or SLC.
Stockholder's Equity: has the meaning ascribed to it in Section
1.05.
Stockholder's Equity Calculation Statement: has the meaning ascribed
to it in Section 1.05.
Subsidiary: means any Person in which KAC or SLC, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the voting control of, such
Person.
Target Stockholder's Equity: has the meaning ascribed to it in
Section 1.04.
Tax or Taxes: means all income, gross receipts, sales, excise, bulk
transfer, use, employment, franchise, profits, property or other taxes, fees,
stamp taxes and duties, assessments, levies or charges of any kind whatsoever
(whether payable directly or by withholding), together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority with respect thereto.
Tax Allocation Agreement: means the Tax Allocation Agreement between
Seller and Purchaser, dated as of the Closing Date, in the form attached hereto
as Exhibit I.
Tax Return: means any return, filing, questionnaire, information
return or other document required to be filed, including requests for extensions
of time, filings made with estimated tax payments, claims for refund and amended
returns that may be filed for any period with any taxing authority (whether
domestic or foreign) in connection with any Tax (whether or not a payment is
required to be made with respect to such filing).
Third Party Claim: has the meaning ascribed to it in
Section 9.04(b).
Transferred Employee: has the meaning ascribed to it in Section
3.10(a).
Transition Services: has the meaning ascribed to it in Section
11.01(a).
Unaudited Financial Statement Date: means the last day of the most
recent fiscal quarter of the Seller for which Unaudited Financial Statements are
delivered to Purchaser pursuant to Section 2.09(a)(ii).
Unaudited Financial Statements: has the meaning ascribed to it in
Section 2.09(a)(ii).
Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or plural
also include the plural or singular, respectively; (iii) the terms "hereof,"
"herein," "hereby" and derivative or similar words refer to this entire
Agreement; (iv) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; and (v) the phrase "ordinary course of business"
refers to the business of the Businesses. All accounting terms used herein and
not expressly defined herein shall have the meanings given to them under GAAP.
Any representation or warranty contained herein as to the enforceability of a
Contract shall be subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium or other similar law affecting the enforcement of
creditors' rights generally and to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at Law).
ARTICLE XIII
MISCELLANEOUS
13.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Purchaser, KAC or SLC to:
Deutsche Financial Services Corporation
655 Maryville Center Drive
St. Louis, Missouri 63141-5832
Facsimile No.: (314) 523-3999
Attn: Clark Benkendorf, Senior Vice President,
Corporate and Strategic Development
with a copy to:
Deutsche Financial Services Corporation
655 Maryville Center Drive
St. Louis, Missouri 63141-5832
Facsimile No.: (314) 523-3999
Attn: Richard C. Goldman, Senior Vice President and
Chief Legal Officer
If to Seller, to:
Baldwin Piano & Organ Company
4680 Parkway Drive, Suite 200
Mason, Ohio 45040-5301
Facsimile No.: (513) 754-4679
Attn: Karen L. Hendricks, President
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Facsimile No.: (212) 504-6666
Attn: Lawrence A. Larose, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 13.01, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section 13.01, be deemed given upon receipt, and
(iii) if delivered by mail in the manner described above to the address as
provided in this Section 13.01, be deemed given upon receipt (in each case
regardless of whether such notice is received by any other Person to whom a copy
of such notice, request or other communication is to be delivered pursuant to
this Section 13.01). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other party hereto.
13.02 Entire Agreement. This Agreement and the Operative Agreements
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof including without limitation any
confidentiality agreement between the parties and contain the sole and entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof.
13.03 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Section 10.02), whether
or not the transactions contemplated hereby are consummated, each party will pay
its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the Operative Agreements and the
transactions contemplated hereby and thereby.
13.04 Public Announcements. At all times at or before the Closing,
Seller and Purchaser will not issue or make any reports, statements or releases
to the public or generally to the employees, customers, suppliers or other
Persons to whom KAC and/or SLC sell goods or provide services or with whom KAC
and/or SLC otherwise have significant business relationships with respect to
this Agreement or the transactions contemplated hereby without the consent of
the other, which consent shall not be unreasonably withheld. If either party is
unable to obtain the approval of its public report, statement or release from
the other party and such report, statement or release is, in the opinion of
legal counsel to such party, required by Law in order to discharge such party's
disclosure obligations, then such party may make or issue the legally required
report, statement or release and promptly furnish the other party with a copy
thereof. Seller and Purchaser will also obtain the other party's prior approval
of any press release to be issued immediately following the Closing announcing
the consummation of the transactions contemplated by this Agreement.
13.05 Confidentiality. Each party hereto will hold, and will use its
best efforts to cause its Affiliates, in the case of Purchaser, any Person who
has provided financing to Purchaser to finance all or any portion of the
Purchase Price and their respective Representatives to hold, in strict
confidence from any Person (other than any such Affiliate, Person who has
provided financing or Representative), unless (i) compelled to disclose by
judicial or administrative process (including without limitation in connection
with obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Purchaser's use of documents and information concerning KAC and/or SLC furnished
by Seller hereunder. In the event the transactions contemplated hereby are not
consummated, upon the request of the other party, each party hereto will, and
will cause its Affiliates, any Person who has provided financing to such party
and their respective Representatives to, promptly (and in no event later than
five (5) days after such request) redeliver or cause to be redelivered all
copies of confidential documents and information furnished by the other party in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by the
party furnished such documents and information or its Representatives.
13.06 Further Assurances; Post-Closing Cooperation. (a) Subject to
the terms and conditions of this Agreement, at any time or from time to time
after the Closing, each of the parties hereto shall execute and deliver such
other documents and instruments, provide such materials and information and take
such other actions as may reasonably be necessary, proper or advisable, to the
extent permitted by Law, to fulfill its obligations under this Agreement and the
Operative Agreements to which it is a party.
(b) Following the Closing, each party will afford the other party,
its counsel and its accountants, during normal business hours, reasonable access
to the books, records and other data relating to the Business or Condition of
KAC and/or SLC in its possession with respect to periods prior to the Closing
and the right to make copies and extracts therefrom, to the extent that such
access may be reasonably required by the requesting party in connection with (i)
the preparation of Tax Returns, (ii) the determination or enforcement of rights
and obligations under this Agreement, (iii) compliance with the requirements of
any Governmental or Regulatory Authority, (iv) the determination or enforcement
of the rights and obligations of any Indemnified Party or (v) in connection with
any actual or threatened Action or Proceeding. Further, each party agrees for a
period extending six (6) years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data unless such party
shall first offer in writing to surrender such books, records and other data to
the other party and such other party shall not agree in writing to take
possession thereof during the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business or Condition of KAC and/or SLC not referred
to in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party agrees to use its
best efforts to furnish or make available such information, documents or records
(or copies thereof) at the recipient's request, cost and expense. Any
information obtained by Seller in accordance with this paragraph shall be held
confidential by Seller in accordance with Section 13.05.
(d) Notwithstanding anything to the contrary contained in this
Section 13.06, if the parties are in an adversarial relationship in litigation
or arbitration, the furnishing of information, documents or records in
accordance with any provision of this Section 13.06 shall be subject to
applicable rules relating to discovery.
13.07 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
13.08 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
13.09 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX.
13.10 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
13.11 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
13.12 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
13.13 Governing Law. This Agreement and any controversy or claim
arising out of or relating to this Agreement shall be governed by the Laws of
the State of Delaware applicable to a Contract executed and performed in such
State, without giving effect to the conflicts of laws principles thereof.
13.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
13.15 Non-Compete. Seller agrees that for a period of five years
following the Closing Date, neither it nor any of its Affiliates shall engage
directly or indirectly in providing any inventory financing, retail financing or
leasing, nor will Seller or any of Seller's Affiliates (as of the date hereof)
subsidize, endorse or support any program for the provision of inventory
financing, retail financing or leasing for any of Seller's or Seller's
Affiliates products, other than programs with Purchaser or Purchaser's
Affiliates.
13.16 Non-Solicitation. Seller agrees that for a period of five
years following the Closing Date, neither it nor any of its Affiliates will
solicit any KAC or SLC employees listed on Section 2.17 of the Disclosure
Schedule, other than Karen Hendricks and Duane Kimble, who are employees of
Seller. Seller agrees that for a period of five years following the Closing
Date, neither it nor any of its Affiliates, will hire George Huebner, Greg Meyer
or Michelle Roberts.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
BALDWIN PIANO & ORGAN COMPANY
By:____________________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:____________________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:____________________________________
Name:
Title:
Exhibit 99.2
CONTACTS: Duane Kimble Joel Pomerantz
Baldwin Piano The Dilenschneider Group
(513) 754-4647 (212) 922-0900
BALDWIN PIANO TO SELL RETAIL FINANCING UNITS
TO DEUTSCHE FINANCIAL SERVICES FOR $35 MILLION
COMPANY WILL REDUCE DEBT AND CONSIDER SHARE REPURCHASE PROGRAM
MASON, OH, December 8, 1999 -- Baldwin Piano & Organ Company
(NASDAQ:BPAO) today announced that it has entered into a definitive agreement
with Deutsche Financial Services (DFS) to sell its two wholly owned retail
financing units -- Keyboard Acceptance Corporation (KAC) and Signature Leasing
Corporation. Baldwin expects to receive gross proceeds of approximately $35
million.
Karen L. Hendricks, chairman, president and chief executive officer
of Baldwin said, "In keeping with our pledge to enhance shareholder value, our
board of directors is actively considering a stock repurchase program, which, if
approved, will be announced at the time of the closing. The remainder of the
proceeds from the sale will be used to reduce Baldwin's debt levels."
Ms. Hendricks said, "Deutsche Financial Services is a financially
strong strategic buyer with extensive knowledge of the piano business. They are
in an excellent position to maintain KAC's long-term dealer relationships and
continue the high quality service that Baldwin dealers have come to expect. Our
shareholders will benefit from the significant de-leveraging of our remaining
businesses and the favorable impact any substantial stock repurchase would have
on future per share results."
-more-
<PAGE>
As part of the transaction, Baldwin said it would retain certain
contingent obligations with respect to accounts receivable and repossessed
keyboard instrument inventory. The parties expect to consummate the transaction
early next year, subject to customary closing conditions.
Baldwin Piano & Organ Company has marketed keyboard musical products
for over 137 years. Baldwin, maker of America's best selling pianos, also
manufactures electronic and electro-mechanical components for Original Equipment
Manufacturers.
Deutsche Financial Services, a unit of Deutsche Bank Group, is an
international leader in providing financing and servicing programs that
facilitate the product distribution and sales process. Programs and services
include inventory financing, accounts receivable financing, asset-based lending,
leveraged acquisition financing, middle market secured lending, non-funded
service programs, consumer and commercial end-user financing, franchise
financing, leasing and related financial services.
Deutsche Financial Services, based in St. Louis, Missouri, operates
across the United States, Canada, Europe and Puerto Rico. Deutsche Bank Group is
the world's largest financial institution with assets in excess of $850 billion
on September 30, 1999. Additional information about DFS may be found on the
World Wide Web at http://www.dfsc.com.
# # #
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995:
This release contains forward-looking statements that are subject to
risks and uncertainties, including, but not limited to, the impact of
competitive products and pricing, product demand and market acceptance,
reliance on key strategic alliances, fluctuations in operating results
and other risks detailed from time to time in the company's filings with
the Securities and Exchange Commission.
