EXHIBIT 99(d)(1)
SECURITIES PURCHASE AGREEMENT
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DRIVE FINANCIAL SERVICES LP
DRIVE GP LLC
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2002
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Increase of
Partnership Interests
by
IFA Drive LP Holdings LLC
and
Membership Interests
by
IFA Drive GP Holdings LLC
SECURITIES PURCHASE AGREEMENT ("Agreement") dated as of June 11, 2002
by and among FirstCity Financial Corporation, a Delaware corporation ("FCFC" or
"FC"), FirstCity Consumer Lending Corporation, a Texas corporation ("CLC"),
FirstCity Funding L.P., a Texas limited partnership ("Auto" or "Funding"),
FirstCity Funding GP Corp., a Texas corporation ("Auto-GP"), IFA Drive GP
Holdings LLC, a Delaware limited liability company ("IFA-GP"), IFA Drive LP
Holdings LLC, a Delaware limited liability company ("IFA-LP"); Drive Holdings
LP, a Delaware limited partnership ("Drive Holdings"); and Drive-LP (as
hereafter defined).
W I T N E S S E T H:
WHEREAS, Drive Financial Services LP ("Drive" or "Drive-LP") is a
Delaware limited partnership with three limited partners: IFA-LP, Funding and
Drive Management LP, a Texas limited partnership ("MG-LP"); its sole general
partner is Drive GP LLC, a Delaware limited liability company ("Drive-GP");
WHEREAS, the partnership interests of Drive-LP are owned of record as
follows: IFA-LP 45.4301636%, Funding 35.9269125%, MG-LP 18.5429239% and Drive-GP
0.1%;
WHEREAS, IFA-LP's interest in Drive-LP, when combined with its
beneficial interest in Drive-LP through its indirect equity interest in Funding
and with IFA-GP's beneficial interest in Drive-LP by virtue of IFA-GP's equity
interest in Drive-GP, constitutes 49% of Drive's partnership interests;
WHEREAS, MG-LP's ownership of Drive-LP, when combined with its indirect
equity interest in Funding and its equity interest in Drive-GP, constitutes 20%
of Drive's partnership interests;
WHEREAS, CLC, a wholly-owned subsidiary of FCFC, owns 31% of Drive's
partnership interests (all of it beneficially through CLC's limited partnership
interest in Funding and equity interest in Drive-GP);
WHEREAS, the partnership interests of Funding are owned of record as
follows: 79.2% by CLC, a limited partner; 19.8% by Drive Holdings, a limited
partner; and 1% by Funding's sole general partner, Auto-GP, 80% of the capital
stock of which is owned by CLC and 20% by Drive Holdings;
WHEREAS, the membership interests in Drive-GP are owned of record as
follows: IFA-GP 49%, CLC 31%, and MG-LP 20%;
WHEREAS, the parties hereto desire that the partnership interests of
the IFA Entities in Drive increase from 49% to 69% and that CLC's beneficial
partnership interest in Drive decrease from 31% to 11%;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Sale of Securities.
1.1 Membership Interests. On the terms and conditions hereinafter
provided, CLC shall sell to IFA-GP (and IFA-GP shall purchase) for $17,239.46
(the "Purchase Price (MI)") such Membership Interests in Drive-GP owned by CLC
so that, immediately after giving effect to such sale, IFA-GP will own 69% of
Drive-GP's Membership Interests and CLC will own 11% of Drive-GP's Membership
Interests.
1.2 Partnership Interests. On the terms and conditions hereinafter
provided, Funding shall assign and sell to IFA-LP (and IFA-LP shall acquire and
purchase) 22.42758% of the Partnership Interests of Drive (together with the
same percentage of the capital accounts of Drive) for $15,982,760.54 (the
"Purchase Price (LPI)") so that, immediately after giving effect thereto, IFA-LP
shall directly own 67.8577436% of the Partnership Interests in Drive (and the
same percentage of the capital accounts of Drive) and Funding shall own
13.4993325% of the Partnership Interests in Drive (and the same percentage of
the capital accounts of Drive).
1.3 Purchase and Sale. Notwithstanding the provisions of Sections 1.1
and 1.2 above, if any of the conditions to the Drive Increase set forth in
Section 5 shall not have been met to the satisfaction of the IFA Entities (or
waived by them) on or before September 30, 2002 (or such later date as the
respective IFA Entities may agree to in a writing signed by them which
specifically refers to this Section 1.3) then the obligation of the IFA Entities
to purchase such securities and acquire such interests shall (at the option of
either IFA Entity) expire on such date.
1.4 Closings. The closing ("Closing") of the Drive Increase shall be
held at the offices of ▇▇▇▇▇▇▇▇ & Worcester LLP in New York, New York (or such
other place as the parties hereto shall agree) at such time and on such date
(but in any event within three business days after the satisfaction, or waiver
by the appropriate party, of the applicable conditions set forth in Sections 5
and 6 hereof) as CLC and the IFA Entities shall agree (the date on which the
Closing occurs, the "Closing Date"). At the Closing, the relevant IFA Entity
shall purchase the relevant Subject Securities to be purchased by such IFA
Entity and pay the Purchase Price therefor (to Funding in the case of the
Purchase Price (LPI) and to CLC in the case of the Purchase Price (MI)) by wire
transfer or as otherwise agreed between the relevant seller and the relevant
purchaser.
1.5 Certain Consents.
(a) Each party hereto that is a party to the Shareholders Agreement
hereby consents to the Drive Increase, the Drive Restatement and the Drive
Holdings Distributions for all purposes of the Shareholders Agreement. Each of
the limited partners of Drive that is a party hereto hereby consents to the
Drive Increase, the Drive Restatement and the Drive Holdings Distributions for
all purposes of the Partnership Agreement. Each member of Drive-GP hereby
consents to the Drive Increase for all purposes of the Operating Agreement.
Without limitation, each of the foregoing hereby waives all rights it or he
might otherwise have under the Shareholders Agreement to acquire any of the
Subject Securities or prevent or restrict the transfer of the Subject Securities
or the Acquisition.
(b) Each of CLC and Drive Holdings hereby consents to the payment (if,
as and when made on or about the Closing Date as part of the Drive Increase and
the other transactions contemplated by this Agreement) of $15,982,760.54
expected to be made by Funding to CLCLLC in redemption of Series B Units then
held by CLCLLC and acknowledges that no distribution is required to be made to
it in respect of its partnership interests in Funding as a result thereof.
2. Representations and Warranties by FC Parties. FC and CLC hereby
jointly and severally represent and warrant to IFA Parent and each IFA Entity
(which representations and warranties shall survive the execution and delivery
of this Agreement to the extent set forth in Section 9.5 below) as of the date
hereof and as of the Closing Date (except as otherwise specified in Section
2.11(a)) that:
2.1 Organization and Business; Power and Authority.
(a) Each of the FC Parties and each of the Auto Entities (i) is an
organization of the type specified opposite its name on Schedule 2.1(a) hereto,
(ii) is duly organized, validly existing and in good
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standing under the laws of the jurisdiction under which it is organized (as
specified in such schedule), and (iii) has all requisite power and authority
(corporate or other) to conduct its business. Auto-GP is the sole general
partner of Funding. CLC owns, of record and beneficially, 80% of the capital
stock of Auto-GP. CLC owns 79.2% of record, and 80% beneficially, of the equity
interests in Funding. Funding conducts no business or activities other than
being a limited partner of Drive; Auto-GP conducts no business or activities
other than being the sole general partner of Funding.
(b) Each Relevant FC Entity has the necessary power and authority
(corporate or otherwise, as applicable), and all necessary franchises, permits,
licenses and other rights and privileges, to enter into and perform its
obligations under this Agreement and each other Related Document to which it is
a party, and (in the case of the Selling FC Entities) to issue, sell, otherwise
transfer or redeem (as applicable) the Subject Securities (FC) contemplated to
be sold, otherwise transferred or redeemed in accordance herewith. The
execution, delivery and performance of this Agreement and each of the other
Related Documents to which a Relevant FC Entity is a party (including without
limitation (i) the sale of the Drive Increase Amount by Funding to IFA-LP, and
(ii) the creation of the Series B Units by Funding, the issuance thereof to
CLCLLC and the redemption by Funding of such Series B Units for $15,982,760.54)
have, as to such Relevant FC Entity, been duly authorized by all necessary
corporate or other applicable action by such Relevant FC Entity. No Government
Authorization or Private Authorization that has not been obtained is required
for the execution, delivery and performance of this Agreement and the other
Related Documents by any Relevant FC Entity, except for (x) those listed in
Schedule 2.1(c) hereto to be obtained after the date hereof and before the
Closing Date, all of which will be obtained by the Closing Date, and (y) Private
Authorizations and Government Authorizations, the failure to obtain which would
not, individually or in the aggregate, adversely affect any of the transactions
contemplated hereby or by any of the Related Documents or any of the parties
hereto. No Relevant FC Entity has any knowledge of any Private Authorization or
Government Authorization required for the execution, delivery and performance of
this Agreement and the other Related Documents by any Relevant FC Entity that
has not been obtained which is not listed on Schedule 2.1(c) hereto. This
Agreement has been duly and validly executed and delivered by each of the
Relevant FC Entities party hereto and constitutes, and each other Related
Document to which a Relevant FC Entity is a party when executed and delivered by
such Person will have been duly and validly executed and delivered by such
Person and will constitute, legal, valid and binding obligations of the Relevant
FC Entities party hereto and thereto (as the case may be), enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency reorganization and similar laws
affecting creditors' rights generally (the "Enforceability Exceptions").
(c) Neither the execution and delivery of this Agreement or any of the
other Related Documents to which any Relevant FC Entity is a party, nor the
issuance, sale, other transfer, redemption or delivery by any Selling FC Entity
of any or all of the Subject Securities (FC), nor the consummation of the
transactions contemplated by any of the foregoing, nor compliance with the
terms, conditions and provisions of any of the foregoing by any Relevant FC
Entity:
(i) will conflict with, or result in a breach or violation of
or constitute a default in the performance, observance or fulfillment
of, any obligation, covenant or condition contained in, or permit the
acceleration of any obligation or liability in, or constitute, or but
for any requirement of giving of notice or passage of time or both
would constitute, a default or an event of default by any of the
Relevant FC Entities under, any Applicable Law, Charter Document,
Private Authorization, Governmental Authorization or Contractual
Obligation, except to the extent (x) such conflicts, breaches,
violations or defaults would not, individually or in the aggregate,
have a Material Adverse Effect on such Relevant FC Entity or (y) where
the Contractual Obligation in connection with which such default or
event of default would occur is, or where the requirement for a Private
Authorization exists is from the lenders under, the Senior
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BOS Loan Agreement in respect of which FC expects to obtain appropriate
consents or waivers or (z) listed, and as listed, on Schedule 2.1(c)
hereto as to Governmental Authorizations and Private Authorizations,
all of which will be obtained on or prior to the Closing Date.
(ii) will result in the creation or imposition of any Lien
upon any of the properties of any Relevant FC Entity or any of their
respective Subsidiaries (except liens in favor of BOS, BOS-UK or IFA
Parent pursuant to one or more of the Loan Agreements); or
(iii) will require any approval or action of, or filing with
or notification to, any Authority, except (x) as set forth in Schedule
2.1(c), and (y) approvals, actions, filings and notifications, the
failure to obtain or do which would not, individually or in the
aggregate, adversely affect any of the transactions contemplated hereby
or by any of the Related Documents or any of the parties hereto. No
Relevant FC Entity has any knowledge of any approval, action, filing or
notification required for the execution, delivery and performance of
this Agreement and the other Related Documents to which any Relevant FC
Entity is a party (or for the issuance, sale, other transfer,
redemption or delivery by any Selling FC Entity of any Subject Security
(FC) or for consummation of the transactions contemplated by any of the
foregoing or for compliance with the terms, conditions or provisions of
any of the foregoing by any Relevant FC Entity) that that has not been
obtained or made which is not listed on Schedule 2.1(c) hereto. Part
One of Schedule 2.1(c) lists all Governmental Authorizations required
to be obtained by or granted to any of the Relevant FC Entities in
connection with the transactions contemplated by this Agreement. Part
Two of Schedule 2.1(c) lists all Private Authorizations required to be
obtained by or granted to any of the Relevant FC Entities in connection
with the transactions contemplated by this Agreement, other than
Private Authorizations required from BOS, BOS-UK or IFA Parent under
the Current Loan Agreement and those required from MG-LP and MG-LLC
referred to in Section 6.5 hereof.
(d) No approval by the stockholders of FC is required for the
execution, delivery or (other than Acceptance of the Exchange Offer by the
Preferred Shareholders) performance of any of this Agreement or any of the
Related Documents or any of the transactions contemplated by any of the
foregoing, whether pursuant to any of the Charter Documents of FC, any
agreements to which FC or any of its Affiliates is a party or otherwise bound or
by which any of their respective assets are subject, any rule or regulation of a
stock exchange or NASDAQ, any provision of US, Texas or Delaware law or
otherwise.
2.2 Compliance with Governmental Authorizations and Applicable Law.
Except as set forth on Schedule 2.1(c) hereto, no notification to, filing with
or consent from the Department of Justice or the Federal Trade Commission or any
other Authority is required by any Relevant FC Entity in connection with the
Exchange Offer, the sale, issuance, other transfer or redemption of any Subject
Securities (FC) or any of the other transactions contemplated by this Agreement
or the other Related Documents (other than a filing with the SEC on Form 10-Q,
Form 8-K or a similar form, filings of Schedules TO and Schedule 13E-3, and the
filing of a registration statement on Form S-4 and the declaration by the SEC of
the effectiveness of such registration statement). Without limitation, no
filings or notifications with respect to the transactions contemplated hereby
need to be made by any Relevant FC Entity under HSR.
2.3 Partnership Interests
(a) Funding owns 35.9269125% of the partnership interests of Drive.
(b) The capital accounts of Funding's partners have been allocated
among its partners since the Original Closing Date as follows: CLC 79.2%, Drive
Holdings 19.8% and Auto-GP 1%. However,
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Funding is taxed as a C corporation under applicable federal income tax laws. In
giving the representation and warranty contained in this clause (b), FC and CLC
have assumed (with the consent of the other parties hereto) that Drive Holdings
has not transferred any of its partnership interest in Funding without Funding's
prior consent.
(c) CLC owns 31% of the membership interests in Drive-GP.
2.4 Related Transactions. None of the officers, directors or
stockholders of FC or CLC or, to the knowledge of the FC Parties, any member of
the Immediate Family of any thereof, or any Affiliate of any of the foregoing,
is a party to, or subject to any Contractual Obligation with, any Drive Entity,
including without limitation any Contractual Obligation providing for the
furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, or guaranteed any
obligation or liability of, any such Person, other than (i) the Related
Documents and the Original Related Documents, (ii) transactions with FC or CLC
previously disclosed by either in writing to IFA Parent or BOS, or (iii) or as
specifically set forth in Schedule 2.4 hereto. With the IFA Entities' consent,
the representations and warranties in this paragraph are given based solely on
the knowledge of Messrs. Sartain, Hawkins, ▇▇▇▇▇ and Vander Woude .
2.5 Ordinary Course of Business. Prior to the Closing Date, neither
Funding nor Auto-GP shall issue or sell, or agree to issue or sell, any equity
interests (whether capital stock, membership interests, partnership interests,
convertible securities, Option Securities or otherwise) or admit or agree to
admit any new members or partners or increase the interests of any existing
members or partners except for the issuance and sales of Subject Securities (FC)
contemplated by this Agreement.
2.6 Offering Circular.
(a) The Exchange Offer will comply with all Applicable Law in all
material respects. No Member of the BOS Group or any Affiliate thereof shall
have any liability for the content of the Registration Statement or the Offering
Circular.
(b) Those portions of the Offering Circular which purport to describe
the provisions of any written agreement between FC (or any affiliate thereof)
and the Bank (or any affiliate thereof) are accurate in all material respects.
(c) The Offering Circular does not, and the Offering Circular as it may
be amended or supplemented at any time after the Date of Issuance will not,
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading; provided, however, that the Company
shall not be responsible for any information regarding any member of the BOS
Group which was supplied by BOS, IFA Parent or an IFA Entity in writing for
inclusion in the Offering Circular (and stating that it has been supplied for
such purpose).
2.7 Disclosure. Neither this Agreement nor any certificate, document
or schedule furnished by or on behalf of any Relevant FC Entity in connection
herewith, taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact required to be stated herein or therein or
necessary in order to make the statements contained herein or therein, in light
of the circumstances in which they are made, not misleading.
2.8 Purchase Price. CLC will use the Purchase Price payable to it by
the IFA Entities solely as follows: (i) to pay the cash portion of the purchase
price required to be paid to those Preferred
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Shareholders who Accept the Exchange Offer, and (ii) the balance, in repayment
of indebtedness outstanding under the Senior BOS Loan Agreement.
2.9 Prior Opinions.
(a) The Fairness Letter delivered by Sandler ▇'▇▇▇▇▇ Partners pursuant
to Section 4.5 of the Original SPA has not been amended, otherwise modified or
withdrawn nor has anyone from such firm had any conversation or other
communication with any FC Party suggesting that any such amendment, modification
or withdrawal might be appropriate.
(b) No legal opinion delivered to any FC Party on or about the Original
Closing Date in connection with the Original SPA has been amended, otherwise
modified or withdrawn, and no one from the issuer of any thereof has had any
conversation or other communication with any FC Party suggesting that any such
amendment, modification or withdrawal might be appropriate.
2.10 Capital Structure.
(a) The aggregate number of shares of New Preferred Stock outstanding
as of the date hereof is 1,222,901 and will not exceed that number on the
Closing Date.
(b) There has been no change in the ownership of Funding or Auto-GP, or
any amendment to the partnership agreement of Funding or the certificate of
incorporation of Auto-GP, since the day following the Original Closing Date. 80%
of the capital stock of Auto-GP is owned by CLC and 20% is owned by Drive
Holdings. None of the equity interests held by CLC in Funding, Auto-GP or
Drive-GP is subject to any preemptive or similar rights (except as may be set
forth in the Shareholders Agreement). All of the issued and outstanding
Membership Interests and partnership interests in the Drive Parties held by any
of the FC Parties (including without limitation the Subject Securities (FC))
were issued in compliance with Applicable Laws and not in violation of any
preemptive or similar rights. All such equity interests are now, and upon
Acquisition Effectiveness will be, free and clear of any Liens (other than
restrictions on transfer imposed by the Shareholders Agreement and Liens in
favor of BOS-UK and IFA Parent pursuant to the Current Loan Agreement and, after
Acquisition Effectiveness, also pursuant to the New FC Loan Agreement).
(c) Other than restrictions on transfer imposed by the Shareholders
Agreement, (i) none of the Subject Securities (FC) is subject to any Lien (other
than Liens in favor of BOS-UK and IFA Parent pursuant to the Current Loan
Agreements) and (ii) the Subject Securities (FC) to be transferred to the IFA
Entities pursuant hereto will be transferred free and clear of any Liens.
(d) Upon giving effect to the transactions contemplated by this
Agreement, the partnership interests of Funding will be owned of record as
follows: 79.2% by CLC, a limited partner; 19.8% by MG-LP, a limited partner; and
1% by Auto-GP, its general partner.
(e) Upon giving effect to the transactions contemplated by this
Agreement, 80% of the outstanding capital stock in Auto-GP will be owned of
record by CLC and 20% of the outstanding capital stock in Auto-GP will be owned
of record by MG-LP.
2.11 Other Representations.
(a) Each of the representations and warranties contained in Annex A
hereto (which Annex is a part of this Agreement) was true and correct on August
18, 2000; nothing has come to the attention of any of the Relevant FC Parties
since that date to cause FC or CLC to believe that they were not true and
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correct on that date. Capitalized terms used in Annex A (except for the term
"Original SPA") have the meanings provided for such terms in the Original SPA.
With respect to those representations or warranties set forth in said Annex A
that are expressly stated to be given to a Person's "knowledge", there would be
no changes in such representations or warranties as of August 18, 2000 if the
knowledge possessed by the relevant Person on that date was the actual knowledge
possessed by such Person on the date of this Agreement.
(b) Incorporated herein by reference, as fully as if the same were set
forth at length herein and made directly to IFA Parent and each IFA Entity, are
each of the representations and warranties made in each Transfer Agreement by
each Relevant FC Entity that is a Selling Entity or otherwise party to such
Transfer Agreement.
2.12 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the purchase and sale of any of the Subject
Securities in the capacity of broker, agent or finder or in any similar capacity
on behalf of any Relevant FC Entity or Affiliate thereof or any of the officers,
directors or equity holders of any of the foregoing.
The IFA Entities acknowledge and agree that, except for the representations and
warranties made by FC and CLC (directly or by incorporation by reference) in
this Section 2, neither FC nor CLC has made any representations or warranties of
any kind (including any representation or warranty with respect to any
projections, forecasts or forward looking statements) in connection with the
transactions contemplated by this Agreement to induce the IFA Entities to enter
into this Agreement and purchase the Subject Securities to be purchased by them
in accordance herewith.
3. Representations and Warranties by Drive. Drive hereby represents
and warrants to IFA Parent and each IFA Entity as of the date hereof and as of
the Closing Date that:
3.1 Organization and Business; Power and Authority.
(a) Each of the Drive Parties (i) is an organization of the type
specified opposite its name on Schedule 2.1(a) hereto, (ii) is duly organized,
validly existing and in good standing under the laws of the jurisdiction under
which it is organized (as specified in such schedule), (iii) has all requisite
power and authority (corporate or other) to own or hold under lease its
properties and to conduct its business, and (iv) is duly qualified and is in
good standing as a foreign organization authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on such Person.
(b) Each of the Drive Parties has the necessary power and authority
(corporate or otherwise, as applicable), and all necessary franchises, permits,
licenses and other rights and privileges, to enter into and perform its
obligations under this Agreement and each other Related Document to which it is
a party, and (in the case of each Drive Party, if any, which is a Selling
Entity) to sell, otherwise transfer or redeem (as applicable) the Subject
Securities contemplated to be sold, otherwise transferred or redeemed by it in
accordance herewith. The execution, delivery and performance of this Agreement
and each of the other Related Documents to which a Drive Party is a party
(including without limitation the distribution of the Minority Funding Interests
by Drive Holdings to Drive and by Drive to MG-LP) have been duly authorized by
all necessary corporate or other applicable action; no Government Authorization
or Private Authorization that has not been obtained is required for the
execution, delivery and performance of this Agreement and the other Related
Documents by any Drive Party, except for (i) consents, if any, from members of
the BOS Group which are lenders to a member of the Drive Group, and (ii) those
listed in Schedule 3.1(c) hereto to be obtained after the date hereof and before
the Closing Date, all of which will
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be obtained by the Closing Date. This Agreement has been duly and validly
executed and delivered by each of the Drive Parties party hereto and
constitutes, and each other Related Document to which each is a party when
executed and delivered by such Person will have been duly and validly executed
and delivered by such Person and will constitute, legal, valid and binding
obligations of the Drive Parties party hereto and thereto (as the case may be),
enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by the Enforceability Exceptions.
(c) Neither the execution and delivery of this Agreement or any of the
other Related Documents to which any Drive Party is a party, nor the sale, other
transfer, redemption or delivery by any Drive Party which is a Selling Entity of
any or all of the Subject Securities contemplated to be sold, otherwise
transferred or redeemed by it hereunder, nor the consummation of the
transactions contemplated by any of the foregoing, nor compliance with the
terms, conditions and provisions of any of the foregoing by any Drive Party:
(i) will conflict with, or result in a breach or violation of
or constitute a default in the performance, observance or fulfillment
of, any obligation, covenant or condition contained in, or permit the
acceleration of any obligation or liability in, or constitute, or but
for any requirement of giving of notice or passage of time or both
would constitute, a default or an event of default by any of the Drive
Parties under, any Applicable Law, Charter Document, Private
Authorization, Governmental Authorization or Contractual Obligation,
except to the extent (x) such conflicts, breaches, violations or
defaults would not, individually or in the aggregate, have a Material
Adverse Effect on such Drive Party or any of its Subsidiaries or (y)
where the Contractual Obligation in connection with which such default
or event of default would occur is, or where the requirement for a
Private Authorization exists is from members of the BOS Group under,
any loan agreement to which members of the BOS Group are the sole
lenders and in respect of which Drive expects to obtain appropriate
consents or waivers or (z) listed, and as listed, on Schedule 3.1(c)
hereto as to Governmental Authorizations and Private Authorizations,
all of which will be obtained on or prior to the Closing Date.
(ii) will result in the creation or imposition of any Lien
upon any of the properties of any Drive Party or any of their
respective Subsidiaries (except liens in favor of BOS, BOS-UK or IFA
Parent pursuant to one or more loan agreements with such Person(s)); or
(iii) will require any approval or action of, or filing with
or notification to, any Authority, except as set forth in Schedule
3.1(c) and those required from MG-LP and MG-LLC referred to in Section
6.5 hereof.
3.2 Compliance with Governmental Authorizations and Applicable Law.
Except as set forth on Schedule 3.1(c) hereto, no notification to, filing with
or consent from the Department of Justice or the Federal Trade Commission or any
other Authority is required by any Drive Party in connection with the sale,
other transfer or redemption of any Subject Securities or any of the other
transactions contemplated by this Agreement or the other Related Documents.
3.3 Partnership Interests.
(a) The capital accounts of Drive's partners are allocated among its
partners as follows: IFA-LP 45.4301636%, Funding 35.9269125%, MG-LP 18.5429239%
and Drive-GP 0.1%. All distributions, profit allocations and loss allocations by
Drive are (and since the day following the Original Closing Date have been)
distributed or allocated (as the case may be) by Drive to its partners in
accordance with the foregoing percentages. There are no "reversing entries" that
would require any
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subsequent distribution, profit allocation or loss allocation to be distributed
or allocated (as the case may be) to such partners other than in accordance with
the foregoing percentages.
(b) The capital accounts of Drive Holdings' partners are allocated
among its partners as follows: Drive 99% and Drive Holdings GP LLC (a Delaware
limited liability company) 1%. All distributions, profit allocations and loss
allocations by Drive Holdings are (and since the day following the Original
Closing Date have been) distributed or allocated (as the case may be) by Drive
Holdings to its partners in accordance with the foregoing percentages. There are
no "reversing entries" that would require any subsequent distribution, profit
allocation or loss allocation to be distributed or allocated (as the case may
be) to such partners other than in accordance with the foregoing percentages.
Drive is the sole member of Drive Holdings GP LLC.
(c) The membership interests in Drive-GP are owned of record as
follows: IFA-GP 49%, CLC 31%, and MG-LP 20%.
(d) Upon giving effect to the transactions contemplated by this
Agreement, (i) the capital accounts of Drive's partners will be allocated among
its partners as follows: IFA-LP 68.9298922%, Funding 13.7360292%, MG-LP
17.232473% and Drive-GP 0.1016055%; (ii) all distributions, profit allocations
and loss allocations to be distributed or allocated (as the case may be) by
Drive to its partners shall be in accordance with the foregoing percentages, and
(iii) there are and will be no "reversing entries" that would require any
subsequent distribution, profit allocation or loss allocation to be distributed
or allocated (as the case may be) to such partners other than in accordance with
the foregoing percentages.
(e) Upon giving effect to the transactions contemplated by this
Agreement, the membership interests in Drive-GP will be owned of record as
follows: IFA-GP 69%, CLC 11%, and MG-LP 20%.
3.4 Related Transactions. No Drive Entity is a party to, or subject
to, any Contractual Obligation with any of the officers, directors or
stockholders of FC, CLC or of any Drive Entity or, to the knowledge of Drive,
any member of the Immediate Family of any thereof, or any Affiliate of any of
the foregoing, including without limitation any Contractual Obligation providing
for the furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, or guaranteed any
obligation or liability of, any such Person, other than (i) the Related
Documents and the Original Related Documents, (ii) transactions with FC or CLC
previously disclosed by either in writing to IFA Parent or BOS, or (iii) or as
specifically set forth in Schedule 2.4 hereto.
3.5 Disclosure. Neither this Agreement nor any certificate, document
or schedule furnished by or on behalf of any Drive Party in connection herewith,
taken as a whole, contains any untrue statement of a material fact or omits to
state a material fact required to be stated herein or therein or necessary in
order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
3.6 MG Entities. MG-LP is a limited partner of Drive and owner of
record of 18.5429239% of the Limited Partnership Interests in Drive and has been
such since the Original Closing Date. MG-LP is a member of Drive-GP and owner of
record of 20% of the Membership Interests in Drive and has been such since the
Original Closing Date.
3.7 Capital Structure. There has been no amendment to the partnership
agreement of Drive or the Operating Agreement since the Original Closing Date.
All of the issued and outstanding Membership Interests and partnership interests
of the Drive Parties (including without limitation the
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Subject Securities) were issued in compliance with Applicable Laws and not in
violation of any preemptive or similar rights.
The foregoing representations and warranties contained in this Section 3 are
solely for the benefit of IFA Parent and the IFA Entities; notwithstanding the
provisions of Section 9.5(a) hereof, they shall not survive the Closing. Drive
shall have no liability to any party (other than IFA Parent and the IFA
Entities) in the event that any of the foregoing are not correct.
4. Representations and Warranties of IFA Entities.
4.1 Of IFA-GP. IFA-GP represents and warrants (which representations
and warranties shall survive the execution and delivery of this Agreement to the
extent set forth in Section 9.5 below) as of the date hereof and as of the
Closing Date that:
(a) Organization; Authority.
(i) IFA-GP (i) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and (ii) has all requisite power and authority to conduct its
business.
(ii) IFA-GP has the necessary limited liability company power
and authority, and all necessary franchises, permits, licenses and
other rights and privileges, to enter into and perform its obligations
under this Agreement and each other Related Document to which it is a
party. The execution, delivery and performance of this Agreement and
each other Related Document to which it is a party have been duly
authorized, as to IFA-GP, by all requisite action by IFA-GP. No
Government Authorization or Private Authorization that has not been
obtained is required for the execution, delivery and performance by
IFA-GP of this Agreement and the other Related Documents, except for
notification to and approval by bank regulatory authorities to the
extent required by applicable banking law. This Agreement has been duly
and validly executed and delivered by IFA-GP and constitutes, and each
other Related Document to which it is a party when executed and
delivered by IFA-GP will have been duly and validly executed and
delivered by IFA-GP and will constitute legal, valid and binding
obligations of IFA-GP, enforceable in accordance with their respective
terms except as the enforceability thereof may be limited by the
Enforceability Exceptions.
(iii) Neither the execution and delivery of this Agreement or
any Related Document to which it is a party, nor the consummation of
the transactions herein or therein contemplated, nor compliance with
the terms, conditions and provisions hereof or thereof by IFA-GP will
require any approval or action of, or filing with or notification to,
any Authority, except for notification to bank regulatory authorities
after the Closing Date. No filings or notifications with respect to the
transactions contemplated hereby need to be made by IFA Parent or any
IFA Entity under HSR.
(b) Securities Act.
(i) IFA-GP acknowledges that (x) the Membership Interests to
be purchased by it hereunder have not been registered under the
Securities Act or any state securities laws and therefore cannot be
resold or transferred unless they are subsequently registered under the
Securities Act and applicable state securities or "blue sky" laws or
exemptions from such registration are available, and (y) neither
Drive-LP nor anyone else is under any obligation to cause any of such
Membership Interests to be so registered.
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(ii) IFA-GP is acquiring the Membership Interests to be
purchased by it for its own account for investment with no present
intention of distributing or reselling the same.
(iii) IFA-GP is an "accredited investor" within the meaning of
Rule 501 of the Securities Act, as presently in effect.
(c) Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the purchase and sale of any of the Subject
Securities in the capacity of broker, agent or finder or in any similar capacity
on behalf of any IFA Entity or Affiliate thereof or any of the officers,
directors or equity holders of any of the foregoing.
4.2 Of IFA-LP. IFA-LP represents and warrants (which representations
and warranties shall survive the execution and delivery of this Agreement to the
extent set forth in Section 9.5 below) as of the date hereof and as of the
Closing Date that:
(a) Organization; Authority.
(i) IFA-LP (i) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and (ii) has all requisite power and authority to conduct its
business.
(ii) IFA-LP has the necessary limited liability company power
and authority, and all necessary franchises, permits, licenses and
other rights and privileges, to enter into and perform its obligations
under this Agreement and each other Related Document to which it is a
party. The execution, delivery and performance of this Agreement and
each other Related Document to which it is a party have been duly
authorized, as to IFA-LP, by all requisite action by IFA-LP. No
Government Authorization or Private Authorization that has not been
obtained is required for the execution, delivery and performance by
IFA-LP of this Agreement and the other Related Documents, except for
notification to and approval by bank regulatory authorities to the
extent required by applicable banking law. This Agreement has been duly
and validly executed and delivered by IFA-LP and constitutes, and each
other Related Document to which it is a party when executed and
delivered by IFA-LP will have been duly and validly executed and
delivered by IFA-LP and will constitute legal, valid and binding
obligations of IFA-LP, enforceable in accordance with their respective
terms except as the enforceability thereof may be limited by the
Enforceability Exceptions.
(iii) Neither the execution and delivery of this Agreement nor
any Related Document to which it is a party, nor the consummation of
the transactions herein or therein contemplated, nor compliance with
the terms, conditions and provisions hereof or thereof by IFA-LP will
require any approval or action of, or filing with or notification to,
any Authority, except for notification to bank regulatory authorities
after the Closing Date. No filings or notifications with respect to the
transactions contemplated hereby need to be made by IFA Parent or any
IFA Entity under HSR.
(b) Securities Act.
(i) IFA-LP acknowledges that (x) the Limited Partnership
Interests to be purchased by it hereunder have not been registered
under the Securities Act or any state securities laws and therefore
cannot be resold or transferred unless they are subsequently registered
under the Securities Act and applicable state securities or "blue sky"
laws or exemptions from such
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registration are available, and (y) neither Drive-GP nor anyone else is
under any obligation to cause any of such Limited Partnership Interests
to be so registered.
(ii) IFA-LP is acquiring the Limited Partnership Interests to
be purchased by it for its own account for investment with no present
intention of distributing or reselling the same.
(iii) IFA-LP is an "accredited investor" within the meaning of
Rule 501 of the Securities Act, as presently in effect.
(c) Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the purchase and sale of any of the Subject
Securities in the capacity of broker, agent or finder or in any similar capacity
on behalf of any IFA Entity or Affiliate thereof or any of the officers,
directors or equity holders of any of the foregoing.
5. Conditions of Closing by IFA Entities. The obligation of IFA-GP
and IFA-LP to acquire the Subject Securities to be acquired by them pursuant to
this Agreement are subject to (a) compliance by the Relevant Entities with its
agreements herein contained, (b) the truth and accuracy of the certificates to
be furnished by them pursuant to this Section, and (c) each of the following
conditions being fulfilled to the satisfaction of the IFA Entities (or waived by
them) on the Closing Date (unless otherwise specifically indicated below):
5.1 No Default, etc. On the Closing Date (both before and after giving
effect to the transactions to occur on that date under this Agreement, the
Related Documents and the Loan Agreements), there shall exist no Potential
Default or Event of Default and all representations and warranties made by the
FC Parties and Selling Entities herein or in the other Related Documents or by
such Persons from and after the date hereof in writing in connection herewith or
therewith shall be true and correct in all material respects with the same
effect as though such representations and warranties have been made at and as of
such time.
5.2 Officers' Certificates; Supporting Documents. There shall have
been delivered to the IFA Entities such information and copies of documents,
approvals (if any) and records (certified where appropriate) of such corporate,
partnership, limited liability company and legal proceedings as either IFA
Entity may have reasonably requested relating to the Relevant Entities'
organization and the entering into and performance of the Related Documents and
(to the extent requested by an IFA Entity) the Original Related Documents to
which each is a party. Such documents shall, in any event, include:
(a) certified copies of the Charter Documents of the FC Parties and the
Relevant Entities (in each case, to the extent changed from copies previously
given to the IFA Entities), and long form good standing certificates of a date
not earlier than 10 days prior to the Closing Date for each of the Relevant
Entities;
(b) certificates of authorized officers of each of the Relevant
Entities (except as otherwise agreed to by the IFA Entities), certifying the
resolutions of each such Person relating to the entering into and performance of
the Related Documents to which each such Person is a party and the transactions
contemplated thereby, and further certifying that such resolutions have not been
amended, modified, superseded or revoked and remain in full force and effect;
(c) certificates of authorized officers of each of the Relevant
Entities (except as otherwise agreed to by the IFA Entities), with respect to
the incumbency and specimen signatures of its officers or representatives
authorized to execute such documents and any other documents and papers, and to
take any other action, in connection herewith or therewith;
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(d) certificates of an authorized officer of each of FC and CLC (and of
Drive and Funding, to the extent requested by an IFA Entity) certifying, as of
the Closing Date, compliance with the conditions of Sections 5.1, 5.4, 5.6, 5.7,
5.9 (as to the Relevant FC Entities), 5.11, 5.14 (as to the Relevant FC
Entities), 5.15 and 5.19(b) and also the absence of any Material Adverse Change
of the type referred to in Section 5.17(a) and the absence of any event of the
type referred to in Section 5.17(b) (first sentence) or 5.19(c); and
(e) certificates of an authorized officer of Drive (to the extent
requested by an IFA Entity) certifying, as of the Closing Date, compliance with
the conditions of Sections 5.1, 5.4, 5.6, 5.9 (as to the Drive Entities), 5.11,
5.14, 5.15 and 5.19(b) and also the absence of any Material Adverse Change of
the type referred to in Section 5.17(a) and the absence of any event of the type
referred to in Section 5.17(b) (first sentence) or 5.19(c).
5.3 Management Group. There shall have been delivered to the IFA
Entities such information and copies of documents, approvals (if any) and
records (certified where appropriate) of , and legal opinions concerning, such
corporate, partnership, limited liability company and legal proceedings as
either IFA Entity may have reasonably requested relating to the organization of
MG-LP, MG-LLC and (if entities by such names exist) Management Group LP and
Management Group GP LLC and the entering into and performance of the Related
Documents and Original Related Documents to which each is party. Such documents
shall, in any event, include:
(a) certified copies of the Charter Documents of such Persons,
including (without limitation) long form good standing certificates of a date
not earlier than 10 days prior to the Closing Date for such Persons; and
(b) to the extent requested by either IFA Entity, certificates of
Management Members and authorized officers of the MG Entities related to
transactions contemplated by this Agreement or the Original SPA and opinions of
counsel, satisfactory in form and substance to the IFA Entities, with respect
thereto.
5.4 Charter Documents.
(a) All legal opinions and other documents required by the Charter
Documents of Drive, Drive-GP and the other Selling Entities to be delivered in
order for equity interests in such Persons to be transferred, and all other
conditions precedent to such transfers set forth therein (including without
limitation in Section 3 of the limited liability company agreement of Drive-GP)
shall have been delivered in accordance with the terms thereof and the IFA
Entities shall have received certificates from each such Person to the effect
that such requirements have been complied with.
(b) Amendments, satisfactory in form and substance to the IFA Entities,
shall have been made in the Charter Documents of Drive-GP, Drive-LP and Funding
to reflect changes in the ownership of such entities relating to the Drive
Increase, and no amendment or other modification shall have been made to any
thereof, directly or indirectly, except as otherwise consented to in writing by
an IFA Entity. True, correct and complete copies of such Amendments shall have
been delivered to the IFA Entities. There shall have been no change in the
capital structure or ownership of Auto-GP. Without limitation to the foregoing,
the amendment to the Partnership Agreement shall reflect the provisions and
percentages set forth in Section 3.3(d) hereof.
5.5 Fairness Letter. FC shall have delivered to the IFA Entities and
IFA Parent a letter from an investment banking firm satisfactory to the IFA
Entities (a "Satisfactory Firm"), in form and substance satisfactory to the IFA
Entities and IFA Parent and addressed to FC, the IFA Entities and IFA Parent, as
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to the fairness of the terms of the Acquisition to FC. If FC and the IFA
Entities agree that no such satisfactory firm will address such a letter to the
IFA Entities and IFA Parent (as opposed to addressing such letter only to FC),
then the condition set forth in the preceding sentence shall be satisfied by FC
instead delivering to the IFA Entities and IFA Parent a copy of a letter from a
Satisfactory Firm, in form and substance satisfactory to the IFA Entities and
IFA Parent and addressed to FC, as to the fairness of the terms of the
Acquisition to FC (such letter to (i) contain a statement that IFA Parent and
the IFA Entities may rely on such letter and (ii) be certified by FC as being a
true, correct and complete copy of such letter and as not having been amended,
otherwise modified or withdrawn).
5.6 Acquisition.
(a) Each of the Transfer Agreements shall have been executed and
delivered by the respective parties thereto. The terms of each such Transfer
Agreement shall be satisfactory in form and substance to the IFA Entities, and
no amendment or other modification shall have been made to any thereof, directly
or indirectly, without the consent of the IFA Entities.
(b) Each of the following shall have occurred:
(i) Funding shall have sold to IFA-LP 22.42758% of the
Partnership Interests in Drive (together with the same percentage of
the capital accounts of Drive) for $15,982,760.54 so that, immediately
after giving effect thereto, IFA-LP shall own 67.8577436% of the
Partnership Interests (and the same percentage of the capital accounts
of Drive) and Funding shall own 13.4993325%;
(ii) Drive Holdings shall have distributed the Minority
Funding Interests (i.e., those in Funding and those in Auto-GP) to
Drive;
(iii) Drive shall have distributed the Minority Funding
Interests to MG-LP; and
(iv) The Partnership Agreement shall have been amended to
restate the Partnership Interests of the partners of Drive so that,
after giving effect thereto, the Partnership Interests of Drive are
owned of record as follows: IFA-LP 68.9298922%, Funding 13.7360292%,
MG-LP 17.232473% and Drive-GP 0.1016055%;
in each case upon satisfaction by the relevant parties to the relevant Transfer
Agreement of all conditions precedent set forth in such Transfer Agreements, and
(in each case), if any, all filings and governmental approvals with respect
thereto shall have been completed. Without the written consent of the IFA
Entities, there shall have been no waivers by any of the parties to any of the
Transfer Agreements of any of the conditions precedent set forth in any Transfer
Agreement.
(c) The opinions of counsel delivered to any Relevant Entity by counsel
for any Relevant Entity in connection with the Exchange Offer or any Transfer
Agreement, or any matter related to either of the foregoing, shall have been
delivered to the IFA Entities, together with a letter from each such counsel
stating that IFA Parent and the IFA Entities may rely upon such opinions with
the same effect as if said opinions were addressed to them.
5.7 Exchange Offer.
(a) Holders of no fewer than 80% of the outstanding shares of New
Preferred Stock shall have accepted the Exchange Offer, irrevocably tendered
their shares to the Exchange Agent for exchange in accordance with the terms
thereof and not withdrawn their shares The IFA Entities shall have received
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a certificate from the Exchange Agent, in form and substance satisfactory to the
IFA Entities, on the Closing Date to that effect.
(b) The Registration Statement shall have become effective and not be
the subject of any "stop order." No Legal Action shall be pending or threatened
before or by any Authority seeking to withdraw any shares tendered pursuant to
the Exchange Offer if the result of such Legal Action (if adversely determined)
would cause the aggregate number of outstanding shares tendered and not
withdrawn or sought to be withdrawn to be fewer than 80% of the outstanding
shares of New Preferred Stock.
5.8 MG Entities' Consent. MG-LLC and MG-LP shall have, in documents
satisfactory in form and substance to the IFA Entities, consented to the Drive
Increase, the Drive Restatement and the Drive Holdings Distributions for all
purposes, including (to the extent applicable) for purposes of the Shareholders
Agreement, the Partnership Agreement and the Operating Agreement.
5.9 Approvals and Consents. All orders, permissions, consents,
approvals, licenses, authorizations and validations of, and filings, recordings
and registrations with, and exemptions by (all of the foregoing, "Requisite
Consents"), any Authority, or any other Person, required to authorize or
required in connection with the execution, delivery and performance of this
Agreement and the other Related Documents and the transactions contemplated
hereby and thereby (including without limitation the Exchange Offer) by any
party hereto or thereto shall have been obtained. If so requested, copies of any
of the foregoing received by any Relevant Entity shall be furnished to the IFA
Entities certified (if so requested) by an officer of FC, CLC or Drive (as
appropriate) as a true and correct copy and being in full force and effect and
final and not subject to modification or appeal).
5.10 Absence of Liens. Evidence satisfactory to each IFA Entity as to
absence of any Lien (other than for restrictions on transfer imposed by the
Shareholders Agreement) on the Subject Securities.
5.11 Employees. No Current Management Member shall have resigned as an
officer or employee of Drive or advised any of the parties of his intention to
do so.
5.12 Existing Loan Agreement. The facilities outstanding under the
Senior BOS Loan Agreement shall have been restructured in a manner satisfactory
to BOS-UK and IFA Parent pursuant to amendments to such agreement satisfactory
to BOS-UK and IFA Parent in form and substance. The IFA Entities acknowledge
that (x) IFA Parent, BOS and FC have entered into a letter agreement dated
January 29, 2002 with respect to the restructuring of the Senior BOS Loan
Agreement and the proposed New FC Loan Agreement, and (y) nothing contained in
this Section 5.12 or Section 5.13 below is intended to vary any of the
provisions of such letter agreement.
5.13 New Loans to FC. The New FC Loan Agreement shall have been
executed and delivered by the parties thereto, become effective in accordance
with its terms and an initial loan made thereunder in accordance with its terms.
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5.14 Shareholders and Employment Agreements. The Shareholders
Agreement shall have been amended in form and substance satisfactory to the
parties thereto. No Drive Party, no FC Party, no Auto Entity, no MG Entity nor
any Management Member shall be in breach of the Shareholders Agreement. All of
the foregoing shall have waived all rights they might have under the
Shareholders Agreement to acquire any of the Subject Securities or prevent or
restrict the transfer of the Subject Securities or the Acquisition. The
Employment Agreement shall have been amended in form and substance satisfactory
to the parties thereto.
5.15 Assignment and Assumption; Certificates. CLC shall have delivered
an Assignment, executed by CLC to IFA-GP for the Membership Interests being
acquired by IFA-GP hereunder. Each other Selling Entity shall have delivered
Assignment Agreements, executed by such Person and other appropriate Persons
(including without limitation, with respect to transfers of Limited Partnership
Interests, by Drive-GP as general partner), to the relevant transferees for the
other Subject Securities being so transferred. The Operating Agreement of
Drive-GP and the Partnership Agreement of Drive-LP shall have been amended to
reflect the respective equity interests of the IFA Entities. References in this
Agreement to transfers of Subject Securities shall include the Series B
Redemption and the Drive Restatement.
5.16 The Owners Agreement shall have been amended in form and
substance satisfactory to the IFA Entities or terminated.
5.17 Adverse Change.
(a) There shall have been, in the opinion of each of IFA-GP and IFA-LP,
no Material Adverse Change since December 31, 2001 with respect to the Drive
Group taken as a whole or any member thereof or with respect to the FC Group
taken as a whole or any of the Specified FC Subsidiaries. Neither IFA Parent nor
any IFA Entity shall have become aware of any previously undisclosed information
with respect to any member of the FC Group, any Management Member, any Drive
Entity or any Auto Entity which, in the opinion of IFA Parent or such IFA
Entity, would have such a Material Adverse Effect.
(b) No FC Party, Drive Entity, member of the BOS Group or Funding shall
have been (in the opinion of IFA Parent or an IFA Entity) the subject of
ridicule, contempt or disgrace, or had its business, operations or reputation
adversely affected, by virtue of any act (or omission to act) by any FC Party,
any Management Member, any Drive Entity or any Auto Entity. Neither IFA Parent
nor any IFA Entity shall have become aware of any previously undisclosed
information with respect to any FC Party, any Management Member, any Drive
Entity or any Auto Entity which, in the opinion of IFA Parent or such IFA
Entity, would (if publicly disclosed) subject any FC Party, any Drive Entity, or
any member of the BOS Group to ridicule, contempt or disgrace or adversely
affect the business, operations or reputation of any FC Party, any Drive Entity,
or any member of the BOS Group.
5.18 Legal Opinions. Each IFA Entity shall have received legal
opinions in form and substance satisfactory to them, addressed to each of the
IFA Entities and IFA Parent and dated the Closing Date, from:
(a) ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, counsel to FC, CLC and the Auto Entities;
(b) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., counsel to the Drive Entities;
(c) ▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to MG-LLC, MG-LP and the
Management Members; and
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(d) Morris, Nichols, Arsht and ▇▇▇▇▇▇▇, special Delaware counsel to the
Relevant Entities. The opinions referred to in clauses (a) and (b) above may
rely, as to matters of Delaware law, on the aforesaid opinion of Morris,
Nichols, Arsht and ▇▇▇▇▇▇▇, stating that (in the opinion of counsel rendering
such opinion) that it is justified in so relying.
Among other things, each of the four opinions set forth above shall include the
following (or words of similar effect in form and substance satisfactory to the
IFA Entities and IFA Parent):
"We have reread our opinion letter(s) to you dated August 24,
2000. Nothing has come to our attention since said date that leads us
to believe or suspect that any opinion contained in said opinion
letter(s) was incorrect. To the extent that any opinion in such
letter(s) was given "to our knowledge" (or comparable language), we
have not subsequently gained any contrary knowledge or any knowledge
that, if then known, would have caused us to modify or qualify such
opinion."
5.19 Change in Law; Litigation.
(a) No provision of Applicable Law or the interpretation thereof by any
Authority, in the opinion of either IFA Entity, shall make it illegal for either
IFA Entity (or any Person of which either IFA Entity is a Subsidiary) to effect
the transactions contemplated hereby or by any other Related Document.
(b) No Legal Action shall be pending or threatened before or by any
Authority seeking to restrain, prohibit, make illegal or delay materially, or
seeking damages from any of the Relevant Entities or any member of the BOS Group
in connection with, or to impose any materially adverse conditions on any
Relevant Entity or any member of the BOS Group in connection with, the
consummation of the transactions contemplated by this Agreement, any of the
Transfer Agreements, the Exchange Offer or any other Related Document.
(c) No Legal Action shall be pending or threatened before or by any
Authority against any Relevant Entity, any Drive Entity, any Management Member
or any executive officer of any of the foregoing which, in the opinion of IFA-GP
or IFA-LP, could (if adversely determined) have a Material Adverse Effect on any
of the foregoing Entities or which challenges the legality or propriety of any
past or present business practice of any Drive Entity or Auto Entity or would
adversely affect the reputation of any FC Party, any Drive Entity, any Auto
Entity or any member of the BOS Group.
5.20 All Proceedings to be Satisfactory. All corporate, partnership,
limited liability company and other legal matters and all instruments in
connection with the transactions contemplated by this Agreement and the other
documents referred to herein shall be reasonably satisfactory in form and
substance to each IFA Entity, and each IFA Entity shall have received all
information and copies of all documents which either may reasonably have
requested in connection herewith or therewith, such documents where requested or
appropriate to be certified by proper company officials or Authorities.
5.21 Fees and Expenses. The legal fees and expenses (through the
Closing Date) of counsel for the IFA Entities and other members of the BOS
Group, ▇▇▇▇▇▇▇▇ & Worcester LLP and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and (if any) local or
special counsel, in connection with the transactions contemplated by this
Agreement and the other Related Documents shall (to the extent demand for
payment thereof shall have been made) have been paid in full by FC.
All documents, agreements, certificates, financial statements, legal opinions,
analyses, reports and other papers required to be delivered by this Section 5
shall be in form and substance satisfactory to IFA Parent
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and the IFA Entities and shall be delivered to them at the Closing Location or
as such Persons may otherwise direct.
6. Conditions of Closing by Relevant FC Entities. The obligations of
the Relevant FC Entities to transfer and sell the Subject Securities (FC) to be
transferred and sold by them pursuant to this Agreement are subject to each of
the following conditions being fulfilled to the satisfaction of CLC (or waived
by it) on the Closing Date (unless otherwise specifically indicated below):
6.1 No Default, etc. On the Closing Date (both before and after giving
effect to the transactions to occur on that date under this Agreement, the
Related Documents and the Loan Agreements), all representations and warranties
made by the IFA Entities herein or in the other Related Documents or by such
Persons from and after the date hereof in writing in connection herewith or
therewith shall be true and correct in all material respects with the same
effect as though such representations and warranties have been made at and as of
such time.
6.2 Officers' Certificates; Supporting Documents. There shall have
been delivered to FC and CLC such information and copies of documents, approvals
(if any) and records (certified where appropriate) of such limited liability
company and legal proceedings as FC or CLC may have reasonably requested
relating to the IFA Entities' organization and the entering into and performance
of the Related Documents.
6.3 Charter Documents. Amendments, satisfactory in form and substance
to CLC, shall have been made in the Charter Documents of Drive-GP, Drive-LP and
Funding to reflect changes in the ownership of such entities relating to the
Drive Increase.
6.4 Exchange Offer.
(a) Holders of no fewer than 80% of the outstanding shares of New
Preferred Stock shall have accepted the Exchange Offer, irrevocably tendered
their shares to the Exchange Agent for exchange in accordance with the terms
thereof and not withdrawn their shares The IFA Entities shall have received a
certificate from the Exchange Agent, in form and substance satisfactory to the
IFA Entities, on the Closing Date to that effect.
(b) The Registration Statement shall have become effective and not be
the subject of any "stop order." No Legal Action shall be pending or threatened
before or by any Authority seeking to withdraw any shares tendered pursuant to
the Exchange Offer if the result of such Legal Action (if adversely determined)
would cause the aggregate number of outstanding shares tendered and not
withdrawn or sought to be withdrawn to be fewer than 80% of the outstanding
shares of New Preferred Stock.
6.5 MG Entities' Consent. MG-LLC and MG-LP shall have, in documents
satisfactory in form and substance to CLC, consented to the Drive Increase, the
Drive Restatement and the Drive Holdings Distributions for all purposes,
including (to the extent applicable) for purposes of the Shareholders Agreement,
the Partnership Agreement and the Operating Agreement.
6.6 Approvals and Consents. All Requisite Consents required to
authorize or required in connection with the execution, delivery and performance
of this Agreement and the other Related Documents and the transactions
contemplated hereby and thereby (including without limitation the Exchange
Offer) by any party hereto or thereto shall have been obtained.
-18-
6.7 New Loans to FC. The New FC Loan Agreement shall have been
executed and delivered by the parties thereto, become effective in accordance
with its terms and an initial loan made thereunder in accordance with its terms.
6.8 Transfers and Redemptions.
(a) Funding shall have sold to IFA-LP 22.42758% of the Partnership
Interests in Drive (together with the same percentage of the capital accounts of
Drive) for $15,982,760.54 so that, immediately after giving effect thereto,
IFA-LP shall own 67.8577436% of the Partnership Interests (and the same
percentage of the capital accounts of Drive) and Funding shall own 13.4993325%;
(b) Funding shall have amended its partnership agreement to create
Class A and Class B partnership interests, and all of the Class B Interests
shall have been issued to CLCLLC;
(c) Funding shall have redeemed the aforesaid Class B Interests from
CLCLLC for $15,982,760.54;
(d) Drive Holdings shall have distributed the Minority Funding
Interests (i.e., those in Funding and those in Auto-GP) to Drive;
(e) Drive shall have distributed the Minority Funding Interests to
MG-LP; and
(f) The Partnership Agreement shall have been amended to restate the
Partnership Interests of the partners of Drive so that, after giving effect
thereto, the Partnership Interests of Drive are owned of record as follows:
IFA-LP 68.9298922%, Funding 13.7360292%, MG-LP 17.232473% and Drive-GP
0.1016055%.
7. Certain Additional Provisions.
7.1 Distributions. Until Acquisition Effectiveness, neither Funding
nor Drive will, nor will the FC Parties permit Funding to, declare, order, pay
or make, directly or indirectly, any Distribution or set apart any sum or
property therefor, or agree to do so, in each case except for (i) Distributions
required by Section 2.7 of the Shareholders Agreement, (ii) the $15,982,760.54
distribution required for the Series B Redemption on the Closing Date, and (iii)
those consented to by IFA Parent in writing.
8. Definitions.
(a) All references to Sections in this Agreement or in any schedule,
exhibit or annex hereto shall be deemed references to Sections in this Agreement
unless otherwise specified.
(b) Phrases such as "hereof" and "herein" refer to the entire Agreement
and not just the section or other portion in which said reference appears.
(c) As used in this Agreement, the terms "including," "including
without limitation" and "such as" (and like terms) are illustrative and not
limitative.
(d) Terms used in this Agreement which are defined below shall have the
meanings specified below (unless otherwise defined or the context shall
otherwise indicate) and shall include in the singular number the plural and in
the plural number the singular. References to any gender shall include all
genders.
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"Acceptance" shall mean the valid tendering of shares of New Preferred
Stock to the Exchange Agent pursuant to and in accordance with the Exchange
Offer such that, after giving effect thereto and any withdrawals of such shares
permitted to be made under the Exchange Offer, the aggregate number of shares
duly tendered (and not withdrawn) immediately prior to Acquisition Effectiveness
is not less than 80% of the outstanding shares of New Preferred Stock.
"Accepted" shall mean, with respect to a Preferred Shareholder, that
such Person has validly tendered shares of New Preferred Stock held by such
Person to the Exchange Agent pursuant to and in accordance with the Exchange
Offer and has not withdrawn such shares. "Accept" shall have a correlative
meaning.
"Acquisition" shall mean the acquisition pursuant to this Agreement (i)
by IFA-GP from CLC of 20% of the Membership Interests of Drive-GP and (ii) by
IFA-LP from Funding of 22.42758% of the Partnership Interests of Drive-LP.
"Acquisition Effectiveness" and "Acquisition Effective Date" shall mean
the time as of which the Drive Increase is effected pursuant to this Agreement.
"Additional Membership Interests" shall mean the Membership Interests
to be assigned and sold by CLC to IFA-GP to increase the percentage of the
latter's Membership Interests from 49% to 69%.
"Additional Partnership Interests" shall mean the Limited Partnership
Interests, and the corresponding capital accounts and rights to receive
distributions and allocations, to be assigned and sold to IFA-GP in accordance
with the terms of this Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such first Person and, if such first Person is an individual, any
member of the immediate family (including parents, spouse, children, siblings
and in-laws) of such individual and any trust whose principal beneficiary is
such individual or one or more members of such immediate family and any Person
who is controlled by any such member or trust. Unless otherwise specified (and
notwithstanding the preceding sentence), when used with respect to (x) IFA-GP,
IFA-LP, MG-LLC, MG-LP, the FC Parties, Funding, Auto-GP and the Management
Members or (y) any Person with respect to which any Person in clause (x) is a
Subsidiary, "Affiliate" shall not include any Drive Entity.
"Agreement" shall mean this Securities Purchase Agreement, together
with the Exhibits, Annexes and Schedules (if any) attached hereto, as it and
they may be amended, supplemented or otherwise modified from time to time as
herein provided.
"Amendments" shall mean, with respect to each of the following
documents as in effect on March 1, 2002, an amendment to such document
satisfactory to the IFA Entities in form and substance: the Shareholders
Agreement, the Employment Agreement and the Charter Documents of Funding,
Drive-GP, Drive-LP and (if any, and if such amendment is requested by either IFA
Entity) each other Selling Entity.
"Applicable Law" shall mean any Law of any Authority, whether domestic
or foreign, to which the Person in question is subject or by which it or any of
its property is bound.
"Assignment Agreements" shall mean (x) the assignment agreements (other
than this Agreement) pursuant to which interests in any of the Subject
Securities are transferred by any Relevant Entity as part of, or in connection
with, the Drive Increase, and (y) any agreements (other than this Agreement)
relating to the redemption of any of the Subject Securities.
-20-
"Authority" shall mean any nation or government, any state or political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Auto" - introductory paragraph.
"Auto Entities" shall mean Funding and Auto-GP.
"Auto-GP" - Recitals.
"Bankruptcy Code" shall mean 11 U.S.C. Section 101 et seq., as from
time to time in effect, and any successor law, and any reference to any
statutory provision shall be deemed to be a reference to any successor statutory
provision.
"BOS" shall mean Bank of Scotland, BOS-UK's federal branch located in
New York City.
"BOS-UK" shall mean The Governor and Company of the Bank of Scotland.
"BOS Group" shall mean HBOS and its consolidated Subsidiaries.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day on which banks in New York City or Texas are authorized by law or other
governmental action to close.
"CEO" shall mean, with respect to a Person, that Person's chief
executive officer.
"Charter Document" shall mean (i) with respect to a corporation, its
certificate or articles of incorporation or association and its by-laws (or
comparable documents under non-US laws); (ii) with respect to a partnership, its
partnership agreement, certificate of partnership (if a limited partnership) and
its certificate of doing business under an assumed name (if a general
partnership); (iii) with respect to a trust, its trust agreement or declaration
of trust; (iv) with respect to a limited liability company, its certificate of
formation and limited liability company agreement or operating agreement or
analogous documents; and (v) with respect to any other type of Person (other
than an individual), such documents as are analogous to the foregoing.
"CLC" - introductory paragraph.
"CLCLLC" shall mean FC Consumer LLC, a Texas limited liability company
whole sole member is CLC.
"Closing" - Section 1.4.
"Closing Date" - Section 1.4.
"Closing Location" shall mean the offices of counsel for the IFA
Entities, ▇▇▇▇▇▇▇▇ & Worcester LLP, in New York, New York or such other location
as the IFA Entities shall agree to.
"Code" shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
-21-
"Common Stock" shall mean FC's shares of New Common Stock, par value
$0.01 per share.
"Contract" and "Contractual Obligation" shall mean any agreement,
arrangement, commitment, contract, covenant, indemnity, undertaking or other
obligation or liability to which a Relevant Entity is a party or to which it or
any of its assets or property is subject (whether or not written).
"control" (including the terms "controlling," "controlled by" and
"under common control with") shall mean the possession, direct or indirect, of
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities or partnership or
other ownership interests, by contract, or otherwise.
"Convertible Securities" shall mean any evidences of indebtedness,
equity stock (other than Membership Interests, Limited Partnership Interests or
common stock) or other securities directly or indirectly convertible into or
exchangeable for Membership Interests, Limited Partnership Interests or common
stock, whether or not the right to convert or exchange thereunder is immediately
exercisable or is conditioned upon the passage of time, the occurrence or
non-occurrence or existence or non-existence of some other Event, or both.
"Current Loan Agreement" shall mean the Senior BOS Loan Agreement.
"Current Management Members" shall mean the Management Members employed
by any member of the Drive Group on the date of this Agreement.
"Damages" - Section 9.4.
"Date of Issuance" shall mean the earliest date that the Offering
Circular, in preliminary or definitive form, is mailed or otherwise delivered to
any of the Preferred Shareholders.
"Distribution" shall mean a dividend, distribution, redemption, return
of capital to one's equity holders as such, or any like payment or payment which
has the effect of any of the foregoing.
"Drive" - Recitals.
"Drive-GP" - Recitals.
"Drive-LP" shall mean Drive.
"Drive Entities" shall mean Drive, Drive-GP and each of their
respective Subsidiaries.
"Drive Group" shall mean the Drive Entities, considered as a whole.
"Drive Holdings" - introductory paragraph.
"Drive Holdings GP" shall mean Drive Holdings GP LLC, a Delaware
limited liability company.
"Drive Holdings Distributions" shall mean (x) the distribution of the
Minority Funding Interests from Drive Holdings to Drive, and (y) the
distribution of the Minority Funding Interests from Drive to MG-LP.
"Drive Increase" shall mean the increase in the IFA Entities'
beneficial ownership of the capital accounts and Partnership Interests of, and
in the right to receive distributions and profit and loss (and all
-22-
other) allocations from, Drive-LP from 49% to 69% (including without limitation
the increase from 49% to 69% of the percentage of Membership Interests in
Drive-GP owned by IFA-GP).
"Drive Increase Amount" shall mean the 22.42758% of the Partnership
Interests of Drive (and the same percentage of the capital accounts of Drive) to
be sold by Funding to IFA-LP pursuant to Section 1.2 hereof and the other
applicable provisions of this Agreement.
"Drive Parties" shall mean Drive, Drive-GP and Drive Holdings.
"Drive Restatement" shall mean the restatement of the Partnership
Interests of all partners of Drive effected pursuant to the Partnership
Agreement amendment referred to in Sections 5.6(b)(iv) and 6.8(f) hereof.
"Employment Agreement" shall mean the employment agreement dated as of
August 18, 2000 between Drive-GP and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Enforceability Exceptions" - Section 2.1(b).
"Entities" shall mean Persons other than individuals.
"Event" shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
"Event of Default" shall mean each of the following:
(a) any Relevant Entity shall fail to observe or perform any
of the covenants, agreements or provisions contained in Section 2, 3 or
7 hereof; or
(b) one or more final judgments for the payment of money in
excess of $100,000 shall be rendered against one or more of the Drive
Entities subsequent to April 1, 2002 and on or prior to the Closing
Date; or
(c) an Insolvency Event shall exist with respect to any
Relevant FC Entity or any Drive Entity.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
"Exchange Agent" shall be the Person designated in the Offering
Circular as the Person to whom shares of New Preferred Stock are to be delivered
for exchange by Preferred Shareholders who Accept the Exchange Offer.
"Exchange Offer" shall mean FC's proposed offer to exchange each
outstanding share of its New Preferred Stock for, at the election of each
Preferred Shareholder, either (x) two shares of FC's Common Stock and $10.00
cash or (y) three shares of FC's Common Stock and $8.00 cash.
"FC" shall mean FCFC.
-23-
"FC Commercial" shall mean FirstCity Commercial Corporation, a Texas
corporation.
"FC Group" shall mean FCFC and its Subsidiaries.
"FC Holdings" shall mean FirstCity Holdings Corporation, a Texas
corporation.
"FC Holdings Management" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"FC Party" shall mean, individually and collectively, FC, CLC and
CLCLLC.
"FCFC" - introductory paragraph.
"Financial Statements" shall mean, with respect to any Person, the
statement of financial position (balance sheet) and the statement of earnings,
cash flow, and stockholders' (or partners') equity of such Person.
"Fiscal Year" shall mean each January 1-December 31 period.
"Funding" - introductory paragraph.
"Governmental Authorizations" shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities in connection with the ownership or operation
of the assets and property of the Relevant Entity or the conduct or operations
of the business of such Person.
"HBOS" shall mean HBOS plc, a Scottish registered company.
"HSR" shall mean the Law commonly known as "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇" (or any
successor statute in effect from time to time), and the rules and regulations of
the Federal Trade Commission promulgated thereunder.
"IFA" shall mean IFA Parent.
"IFA Entities" shall mean IFA-GP and IFA-LP.
"IFA-GP" - introductory paragraph.
"IFA-LP" - introductory paragraph.
"IFA Parent" shall mean BoS (USA) Inc. (formerly IFA Incorporated), an
Illinois corporation.
"Immediate Family" shall mean, with respect to any individual, his or
her spouses, past or present, children, parents and siblings, and any of the
spouses of the foregoing, past or present, in all cases whether related by
blood, by adoption or by marriage.
"Indemnified Parties" - Section 9.4
"Insolvency Event" shall mean the occurrence of any of the following
with respect to a Person: such Person shall make an assignment for the benefit
of, or composition with, creditors or shall become insolvent or be unable, or
generally fail, to pay its debts when due; or any bankruptcy, insolvency or
other proceeding for the relief of financially distressed debtors shall be
commenced with respect to such Person,
-24-
or a receiver, liquidator, custodian or trustee shall be appointed for such
Person or a substantial part of its assets, and, if any of the same shall occur
involuntarily as to such Person, it shall not be dismissed, stayed or discharged
within 60 days; or if any order for relief shall be entered against such Person
under Title 11 of the United States Code entitled "Bankruptcy" (or any analogous
statute); or such Person shall take any action to effect, or which indicates its
acquiescence in, any of the foregoing.
"Law" shall mean (a) any administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, Law, injunction, judgment, order, ordinance, proclamation, regulation,
requirement, rule, statute, or writ of any Authority; (b) the common law; or (c)
any arbitrator's or referee's award or decision
"Legal Action" shall mean, with respect to any Person, any and all
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information by or pursuant to
the order of any Authority or suits, at law or in arbitration, equity or
admiralty, whether or not purported to be brought on behalf of such Person,
affecting such Person or any of such Person's business, property or assets.
"Lien" shall mean any of the following: mortgage; lien (statutory or
other); or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; any financing lease involving substantially the same economic
effect as any of the foregoing; or any restriction on sale, transfer,
assignment, disposition or other alienation.
"Limited Partnership Interests" shall mean Partnership Interests held
by limited partners of Drive in their capacity as limited partners.
"Loan Agreements" shall mean the Current Loan Agreement and the New FC
Loan Agreement.
"Management Group" shall mean, collectively, the Management Members.
"Management Group Partnership Agreement" shall mean the limited
partnership agreement of MG-LP as in effect on the Original Closing Date, as the
same may from time to time thereafter be amended, supplemented or otherwise
modified in accordance with its terms and those of the Shareholders Agreement.
"Management Members" shall mean the following individuals: ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and R. ▇▇▇▇▇ ▇▇▇▇▇.
"Material Adverse Change" in respect of a Person shall mean a material
adverse change in the business, properties, operations or condition (financial
or otherwise) of such Person.
"Material Adverse Effect" in respect of a Person shall mean an effect
that would result in a Material Adverse Change.
"material adverse" when used in uncapitalized form (alone or in
conjunction with other terms ) shall mean, with respect to the Person(s)
indicated, any Event or set of Events which could reasonably be expected to (a)
have any material adverse effect upon or result in any material adverse change
in the validity or enforceability of this Agreement or any Related Document, (b)
materially and adversely affect the business, properties, operations or
condition (financial or otherwise) of such Person, (c) materially
-25-
impair the Relevant Entity's ability to fulfill its obligations under the terms
of any material agreement, instrument or other document executed or required to
be executed by such Person, (d) materially and adversely affect the rights and
remedies of any party (other than the Relevant Entities) under this Agreement or
any Related Document, or (e) materially and adversely affect any Relevant
Entity's ability to perform this Agreement or any of the other Related
Documents.
"Membership Interests" shall mean the membership interests in Drive-GP
described in Drive-GP's Operating Agreement.
"MG-LLC" shall mean Drive Management GP LLC, a Texas limited liability
company.
"MG-LP" - Recitals.
"MG Entities" shall mean MG-LP and MG-LLC.
"Minority Funding Interests" shall mean, collectively, (x) the
partnership interests (and related capital accounts) in Funding held by Drive
Holdings as of March 1, 2002, and (y) the 1,000 shares of capital stock in
Auto-GP that are owned by Drive Holdings as of March 1, 2002.
"New FC Loan Agreement" shall mean a loan agreement proposed to be
entered into between BOS and FC Commercial or another member of the FC Group and
satisfactory to FC, the relevant borrower and BOS in form and substance,
pursuant to which, on the terms and conditions to be set forth therein, BOS
would agree to lend to FC Commercial (guaranteed by FC and certain Subsidiaries
of FC) or to FC and FC Commercial (guaranteed by certain Subsidiaries of FC) up
to an aggregate of $5,000,000 in revolving credit loans and up to an aggregate
of $55,000,000 in term loans for the acquisition of distressed debt, as such
agreement may from time to time be amended, supplemented or otherwise modified
in accordance with its terms.
"New Preferred Stock" shall mean FC's New Preferred Stock, par value
$0.01 per share.
"Offering Circular" shall mean the prospectus (in preliminary or
definitive form) and related material sent by or on behalf of FC to Preferred
Shareholders from time to time in connection with the Exchange Offer.
"Operating Agreement" shall mean the Third Amended and Restated Limited
Liability Company Agreement of Drive-GP dated as of August 18, 2000, as the same
may from time to time be amended, supplemented or otherwise modified in
accordance with its terms and with IFA-GP's prior written consent.
"Option" shall mean the agreement dated December 20, 1999 and entitled
"Option to Acquire Warrant" issued by FC to IFA Parent in connection with FC's
purchase from IFA Parent on or about said date of $25,000,000 principal amount
of subordinated notes, as such agreement has been and may hereafter be amended,
supplemented or otherwise modified in accordance with its terms.
"Option Securities" shall mean all rights, options, warrants and the
like, and calls or commitments evidencing the right, to subscribe for, purchase
or otherwise acquire shares of capital stock, Convertible Securities, Membership
Interests or partnership interests whether or not the right to subscribe for,
purchase or otherwise acquire is immediately exercisable or is conditioned upon
the passage of time, the occurrence or non-occurrence or the existence or
non-existence of some other Event.
"Original Closing Date" shall mean August 24, 2000.
-26-
"Original Related Documents" shall have the meaning provided for the
term "Related Documents" in the Original SPA.
"Original SPA" shall mean that certain Securities Purchase Agreement
dated as of August 18, 2000 among FC, CLC, Funding, Auto-GP, IFA-GP and IFA-LP,
as amended by Section 9.4(d) of this Agreement, and as the same may from time to
time thereafter be further amended, supplemented or otherwise modified in
accordance with its terms.
"Owners Agreement" shall mean the agreement dated as of August 18, 2000
entitled "Agreement Among the Owners" among Drive, Drive-GP, MG-LLC, MG-LP,
IFA-GP, IFA-LP, IFA Parent, CLC, Funding and Auto-GP, as in effect on the date
hereof.
"Partnership Agreement" shall mean the Second Amended and Restated
Agreement of Limited Partnership of Drive dated as of August 18, 2000, as the
same may from time to time be amended, supplemented or otherwise modified in
accordance with its terms and with IFA-LP's prior written consent.
"Partnership Interests" shall mean the partnership interests in Drive
described in Drive's Partnership Agreement.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, the BOS Group,
the CLC Group, the Drive Group, the Management Group, a limited liability
company, a not-for-profit corporation or other not-for-profit entity, a trust,
an unincorporated association, a joint venture or other entity or an Authority.
"Potential Default" shall mean any Event which after notice, passage of
time, or both, would constitute an Event of Default.
"Preferred Shareholders" shall mean holders of the New Preferred Stock.
"Private Authorizations" shall mean all approvals, concessions,
consents, franchises, licenses, permits, and other authorizations of all Persons
(other than Authorities).
"Purchase Price" shall mean, unless the context shall otherwise
indicate, the aggregate amount of the Purchase Price (LPI) and the Purchase
Price (MI).
"Purchase Price (LPI)" - Section 1.3.
"Purchase Price (MI)" - Section 1.3.
"Registration Statement" shall mean (from and after same is initially
filed with the SEC) the Registration Statement on Form S-4, including all
exhibits thereto, filed by FC with the SEC in connection with the Exchange
Offer, as the same may be amended by FC from time to time.
"Related Documents" shall mean this Agreement, the Transfer Agreements,
the Amendments, the Employment Agreement, the Shareholders Agreement, the
Charter Documents of Funding and of the Drive Parties and the other Selling
Entities (other than CLC), and each other agreement, instrument and other
document (other than the Loan Agreements and the guarantees, security
agreements, pledge agreements and the like executed in connection therewith)
executed or required to be executed by any of the Relevant Entities on or prior
to the Closing Date (or, if pursuant to Section 9.14 hereof, at any time
-27-
thereafter) in connection with the transactions contemplated by this Agreement
and the other Related Documents, in each case as amended, supplemented or
otherwise modified from time to time in accordance with their respective terms.
"Relevant Entity" shall mean, collectively, the FC Parties, Drive-GP,
Drive-LP, Drive Holdings and the Auto Entities, or such one or more of them as
the context shall indicate.
"Relevant FC Entity" shall mean, collectively, the FC Parties and the
Auto Entities, or such one or more of them as the context shall indicate.
"Requisite Consents" - Section 5.9.
"Securities Act" shall mean the Securities Act of 1933, and the rules
and regulations promulgated thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Selling Entities" shall mean CLC, CLCLLC, Funding, Drive, Drive
Holdings and MG-LP.
"Selling FC Entities" shall mean CLC, CLCLLC and Funding.
"Senior BOS Loan Agreement" shall mean that certain Amended and
Restated Loan Agreement dated as of December 20, 1999 (for reference purposes
only) with FCFC as borrower, BOS-UK and IFA Parent as lenders, and BOS as agent
for such lenders, as such agreement has been and may hereafter be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Series B Redemption" shall mean the redemption of the Series B Units
by Funding from CLCLLC for $15,982,760.54.
"Series B Units" shall mean the Series B limited partnership interest,
with a redemption or comparable value of $15,982,760.54, contemplated to be
established by Funding in connection with the transactions contemplated hereby.
"Shareholders Agreement" means the Agreement Among Members dated as of
August 18, 2000, as such agreement may from time to time be amended,
supplemented or otherwise modified in accordance with its terms.
"Subject Securities" shall mean, collectively, (i) the Membership
Interests in Drive-GP to be sold by CLC to IFA-GP, (ii) the Minority Funding
Interests, (iii) the Series B Units to be redeemed by Funding, and (iv) the
capital accounts of, and Limited Partnership Interests in, Drive-LP to be sold
by Funding to IFA-LP, in each case as set forth in this Agreement.
"Subject Securities (FC)" shall mean, collectively, (i) the Membership
Interests in Drive-GP to be sold by CLC to IFA-GP, (ii) the Series B Units to be
redeemed by Funding, and (iii) the capital accounts of, and Limited Partnership
Interests in, Drive-LP to be sold by Funding to IFA-LP, in each case pursuant to
Sections 1.1 and 1.2 and the other applicable provisions hereof.
"Subsidiary" of any Person shall mean any other firm, corporation,
limited liability company, partnership, trust or other unincorporated
organization or association or other enterprise, 50% or more of
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the indicia of equity rights (whether capital stock or otherwise) of which is at
the time owned, directly or indirectly, by such Person and/or by one or more of
such Person's Subsidiaries.
"Tax" (and "Taxable", which shall mean subject to Tax), shall mean,
with respect to any Person, (a) all taxes (domestic or foreign), including
without limitation any income (net, gross or other including recapture of any
Tax items such as investment Tax credits), alternative or add-on minimum Tax,
gross income, gross receipts, gains, sales, use, leasing, lease, user, ad
valorem, transfer, recording, franchise, profits, property (real or personal,
tangible or intangible), fuel, license, withholding on amounts paid to or by
such Person, payroll, employment, unemployment, social security, excise,
severance, stamp, occupation, premium, environmental or windfall profit Tax,
custom, duty or other Tax, or other like assessment or charge of any kind
whatsoever, together with any interest, levies, assessments, charges, penalties,
additions to Tax or additional amount imposed by any Taxing Authority, (b) any
joint or several liability of such Person with any other Person for the payment
of any amounts of the type described in (a), and (c) any liability of such
Person for the payment of any amounts of the type described in (a) as a result
of any express or implied obligation to indemnify any other Person.
"Taxing Authority" shall mean any Authority responsible for the
imposition of any Tax.
"transfer" and variations thereof, when used with respect to Subject
Securities, shall include the Series B Redemptions and the Drive Restatement.
"Transfer Agreements" shall mean the Assignment Agreements.
"written," "in writing" and other variations thereof shall mean any
form of written communication or a communication by means of telecopier.
9. Miscellaneous Provisions.
9.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date by the mutual written consent of FC and the IFA Entities.
9.2 Stamp and Other Taxes. The FC Parties jointly and severally
covenant and agree that they will pay all documentary stamp or similar excise
taxes, including any interest or penalties thereon, which may be legally payable
in connection with or arising out of the issue, redemption or transfer of any of
the Subject Securities and will indemnify each holder of any thereof against,
and save it harmless from, any liability, cost or expense in respect of any such
stamp taxes or other taxes and any interest or penalties thereon. The foregoing
agreement in this connection shall survive termination of this Agreement.
9.3 Expenses.
(a) Whether or not the transactions hereby contemplated shall be
consummated, FC shall pay (x) the legal fees and expenses of IFA Parent and the
IFA Entities (including those from counsel referred to in Section 5.21) incurred
in connection with the transactions contemplated by this Agreement and the other
Related Documents, whether rendered before, on or after the Closing Date (but
not for any period subsequent to 60 days after the Closing Date). The legal fees
and expenses of counsel for members of the FC Group and members of the Drive
Group in connection herewith shall be paid by FC and Drive, respectively.
(b) Whether or not the transactions hereby contemplated shall be
consummated, FC shall pay the fees and expenses of other external third parties
(including without limitation KPMG) retained by IFA
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Parent or the IFA Entities in connection with the transactions contemplated by
this Agreement and the other Related Documents, in each case for services
rendered on or prior to the Closing Date.
9.4 Indemnification.
(a) (i) Each of the FC Parties hereby jointly and severally agrees to
indemnify, pay and hold harmless IFA Parent, IFA-GP and IFA-LP and each of them
(collectively, the "Indemnified Parties") from and against all liability,
losses, damages and expenses (collectively, "Damages"), including without
limitation legal fees and expenses, incurred by any one or more of them as a
result of any representation or warranty contained in Section 2 of this
Agreement (other than those contained in Section 2.11(a) hereof and Annex A
hereto) or otherwise made by any FC Party or Auto Entity in connection with the
Acquisition or the transactions contemplated hereby Agreement (other than those
contained in Section 2.11(a) hereof and Annex A hereto) being incorrect,
incomplete or misleading. The obligations provided for in this Section 9.4(a)(i)
shall survive for seven years from the Closing Date with respect to all
Tax-related representations and warranties and for 30 months from the Closing
Date with respect to all other representations and warranties; provided,
however, that if at the expiration of the seven-year or 30-month period (as
applicable), any claim for indemnification hereunder has been asserted in
writing by an Indemnified Party to an FC Party but not fully determined or (with
respect to Tax-related representations and warranties) any audit by the Internal
Revenue Service has been initiated but not completed, such seven-year or
30-month period (as applicable) will be extended as to such claim or audit until
it is finally determined or concluded.
(ii) Each of the FC Parties hereby jointly and severally agrees to
indemnify, pay and hold harmless the Indemnified Parties from and against all
Damages, including without limitation legal fees and expenses, incurred by any
one or more of them as a result of any representation or warranty contained in
Section 2.11(a) of this Agreement or Annex A hereto being incorrect, incomplete
or misleading. The obligations provided for in this Section 9.4(a)(ii) shall
survive for seven years from the Original Closing Date with respect to all
Tax-related representations and warranties and for 30 months from the Original
Closing Date with respect to all other representations and warranties; provided,
however, that if at the expiration of the seven-year or 30-month period (as
applicable), any claim for indemnification hereunder has been asserted in
writing by an Indemnified Party to an FC Party but not fully determined or (with
respect to Tax-related representations and warranties) any audit by the Internal
Revenue Service has been initiated but not completed, such seven-year or
30-month period (as applicable) will be extended as to such claim or audit until
it is finally determined or concluded.
(b) Neither of the FC Parties or Funding shall be required to make any
payments under Section 9.4(a) until the aggregate amount payable thereunder
shall exceed $250,000, and then only for the amount in excess of said $250,000
in the aggregate; provided, however, that the foregoing provisions of this
Section 9.4(b) shall not apply to matters arising in respect of Sections 2.1(d),
2.4, 2.6, 2.9 or 2.12 (or to Sections 1.1(d), 1.7, 1.9, 1.15 or 1.17 of Annex A
hereto) or to any breach of a representation or warranty made by FC or CLC of
which FC, CLC, Funding or Auto-GP had knowledge prior to the Closing Date or to
any intentional breach of any representation, warranty or obligation of any FC
Party or Auto Entity, and each FC Party will be jointly and severally liable for
all Damages with respect to each such breach.
(c) Each of the FC Parties hereby jointly and severally agrees to
indemnify, pay and hold harmless each member of the BOS Group from and against
all Damages incurred by any one or more of them as a result of any
representation or warranty contained in Section 2.6 of this Agreement, or
otherwise made by any FC Party or Auto Entity in connection with the Exchange
Offer, being incorrect, incomplete or misleading.
-30-
(d) The last sentence of Section 7.4(a) of the Original SPA is hereby
amended by adding the following at the end thereof:
"provided, however, that if at the expiration of the seven-year or
30-month period (as applicable), any claim for indemnification
hereunder has been asserted in writing by an Indemnified Party to an FC
Party but not fully determined or (with respect to Tax-related
representations and warranties) any audit by the Internal Revenue
Service has been initiated but not completed, such seven-year or
30-month period (as applicable) will be extended as to such claim or
audit until it is finally determined or concluded."
The provisions of this clause (d) shall be deemed signed only by those parties
hereto that are also parties to the Original SPA and hence no consent of any
party hereto that was not also a signatory to the Original SPA is required for
any amendment of this clause (d), notwithstanding anything to the contrary in
Section 9.7(a) hereof. Capitalized terms used in the foregoing amendment have
the definitions provided therefor in the Original SPA.
(e) Each of the FC Parties hereby jointly and severally agrees to
indemnify, pay and hold harmless Drive from and against all Damages , including
without limitation legal fees and expenses, incurred by Drive to the extent that
the assignment and transfer by Drive to Drive Holdings in August 2000 of Drive's
limited partnership interest in Funding pursuant to that certain Contribution
and Assumption Agreement among Drive, Drive Holdings and Drive Holdings GP did
not result in Drive Holdings replacing Drive as a limited partner of Funding in
August 2000 in accordance with the provisions of Funding's partnership agreement
recognizing the effectiveness of such transfers and the admission of new limited
partners.
9.5 Survival of Covenants.
(a) All covenants, agreements and representations made herein and in
certificates delivered in connection herewith shall be deemed material and
relied on by the IFA Entities notwithstanding any investigation made by either
of them or in its or their behalf, and shall survive the execution and delivery
of the Subject Securities and payment therefor for a period of two years after
the Closing Date except those relating to Taxes (which shall survive until the
end of the Fiscal Year following the sixth anniversary of the Closing Date) and
those contained in Section 2.6 of this Agreement (which shall survive for the
duration of the longest statute of limitations applicable to any suit or other
action that may be instituted against any Indemnified Party concerning any of
the matters referred to in said Section 2.6); provided, however, that (i) those
in Section 2.11(a) of this Agreement or Annex A hereto relating to Taxes shall
survive until the end of the Fiscal Year following the sixth anniversary of the
Original Closing Date and (ii) those in Section 2.11(a) or Annex A hereto (other
than those relating to Taxes) shall survive for a period of two years after the
Original Closing Date.
(b) In furtherance and not in limitation of the provisions of clause
(a) above: NO INVESTIGATION PERFORMED BY OR ON BEHALF OF ANY OF THE IFA ENTITIES
OR DRIVE OR ANY OF THEIR RESPECTIVE AFFILIATES (OR BY ANY OFFICER, DIRECTOR,
EMPLOYEE OR AGENT OF ANY OF THE FOREGOING), NOR ANY INFORMATION POSSESSED BY ANY
SUCH PERSON, SHALL AFFECT ANY REPRESENTATION OR WARRANTY MADE IN THIS AGREEMENT
(UNLESS EXPRESSLY ADDRESSED IN SUCH REPRESENTATION OR WARRANTY) BY ANY OF THE
OTHER PARTIES HERETO, OR ANY CONDITION TO THE OBLIGATIONS OF THE PARTIES HERETO,
OR LIMIT THE SCOPE OF ANY SUCH REPRESENTATIONS, WARRANTIES OR CONDITIONS, OR IN
ANY WAY LIMIT ANY LIABILITY OF ANY FC PARTY UNDER SECTION 9.4.
9.6 Notices. Except as otherwise expressly provided herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or
-31-
made when delivered if sent by Federal Express or other similar overnight
delivery service or by telecopier, or five Business Days after mailing (when
mailed, postage prepaid, by registered or certified mail, return receipt
requested); in each case addressed as follows:
If to IFA-GP or IFA-LP:
26th floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to FC, CLC, Funding or Auto-GP:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇, CEO
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person(s), facsimile number(s) or address(es) as the party to
receive any such notice or other communication may have designated by written
notice to the other parties.
9.7 Amendment; Waiver.
(a) Except as may otherwise be specifically provided herein, no
provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by all the parties hereto.
Any such change, waiver, discharge or termination shall be effective only in the
specific instance and for the specific purposes for which made or given.
(b) No failure or delay on the part of any of the parties hereto in
exercising any right, power or privilege under this Agreement, and no course of
dealing between or among any one or more of them shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
9.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED WHOLLY WITHIN THE STATE OF NEW YORK (REGARDLESS OF THE PLACE WHERE THIS
AGREEMENT IS EXECUTED) AND WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS
PROVISIONS.
9.9 Entire Agreement. (a) Integration. This Agreement, together with
the other Related Documents and the Loan Agreements (and the documents referred
to therein), comprises the complete and integrated agreement of the parties on
the subject matter of the Drive Increase, the Drive Restatement and the Drive
Holdings Distributions and supersedes all prior agreements, written or oral,
between or among the parties hereto on such subject matter, it being understood
and acknowledged that nothing contained in this Agreement or in any of the other
Related Documents supersedes the Original SPA or
-32-
(except to the extent any of the other Original Related Documents are amended in
connection herewith) such other Original Related Documents.
(b) Notwithstanding anything to the contrary contained herein, unless a
party hereto otherwise requests with respect to any specific exhibit, exhibits
to this Agreement shall not be required to be attached to the execution or any
other copy of this Agreement, and any references in this Agreement or any
Related Document to such exhibits as "Exhibits hereto," "Exhibits to this
Agreement" or words of similar effect shall be deemed to refer to such document
as executed by the relevant parties thereto and delivered on the Closing Date.
9.10 Jurisdiction. Each party hereto hereby agrees that any legal
action or proceeding against it or any of its Affiliates or any Drive Entity or
any of its Affiliates with respect to this Agreement or any of the agreements or
other documents delivered pursuant hereto or in connection herewith may (and
shall exclusively) be brought in the courts of the State of New York located in
New York City or of the United States of America for the Southern District of
New York as the party bringing such action or proceeding may elect, and, by
execution and delivery hereof, each of the parties hereto hereby accepts and
consents for itself and in respect to its property, generally and
unconditionally, with respect to any such action or proceeding, the exclusive
jurisdiction of the aforesaid courts and waives any right to stay or to dismiss
any such action or proceeding brought before said courts on the basis of forum
non conveniens; provided that nothing contained herein shall limit the right of
IFA-GP or IFA-LP or any member of the BOS Group to bring any such action or
proceeding in the courts of Texas or any other jurisdiction where IFA-GP or
IFA-LP or such member may obtain proper jurisdiction over such party. The
parties hereto further agree that the provisions of Sections 5-1401 and 5-1402
of the General Obligations Law of the State of New York shall apply to this
Agreement and such other agreements and documents. Each party hereto hereby
irrevocably consents that all process served or brought against it with respect
to any such action or proceeding in any such court shall be effective and
binding service in every respect if sent by registered mail, or (if permitted by
law) by Federal Express or other similar overnight courier service, to such
party at its address set forth in Section 9.6 (or such other address as the
other parties hereto are notified of in accordance with the provisions of said
Section); nothing in this Section 9.10 shall affect the right of any party
hereto to serve process in any other manner permitted by law.
9.11 Business Days. Whenever a specified time period is provided for
herein and such period ends on a day which is not a Business Day, the last day
of such period shall be deemed extended to the next succeeding day which is a
Business Day.
9.12 Headings; Counterparts. The headings contained in this Agreement
are for reference purposes only and shall not limit or otherwise affect the
meaning of any provision of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument, binding upon all of the parties
hereto. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts. Telecopied signatures
hereto shall be of the same force and effect as an original of a manually signed
copy.
9.13 Severability. If any term or provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution,
-33-
statute or rule of public policy, but this Agreement shall be reformed and
construed in any such jurisdiction or case as if such invalid, inoperative,
illegal or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case. Notwithstanding
the foregoing, in the event of any such determination the effect of which is to
affect materially and adversely any party, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by Applicable Law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled and consummated to the maximum extent possible.
9.14 Further Acts. Each party agrees that at any time, and from time
to time, after the Closing Date, it will do all such things and execute and
deliver all such additional agreements, instruments and documents, and other
assurances, as any other party or its counsel reasonably deems necessary or
desirable in order to carry out the terms and conditions of this Agreement and
the transactions contemplated hereby or to facilitate the enjoyment of any of
the rights created hereby.
9.15 Mutual Drafting. This Agreement and the other Related Documents
are the result of the joint efforts of the parties hereto and thereto,
respectively, and each provision hereof and thereof has been subject to the
mutual consultation, negotiation and agreement of the parties to each and there
shall be no construction against any party based on any presumption of that
party's involvement in the drafting hereof or thereof.
9.16 No Third-Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained herein shall be deemed to confer upon anyone other
than the relevant parties hereto and their respective successors and permitted
assigns any right to insist on or to enforce the performance or observance of
any of the obligations contained herein.
9.17 Jury Waiver. EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT OR HE MAY HAVE TO A TRIAL BY
[balance of page intentionally blank]
-34-
JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR IN CONNECTION WITH ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BY
ANY PARTY HERETO OR ANY AFFILIATE THEREOF.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
FIRSTCITY FINANCIAL CORPORATION FIRSTCITY CONSUMER LENDING CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President Title: Chairman of the Board
FIRSTCITY FUNDING GP CORP. FIRSTCITY FUNDING L.P.
By FirstCity Funding GP Corp.,
its general partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board Title: Chairman of the Board
IFA DRIVE GP HOLDINGS LLC IFA DRIVE LP HOLDINGS LLC
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Manager Title: Manager
DRIVE FINANCIAL SERVICES LP DRIVE HOLDINGS LP
By Drive GP LLC, its sole By Drive Holdings GP LLC, its sole
general partner partner general partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President Title: President
CONSENTED TO:
DRIVE GP LLC
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
-35-
SCHEDULES AND ANNEXES
Schedule 2.1(a)....................................Jurisdictions of Organization
Schedule 2.1(c).....................Governmental and Private Authorizations (FC)
Schedule 2.4.............................................Affiliated Transactions
Schedule 3.1(c)..................Governmental and Private Authorizations (Drive)
Annex A................................Additional Representations and Warranties
Schedule 2.1(a)
Jurisdictions of Organization
Name of Entity Type of Entity State of Organization
-------------- -------------- ---------------------
FirstCity Financial Corporation corporation Delaware
FirstCity Consumer Lending Corporation corporation Texas
FirstCity Funding, L.P. limited partnership Texas
FirstCity Funding GP Corp. corporation Texas
FC Consumer LLC limited liability company Texas
Drive Financial Services LP limited partnership Delaware
Drive GP LLC limited liability company Delaware
Drive Holdings LP limited partnership Delaware
Schedule 2.1(c)
Governmental and Private Authorizations
(FC ENTITIES)
PART ONE
Governmental Authorizations
Entity Requiring Date Date
Authorization Granting Entity Description of Action Required Received Expected
----------------------------------------------------------------------------------------------------------------------
First City Securities and Filing of documents listed in the June 11, 2002
Financial Exchange parenthetical contained in the first
Corporation Commission sentence of Section 2.2 of Agreement
to which this Schedule is attached
(the "SPA")
----------------------------------------------------------------------------------------------------------------------
First City Securities and Declaring the Registration Statement July 31, 2002
Financial Exchange (as defined in the SPA) effective
Corporation Commission
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
PART TWO
Private Authorizations
Entity Requiring Granting Description of Relevant Document Date Date
Authorization Entity Action Required Requiring Same Received Expected
----------------------------------------------------------------------------------------------------------------------
FirstCity CFSC Capital Consent Loan Agreement dated 3 business
Financial Corp. XXX February 16, 1999, as days prior
Corporation amended to Closing
Date (as
defined in
SPA)
----------------------------------------------------------------------------------------------------------------------
FirstCity CFSC Capital Consent Loan Agreement dated 3 business
Holdings Corp. XXX April 6, 2000, as days prior
Corporation amended to Closing
Date
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
FirstCity Drive Consents similar to Agreement Among Prior to
Funding L.P. Management LP those in first Members dated as of August 1,
and sentence of Section August 18, 2000 2002
FirstCity 1.5 of the SPA and
Consumer consent to transfer
Lending of membership
Corporation interests by CLC to
IFA-GP
----------------------------------------------------------------------------------------------------------------------
FirstCity Drive Consents similar to Partnership Agreement Closing
Funding L.P. Management LP those in second of Drive Date
sentence of
Section 1.5 of
the SPA
----------------------------------------------------------------------------------------------------------------------
FirstCity Drive Consents similar to Limited Liability Closing
Consumer Management LP those in third Company Agreement of Date
Lending sentence of Drive GP LLC
Corporation Section 1.5 of
the SPA
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Schedule 2.4
Affiliated Transactions
1. Services Agreement (▇▇▇▇▇) dated as of August 18, 2000, between
Drive Financial Services LP and FirstCity Consumer Lending Corporation.
2. Amendment to Software License and Services Agreement between
PeopleSoft USA, Inc. and
FirstCity Financial Corporation executed by Drive
Financial Services LP related to its use of the software.
3. Agreement dated effective as of August 1, 2000 between Drive
Financial Services LP ("Drive") and
FirstCity Financial Corporation ("FCFC")
relating to use of PeopleSoft software by Drive and payment by Drive to FCFC of
a pro-rata share of the annual support services fee and the incremental licenses
fees for PeopleSoft Financial Software Modules based upon Drive's projected
revenues for the next year and Drive's annual revenues for the past year
compared to FCFC's projected consolidated revenues for the next year (not
including any income/revenues from its interest in Drive) and FCFC's
consolidated annual revenue for the past year (not including any income/revenue
from its interest in Drive).
Schedule 3.1(c)
Governmental and Private Authorizations
(DRIVE ENTITIES)
PART ONE
Governmental Authorizations
Entity Requiring Date Date
Authorization Granting Entity Description of Action Required Received Expected
------------- --------------- ------------------------------- --------- --------
NONE
PART TWO
Private Authorizations
Entity Requiring Granting Description of Relevant Document Date Date
Authorization Entity Action Required Requiring Same Received Expected
------------- ------ --------------- -------------- -------- --------
NONE
Annex A
Additional Representations and Warranties
10. FC and CLC hereby jointly and severally represent and warrant to
IFA Parent and each IFA Entity (which representations and warranties shall
survive the execution and delivery of the Agreement to the extent set forth in
Section 9.5 of the Agreement) as follows as of August 18, 2000. Capitalized
terms used in this Annex A (except for the term "Original SPA") have the
meanings provided for such terms in the Original SPA. References below in this
Annex A to "is," "now" and other terms denoting the current tense refer to
August 18, 2000. References to the knowledge of Persons refer to the knowledge
of such Persons as of August 18, 2000; however, as further set forth in Section
2.11(a) of the SPA to which this Annex is attached, FC and CLC also represent
(jointly and severally) as of the date of said SPA that, with respect to any
representations or warranties set forth below that are expressly stated to be
given to a Person's "knowledge", there would be no changes in such
representations or warranties as of August 18, 2000 if the knowledge possessed
by the relevant Person on that date was the actual knowledge possessed by such
Person on the date of the SPA to which this Annex is attached.
10.1 Organization and Business; Power and Authority.
(a) Each of the FC Parties, each of the Auto Entities and each of the
Drive Entities (i) is an organization of the type specified opposite its name on
Schedule 2.1(a) to the Original SPA, (ii) is duly organized, validly existing
and in good standing under the laws of the jurisdiction under which it is
organized (as specified in such schedule), (iii) has all requisite power and
authority (corporate or other) to own or hold under lease its properties and to
conduct its business as now conducted (in the case of the FC Parties and the
Auto Entities) and as proposed to be conducted (in the case of the Drive
Entities), and (iv) except as set forth in Schedule 2.1(a) to the Original SPA,
is duly qualified and is in good standing as a foreign organization authorized
to do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on such
Person. Except as stated in Schedule 2.1(c) to the Original SPA or Schedule 2.17
to the Original SPA, each of the Auto Subsidiaries is wholly owned by Auto. Each
of the Securitization Subsidiaries is owned as set forth on Schedule 2.17 to the
Original SPA. References in this Annex A to "as proposed to be conducted," when
used with respect to the business proposed to be conducted by the Drive Entities
on or after Acquisition Effectiveness, shall be considered to mean "as proposed
to be conducted by the Drive Entities in substantially the same manner and in
the same jurisdictions as the Auto Entities were conducting such business prior
to Acquisition Effectiveness."
(b) Other than licenses identified on Schedule 2.6(a) to the Original
SPA, each Relevant Entity has the necessary power and authority (corporate or
otherwise, as applicable), and all necessary franchises, permits, licenses and
other rights and privileges, to enter into and perform its obligations under the
Original SPA and each other Related Document to which it is a party, and (in the
case of CLC) to sell the Subject Securities. The execution, delivery and
performance of the Original SPA and each of the other Related Documents to which
a Relevant Entity is a party (including without limitation (i) the transfer of
assets (including, without limitation, the assets transferred to CLC by Auto-FCA
and FC Consumer Finance), the Residuals and the Securitization Shares by CLC to
Drive pursuant to the Residuals Agreement (CLC), (ii) the transfer of Residuals
by Auto-ABS to Auto pursuant to the Residuals Agreement (ABS), (iii) the
transfer of assets by (A) Auto-FCA and Auto-Servicing to Auto, (B) FC Consumer
Finance and Auto-FCA to CLC, and (C) FC Consumer Finance to CLC pursuant to the
Assignment Agreements, (iv) the transfer of the Auto Assets (including without
limitation (x) the Residuals transferred to Auto pursuant to the Residuals
Agreement (ABS) and (y) the assets transferred
A-1
by Auto-FCA, Auto-Servicing and FC Consumer Finance to Auto pursuant to the
Assignment Agreements) by Auto to Drive pursuant to the Asset Acquisition
Agreement (Auto), and (v) the transfer of the aforementioned Residuals by Drive
to Drive-ABS pursuant to the Residuals Agreement (Drive) and the sale of the
Subject Securities by CLC to the IFA Entities pursuant to the Original SPA) have
been duly authorized by all necessary corporate or other applicable action; no
Government Authorization or Private Authorization that has not been obtained is
required for the execution, delivery and performance of the Original SPA and the
other Related Documents by any Relevant Entity. No approval of the transactions
contemplated by the Original SPA or by any of the other Related Documents,
individually or as a whole, is required from FC's stockholders. The Original SPA
has been duly and validly executed and delivered by each of the Relevant
Entities party to the Original SPA and constitutes, and each other Related
Document to which each is a party when executed and delivered by such Person
will have been duly and validly executed and delivered by such Person and will
constitute, legal, valid and binding obligations of the Relevant Entities party
to the Original SPA and thereto (as the case may be), enforceable in accordance
with their respective terms, except as the enforceability thereof may be limited
by Enforceability Exceptions.
(c) Prior to giving effect to the Acquisition, neither Auto nor Auto-GP
owns any voting shares or other equitable interest in any Person, however
organized and however such interest may be denominated or evidenced, except as
set forth in Schedule 2.1(c) to the Original SPA. All of the assets held by each
of the Persons listed on Schedule 2.1(c) to the Original SPA as owned by Auto or
Auto-GP (other than Auto-FCAR), and all of the equity interests in each of the
Securitization Subsidiaries, in whole or in part, have been transferred
(directly or indirectly) to one or more of the Drive Entities except for CLC's
shares in Auto-FCA and FC Consumer Finance and Auto's shares in Auto-Servicing,
Auto-FCA and Auto-ABS.
(d) No approval by the shareholders of FC is required for the
execution, delivery or performance of any of the Original SPA or any of the
Related Documents or any of the transactions contemplated by any of the
foregoing, whether pursuant to any of the Charter Documents of FC, any
agreements to which FC or any of its Affiliates is a party or otherwise bound or
by which any of their respective assets are subject, or any provision of US,
Texas or Delaware law or otherwise.
10.2 Financial Information.
(a) FC, CLC and Auto have, prior to their execution of the Original
SPA, furnished the Specified Financial Statements to the IFA Entities. The
Specified Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby and fairly
present the financial condition and results of operations (and, for those
relating to full fiscal years, cash flow, if any) of the Auto Entities on the
bases therein stated, as of the respective dates thereof and for the respective
periods covered thereby subject, in the case of unaudited financial statements,
to normal year-end audit adjustments. Except as set forth in the most recent
balance sheet constituting a part of the Specified Financial Statements (the
"Most Recent Balance Sheet"), no Auto Entity has any Indebtedness for Money
Borrowed.
(b) Except as disclosed in Schedule 2.2 to the Original SPA, (i) at the
date of the Most Recent Balance Sheet (the "Balance Sheet Date"), no Auto Entity
had any material obligations or liabilities, past, present or deferred, accrued
or unaccrued, fixed, absolute, contingent or other, except as disclosed in the
Most Recent Balance Sheet and (ii) since the Balance Sheet Date, no Auto Entity
has incurred any such obligation or liability other than obligations and
liabilities incurred in the ordinary course of business consistent with past
practice of the relevant Auto Entity, which in the case of clause (ii) could not
reasonably be expected to, in the aggregate, have an material adverse effect on
such Auto Entity or (after the Acquisition) any Drive Entity.
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(c) Upon Acquisition Effectiveness and thereafter, no Drive Entity
shall have any liability or responsibility for any pension or like obligations
of any member of the FC Group or any Auto Entity except as specifically set
forth in the Services Agreement (FC) and the Services Agreement (▇▇▇▇▇).
10.3 Changes in Condition. During the period from the Balance Sheet Date through
the Closing Date, except as specifically set forth in Schedule 2.3 to the
Original SPA, no Event has occurred that, individually or in the aggregate, has
had or (so far as the FC Parties and Auto Entities party to the Original SPA
reasonably can foresee) likely will have any material adverse effect on any Auto
Entity or the Acquisition Assets or (after the Acquisition) any Drive Entity.
10.4 Title to Properties; Leases.
(a) No Auto Entity owns any real property.
(b) One or more of the Auto Entities has good and marketable title to,
or a valid leasehold interest in, all assets, tangible and intangible, reflected
on the Most Recent Balance Sheet, or used by one or more of the Auto Entities in
its business if not so reflected, or purported to have been acquired by an Auto
Entity since the Balance Sheet Date, except inventory or receivables sold, or
property, plant and other equipment used up or retired, since the Balance Sheet
Date, in each case in the ordinary course of business consistent with past
practice of the relevant Auto Entity, free and clear of all Liens, except
Permitted Liens.
(c) Except for financing statements evidencing Permitted Liens (a true,
correct and complete list and description of which is set forth in Schedule 2.4
to the Original SPA), no financing statements under the Uniform Commercial Code
and no other filing which names any Auto Entity as debtor or which covers or
purports to cover any of the property of any Auto Entity is on file in any state
or other jurisdiction, and no Auto Entity has signed or agreed to sign any such
financing statement or filing or any security agreement authorizing any secured
party thereunder to file any such financing statement or filing.
(d) Each lease under which any Auto Entity holds real or personal
property (other than miscellaneous office equipment and the like with a fair
market value of less than $15,000) constituting a part of the assets and
property of any such Auto Entity is in full force and effect, has been duly
authorized, executed and delivered by the relevant Auto Entity, and, to its
knowledge, each of the other parties thereto, and is a legal, valid and binding
obligation of the relevant Auto Entity, and, to its knowledge, each of the other
parties thereto , enforceable in accordance with its terms, except as such
enforceability may be limited by the Enforceability Exceptions. One or more of
the Auto Entities has (and, upon Acquisition Effectiveness, one or more of the
Drive Entities will have) a valid leasehold interest in and enjoys (and, upon
and immediately after Acquisition Effectiveness, one or more of the Drive
Entities will enjoy) peaceful and undisturbed possession under all leases
pursuant to which any Auto Entity now holds any such real property or tangible
personal property, subject to the terms of each lease and Applicable Law. All of
such leases are valid and subsisting and in full force and effect; no Auto
Entity nor, to its knowledge, any other party thereto, is in default in the
performance, observance or fulfillment in any material respects of any
obligation, covenant or condition contained in any such lease.
(e) Upon Acquisition Effectiveness, Drive will be entitled to use in
its business and that of the other Drive Entities all software currently used by
Auto and the other Auto Entities in their respective businesses, including
without limitation the right to use all software and other services provided by
PeopleSoft.
10.5 Compliance with Private Authorizations. Upon Acquisition
Effectiveness, each Drive Entity will have obtained all Private Authorizations
that are necessary for the ownership or operation by
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the relevant Drive Entities of the assets and property owned or otherwise held
by the Auto Entities immediately prior to Acquisition Effectiveness or necessary
or advisable for the conduct of the business and operations of Drive Entities in
the same manner and to the same extent after Acquisition Effectiveness as was
conducted by the Auto Entities before Acquisition Effectiveness (or, with
respect to Private Authorizations which the FC Parties do not consider material,
that are able to be obtained without undue delay and at nominal cost by Drive in
the ordinary course of its business). All of such Private Authorizations are
valid and in good standing and are in full force and effect and will be in good
force and effect after Acquisition Effectiveness with respect to the Drive
Entities (or will promptly be replaced, at nominal cost, on or within 30
Business Days after Acquisition Effectiveness, by substantially identical
Private Authorizations for the Drive Entities). No Auto Entity is in breach or
violation of, or in default in the performance, observance or fulfillment of,
any such Private Authorization, and no Event exists or has occurred which
constitutes, or but for any requirement of giving of notice or passage of time
or both would constitute, such a breach, violation or default, under any such
Private Authorization, in each case except as listed on Schedule 2.5 to the
Original SPA; as of Acquisition Effectiveness, all such breaches, violations and
defaults will have been cured or duly and properly waived in writing by the
required Persons. No such Private Authorization is the subject of any pending
(or, to the knowledge of the FC Parties and Auto Entities, threatened) attack,
revocation or termination.
10.6 Compliance with Governmental Authorizations and Applicable Law.
(a) Except as set forth on Schedule 2.6(a) to the Original SPA, each
Drive Entity by the Closing Date will have obtained all Governmental
Authorizations that are necessary or advisable for the ownership of the assets
and property of Drive Entities or the conduct of the business and operations of
the Drive Entities as now conducted by Auto and proposed to be conducted after
the Closing Date by Drive. None of any Auto Entity's Governmental Authorizations
is (and none of any Drive Entity's Governmental Authorities will be) subject to
any restriction or condition that would limit in any material respect the
ownership or operations of the assets and property of the Auto Entities (or,
after the Closing, the Drive Entities) or the conduct of the business and
operations of the Auto Entities (or, after the Closing, the Drive Entities), as
currently conducted by Auto and proposed to be conducted by Drive, except for
restrictions and conditions generally applicable to Governmental Authorizations
of such type. Each of the Auto Entities' Governmental Authorizations are (and,
upon Acquisition Effectiveness, each of the Drive Entities' Governmental
Authorizations, except those listed on Schedule 2.6(a) to the Original SPA, will
be) valid and in good standing, in full force and effect and not impaired in any
material respect by any act or omission of any Auto Entity or Drive Entity or
any of their respective officers, directors, employees or, to the Relevant
Entities' knowledge, their respective agents, and the ownership and operation of
the assets and property of the Auto Entities (and, after Acquisition
Effectiveness, the Drive Entities), and the conduct of the business and
operations of the Auto Entities as currently conducted and the conduct of the
business and operations of the Drive Entities as currently conducted by the Auto
Entities and proposed to be conducted by the Drive Entities, are in accordance
in all material respects with the Governmental Authorizations. All material
reports, forms and statements required to be filed by the Auto Entities with all
Authorities have been filed and are true, complete and accurate in all material
respects. No Governmental Authorization in favor of any of the Auto Entities or
any of the Drive Entities is the subject of any pending (or, to the Relevant
Entities' knowledge, threatened) challenge or proceeding to revoke or terminate
any such Governmental Authorization. No Relevant Entity has any reason to
believe that any such Governmental Authorization will not be renewed in the name
of Auto (if requested) or reissued (at reasonable cost and without significant
restriction) in the name of Drive by the granting Authority in the ordinary
course. With respect to each Governmental Authorization listed on Schedule
2.6(a) to the Original SPA, no Relevant Party has any reason not to expect that
such Governmental Authorizations, satisfactory in form and substance to the
Relevant Entities, will not be duly issued to the appropriate Drive Entity, at
reasonable cost, (A) on or within 30 Business Days with respect to material
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Governmental Authorizations, and (B) on or within 120 Business Days with respect
to immaterial Governmental Authorizations, after Acquisition Effectiveness (or
such later date specified alongside such permit's description on said schedule).
(b) No Auto Entity is in, or charged by any Authority with, or, to the
knowledge of the FC Parties and the Auto Entities, threatened or under
investigation by any Authority with respect to, breach or violation of, or
default in the performance, observance or fulfillment of, any Applicable Law
relating to the ownership of the assets and property of the Auto Entities or the
conduct of the business or operations of the Auto Entities. No Event exists or
has occurred which constitutes, or but for any requirement of giving of notice
or passage of time or both would constitute, such a breach, violation or default
under any Governmental Authorization or any Applicable Law.
(c) Except as set forth in Schedule 2.6(c) to the Original SPA (and
except for Legal Actions involving collection efforts, repossessions,
foreclosures, bankruptcy actions of obligors under retail installment sales
contracts owned by an Auto Entity, related counterclaims and like litigation),
there are no Legal Actions of any kind pending or, to the knowledge of the FC
Parties and the Auto Entities, threatened at Law, in equity or before any
Authority, against any of the Relevant Entities or any of their respective
officers or directors, relating to the assets or property of any of the Auto
Entities or Drive Entities or the conduct of the business or operations or
proposed business or operations of any of the Auto Entities or Drive Entities.
No such Legal Action (whether listed on said schedule or excluded by virtue of
the foregoing parenthetical or otherwise), if determined adversely to the
relevant Relevant Entity, will (individually or in the aggregate) have a
material adverse effect on any of the Auto Entities or Drive Entities.
(d) No notification to, filing with or consent from the Department of
Justice or the Federal Trade Commission or any other Authority is required by
any Relevant Entity in connection with the Acquisition, the sale of the Subject
Securities or any of the other transactions contemplated by the Original SPA or
the other Related Documents (other than a filing with the SEC on Form 10-Q, Form
8-K or a similar form).
10.7 Related Transactions. No Auto Entity is, and upon Acquisition
Effectiveness no Drive Entity will be, a party or subject to any Contractual
Obligation relating to the assets or property of any of the Auto Entities or
Drive Entities, or the conduct of the business or operations of any of the Auto
Entities or Drive Entities, between any of the Auto Entities or Drive Entities
and any of the officers, directors or stockholders of any Auto Entity or Drive
Entity or, to the knowledge of the FC Parties and the Auto Entities, any member
of the Immediate Family of any thereof, or any Affiliate of any of the
foregoing, including without limitation any Contractual Obligation providing for
the furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, or guaranteed any
obligation or liability of, any such Person, other than (i) the Related
Documents, (ii) transactions with FC or CLC previously disclosed by either in
writing to IFA Parent or BOS, or (iii) or as specifically set forth in Schedule
2.7 to the Original SPA. With the IFA Entities' consent, the representations and
warranties in this paragraph are given based solely on the knowledge of Messrs.
Sartin, Hawkins, ▇▇▇▇▇, ▇▇▇▇▇▇ Woude and (based solely on a certificate to the
same effect delivered to FC by the Management Members) the Management Members.
10.8 Insurance. At Acquisition Effectiveness, all properties, assets,
business and operations of the Drive Entities will be, adequately insured as set
forth on Schedule 2.8 attached to the Original SPA.
10.9 Tax Matters. The Auto Entities have in accordance with all
Applicable Laws filed all Tax Returns which are required to be filed, and have
paid, or made adequate provision for the payment of,
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all Taxes which have or may become due and payable pursuant to said Tax Returns
and all other governmental charges and assessments received to date other than
those Taxes being contested by appropriate proceedings in good faith for which
adequate provision has been made on the Most Recent Balance Sheet; (b) the Tax
Returns of the Auto Entities have been prepared in all material respects in
accordance with all Applicable Laws; (c) all Taxes which the Auto Entities are
required by Law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable; and (d) adequate provision has been made on the Most
Recent Balance Sheet for all Taxes (if any) accrued through the date of such
balance sheet of any kind, including interest and penalties in respect thereof,
whether disputed or not, and whether past, current or deferred, accrued or
unaccrued, fixed, contingent, absolute or other, and there are, to the knowledge
of the FC Parties and the Auto Entities, no past transactions or matters which
could result in additional Taxes of a material nature to the Auto Entities or
any Drive Entity for which an adequate reserve has not been provided on such
balance sheet. No Relevant Entity is a "consenting corporation" within the
meaning of Section 341(f) of the Code. No Drive Entity is, or upon Acquisition
Effectiveness will be, a party to any Tax sharing agreement or arrangement.
10.10 ERISA.
(a) Upon Acquisition Effectiveness, all employees of the Drive Entities
who were employees of each Auto Entity shall remain participants in the relevant
employee benefits plans and programs previously provided by FC and/or the Auto
Entities to employees of the Auto Entities and no Drive Entity shall incur any
obligation to any such individual under any such plan or program, or under
applicable Law, for any period prior to August 1, 2000.
(b) (i) All Plans and Benefit Arrangements maintained by any Auto
Entity or FC Entity for which any of the Drive Entities shall be in any way
responsible comply and have been administered in form and in operation, in all
material respects, in accordance with their respective terms and with all
Applicable Laws and no Auto Entity or any FC Party has received any written
notice from any Authority disputing or investigating such compliance. None of
the assets of any such Plan or Benefit Arrangement are invested in employer
securities or employer real property. There are no claims (other than routine
claims for benefits or actions seeking qualified domestic relations orders)
pending or, to any Relevant Entity's knowledge, threatened involving such Plans
or Benefit Arrangements or the assets of such Plans, and, to the Relevant
Entities' knowledge, no facts exist which are reasonably likely to give rise to
any such claims (other than routine claims for benefits or actions seeking
qualified domestic relations orders);
(ii) All material contributions to, and material payments
from, such Plans and Benefit Arrangements that may have been required
to be made in accordance with the terms of such Plans and Benefit
Arrangements, and any applicable collective bargaining agreement, have
been made. All such contributions to, and payments from, such Plans and
Benefit Arrangements, except those payments to be made from a trust
qualified under Section 401(a) of the Code, for any period ending
before the Closing Date that are not yet, but will be, required to be
made, will be properly accrued and reflected on the financial books and
records of an FC Party or an Auto Entity;
(iii) No Event has occurred which would result in imposition
on any Auto Entity or Drive Entity of (A) any breach of fiduciary duty
liability damages under Section 409 of ERISA, (B) a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of
ERISA or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of the
Code; and
(iv) No current or former employee of any Auto Entity will be
entitled to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any
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such Plan or Benefit Arrangement as a result of the transactions
contemplated by the Original SPA or any Related Document other than,
upon any termination of the employment of any employee of such Auto
Entity, any vesting that may be required pursuant to Section 411 of the
Code or health care continuation coverage required pursuant to Section
4980B of the Code. All 401(k) benefits have been funded through July
31, 2000.
10.11 Employee Relations. No Auto Entity is party to any written
Contract with any of its officers, directors or employees other than for an
employment contract with ▇▇▇▇▇▇ ▇▇▇▇▇▇ that is to terminate on the Closing Date.
There are no commitments to have any employment contract between any Drive
Entity and any individual other than ▇▇▇▇▇▇ ▇▇▇▇▇▇. None of any Auto Entity's
employees ("Auto Employees"), as such, is now, or in the past five years has
been, represented by any labor union or other employee collective bargaining
organization, and no Auto Entity is, or ever has been, a party to any labor or
other collective bargaining agreement with respect to any of their respective
employees. There are no pending grievances, disputes or controversies with any
union or any other employee or collective bargaining organization of such
employees, or any threats of strikes, work stoppages or slowdowns by any Auto
Employees, or any pending demands for collective bargaining by any union or
other organization. No Auto Entity is now, nor in the last five years has been,
subject to or involved in or, to the knowledge of the FC Parties and the Auto
Entities, threatened with, any union elections, petitions therefor or other
organizational or recruiting activities, in each case with respect to its
employees.
10.12 Material Contracts. Listed on Schedule 2.12 to the Original SPA
are all Contracts material to the business, assets, operations, financial
condition or results of operation of each Auto Entity (each a "Material
Contract") to which any Auto Entity is a party or to which it is bound or which
any of the assets or property of any Auto Entity is subject. True, accurate and
complete copies of each of such Material Contracts have been made available by
the Auto Entities to IFA Parent, and Auto has provided IFA Parent with
photocopies of all such Material Contracts requested by IFA Parent. All such
Material Contracts (other than those of Auto-FCAR and the Securitization
Subsidiaries) are being assigned to Drive or another Drive Entity as part of the
Acquisition or, if currently owned by a Subsidiary of Auto or a Securitization
Subsidiary which after the Closing Date will be a Subsidiary of Drive, will
continue to be owned by such Subsidiary. No Material Contract is terminable, by
its terms or at the option of any other party thereto , by virtue of the
Acquisition (or, if any is so terminable at another's option, that Person's
consent to its assignment has been obtained and a copy thereof provided to
IFA-GP or IFA Parent). All of the Material Contracts are valid, binding and
legally enforceable obligations of the Auto Entities party thereto and, to the
knowledge of the FC Parties and the Auto Entities, all other parties thereto,
except as such enforceability may be limited by the Enforceability Exceptions.
No Auto Entity nor, to the knowledge of the FC Parties and the Auto Entities,
any other party thereto, has failed to duly comply with all of the terms and
conditions of each such Material Contract or has done or performed, or failed to
do or perform (and no claim is pending or, to the knowledge of the FC Parties
and the Auto Entities, threatened in writing to the effect that an Auto Entity
has not so complied, done and performed or failed to do and perform) any act
which would invalidate or provide grounds for the other party thereto to
terminate (with or without notice, passage of time or both) such Material
Contract or impair the rights or benefits, or materially increase the costs, of
the Auto Entities (or, after the Acquisition, of the Drive Entities) under any
such Material Contract, except where the failure to so comply or perform would
not, individually or in the aggregate, have a material adverse effect on any
Auto Entity or any Drive Entity. No Auto Entity is in breach or violation of, or
in default in the performance, observance or fulfillment of, any such Material
Contract, and no Event exists or has occurred which constitutes, or but for any
requirement of giving of notice or passage of time or both would constitute,
such a breach, violation or default, under any such Material Contract, in each
case except as listed on said Schedule 2.12 to the Original SPA; as of
Acquisition Effectiveness, all such breaches, violations and defaults will have
been cured or duly and properly waived in writing by the required Persons.
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10.13 Ordinary Course of Business. Each Auto Entity, from the Balance
Sheet Date through the Closing Date, except (i) as may be described in Schedule
2.13 to the Original SPA, or (ii) as may be required or expressly contemplated
by the terms of the Original SPA and the Related Documents:
(a) has operated its business in all material respects in the normal,
usual and customary manner in the ordinary and regular course of business,
consistent with the prior practice of the Auto Entities;
(b) except (in each case) as disclosed to IFA Parent:
(i) has not incurred any obligation or liability (fixed,
contingent or other) (x) in excess of $50,000, or (y) if less than that
amount, in the ordinary course of business consistent with prior
practice;
(ii) has not sold or otherwise disposed of or contracted to
sell or otherwise dispose of any of its properties or assets (x) with a
fair market value in excess of $50,000 or (y) if less than that amount,
in the ordinary course of business consistent with prior practice;
(iii) has not entered into any individual material commitments
in excess of $50,000 or (other than in the ordinary course of business
consistent with prior practice) any material commitments in excess of
$50,000 in the aggregate; and
(iv) has not canceled any material debts or claims except in
the ordinary course of business consistent with prior practice.
(c) has not created or permitted to be created any Lien on any of the
assets or property of any of the Auto Entities or any of the Drive Entities,
except for Permitted Liens;
(d) has not made or committed to make any additions to its property or
any purchases of equipment, except in the ordinary course of business consistent
with past practice or for normal maintenance and replacements;
(e) has not increased the compensation payable or to become payable to
any of its employees (other than Management Members) other than nonmaterial
increases in the ordinary course of business, or otherwise materially altered,
modified or changed the terms of their employment, in each case other than (x)
as set forth in Schedule 2.13(e) to the Original SPA or (y) as previously
disclosed in writing by FC to IFA Parent;
(f) has not suffered any material damage, destruction or loss (whether
or not covered by insurance) or any acquisition or taking of property by any
Authority;
(g) has not waived any rights of material value without fair and
adequate consideration;
(h) has not experienced any work stoppage;
(i) has not entered into, amended or terminated any Contract or
arrangement with any Affiliate of any of the FC Parties or Auto Entities or,
except in the ordinary course of business, has not entered into, amended or
terminated any Governmental Authorization, Private Authorization, or material
Plan or Benefit Arrangement;
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(j) (as to the Drive Entities only, and from their respective dates of
organization through the date of the IFA Entities purchase of the Subject
Securities hereunder) has not issued or sold, or agreed to issue or sell, any
equity interests (whether capital stock, membership interests, partnership
interests, convertible securities, Option Securities or otherwise) except (1)
the issuance of 80% of Drive GP's Membership Interests to CLC and 20% to MG-LLC,
(2) the issuance of approximately 81% (directly and indirectly) of the Limited
Partnership Interests in Drive-LP to CLC and Auto and approximately 18.5% to
MG-LP;
(k) has not made, paid or declared any Distribution, other than a cash
distribution in an amount between five and seven million dollars contemplated to
be made on the Closing Date by Auto to CLC from the proceeds of a loan in the
same amount to be made by CLC to Auto on such date;
(l) has not entered into any transaction or series of related
transactions which individually or in the aggregate is material to the assets
and property of any of the Auto Entities or any of the Drive Entities or the
conduct of the business or operations of any of the foregoing, other than the
Related Documents and the transactions contemplated by the Related Documents;
and
(m) has not assumed any liability of any third party, except (x) by
subsidiaries of Auto, liabilities in connection with securitized receivables in
the ordinary course of business consistent with prior practice, (y) liabilities
of Auto Entities assumed by Drive Entities pursuant to Transfer Agreements and
listed on Schedule 2.13(m) to the Original SPA; and (z) as may be required or
expressly contemplated by the terms of the Original SPA and the Related
Documents.
10.14 Disclosure. Neither the Original SPA nor any certificate,
document or schedule furnished by or on behalf of any Relevant Entity in
connection with the Original SPA (but excluding the Projections), taken as a
whole, contains any untrue statement of a material fact or omits to state a
material fact required to be stated in the Original SPA or therein or necessary
in order to make the statements contained in the Original SPA or therein, in
light of the circumstances in which they are made, not misleading.
10.15 Environmental Matters. Each Auto Entity is in compliance in all
material respects with all Environmental Laws, and is not the subject of or, to
the knowledge of the FC Parties and the Auto Entities, threatened with any Legal
Action involving a demand for damages or other potential liability, including
any Lien, with respect to violations or breaches of any Environmental Law.
10.16 Capital Stock. The authorized capital structure of each Auto
Entity and each Drive Entity is as set forth in Schedule 2.17 to the Original
SPA. All such outstanding equity interests have been duly authorized, validly
issued, fully paid and nonassessable; none is subject to any preemptive or
similar rights and are owned of record and as shown in said Schedule. No Drive
Entity has granted or issued, or agreed to grant or issue, any equity interests
(capital stock, membership interests, partnership interests, Option Securities,
Convertible Securities or otherwise) other than as listed in clauses (1) and (2)
of Section 2.13(j) of the Original SPA, and no Drive Entity is party to or bound
by any agreement, put or commitment pursuant to which it is obligated to
purchase, redeem or otherwise acquire any such equity interest (except as set
forth in said Section 2.13(j) to the Original SPA). No Drive Entity, FC Party or
Auto Entity is, nor to the knowledge of the foregoing no other equity holder in
any Drive Entity is, party to any stockholders or similar agreement or other
Contract relating to the pledge, disposition or voting of any equity interests
in any of the Drive Entities, other than the Shareholders Agreement, and (except
for the foregoing two Contracts) there are no voting trusts or voting agreements
with respect to any such equity interests. All of the issued and outstanding
Membership Interests, Limited Partnership Interests, general partnership
interest and shares of capital stock of the Drive Entities were issued in
compliance with Applicable Laws and not in violation of any preemptive or
similar rights. Neither Auto nor Auto-GP has any Subsidiaries except as listed
on Schedule 2.17 to the Original SPA, and neither Drive-GP nor Drive-LP
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has any Subsidiaries except as listed on such schedule. Schedules 2.1(c) and
2.17 to the Original SPA, collectively, accurately set forth the equity owners
of record of each of the Auto Entities.
10.17 Inapplicability of Specified Statutes. No Auto Entity is, and
upon Acquisition Effectiveness no Auto Entity or Drive Entity will be, a
"holding company" or a "subsidiary company" or an "affiliate" of a "holding
company" as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or an "investment company" or a company "controlled" by or
acting on behalf of an "investment company", as defined in the Investment
Company Act of 1940, as amended. No Auto Entity is, and upon Acquisition
Effectiveness no Auto Entity or Drive Entity will be, engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations T and U of the Board of Governors of the
Federal Reserve System.
10.18 Notices to Creditors. Neither CLC nor any Auto Entity is
required by applicable law to deliver any notice to any creditor of CLC or any
of the Auto Entities (respectively), or to any state or local taxing authority,
stating that it is about to transfer substantially all of its assets.
10.19 Other Representations. Incorporated in this Annex A by
reference, as fully as if the same were set forth at length in this Annex A and
made directly to IFA Parent and each IFA Entity, are each of the representations
and warranties made by each Auto Entity in each Transfer Agreement, including
without limitation the representations and warranties set forth in Section 5 of
the Residuals Agreement (CLC) and Section 5 of the Asset Acquisition Agreement
(Auto).
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