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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE KING MANAGEMENT CORPORATION
AND
SUNRISE INTERNATIONAL LEASING CORPORATION
DATED AS OF JANUARY 31, 2000
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TABLE OF CONTENTS
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ARTICLE 1. THE MERGER; CANCELLATION AND CONVERSION OF SECURITIES............................................1
1.1. The Merger..........................................................................................1
1.2. The Closing.........................................................................................1
1.3. Effective Time......................................................................................2
1.4. Effects of the Merger...............................................................................2
1.5. Certificate of Incorporation of the Surviving Corporation...........................................2
1.6. Bylaws of the Surviving Corporation.................................................................2
1.7. Directors and Officers of the Surviving Corporation.................................................2
1.8. Cancellation and Conversion of Securities...........................................................2
1.9. Dissenting Shares...................................................................................3
1.10. Surrender of Securities; Funding of Payments; Stock Transfer Books..................................3
1.11. Stock Options.......................................................................................5
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................5
2.1. Disclosure Schedule.................................................................................6
2.2. Organization and Qualification......................................................................6
2.3. Authorization and Enforceability....................................................................6
2.4. Capitalization......................................................................................7
2.5. SEC Filings and Financial Statements................................................................7
2.6. Absence of Undisclosed Liabilities..................................................................8
2.7. Consents and Approvals..............................................................................8
2.8. Compliance with Laws................................................................................8
2.9. Litigation..........................................................................................9
2.10. Absence of Material Adverse Changes.................................................................9
2.11. Disclosure Documents................................................................................9
2.12. Merger Filings......................................................................................9
2.13. Vote Required......................................................................................10
2.14. Company Action.....................................................................................10
2.15. State Takeover Laws................................................................................10
2.16. Rights Plan........................................................................................10
2.17. Fairness Opinion...................................................................................10
2.18. No Finders.........................................................................................10
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY..................................10
3.1. Organization and Qualification.....................................................................10
3.2. Authorization and Enforceability...................................................................11
3.3. Consents and Approvals.............................................................................11
3.4. Disclosure Documents...............................................................................11
3.5. Merger Filings.....................................................................................12
3.6. No Vote Required...................................................................................12
3.7. Financing..........................................................................................12
3.8. No Finders.........................................................................................12
ARTICLE 4. COVENANTS.......................................................................................12
4.1. No Solicitation....................................................................................12
4.2. Stockholders Meeting; Proxy Statement..............................................................13
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TABLE OF CONTENTS
(continued)
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4.3. Access to Information..............................................................................14
4.4. Consents...........................................................................................14
4.5. Expenses...........................................................................................14
4.6. Further Actions....................................................................................14
4.7. Regulatory Approvals...............................................................................14
4.8. Certain Notifications..............................................................................15
4.9. Officers' and Directors' Indemnification...........................................................15
4.10. Financing..........................................................................................15
ARTICLE 5. CLOSING CONDITIONS..............................................................................15
5.1. Conditions to Obligations of Parent, Merger Subsidiary and the Company.............................15
5.2. Conditions to Obligations of Parent and Merger Subsidiary..........................................16
5.3. Conditions to Obligations of the Company...........................................................16
ARTICLE 6. TERMINATION AND ABANDONMENT.....................................................................17
6.1. Termination........................................................................................17
6.2. Effect of Termination..............................................................................18
ARTICLE 7. MISCELLANEOUS...................................................................................19
7.1. Amendment and Modification.........................................................................19
7.2. Waiver.............................................................................................19
7.3. Notices............................................................................................19
7.4. Assignment.........................................................................................20
7.5. Governing Law......................................................................................20
7.6. Counterparts.......................................................................................20
7.7. Knowledge..........................................................................................20
7.8. Interpretation.....................................................................................21
7.9. Publicity..........................................................................................21
7.10. Entire Agreement...................................................................................21
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
January 31, 2000, by and between THE KING MANAGEMENT CORPORATION, a Minnesota
corporation (the "Acquiror"), and SUNRISE INTERNATIONAL LEASING CORPORATION, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Acquiror and the
Company have both approved and adopted this Agreement and the transactions
contemplated hereby, including the merger of the Company with and into the
Acquiror (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, the Board of Directors of the Company (the "Company Board"),
based upon the recommendation of a special committee of independent directors of
the Company Board (the "Special Committee"), has determined that this Agreement
and the transactions contemplated hereby, including the Merger, are advisable
and are fair to and in the best interests of the Company's stockholders (other
than the Acquiror);
WHEREAS, certain persons and entities affiliated with the Acquiror have
entered into an Agreement to Facilitate the Merger (the "Agreement to
Facilitate") pursuant to which they have agreed, among other things, to vote all
of their shares of Company stock in favor of the Merger;
WHEREAS, pursuant to the Agreement to Facilitate, between the date of
this Agreement and prior to the Effective Time of the Merger, the shareholders
of the Acquiror will contribute all of the outstanding shares of common stock of
the Acquiror to a newly-formed Minnesota corporation (the "Parent"), which will
thereafter own all of the outstanding shares of common stock of the Acquiror;
WHEREAS, also pursuant to the Agreement to Facilitate, between the date
of this Agreement and prior to the Effective Time of the Merger, the
shareholders of the Acquiror will contribute all of their shares of Company
stock to the Parent, which will thereafter contribute these shares of Company
stock to the Acquiror; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto intending to be legally bound hereby, agree as follows:
ARTICLE 1.
THE MERGER; CANCELLATION AND CONVERSION OF SECURITIES
1.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the General Corporation Law of the
State of Delaware ("DGCL") and the Minnesota Business Corporation Act (the
"MBCA"), at the Effective Time (as defined in Section 1.3 hereof), the Company
will merge with and into the Acquiror. As a result of the Merger, the separate
corporate existence of the Company will cease and the Acquiror will continue as
the surviving corporation (the "Surviving Corporation") in accordance with the
DGCL and the MBCA.
1.2. The Closing. Unless this Agreement will have been terminated and
the transactions herein contemplated will have been abandoned pursuant to
Section 6.1 hereof and subject to the
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satisfaction or waiver of the conditions set forth in Article 5, the closing of
the Merger (the "Closing") will take place at 10:00 a.m., local time, on the day
the Merger is approved by the stockholders of the Company at the Stockholders
Meeting (as defined in Section 4.2 hereof), or as soon thereafter as all
conditions to the Closing have been satisfied or waived, or on such other date
and/or at such other time as the Acquiror and the Company may mutually agree.
The date on which the Closing actually occurs is herein referred to as the
"Closing Date." The Closing will take place at the offices of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP, Plaza VII Building, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place or in such other manner (e.g., by
telecopy exchange of signature pages with originals to follow by overnight
delivery) as the parties hereto may agree.
1.3. Effective Time. At the Closing, the Company and the Acquiror will
file, or cause to be filed, with the Secretaries of State of the States of
Delaware and Minnesota a certificate or articles of merger or other appropriate
documents (in any such case, the "Certificates of Merger"), substantially in the
form set forth in Exhibit A attached hereto, and executed in accordance with,
the relevant provisions of the DGCL and the MBCA. The parties will take such
other and further actions as may be required by law to make the Merger
effective. The Merger will become effective at the time of such filing or, if
agreed to by the Acquiror and the Company, at such later time or date as is set
forth in the Certificates of Merger (the date and time the Merger becomes
effective being herein referred to as the "Effective Time").
1.4. Effects of the Merger. At and after the Effective Time, the Merger
will have the effects set forth in the DGCL and the MBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and the
Acquiror will vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and the
Acquiror will become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.5. Articles of Incorporation of the Surviving Corporation. At the
Effective Time, the Articles of Incorporation of the Acquiror, as in effect
immediately prior to the Effective Time, will be the Articles of Incorporation
of the Surviving Corporation until thereafter amended in accordance with
applicable law and the provisions of such Articles of Incorporation.
1.6. Bylaws of the Surviving Corporation. At the Effective Time, the
Bylaws of the Acquiror, as in effect immediately prior to the Effective Time,
will be the Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law, the provisions of the Articles of Incorporation
of the Surviving Corporation and such Bylaws.
1.7. Directors and Officers of the Surviving Corporation. The directors
and officers of the Acquiror immediately prior to the Effective Time will be the
directors and officers, respectively, of the Surviving Corporation, in each case
until their respective successors are elected or appointed and qualified.
1.8. Cancellation and Conversion of Securities. At the Effective Time,
automatically by virtue of the Merger and without any further action on the part
of the Company, the Acquiror, the Surviving Corporation or any holder of any of
the following securities:
(a) Each share of the Company's common stock, par value $.01 per
share ("Company Common Stock"), issued and outstanding immediately
prior to the Effective Time (other than any shares of Company Common
Stock cancelled pursuant to Section 1.8(b) and Dissenting Shares (as
defined in Section 1.9 hereof)) will be cancelled, retired and
converted into and become a right to receive from the Acquiror $5.25 in
net cash per share, without any interest thereon and less any required
withholding taxes (the "Merger Consideration"), upon surrender of
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the certificate formerly representing such share of Company Common
Stock in the manner provided in Section 1.10.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is held in treasury of the
Company or is then owned beneficially or of record by the Acquiror or
any direct or indirect subsidiary of the Acquiror or the Company, will
be cancelled and retired without payment of any consideration therefor
and without any conversion thereof.
(c) Each share of any other class of capital stock of the Company
(other than Company Common Stock) will be cancelled and retired without
payment of any consideration therefor and without any conversion
thereof.
1.9. Dissenting Shares. Notwithstanding any provision of this Agreement
to the contrary, any shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time that are held by a stockholder who has
not voted in favor of the Merger and has properly exercised and perfected such
holder's demand for appraisal rights in accordance with Section 262 of the DGCL
(the "Dissenting Shares") and as of the Effective Time has neither effectively
withdrawn nor lost such holder's right to such appraisal will not be converted
into the right to receive the Merger Consideration, but will become entitled to
the right to receive such consideration as may be determined to be due to the
holder of such Dissenting Shares pursuant to the DGCL; provided, however, that
any holder of Dissenting Shares who fails to perfect or who effectively
withdraws or loses such rights of appraisal under the DGCL will forfeit the
right to appraisal of such shares, and such shares of Company Common Stock will
no longer be Dissenting Shares and will be deemed to have been converted into
the right to receive, at the Effective Time, the Merger Consideration set forth
in Section 1.8(a) hereof. The Company will give the Acquiror (i) prompt written
notice of any demands for appraisal, withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by the Company, and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. The Company will not, except with the
prior written consent of the Acquiror, voluntarily make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
1.10. Surrender of Securities; Funding of Payments; Stock Transfer
Books.
(a) Prior to the Effective Time, the Acquiror will appoint the
Company's stock transfer agent, or such other bank or trust company as
the Acquiror may choose to appoint, to act as paying agent (the "Paying
Agent"), for the purpose of exchanging certificates that immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock ("Company Certificates") for the Merger Consideration.
When and as needed, the Surviving Corporation will make available to
the Paying Agent sufficient funds to make the payments pursuant to
Section 1.8 hereof to holders of shares of Company Common Stock that
are issued and outstanding immediately prior to the Effective Time
(such amounts being hereinafter referred to as the "Exchange Fund"),
and to make the appropriate cash payments, if any, to holders of
Dissenting Shares. The Paying Agent will invest the Exchange Fund as
the Acquiror directs; provided, however, that substantially all such
investments will be in direct obligations of the United States of
America, obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of all
principal and interest, commercial paper obligations receiving the
highest rating from either ▇▇▇▇▇'▇ Investors Services, Inc. or Standard
& Poor's Corporation, or certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital
exceeding $10 billion. The Exchange Fund will not be used for any other
purpose, except as provided in this Agreement.
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(b) The Acquiror agrees that, promptly after the Effective Time, the
Acquiror will cause the Paying Agent to mail to each holder of record
(other than the Company, the Acquiror or any direct or indirect subsidiary
of the Acquiror or the Company) of Company Certificates a form letter of
transmittal for use in effecting the surrender of the Company Certificates
in exchange for payment of the Merger Consideration.
(c) Upon the surrender to the Paying Agent of each such Company
Certificate formerly representing shares of Company Common Stock, together
with a duly completed and executed letter of transmittal, the Paying Agent
will pay to the holders of such Company Certificates the Merger
Consideration for each share of Company Common Stock formerly represented
by such Company Certificate, less any amounts required to be held pursuant
to applicable tax laws, and the Company Certificate(s) so surrendered will
be cancelled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the transfer records of the Company, it
will be a condition to the payment of the Merger Consideration that the
Company Certificate(s) so surrendered will be properly endorsed or be
otherwise in proper form for transfer and that such transferee will (i) pay
to the Paying Agent any transfer or other taxes required, or (ii) establish
to the satisfaction of the Paying Agent that such tax has been paid or is
not payable.
(d) At the Effective Time, the stock transfer books of the Company
will be closed and after the Effective Time, there will be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Company Certificates representing such shares are presented to the
Surviving Corporation, they will be cancelled and exchanged as provided in
Section 1.8 hereof. As of the Effective Time, the holders of Company
Certificates representing shares of Company Stock will cease to have any
rights as stockholders of the Company, except such rights, if any, as they
may have pursuant to the DGCL. Except as provided above, until such Company
Certificates are surrendered for exchange, each such Company Certificate
will, after the Effective Time, represent for all purposes only the right
to receive the Merger Consideration, without interest and subject to any
required withholding of taxes.
(e) In the event any Company Certificates will have been lost, stolen
or destroyed, the Paying Agent will issue in exchange for such lost, stolen
or destroyed Company Certificates, upon the making of an affidavit of that
fact by the holder thereof, such Merger Consideration as may be required
pursuant to this Section 1.10; provided, however, that the Acquiror may, in
its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Company Certificate to
deliver a bond in such sum as the Acquiror may direct as indemnity against
any claim that may be made against the Acquiror or the Paying Agent with
respect to such Company Certificate alleged to have been lost, stolen or
destroyed.
(f) After the Effective Time, no dividends, interest or other
distributions will be paid to the holder of any unsurrendered Company
Certificates.
(g) At any time following six months after the Effective Time, the
Surviving Corporation will be entitled to require the Paying Agent to
deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and not
disbursed to holders of shares of Company Common Stock, and thereafter such
holders will be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Company Certificates, without any interest thereon. None
of the Surviving Corporation, the Acquiror or the Paying Agent will be
liable to any holder of a share of
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Company Common Stock for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
laws.
1.11. Stock Options.
(a) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any committee thereof) will adopt appropriate
resolutions and use its best efforts to take all other actions necessary to
provide for the cancellation, effective at the Effective Time, of all the
outstanding stock options to purchase Company Common Stock (the "Options")
granted under the Company's 1991 Stock Option Plan, as amended (the "Option
Plan"). The Company will use its best efforts to ensure that each such
Option, whether or not then vested or exercisable, will at the Effective
Time no longer be exercisable for the purchase of shares of Company Common
Stock. Each holder of an Option which is vested at the Effective Time,
however, in cancellation and settlement thereof, shall have the right to
receive from the Surviving Corporation a cash payment (less any applicable
withholding taxes) in the aggregate amount equal to the product of (i) the
number of shares of Company Common Stock into which such Option would have
been exercisable at the Effective Time if such Option had not been
cancelled and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share for the shares of Company Common Stock subject to
such Option as expressly stated in the applicable stock option agreement or
other agreement, without any interest thereon (the "Option Consideration").
The Company will take such other actions as are necessary to fully advise
holders of Options of their rights under this Agreement and the Options, to
facilitate their timely exercise of such rights and to effectuate the
provisions of this Section 1.11. Prior to the Effective Time, the Acquiror
and the Company will establish a procedure to effect the surrender of
Options in exchange for the Option Consideration to which the holder of an
Option will be entitled under this Section 1.11, and, upon surrender of
such Option, the Surviving Corporation will pay to the holder thereof in
cash the amount of the Option Consideration, if any, to which such holder
will be entitled thereunder. Other than as expressly set forth in this
Section 1.11, no holder of an Option will have from and after the Effective
Time any other rights in respect thereof other than to receive payment for
his or her Options equal to the Option Consideration, and the Company will
take all necessary actions to terminate effective as of the Effective Time
the Company's stock option plans, agreements and similar arrangements.
(b) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any committee thereof) will adopt appropriate
resolutions and use its best efforts to take all other actions necessary to
provide for the cancellation, effective at the Effective Time, of all
outstanding stock options to purchase Company Common Stock not granted
under the Option Plan (the "Non-Plan Options"). The Company will use its
best efforts to ensure that each such Non-Plan Option, whether or not then
vested or exercisable, will at the Effective Time no longer be exercisable
and will terminate and be cancelled. Other than as expressly set forth in
this Section 1.11, no holder of a Non-Plan Option will have from and after
the Effective Time any other rights in respect thereof, and the Company
will take all necessary actions to terminate effective as of the Effective
Time the Company's stock option agreements and similar arrangements with
respect to the Non-Plan Options.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule referred to in Section 2.1
hereof, the Company represents and warrants to the Acquiror as of the date
hereof as follows:
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2.1. Disclosure Schedule. The Company has heretofore delivered to the
Acquiror a disclosure schedule (the "Disclosure Schedule") which is divided
into sections which correspond to the sections of this Article 2. The
Disclosure Schedule is true, accurate and complete in all material
respects. Any item, information or facts set forth in the Disclosure
Schedule will be deemed adequate to disclose an exception to a
representation and warranty unless a reasonable person would not understand
the exception taken from the item, information or facts provided; provided,
however, the mere listing (or inclusion of a copy) of a document or other
item will not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation or
warranty has to do with the existence of the document or other item
itself). In addition, any item, information or facts disclosed in one
subsection of the Disclosure Schedule will be deemed to be disclosed in all
other applicable subsections of the Disclosure Schedule; provided, that
such item, information or fact has been initially disclosed in such a
manner that a reasonable person could infer that the inclusion of such
information in such additional subsection would be warranted.
2.2. Organization and Qualification. To the Company's knowledge, the
Company and each subsidiary of the Company (referred to herein as a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and
has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. To the
Company's knowledge, the Company and each Subsidiary is duly qualified and
in good standing to do business in each jurisdiction in which the property
owned, leased, or operated by it or the nature of the business conducted by
it makes such qualification necessary and where the failure to qualify
could reasonably be expected to have a Company Material Adverse Effect (as
defined below). "Company Material Adverse Effect" means any effect, change
or event that, individually or in the aggregate with all similar effects,
changes or events, is or would be material and adverse: (i) either before
or immediately after the Effective Time, to the business, properties,
liabilities, results of operation, or financial condition of the Company
and its Subsidiaries, considered as a whole; (ii) to the ability of the
Acquiror or the Surviving Corporation to conduct such business, as
presently conducted, immediately following the Effective Time; or (iii) to
the Company's ability to perform any of its obligations under this
Agreement or which threatens or is or would reasonably be expected to
impede the Company's ability to consummate the Merger. The Company has
heretofore delivered to the Acquiror complete and accurate copies of the
Certificate of Incorporation and Bylaws of the Company and each Subsidiary,
as currently in effect. Except to the extent specifically disclosed on the
Disclosure Schedule, or any entity in which the Company owns, directly or
indirectly, an equity interest of less than 1% of the fair market value of
such entity's outstanding equity securities, to the Company's knowledge,
neither the Company nor any Subsidiary, directly or indirectly, owns or
controls or has any capital, equity, partnership, participation or other
ownership interest in any corporation, partnership, joint venture or other
business association or entity.
2.3. Authorization and Enforceability. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and,
subject to obtaining the necessary approval of its stockholders, the
requisite corporate power and authority to consummate the transactions
contemplated hereby and to file and distribute the Proxy Statement (as
defined in Section 4.2 hereof). The execution and delivery of this
Agreement by the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by
the Company Board, no other corporate proceedings on the part of the
Company (other than stockholder approval) or any Subsidiary are necessary
to authorize this Agreement and, subject to obtaining the approval of the
Company's stockholders, no other corporate action on the part of the
Company or any Subsidiary is necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors'
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rights generally and rules of law governing specific performance,
injunctive relief or other equitable remedies.
2.4. Capitalization. The authorized capital stock of the Company
consists of (i) 17,500,000 shares of Company Common Stock, of which
6,636,253 shares are issued and outstanding as of January 24, 2000 and (ii)
2,500,000 shares of undesignated preferred stock, par value $.01 per share,
none of which are issued or outstanding. All issued and outstanding shares
of capital stock of each Subsidiary are owned, beneficially and of record,
by the Company, free and clear of any pledge, security interest,
encumbrance, lien, claim or charge of any kind ("Lien"). All issued and
outstanding shares of Company Common Stock have been validly issued, are
fully paid and nonassessable and have not been issued in violation of and
are not currently subject to any preemptive rights. Except as set forth on
the Disclosure Schedule, there are not, to the Company's knowledge, any
outstanding or authorized subscriptions, options, warrants, calls, rights,
convertible securities, commitments, restrictions, arrangements or any
other agreements of any character to which the Company or any Subsidiary is
a party that, directly or indirectly, (i) obligate the Company or any
Subsidiary to issue any shares of capital stock or any securities
convertible into, or exercisable or exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock, (ii) call for or
relate to the sale, pledge, transfer or other disposition or encumbrance by
the Company or any Subsidiary of any shares of its capital stock, or (iii)
relate to the voting or control of such capital stock. To the Company's
knowledge, the Disclosure Schedule sets forth a complete and accurate list
of all stock options, warrants and other rights to acquire Company Common
Stock or any other shares of capital stock of the Company, including the
name of the holder, the date of grant, acquisition price, expiration date,
number of shares, exercisability schedule and, in the case of options, the
type of option under the Internal Revenue Code of 1986, as amended. To the
Company's knowledge, the Disclosure Schedule also sets forth the
contractual restrictions to which any shares of Company Common Stock issued
pursuant to the Option Plan or other option arrangements are currently
subject and also sets forth the restrictions to which such shares will be
subject immediately after the Effective Time, other than as set forth in
the Option Plan or stock option agreements thereunder. No consent of
holders or participants under the Option Plan or other stock option
agreements is required to carry out the provisions of Section 1.11 hereof.
All actions, if any, required on the part of the Company under the Option
Plan to allow for the treatment of Options as is provided in Section 1.11
hereof, has been, or prior to the Closing will be, validly taken by the
Company. All actions, if any, required on the part of the Company to allow
for the treatment of Non-Plan Options as is provided in Section 1.11
hereof, has been, or prior to the Closing will be, validly taken by the
Company.
2.5. SEC Filings and Financial Statements. To the Company's knowledge,
the Company has filed all forms, reports, registration statements and
documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") since January 1, 1996 (such forms, reports,
registration statements and documents, together with any amendments
thereto, are referred to as the "Company SEC Filings"). As of their
respective dates, the Company SEC Filings, to the Company's knowledge, (i)
complied as to form in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act") and the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), as the case may be, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements
included or incorporated by reference in the Company SEC Filings, including
but not limited to the Company's audited financial statements at and for
the fiscal year ended March 31, 1999 (the "Company 1999 Financials"), to
the Company's knowledge (i) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes
thereto), subject, in the case of unaudited interim financial statements,
to the absence of notes and to year-end adjustments, (ii) complied as of
their respective dates in all material respects with applicable accounting
requirements and the
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published rules and regulations of the SEC with respect thereto, and (iii)
fairly presented the consolidated financial position of the Company as of the
dates thereof and the income, cash flows and changes in stockholders' equity for
the periods involved. To the Company's knowledge, the statements of earnings
included in the audited or unaudited interim financial statements in the Company
SEC Filings do not contain any items of special or nonrecurring income or any
other income not earned in the ordinary course of business, except as expressly
specified in the applicable statement of operations or notes thereto. The
Company has also previously delivered to the Acquiror complete and accurate
copies of all statements on Schedule 13D and Schedule 13G known to the Company
to have been filed with the SEC since January 1, 1996, with respect to the
capital stock of the Company. Since January 1, 1996, the Company has filed in a
timely manner all reports required to be filed by it pursuant to Sections 13, 14
or 15(d) of the Exchange Act.
2.6. Absence of Undisclosed Liabilities. Except to the extent specifically
disclosed on the Disclosure Schedule or otherwise to the Company's knowledge,
neither the Company nor any Subsidiary has any liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise) which would have a
Company Material Adverse Effect, except (a) liabilities or obligations that are
accrued or reserved against in the audited consolidated balance sheet of the
Company as of March 31, 1999 contained in the Company 1999 Financials (the
"Company Audited Balance Sheet") or in the unaudited consolidated balance sheet
of the Company as of September 30, 1999 contained in the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1999 (the
"Company Interim Balance Sheet"), and (b) liabilities or obligations disclosed
in this Agreement.
2.7. Consents and Approvals. Except for (i) any applicable requirements of
the Securities Act, the Exchange Act, state securities laws and the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and the regulations
thereunder (the "HSR Act"), (ii) approval by the Company's stockholders, (iii)
the filing and recordation of appropriate merger documents as required by the
DGCL and the MBCA, (iv) compliance with Section 262 of the DGCL regarding
appraisal rights, and (v) any items disclosed on the Disclosure Schedule, the
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated hereby will not: (a) violate any provision of the
Certificate of Incorporation or Bylaws of the Company or any Subsidiary; (b)
violate any statute, rule, regulation, order or decree of any federal, state,
local or foreign body or authority (including without limitation any
non-governmental self-regulatory agency) by which the Company or any Subsidiary
or any of their respective properties or assets may be bound; (c) require any
filing with or permit, consent or approval of any federal, state, local or
foreign public body or authority (including without limitation any
non-governmental self-regulatory agency); or (d) result in any violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, result in the loss of any material benefit under, or give rise to
any right of termination, cancellation, increased payments or acceleration
under, or result in the creation of any Lien (as defined in Section 2.4 hereof)
on any of the properties or assets of the Company or any Subsidiary under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, franchise, permit, authorization, agreement or other instrument or
obligation to which the Company or any Subsidiary is a party, or by which it or
any of its properties or assets may be bound, except, (x) in the cases of
clauses (b) or (c), where such violation, failure to make any such filing or
failure to obtain such permit, consent or approval, would not prevent or delay
consummation of the Merger or otherwise prevent the Company from performing its
obligations under this Agreement and would not have a Company Material Adverse
Effect, and (y) in the case of clause (d), for any such violations, breaches,
defaults or other occurrences that would not prevent or delay consummation of
any of the transactions contemplated hereby in any material respect or otherwise
prevent the Company from performing its obligations under this Agreement in any
material respect and would not have a Company Material Adverse Effect.
2.8. Compliance with Laws. Except to the extent specifically disclosed on
the Disclosure Schedule or otherwise to the Company's knowledge and except for
those violations of the law which the
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officers of the Company should have reasonably been expected to know in the
course of discharging their duties as officers of the Company, all activities of
the Company and each Subsidiary have been and are currently being, conducted, to
the Company's knowledge, in compliance with all applicable federal, state, local
and foreign laws, ordinances, regulations, interpretations, judgments, decrees,
injunctions, permits, licenses, certificates, governmental requirements, orders
and other similar items of any court or other governmental entity (including
without limitation any non-governmental self-regulatory agency), the failure to
comply with which could reasonably be expected to have a Company Material
Adverse Effect.
2.9. Litigation. Except to the extent specifically disclosed on the
Disclosure Schedule, no investigation or review by any federal, state, local or
foreign body or authority (including without limitation any non-governmental
self-regulatory agency) with respect to the Company or any Subsidiary, to the
Company's knowledge, is pending or threatened, nor has any such body or
authority (including without limitation any non-governmental self-regulatory
agency) indicated to the Company or any Subsidiary an intention to conduct the
same. Except to the extent specifically disclosed on the Disclosure Schedule,
there are no claims, actions, suits or proceedings by any private party that, to
the Company's knowledge, could reasonably be expected to involve individually an
amount in excess of $50,000 or collectively an aggregate amount in excess of
$100,000, or by any governmental body or authority (including without limitation
any non-governmental self-regulatory agency), against or affecting the Company
or any Subsidiary, pending or threatened at law or in equity, or before any
federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality and to the Company's knowledge there is
no basis for any such investigation, review, claim, action, suit or proceedings.
2.10. Absence of Material Adverse Changes. Except to the extent
specifically disclosed in the Disclosure Schedule, since March 31, 1999 there
has not been any (a) change or circumstance with a Company Material Adverse
Effect; (b) damage, destruction or loss, whether or not covered by insurance,
that could reasonably be expected to have a Company Material Adverse Effect; (c)
change by the Company or any Subsidiary in accounting methods or principles used
for financial reporting purposes, except as required by a change in generally
accepted accounting principles and concurred with by the Company's independent
public accountants; or (d) agreement, whether in writing or otherwise, to take
any action described or referenced in this Section 2.10.
2.11. Disclosure Documents. The Proxy Statement and the Schedule 13E-3 (as
defined in Section 4.2 hereof) and any amendments or supplements thereto, will
comply in all material respects with all applicable laws, regulations and
requirements, including the requirements of the Exchange Act. None of the
information relating to the Company included or incorporated by reference in (A)
the Proxy Statement, at the date such Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting, or (B) the
Schedule 13E-3, at the time of filing with the SEC (and at any time such Proxy
Statement or Schedule 13E-3 is amended or supplemented), will, to the Company's
knowledge, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing provisions of this Section 2.11, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Proxy Statement or the Schedule 13E-3
based on information supplied in writing by the Acquiror or any of its
representatives specifically for inclusion or incorporation by reference
therein.
2.12. Merger Filings. The information as to the Company and the
Subsidiaries or any of their affiliates or stockholders included in the
Company's filing, or submitted to the Acquiror for inclusion in its filing, if
any, required to be submitted under the HSR Act will be true, correct and
complete in all material respects and will comply in all material respects with
the applicable requirements of the HSR Act and the rules and regulations issued
by the Federal Trade Commission pursuant thereto.
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2.13. Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Company Common Stock (the "Required Company
Vote") is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.14. Company Action. As of the date hereof, the Company Board, based
upon the recommendation of the Special Committee, at a meeting thereof duly
called and held has (i) approved the Merger and approved and adopted and
declared advisable this Agreement and the transactions contemplated hereby,
including the Merger, (ii) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are fair to and in
the best interests of the Company's stockholders (other than the Acquiror),
and (iii) resolved to declare advisable and recommend approval of this
Agreement and the transactions contemplated hereby, including the Merger,
by the Company's stockholders.
2.15. State Takeover Laws. The Company Board has taken all action
necessary to exempt the transactions contemplated by this Agreement,
including without limitation the Merger, from the operation of any
applicable "fair price," "moratorium," "control share acquisition,"
"business combination" or any other applicable anti-takeover statute or
similar statute enacted under the state or federal laws of the United
States or similar statute or regulation.
2.16. Rights Plan. The Company has not entered into, and the Company
Board has not adopted or authorized the adoption of, a stockholder rights
plan or similar agreement.
2.17. Fairness Opinion. As of the date hereof, the Special Committee
has received the written opinion of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.,
financial advisor to the Special Committee, dated as of the date hereof, to
the effect that, subject to the qualifications and limitations stated
therein, the consideration to be received by the holders of shares of
Company Common Stock (other than the Acquiror) in the Merger is fair to
such holders from a financial point of view. The Special Committee has
furnished an accurate and complete copy of such written opinion to the
Acquiror.
2.18. No Finders. Except for the engagement letter between the Company
and U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., dated September 15, 1999, a copy of
which has been provided to the Acquiror prior to the date of this
Agreement, pursuant to which the only fees payable by the Company are
$125,000 paid as of the date hereof and $425,000 payable upon the Closing
of the Merger, no act of the Company or any Subsidiary has given or will
give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated herein.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror represents and warrants to the Company as of the date
hereof as follows:
3.1. Organization and Qualification. The Acquiror is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted. The Acquiror is duly qualified and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary and where the failure to qualify could reasonably
be expected to have an Acquiror Material Adverse Effect (as defined below).
"Acquiror Material Adverse Effect" means any effect, change or event that,
individually or in the aggregate with all similar effects, changes or
events, is or would be material and adverse: (i) either before or
immediately after the Effective Time, to the business, properties,
liabilities, results of operation or financial condition of the Acquiror
and its
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subsidiaries, considered as a whole, or (ii) to the Acquiror's ability to
perform any of its obligations under this Agreement or which threatens or is or
would reasonably be expected to impede the Acquiror's ability to consummate the
Merger.
3.2. Authorization and Enforceability. The Acquiror has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Acquiror and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Board of Directors of the Acquiror and will be duly and validly authorized and
approved by the Parent as the sole shareholder of the Acquiror and no other
corporate proceedings on the part of the Acquiror or the Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the Acquiror
and constitutes the valid and binding obligation of the Acquiror, enforceable
against the Acquiror in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and rules of law
governing specific performance, injunctive relief or other equitable remedies.
3.3. Consents and Approvals. Except for (i) any applicable requirements of
the Securities Act, the Exchange Act, state securities laws and the HSR Act,
(ii) the filing and recordation of appropriate merger documents as required by
the DGCL and the MBCA, and (iii) compliance with Section 262 of the DGCL
regarding appraisal rights of the Company's stockholders, the execution and
delivery of this Agreement by the Acquiror and the consummation of the
transactions contemplated hereby will not: (a) violate any provision of the
Articles of Incorporation or Bylaws of the Acquiror; (b) violate any statute,
rule, regulation, order or decree of any public body or authority (including
without limitation any non-governmental self-regulatory agency) by which the
Acquiror or any of its subsidiaries or any of their respective properties or
assets may be bound; (c) require any filing with or permit, consent or approval
of any public body or authority (including without limitation any
non-governmental self-regulatory agency); or (d) result in any violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default under, result in the loss of any material benefit under, or give rise to
any right of termination, cancellation, increased payments or acceleration
under, or result in the creation of any Lien on any of the properties or assets
of the Acquiror or its subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, franchise, permit,
agreement or other instrument or obligation to which the Acquiror or any of its
subsidiaries is a party, or by which any of them or any of their respective
properties or assets may be bound, except (x) in the cases of clauses (b) or
(c), where such violation, failure to make any such filing or failure to obtain
such permit, consent or approval, would not prevent or delay consummation of
this Merger or otherwise prevent the Acquiror from performing its obligations
under the Agreement and would not have an Acquiror Material Adverse Effect, and
(y) in the case of clause (d), for any such violations, breaches, defaults or
other occurrences that would not prevent or delay consummation of any of the
transaction contemplated hereby in any material respect, or otherwise prevent
the Acquiror from performing its obligations under this Agreement in any
material respect and would not have an Acquiror Material Adverse Effect.
3.4. Disclosure Documents. None of the information supplied or to be
supplied by the Acquiror or its affiliates in writing specifically for inclusion
or incorporation by reference in (A) the Proxy Statement, at the date such Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, or (B) the Schedule 13E-3, at the time of filing with the
SEC (and at any time such Proxy Statement or Schedule 13E-3 is amended or
supplemented), will contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
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3.5. Merger Filings. The information as to the Acquiror and the Parent or
any of their affiliates or stockholders included in the Acquiror's filing, or
submitted to the Company for inclusion in its filing, if any, required to be
submitted under the HSR Act will be true, correct and complete in all material
respects and will comply in all material respects with the applicable
requirements of the HSR Act and the rules and regulations issued by the Federal
Trade Commission pursuant thereto.
3.6. No Vote Required. No vote of the holders of the outstanding shares of
common stock of either the Acquiror or the Parent is necessary to approve this
Agreement and the transactions contemplated hereby other than those obtained by
the Acquiror and the Parent as of the date hereof.
3.7. Financing. The Acquiror has cash on hand or reasonably expects to
receive commitments to provide, in the aggregate, monies sufficient to fund the
consummation of the transactions contemplated by this Agreement, including the
Merger and satisfy all other costs and expenses arising in connection therewith
(the "Financing").
3.8. No Finders. No act of the Acquiror or the Parent has given or will
give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated herein, except for those fees owed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLC.
ARTICLE 4.
COVENANTS
4.1. No Solicitation. Neither the Company, its Subsidiaries, nor any of
their respective officers, directors, employees, financial advisors, counsel,
representatives, agents or affiliates will, directly or indirectly, encourage,
solicit, initiate or, except to the extent provided below, participate in any
way in discussions or negotiations with, or provide any confidential information
regarding the Company or any Subsidiary to, any Third Party (as defined below)
concerning or in connection with any tender offer (including a self-tender
offer), exchange offer, merger, sale of substantial assets outside the ordinary
course of business, sale of securities or similar transactions involving the
Company or any Subsidiary or division of the Company (each, an "Acquisition
Proposal"); except that nothing contained in this Section 4.1 or in any other
provision of this Agreement will prohibit the Company or the Company Board from:
(i) taking and disclosing to the Company's stockholders a position contemplated
by Rules 14d-9 and 14e-2 promulgated under the Exchange Act; or (ii) making such
disclosure to the Company's stockholders as, in the reasonable judgment of the
Company Board with the advice of outside counsel, is required under applicable
law. For purposes of this Agreement, "Third Party" will mean any corporation,
partnership, person or other entity or "group" (as defined in Section 13(d)(3)
of the Exchange Act) other than the Acquiror or any affiliate of the Acquiror
and their respective directors, officers, employees, representatives and agents.
Notwithstanding the foregoing, the Company may furnish confidential information
regarding the Company to and enter into discussions or negotiations with any
Third Party if and only if: (x) such Third Party, has on an unsolicited basis,
submitted a bona fide written Acquisition Proposal; (y) the Company Board
determines in good faith, based on, among other things, the legal advice of the
Company's outside counsel, that its fiduciary duties require the Company Board
to take such action; and (z) the Company and such Third Party enter into a
confidentiality agreement with standard terms and provisions. Subject to the
provisions of Section 6.1 hereof, the Company may approve, accept and recommend
an Acquisition Proposal if and only if: (1) the Company Board determines in good
faith, based on, among other things, advice of its legal counsel that its
fiduciary duties require the Company Board to take such action; (2) the Company
Board determines, after consultation with its financial advisors, that the
Acquisition Proposal would result in a transaction more favorable to the
Company's stockholders from a financial point of view than the transaction
contemplated by this Agreement (such Acquisition Proposal satisfying the
immediately preceding clauses (1) and (2)) is referred to hereinafter as an
"Approved Offer"); (3) the Company promptly notifies the Acquiror of the Company
Board's
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determination that an Acquisition Proposal constitutes an Approved Offer;
and (4) the Acquiror does not make, within three (3) business days of the
Acquiror's receiving such notice, an offer which the Company Board, after
consultation with its financial advisors, determines is superior to such
Approved Offer. The Company will promptly notify the Acquiror of the receipt and
the terms of any Acquisition Proposal that it may receive, including the
identity of the offeror, and will keep the Acquiror reasonably informed of the
status of any such Acquisition Proposal. The Company Board acknowledges that the
agreements contained in this Section 4.1 are derived from and based upon its
opinion that the Merger is fair and in the best interests of the Company and its
stockholders (other than the Acquiror). Nothing contained in this Section 4.1
will relieve any party from fulfilling its obligations under Article 6.
4.2. Stockholders Meeting; Proxy Statement.
(a) The Company will, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders Meeting") for the purpose of
adopting this Agreement and the transactions contemplated hereby,
including the Merger, by obtaining the Required Company Vote. Subject to
the Company Board's fiduciary duties, the Company Board, based upon the
recommendation of the Special Committee, will declare the advisability
of, and recommend to its stockholders the approval and adoption of, this
Agreement and the transactions contemplated hereby, including the
Merger, will include such recommendation in the Proxy Statement and will
take all lawful action to solicit such approval and adoption.
(b) As soon as reasonably practicable following the date of this
Agreement, the Company and the Acquiror will jointly prepare, and the
Company will file with the SEC, a proxy statement and a form of proxy in
connection with the Stockholders Meeting (such proxy statement, together
with any amendments thereof or supplements thereto, in each case in the
form or forms mailed to the Company's stockholders, being the "Proxy
Statement") and a Rule 13E-3 Transaction Statement (the "Schedule
13E-3"). The Acquiror will cooperate with the Company in connection with
the preparation and filing with the SEC of the Proxy Statement and the
Schedule 13E-3, including without limitation furnishing the Company upon
request with any and all information regarding the Acquiror, the Parent
or their respective affiliates, the plans of such persons for the
Surviving Corporation after the Effective Time, and all other matters
and information as may be required to be set forth therein under the
Exchange Act. The Company will use reasonable best efforts to respond to
the comments of the SEC concerning the Proxy Statement or the Schedule
13E-3 as promptly as practicable and to mail the definitive Proxy
Statement to its stockholders as soon as practicable. The Company will
pay the filing fees for the Proxy Statement and the Schedule 13E-3. The
Acquiror will be given a reasonable opportunity to review and approve
all filings with the SEC and all mailings to the Company's stockholders
in connection with the Merger prior to the filing or mailing thereof.
The Company and the Acquiror each agree to correct any information
provided by such party for use in the Proxy Statement or the Schedule
13E-3 that becomes false or misleading. The Company will cause the
fairness opinion of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ referred to in Section
2.17 to be included as an exhibit to the Proxy Statement and the
Schedule 13E-3.
(c) Each party will notify the other party promptly of (i) the
receipt of any notices, comments or other communications from the SEC,
and (ii) any requests by the SEC for amendments or supplements to the
Proxy Statement or the Schedule 13E-3 or for additional information, and
will promptly provide the other party with copies of all correspondence
between such party or its representatives on the one hand and the SEC or
members of its staff on the other hand with respect to the Proxy
Statement or the Schedule 13E-3.
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(d) If, at any time prior to the Stockholders Meeting, any event
should occur relating to the Company or its Subsidiaries which should be
set forth in an amendment of, or a supplement to, the Proxy Statement or
the Schedule 13E-3, the Company will promptly inform the Acquiror. If,
at any time prior to the Stockholders Meeting, any event should occur
relating to the Acquiror or the Parent or relating to the plans of the
Acquiror for the Surviving Corporation after the Effective Time, which
should be set forth in an amendment of, or a supplement to, the Proxy
Statement or the Schedule 13E-3, the Acquiror will promptly inform the
Company. In any such case, the Company or the Acquiror, as the case may
be, with the cooperation of the other party, will, upon learning of such
event, promptly prepare, file and, if required, mail such amendment or
supplement to the Company's stockholders; provided that, prior to such
filing or mailing, the parties will approve the form and content of such
amendment or supplement.
(e) The Company will cause Norwest Bank Minnesota, N.A., the
Company's transfer agent, to make stock transfer records available to
the extent reasonably necessary to effectuate the intent of this
Agreement.
4.3. Access to Information. The Company will afford to the Acquiror,
and to the Acquiror's accountants, officers, directors, employees, counsel and
other representatives, full access, from the date hereof through the Effective
Time, to all of its and its Subsidiaries' properties, books, contracts,
commitments and records, and, during such period, the Company will furnish
promptly to the Acquiror all information concerning the Company's and its
Subsidiaries' businesses, prospects, properties, liabilities, results of
operations, financial condition, officers, employees, distributors, customers,
suppliers and others having dealings with the Company as the Acquiror may
reasonably request.
4.4. Consents. The Company will, at its cost and expense, use all
reasonable best efforts to obtain all approvals and consents of all third
parties necessary on the part of the Company or its Subsidiaries to consummate
the transactions contemplated hereby. The Acquiror agrees to cooperate with the
Company in connection with obtaining such approvals and consents. The Acquiror
will, at its cost and expense, use all reasonable efforts to obtain all
approvals and consents of all third parties necessary on the part of the
Acquiror to consummate the transactions contemplated hereby. The Company agrees
to cooperate with the Acquiror in connection with obtaining such approvals and
consents.
4.5. Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such costs and expenses,
except (i) the Company and the Acquiror will share equally the cost of the
filing fees required under the HSR Act; (ii) the Company will pay all costs and
expenses incurred in connection with the printing, filing and mailing to
stockholders of the Proxy Statement and the solicitation of stockholder
approvals; and (iii) as otherwise provided in Section 6.2.
4.6. Further Actions. Subject to the terms and conditions herein
provided and without being required to waive any conditions herein (whether
absolute, discretionary or otherwise), each of the parties hereto agrees to use
all commercially reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement will take all such
necessary action.
4.7. Regulatory Approvals. The Company and the Acquiror will take
all reasonable action as may be necessary under federal or state securities laws
or the HSR Act applicable to or necessary for, and will file as soon as
reasonably practicable and, if appropriate, use all reasonable efforts to have
declared effective or approved all documents and notifications with the SEC and
other governmental or regulatory bodies that they deem necessary or appropriate
for, the consummation of the Merger and the transactions
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contemplated hereby, and each party will give the other information reasonably
requested by such other party pertaining to it and its subsidiaries and
affiliates to enable such other party to take such actions. Notwithstanding the
foregoing or anything herein to the contrary, the Acquiror will not be required
to make arrangements for or to effect the cessation, sale or other disposition
of particular assets or categories of assets or businesses of the Acquiror, the
Company, or any of their affiliates.
4.8. Certain Notifications. From time to time prior to the Effective
Time within five days of the end of each calendar month, the Company will
provide written notice to the Acquiror of any matter which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedule or which is necessary to
correct any information in the Disclosure Schedule which has been rendered
inaccurate thereby, or (b) would constitute a breach of any covenant contained
in this Agreement. For purposes of determining the accuracy of the
representations and warranties of the Company contained in Article 2 of this
Agreement in order to determine the fulfillment of the conditions set forth in
Section 5.2(a) and to determine whether a breach has occurred for purposes of
Section 5.2(b) or pursuant to Section 6.1(g) hereof, the Disclosure Schedule
delivered by Company in accordance with Section 2.1 will be deemed to include
only the information contained therein when delivered in accordance with Section
2.1 and will be deemed to exclude any information contained in any subsequent
notifications hereunder.
4.9. Officers' and Directors' Indemnification. The Surviving
Corporation agrees that it will provide to the directors and officers of the
Company indemnification to the fullest extent provided by its Articles of
Incorporation and Bylaws with respect to matters occurring prior to the
Effective Time, including without limitation the authorization of this Agreement
and the transactions contemplated hereby until the six year anniversary date of
the Effective Time (or, in case of matters occurring prior to the Effective Time
giving rise to claims that are made prior to but which have not been resolved by
the sixth anniversary of the Effective Time, until such matters are finally
resolved). The Surviving Corporation will obtain and maintain in effect for not
less than three years after the Effective Date, the current directors' and
officers' liability insurance policies maintained by the Company (provided that
the Surviving Corporation may substitute therefore a policy or policies of at
least the same coverage containing similar terms and conditions so long as no
lapse in coverage occurs as a result of such substitution); provided that in no
event will Surviving Company be required to expend more than 150% of the current
annual premiums paid by the Company for such coverage (the "Maximum Premium");
and provided further that if the Surviving Corporation is unable to obtain the
amount of insurance required by this Section 4.9 for such aggregate premium, the
Surviving Corporation will obtain as much insurance as can be obtained for an
annual premium not in excess of the Maximum Premium.
4.10. Financing. The Acquiror will use its reasonable best efforts
(i) to consummate the Financing or such other financing as will be mutually and
reasonably satisfactory to the Company and the Acquiror on or before the Closing
Date and (ii) to execute and deliver definitive agreements with respect to the
Financing or such other financing as will be mutually and reasonably
satisfactory to the Company and the Acquiror (the "Definitive Financing
Agreements") on or before the Closing Date. The Company will use its reasonable
best efforts to assist and cooperate with the Acquiror to satisfy on or before
the Closing Date all of the conditions to closing the transactions constituting
the Financing which are applicable to the Company.
ARTICLE 5.
CLOSING CONDITIONS
5.1. Conditions to Obligations of the Acquiror and the Company. The
respective obligations of each party to consummate the Merger and to consummate
the other transactions contemplated by this Agreement to occur on the Closing
Date will be subject to the satisfaction at or prior to the Closing Date
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of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by applicable law:
(a) Neither the Acquiror nor the Company are subject to any final
order, decree or injunction of a court of competent jurisdiction within
the United States that (i) prevents or materially delays the consummation
of the Merger, or (ii) would impose any material limitation on the
ability of the Acquiror effectively to exercise full rights of ownership
of the Company or the assets or business of the Company.
(b) The waiting periods applicable to the consummation of the Merger
under the HSR Act has expired or terminated.
5.2. Conditions to Obligations of the Acquiror. The obligation of the
Acquiror to consummate the Merger will be subject to the fulfillment at or
prior to the Closing of the following additional conditions:
(a) Each representation and warranty of the Company contained in
this Agreement is true and correct on the date hereof and on the Closing
Date as though such representations and warranties were made on such date
(except those representations and warranties that address matters only as
of a particular date will remain true and correct as of such date),
except for any inaccuracies that have not had, and would not have, a
Company Material Adverse Effect. For purposes of this Section 5.2(a), all
representations and warranties contained in Article 2 qualified by
Company Material Adverse Effect will not be deemed so qualified.
(b) The Company has performed and complied in all material respects
with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the
Closing; provided, however, that the obligation of the Acquiror to
consummate the Merger will not be subject to the satisfaction of this
condition if the reason that the Company has not performed or complied in
all material respect with a particular agreement, obligation or condition
is the result of the action or inaction by the officers of the Company
that constitutes a breach of any such agreement, obligation or condition.
(c) The Company has obtained all permits, authorizations, consents
and approvals required on its part to perform its obligations under, and
consummate the transactions contemplated by, this Agreement, in form and
substance reasonably satisfactory to the Acquiror, and the Acquiror has
received evidence reasonably satisfactory to it of the receipt of such
permits, authorizations, consents and approvals.
(d) The funding of the financing under the Definitive Financing
Agreements has occurred or the Acquiror will otherwise have immediate
access to sufficient funds under any other commitment acceptable to the
Acquiror to enable performance of the obligations of the Acquiror under
this Agreement.
(e) Holders of no more than 5% of the outstanding Company Common
Stock have exercised appraisal rights.
5.3. Conditions to Obligations of the Company. The obligation of the
Company to consummate the Merger will be subject to the fulfillment at or prior
to the Closing of the following additional conditions:
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(a) The approval of the stockholders of the Company referred to in
Section 4.2 hereof has been obtained, in accordance with the DGCL and the
Company's Certificate of Incorporation and Bylaws.
(b) Each representation and warranty of the Acquiror contained in
this Agreement is true and correct on the date of this Agreement and on
the Closing Date as though such representations and warranties were made
on such date (except those representations and warranties that address
matters only as of a particular date will remain true and correct as of
such date), except for any inaccuracies that have not had, and would not
have, an Acquiror Material Adverse Effect. For purposes of this Section
5.3(b), all representations and warranties contained in Article 3
qualified by Acquiror Material Adverse Effect will not be deemed so
qualified.
(c) The Acquiror has performed and complied in all material respects
with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by the Acquiror on or prior to
the Closing.
ARTICLE 6.
TERMINATION AND ABANDONMENT
6.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company, only:
(a) by mutual written consent duly authorized by the Board of
Directors of the Acquiror and the Board of Directors of the Company;
(b) by either the Acquiror or the Company if the Merger has not been
consummated on or before the date that is nine months after the date
hereof; provided, however, that the terminating party has not breached in
any material respect its obligations under this Agreement in any manner
that was the proximate cause of, or resulted in, the failure to
consummate the Merger by such date and provided further, however, that,
if a request for additional information is received from the U.S. Federal
Trade Commission (the "FTC") --- or Department of Justice ("DOJ")
pursuant to the HSR Act, such date will be extended to the 90th day ---
following acknowledgment by the FTC, or DOJ, as applicable, that the
Acquiror and the Company have complied with such request, but in any
event not later than six months from the date hereof;
(c) by either the Acquiror or the Company if a court of competent
jurisdiction or an administrative, governmental or regulatory body has
issued a final nonappealable order, decree or ruling, or taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger;
(d) by either the Acquiror or the Company if, at the Stockholders
Meeting, the Required Company Vote is not obtained, except that the right
to terminate this Agreement under this Section 6.1(d) will not be
available to any party whose failure to perform any material obligation
under this Agreement has been the proximate cause of, or resulted in, the
failure to obtain the Required Company Vote;
(e) by the Acquiror if (i) Company has breached its obligations
under Section 4.1 hereof in any material respect, (ii) the Company Board
has recommended, approved, accepted or entered into an agreement (other
than a confidentiality agreement) regarding an Acquisition Proposal or an
Approved Offer, (iii) the Company Board has withdrawn or modified in a
manner adverse to the Acquiror its recommendation of the Merger, (iv) a
tender offer or exchange offer for 15% or more of the outstanding shares
of Company Common Stock is commenced, and the
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Company Board, within 10 business days after such tender offer or
exchange offer is so commenced, either fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders or
takes no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders; or (v) the Company has failed to mail
the Proxy Statement to its stockholders within 10 days after being
cleared by the SEC, failed to include in the Proxy Statement the Company
Board's recommendation of the Merger or the fairness opinion of ▇▇▇▇▇
▇▇▇▇▇▇▇ referred to in Section 2.17 hereof or has postponed or, without
having obtained the Required Company Vote, adjourned the Stockholders
Meeting (unless such failure to mail, postponement or adjournment, as the
case may be, was necessitated by applicable law);
(f) by the Company if (i) it is not in material breach of its
obligations under this Agreement, (ii) the Company Board has approved,
accepted or recommended an Approved Offer in accordance with Section 4.1
hereof and (iii) the Company has paid to the Acquiror the fee required by
Section 6.2 hereof to be paid to the Acquiror in the manner provided
therein;
(g) by the Acquiror if (i) the Acquiror is not in material breach of
its obligations under this Agreement and (ii) there has been a material
breach by the Company of any of its representations, warranties or
obligations under this Agreement such that the conditions in Article 5
hereof will not be satisfied, and the breach is not curable or, if
curable, is not cured by the Company within 10 calendar days after
receipt by the Company of written notice from the Acquiror of such
breach;
(h) by the Company if (i) the Company is not in material breach of
its obligations under this Agreement and (ii) there has been a material
breach by the Acquiror of any of its representations, warranties or
obligations under this Agreement such that the conditions in Article 5
hereof will not be satisfied, and the breach is not curable or, if
curable, is not cured by the Acquiror within 10 calendar days after
receipt by the Acquiror of written notice from the Company of such
breach; or
(i) by the Acquiror, if the holders of more than 5% of the
outstanding Company Common Stock exercise appraisal rights.
6.2. Effect of Termination.
(a) In recognition of the time, efforts and expenses expended and
incurred by the Acquiror with respect to the Company and the opportunity
that the acquisition of the Company presents to the Acquiror, if:
(i) this Agreement is terminated pursuant to Sections
6.1(e)(i), (ii) or (iii) above, then the Company will pay to the
Acquiror a fee in the amount of One Million Dollars ($1,000,000)
(the "Fee"), payable upon such date of termination;
(ii) this Agreement is terminated pursuant to Section
6.1(e)(iv) above, then the Company will pay to the Acquiror the
Fee upon, and only upon: (A) the entering into of an agreement
(except for a confidentiality agreement) providing for an
Acquisition Proposal or an Approved Offer, or (B) the date a
Third Party acquires 50% or more of the Company's outstanding
shares of Company Common Stock in a tender or exchange offer, if
such agreement is entered into or if such acquisition occurs
within 12 months of the termination of this Agreement;
(iii) this Agreement is terminated pursuant to Section
6.1(e)(v) above, then the Company will pay to the Acquiror the
Fee upon, and only upon the entering into of
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an agreement (except for a confidentiality agreement) providing
for an Acquisition Proposal or an Approved Offer, if such
agreement is entered into or if such acquisition occurs within 12
months of the termination of this Agreement; or
(iv) this Agreement is terminated pursuant to Section 6.1(f)
above, then the Company will pay to the Acquiror the Fee, payable
upon such date of termination.
The Fee, if payable pursuant to subsections (i), (ii), (iii) or (iv)
above, will be paid by wire transfer of immediately available funds to
an account designated by the Acquiror for such purpose. The Company
acknowledges that the agreements contained in this Section 6.2 are an
integral part of the transactions contemplated by this Agreement and
are not a penalty, and that, without these agreements, the Acquiror
would not enter into this Agreement. If the Company fails to pay
promptly, the Fee due pursuant to this Section 6.2, the Company will
also pay to the Acquiror the Acquiror's costs and expenses (including
legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment,
together with interest on the amount of the unpaid Fee under this
section, accruing from its due date, at an interest rate per annum
equal to five percentage points in excess of the prime commercial
lending rate quoted by Norwest Bank Minnesota, N.A. Any change in the
interest rate hereunder resulting from a change in such prime rate will
be effective at the beginning of the day of such change in such prime
rate.
(b) Except as provided in the next sentence of this paragraph, in
the event of the termination of this Agreement pursuant to any paragraph
of Section 6.1 hereof, the obligations of the parties to consummate the
Merger will expire, and none of the parties will have any further
obligations under this Agreement except pursuant to Sections 4.3, 4.5 and
6.2(a) hereof, which sections will survive termination of this Agreement.
In the event of the termination of this Agreement pursuant to any
paragraph of Section 6.1 hereof that is caused by a breach of a party,
the party whose breach was the basis for the termination will not be
relieved from any liability for its breach or its obligations pursuant to
this Section 6.2, and the other party will have no further obligations
under this Agreement except as provided in Sections 4.2 and 4.5 and
Article 7 hereof.
ARTICLE 7.
MISCELLANEOUS
7.1. Amendment and Modification. Subject to applicable law, this
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
7.2. Waiver. At any time prior to the Effective Time, any party hereto
may (i) extend the time for the performance of any obligation or other act of
any other party hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any agreement or condition contained herein;
provided, however, that, if the Company seeks to make such extension or waiver
as provided in (i), (ii) or (iii) above, it must first obtain the approval of
the Special Committee. Any such extension or waiver will be valid if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
7.3. Notices. All notices and other communications hereunder will be in
writing and will be deemed given when delivered personally by commercial courier
service or otherwise, or by telecopier, or three days after such notice is
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as will be
specified by like notice):
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(a) if to the Acquiror, to it at:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
with a copy (which will not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company, to it at:
Sunrise International Leasing Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.A.
1100 International Centre
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
7.4. Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that the Acquiror may assign its rights and obligations under the Agreement to
the Parent, nor is this Agreement intended to confer upon any other person
except the parties hereto any rights or remedies hereunder, except that Section
4.9 of this Agreement will inure to the benefit of the persons identified
therein.
7.5. Governing Law. This Agreement will be construed in accordance with
and governed by the law of the State of Minnesota, except that, insofar as the
procedures of the Merger are subject to the law of the State of Delaware because
the Company is incorporated in Delaware are concerned, the law of the State of
Delaware will apply.
7.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
7.7. Knowledge. As used in this Agreement, the term "to the Company's
knowledge" or words to similar effect will mean the actual knowledge of the
executive officers of the Company.
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7.8. Interpretation. The Table of Contents, article and section headings
contained in this Agreement are inserted for reference purposes only and will
not affect the meaning or interpretation of this Agreement. This Agreement will
be construed without regard to any presumption or other rule requiring the
resolution of any ambiguity regarding the interpretation or construction hereof
against the party causing this Agreement to be drafted.
7.9. Publicity. Upon execution of this Agreement by the Acquiror and the
Company, the parties will jointly issue a press release, as agreed upon by them.
The parties intend that all future statements or communications to the public or
press regarding this Agreement or the Merger will be mutually agreed upon by
them and neither party will, without such mutual agreement or the prior consent
of the other, issue any statement or communication to the public or to the press
regarding this Agreement, or any of the terms, conditions or other matters with
respect to this Agreement, except as required by law or the rules of The Nasdaq
Stock Market ("Nasdaq") and then only (a) upon the advice of such party's legal
counsel; (b) to the extent required by law or the rules of Nasdaq; and (c)
following prior notice to the other party and an opportunity for the other party
to discuss with the disclosing party (which notice will include a copy of the
proposed statement or communication to be issued to the press or public). The
foregoing will not restrict the Acquiror's or the Company's communications with
their employees or customers in the ordinary course of business.
7.10. Entire Agreement. This Agreement, including the exhibits and
schedules hereto, embodies the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and the understandings between the parties with
respect to such subject matter. No discussions regarding or exchange of drafts
or comments in connection with the transactions contemplated herein will
constitute an agreement among the parties hereto. Any agreement among the
parties will exist only when the parties have fully executed and delivered this
Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE KING MANAGEMENT CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Its: Chief Executive Officer
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SUNRISE INTERNATIONAL LEASING CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Executive Vice President and Chief Financial Officer
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