AGREEMENT AND PLAN OF MERGER
AMONG
CONSECO, INC.,
MARBLE ACQUISITION CORP.
AND
GREEN TREE FINANCIAL CORPORATION
Dated as of April 6, 1998
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I--THE MERGER
Section 1.1 The Merger
Section 1.2 Effective Time
Section 1.3 Effects of the Merger; Directors and Officers
Section 1.4 Charter and Bylaws; Directors and Officers
Section 1.5 Conversion of Securities
Section 1.6 Parent to Make Certificates Available
Section 1.7 Dividends; Transfer Taxes; Withholding
Section 1.8 No Fractional Securities
Section 1.9 Return of Exchange Fund
Section 1.10 Adjustment of Exchange Ratio
Section 1.11 No Further Ownership Rights in
Company Common Stock
Section 1.12 Closing of Company Transfer Books
Section 1.13 Lost Certificates
Section 1.14 Further Assurances
Section 1.15 Closing
ARTICLE II--REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Section 2.1 Organization, Standing and Power
Section 2.2 Capital Structure
Section 2.3 Authority.
Section 2.4 Consents and Approvals; No Violation
Section 2.5 SEC Documents and Other Reports
Section 2.6 Registration Statement and Joint Proxy Statement
Section 2.7 Absence of Certain Changes or Events
Section 2.8 Permits and Compliance
Section 2.9 Tax Matters
Actions and Proceedings
Section 2.11 Certain Agreements
Section 2.12 ERISA
Section 2.13 Compliance with Worker Safety and
Environmental Laws
Section 2.14 Labor Matters
Section 2.15 Intellectual Property
Section 2.16 Pooling of Interests; Reorganization
Section 2.17 Required Vote of Parent Stockholders.
Section 2.18 Operations of Sub
Section 2.19 Opinion of Financial Advisor
Section 2.20 Brokers
Section 2.21 State Takeover Statutes;
Certain Charter Provisions
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power
Section 3.2 Capital Structure
Section 3.3 Authority
Section 3.4 Consents and Approvals; No Violation
Section 3.5 SEC Documents and Other Reports
Section 3.6 Registration Statement and Joint Proxy Statement
Section 3.7 Absence of Certain Changes or Events
Section 3.8 Permits and Compliance
Section 3.9 Tax Matters
Section 3.10 Actions and Proceedings
Section 3.11 Certain Agreements
Section 3.12 ERISA
Section 3.13 Compliance with Worker Safety and
Environmental Laws
Section 3.14 Labor Matters.
Section 3.15 Intellectual Property
Section 3.16 Opinion of Financial Advisor
Section 3.17 State Takeover Statutes; Certain Charter Provisions
Section 3.18 Required Vote of Company Stockholders
Section 3.19 Pooling of Interests; Reorganization
Section 3.20 Brokers
ARTICLE IV--COVENANTS RELATING TO CONDUCT
OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger
Section 4.2 No Solicitation
Section 4.3 Third Party Standstill Agreements
Section 4.4 Pooling of Interests; Reorganization
ARTICLE V--ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings.
Section 5.2 Preparation of the Registration Statement
and the Joint Proxy Statement.
Section 5.3 Comfort Letters
Section 5.4 Access to Information
Section 5.5 Compliance with the Securities Act
Section 5.6 Stock Exchange Listings.
Section 5.7 Fees and Expenses
Section 5.8 Company Stock Options
Section 5.9 Reasonable Best Efforts; Pooling of Interests
Section 5.10 Public Announcements
Section 5.11 Real Estate Transfer and Gains Tax
Section 5.12 State Takeover Law
Section 5.13 Indemnification; Directors and Officers Insurance
Section 5.14 Notification of Certain Matters
Section 5.15 Employee Benefit Plans and Agreements
ARTICLE VI--CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger
Section 6.2 Conditions to Obligation of the Company
to Effect the Merger
Section 6.3 Conditions to Obligations of Parent and
Sub to Effect the Merger
ARTICLE VII--TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination
Section 7.2 Effect of Termination
Section 7.3 Amendment
Section 7.4 Waiver
ARTICLE VIII--GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties
Section 8.2 Notices
Section 8.3 Interpretation
Section 8.4 Counterparts
Section 8.5 Entire Agreement; No Third-Party Beneficiaries
Section 8.6 Governing Law
Section 8.7 Assignment
Section 8.8 Severability
Section 8.9 Enforcement of this Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 6, 1998 (this
"Agreement"), among Conseco, Inc., an Indiana corporation ("Parent"), Marble
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Green Tree Financial Corporation, a Delaware corporation
(the "Company") (Sub and the Company being hereinafter collectively referred to
as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub and the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of common stock, par value
$.01 per share, of the Company ("Company Common Stock") not owned directly or
indirectly by Parent or the Company will be converted into shares of Common
Stock, no par value, of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is in the best interest of
their respective stockholders;
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith Parent and the Company are entering into the
Stock Option Agreement dated as of the date hereof (the "Stock Option
Agreement") in the form of the attached Exhibit A;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL. Notwithstanding
anything to the contrary herein, at the election of Parent, any direct wholly
owned Subsidiary (as hereinafter defined) of Parent may be substituted for Sub
as a constituent corporation in the Merger; provided that such substituted
corporation is a Delaware corporation which is formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has engaged in
no other business activities. In such event, the parties agree to execute an
appropriate amendment to this Agreement, in form and substance reasonably
satisfactory to Parent and the Company, in order to reflect such substitution.
Section 1.2 Effective Time. The Merger shall become effective
when a Certificate of Merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL, is filed with the Secretary
of State of the State of Delaware; provided, however, that, upon mutual consent
of the Constituent Corporations, the Certificate of Merger may provide for a
later date of effectiveness of the Merger not more than 30 days after the date
the Certificate of Merger is filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of Merger
is accepted for record or such later time established by the Certificate of
Merger. The filing of the Certificate of Merger shall be made on the date of the
Closing (as defined in Section 1.15).
Section 1.3 Effects of the Merger; Directors and Officers.
The Merger shall have the effects set forth in Section 259 of the DGCL.
Section 1.4 Charter and Bylaws; Directors and Officers. (a) At
the Effective Time, the Certificate of Incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be amended so that (i)
Article 4 of such Certificate of Incorporation reads in its entirety as follows:
"The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 100 shares of Common Stock, par
value $.01 per share" and (ii) Articles 8 and 9 of such Certificate of
Incorporation are deleted. As so amended, such Certificate of Incorporation of
the Company shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. At the Effective Time, the Restated Bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided
therein or by the Certificate of Incorporation.
(b) The directors of Sub at the Effective Time of the Merger
shall be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company at the Effective Time
of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in the
treasury of the Company or by any wholly owned Subsidiary of the
Company and any shares of Company Common Stock owned by Parent shall be
cancelled and no capital stock of Parent or other consideration shall
be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10 hereof,
each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in
accordance with Section 1.5(b)) shall be converted into 0.9165 (such
number being the "Exchange Ratio") validly issued, fully paid and
nonassessable shares of Parent Common Stock. All such shares of Company
Common Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and each holder of a
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive any dividends and
other distributions in accordance with Section 1.7, certificates
representing the shares of Parent Common Stock into which such shares
are converted and any cash, without interest, in lieu of fractional
shares to be issued or paid in consideration therefor upon the
surrender of such certificate in accordance with Section 1.6.
Section 1.6 Parent to Make Certificates Available. (a)
Exchange of Certificates. Parent shall authorize a commercial bank (or such
other person or persons as shall be reasonably acceptable to Parent and the
Company) to act as Exchange Agent hereunder (the "Exchange Agent" ). As soon as
practicable after the Effective Time, Parent shall deposit with the Exchange
Agent, in trust for the holders of shares of Company Common Stock converted in
the Merger, certificates representing the shares of Parent Common Stock issuable
pursuant to Section 1.5(c) in exchange for outstanding shares of
Company Common Stock and cash, as required to make payments in lieu of any
fractional shares pursuant to Section 1.8 (such cash and shares of Parent Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall
deliver the Parent Common Stock contemplated to be issued pursuant to Section
1.5(c) out of the Exchange Fund.
(b) Exchange Procedures. Parent shall instruct the Exchange
Agent, as soon as practicable after the Effective Time, to mail to each record
holder of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock converted in the
Merger (the "Certificates") a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon actual delivery of the Certificates to the Exchange Agent, and
shall contain instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock and cash in lieu of fractional shares). Upon surrender for cancellation to
the Exchange Agent of all Certificates held by any record holder of a
Certificate, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares represented by the surrendered Certificate shall have been
converted at the Effective Time pursuant to this Article I, cash in lieu of any
fractional share in accordance with Section 1.8 and certain dividends and other
distributions in accordance with Section 1.7, and any Certificate so surrendered
shall forthwith be cancelled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the Effective
Time on Parent Common Stock, or are payable to the holders of record thereof on
or after the Effective Time, will be paid to any person entitled by reason of
the Merger to receive a certificate representing Parent Common Stock until such
person surrenders the related Certificate or Certificates, as provided in
Section 1.6, and no cash payment in lieu of fractional shares will be paid to
any such person pursuant to Section 1.8 until such person shall so surrender the
related Certificate or Certificates. Subject to the effect of applicable law,
there shall be paid to each record holder of a new certificate representing such
Parent Common Stock: (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of any dividends or other distributions
theretofore paid with respect to the shares of Parent Common Stock represented
by such new certificate and having a record date on or after the Effective Time
and a payment date prior to such surrender; (ii) at the appropriate payment date
or as promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender; and (iii) at the time of
such surrender or as promptly as practicable thereafter, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to
Section 1.8. In no event shall the person entitled to receive such dividends or
other distributions be entitled to receive interest on such dividends or other
distributions. If any cash or certificate representing shares of Parent Common
Stock is to be paid to or issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or under any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent or the Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, and no Parent
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the per share closing price on the New York Stock Exchange, Inc. (the
"NYSE") of Parent Common Stock (as reported in the NYSE Composite Transactions)
on the date of the Effective Time (or, if the shares of Parent Common Stock do
not trade on the NYSE on such date, the first date of trading of shares of
Parent Common Stock on the NYSE after the Effective Time) by (ii) the fractional
interest to which such holder would otherwise be entitled. As promptly as
practicable after the determination of the amount of cash, if any, to be paid to
holders of fractional share interests, the Exchange Agent shall so notify the
Parent, and the Parent shall deposit such amount with the Exchange Agent and
shall cause the Exchange Agent to forward payments to such holders of fractional
share interests subject to and in accordance with the terms of Section 1.7 and
this Section 1.8.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of the
Company for six months after the Effective Time shall be delivered to Parent,
upon demand of Parent, and any such
former stockholders who have not theretofore complied with this Article I shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock. Neither Parent
nor the Surviving Corporation shall be liable to any former holder of Company
Common Stock for any such shares of Parent Common Stock, cash and dividends and
distributions held in the Exchange Fund which is delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 1.10 Adjustment of Exchange Ratio. In the event of any
reclassification, stock split or stock dividend with respect to Parent Common
Stock, any change or conversion of Parent Common Stock into other securities of
Parent or any other dividend or distribution with respect to the Parent Common
Stock other than normal quarterly cash dividends as the same may be adjusted
from time to time pursuant to the terms of this Agreement (or if a record date
with respect to any of the foregoing should occur) prior to the Effective Time,
appropriate and proportionate adjustments, if any, shall be made to the Exchange
Ratio, and all references to the Exchange Ratio in this Agreement shall be
deemed to be to the Exchange Ratio as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 1.8) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Exchange Agent or the Parent, such
Certificates shall be cancelled and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Exchange Agent, the posting by such person of a bond,
in such reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 1.8 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.7.
Section 1.14 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.15 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions specified in this
Agreement to occur at the Closing shall take place at the offices of Dorsey &
Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota, at 10:00 a.m.,
local time, no later than the second business day following the day on which the
last of the conditions set forth in Article VI shall have been fulfilled or
waived (if permissible) or at such other time and place as Parent and the
Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of its place of incorporation and has the requisite corporate
power and authority to carry on its business as now being conducted. Each
Subsidiary (as hereinafter defined) of Parent is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority to carry on its
business as now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power or authority would not,
individually or in the aggregate, have a Material Adverse Effect (as hereinafter
defined) on Parent. Parent and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent. For purposes of this Agreement (a) "Material Adverse Change" or
"Material Adverse
Effect" means, when used with respect to Parent or the Company, as the case may
be, any change or effect that is or could reasonably be expected (as far as can
be foreseen at the time) to be materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and its
Subsidiaries, taken as a whole, or the Company and its Subsidiaries, taken as a
whole, as the case may be; provided, however, that in determining whether a
Material Adverse Change or Material Adverse Effect has occurred with respect to
either referenced party, any change or effect, to the extent it is attributable
to changes in prevailing interest rates, to any change in general economic
conditions affecting companies in industries similar to the industries in which
the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may
be, operate or to the actions described in Section 2.1 of the Company Letter (as
hereinafter defined) shall not be considered when determining if a Material
Adverse Change or Material Adverse Effect has occurred; and (b) "Subsidiary"
means any corporation, partnership, limited liability company, joint venture or
other legal entity of which Parent or the Company, as the case may be (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, limited liability
company, joint venture or other legal entity.
Section 2.2 Capital Structure. As of the date hereof, the
authorized capital stock of Parent consists of 1,000,000,000 shares of Parent
Common Stock and 20,000,000 shares of Preferred Stock, no par value (the "Parent
Preferred Stock"). At the close of business on April 3, 1998, (i) 186,696,453
shares of Parent Common Stock were issued and outstanding all of which were
validly issued, fully paid and nonassessable and free of preemptive rights, (ii)
39,823,149 shares of Parent Common Stock were held in treasury of Parent or by
Subsidiaries of Parent, (iii) 1,895,250 shares of Preferred Redeemable Increased
Dividend Equity Securities of Parent (the "Parent PRIDES") were issued and
outstanding under which Parent had the obligation to deliver 6,481,755 shares of
Parent Common Stock, (iv) 90,000 shares of Series E Preferred Stock held by
Bankers National Life Insurance Company, a wholly owned subsidiary of Parent,
were issued and outstanding, (v) 10,074,900 FELINE PRIDES of Parent ("FELINE
PRIDES") were issued and outstanding under which Parent has the obligation to
deliver 9,463,332 shares of Parent Common Stock, (vi) $29,128,000 in principal
amount of 6.5% Convertible Subordinated Notes of Parent due 2005, which debt is
convertible into an aggregate of 2,241,691 shares of Parent Common Stock, (vii)
$86,038,000 in principal amount of 6.5% Convertible Subordinated Notes of
Pioneer Financial Services, Inc. due 2003, which notes are convertible into an
aggregate of 3,044,454 shares of Parent Common Stock, (viii) 700,000 warrants to
purchase Parent Common Stock, (ix) 23,974,665 shares of Parent Common Stock were
reserved for issuance pursuant to outstanding options to purchase shares of
Parent Common Stock and other benefits granted under Parent's benefit plans (the
"Parent Stock Plans"), or pursuant to any plans assumed by Parent Company in
connection with any acquisition, business combination or similar transaction and
(x) 15,945,087 shares of Parent Common Stock were reserved for issuance upon
conversion of
the Parent PRIDES and FELINE PRIDES. As of the date of this Agreement, except
(i) as set forth above and (ii) as set forth in the Parent SEC Documents (as
hereinafter defined), no shares of capital stock or other voting securities of
Parent were issued, reserved for issuance or outstanding. All of the shares of
Parent Common Stock issuable in exchange for Company Common Stock at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. As of the date of this Agreement, except for (i) this Agreement, (ii) as
set forth above, or (iii) as disclosed in any Parent SEC Documents and (iv)
except as set forth in Section 2.2 of the letter dated the date hereof and
delivered on the date hereof by Parent to the Company, which letter relates to
this Agreement and is designated therein as the Parent Letter (the "Parent
Letter"), there are no options, warrants, calls, rights or agreements to which
Parent or any of its wholly owned Subsidiaries is a party or by which any of
them is bound obligating Parent or any of its wholly owned Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Parent or any of its wholly owned Subsidiaries or
obligating Parent or any of its wholly owned Subsidiaries to grant, extend or
enter into any such option, warrant, call, right or agreement. Except as set
forth in Section 2.2 of the Parent Letter, each outstanding share of capital
stock of each Subsidiary of Parent is duly authorized, validly issued, fully
paid and nonassessable and, except as disclosed in the Parent SEC Documents
filed prior to the date of this Agreement, each such share is owned by Parent or
another Subsidiary of Parent, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever. Except
as set forth above, Parent does not have any outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. All of Parent's material
Subsidiaries are wholly owned by Parent. Exhibit 21 to Parent's Annual Report on
Form 10-K for the year ended December 31, 1997 as filed with the Securities and
Exchange Commission (the "SEC") (the "Parent Annual Report"), is a true,
accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC.
Section 2.3 Authority. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Sub have declared the Merger
advisable and fair to and in the best interest of Parent and Sub, respectively,
and their stockholders, approved and adopted this Agreement in accordance with
the Business Corporation Law of the State of Indiana and the DGCL, respectively,
and the Board of Directors of Parent has resolved to recommend the approval by
Parent's stockholders of the issuance of Parent Common Stock in connection with
the Merger (the "Share Issuance"). Each of Parent and Sub has all requisite
corporate power and authority to enter into this Agreement, Parent has all
requisite corporate power and authority to enter into the Stock Option
Agreement, and, subject to approval by the stockholders of Parent of the Share
Issuance, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement by Parent and Sub, the execution and
delivery of the Stock Option Agreement by
Parent and the consummation by Parent and Sub of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub, subject to (x) approval by the stockholders of
Parent of the Share Issuance and (y) the filing of appropriate Merger documents
as required by the DGCL. This Agreement and the consummation of the transactions
contemplated hereby have been approved by the sole stockholder of Sub. This
Agreement has been duly executed and delivered by Parent and Sub, the Stock
Option Agreement has been duly executed and delivered by Parent, and (assuming
the valid authorization, execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the validity and binding effect hereof and
thereof on the Company) this Agreement constitutes the valid and binding
obligation of Parent and Sub enforceable against each of them in accordance with
its terms and the Stock Option Agreement constitutes the valid and binding
obligation of Parent enforceable against Parent in accordance with its terms.
The Share Issuance and the filing of a registration statement on Form S-4 with
the SEC by Parent under the Securities Act of 1933, as amended (together with
the rules and regulations promulgated thereunder, the " Securities Act"), for
the purpose of registering the shares of Parent Common Stock to be issued in the
Merger (together with any amendments or supplements thereto, whether prior to or
after the effective date thereof, the "Registration Statement") have been duly
authorized by Parent's Board of Directors.
Section 2.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 2.4 have been obtained and all filings and obligations described in this
Section 2.4 have been made, and except as set forth in Section 2.4 of the Parent
Letter, the execution and delivery of this Agreement and the Stock Option
Agreement do not, and the consummation of the transactions contemplated hereby
and thereby and compliance with the provisions hereof and thereof will not,
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Parent or any of its Subsidiaries under,
any provision of (i) the Amended and Restated Articles of Incorporation or the
Amended and Restated By-Laws of Parent or the Certificate of Incorporation or
Bylaws of Sub, (ii) any provision of the comparable charter or organization
documents of any of Parent's Subsidiaries, (iii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its Subsidiaries
or (iv) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent, materially impair the ability of Parent or Sub to
perform their respective obligations hereunder or under the Stock Option
Agreement or prevent the consummation of any of the transactions contemplated
hereby or thereby. No filing or
registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement or the Stock Option Agreement
by Parent or Sub or is necessary for the consummation of the Merger and the
other transactions contemplated by this Agreement or the Stock Option Agreement,
except for (i) in connection, or in compliance, with the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act and the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), (ii) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant authorities
of other states in which the Company or any of its Subsidiaries is qualified to
do business, (iii) such filings, authorizations, orders and approvals as may be
required by state takeover laws (the " State Takeover Approvals"), (iv) such
filings as may be required in connection with the taxes described in Section
5.11, (v) applicable requirements, if any, of state securities or "blue sky"
laws ("Blue Sky Laws") and the NYSE, (vi) as may be required under foreign laws,
(vii) such filings and consents as may be required under federal and state
commercial finance, lending and banking laws, (viii) any required filings and/or
notices required under the insurance laws of the jurisdictions set forth in
Section 2.4 of the Parent Letter and (ix) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, materially impair the ability of Parent or Sub to
perform its obligations hereunder or under the Stock Option Agreement or prevent
the consummation of any of the transactions contemplated hereby or thereby.
Section 2.5 SEC Documents and Other Reports. Parent has filed
all required documents with the SEC since January 1, 1995 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of Parent included in the Parent
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles (except, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented in all material respects
the consolidated financial position of Parent and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as set forth
in Section 2.5 of the Parent Letter, as disclosed in the Parent SEC Documents or
as required by generally accepted accounting principles, Parent has not, since
December 31, 1997, made any change in the accounting practices or policies
applied in the preparation of financial statements.
Section 2.6 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the joint proxy
statement/prospectus included therein relating to the Stockholder Meetings (as
defined in Section 5.1) (together with any amendments or supplements thereto,
the "Joint Proxy Statement") will (i) in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or (ii) in the
case of the Joint Proxy Statement, at the time of the mailing of the Joint Proxy
Statement, at the time of each of the Stockholder Meetings and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
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. If at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its Subsidiaries shall occur which
is required to be described in the Joint Proxy Statement or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Parent and the Company. The Registration
Statement will comply (with respect to Parent) as to form in all material
respects with the provisions of the Securities Act, and the Joint Proxy
Statement will comply (with respect to Parent) as to form in all material
respects with the provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except as
disclosed in Parent SEC Documents filed with the SEC prior to the date of this
Agreement, since December 31, 1997, (A) Parent and its Subsidiaries have not
incurred any material liability or obligation (indirect, direct or contingent),
or entered into any material oral or written agreement or other transaction,
that is not in the ordinary course of business or that would result in a
Material Adverse Effect on Parent, (B) Parent and its Subsidiaries have not
sustained any loss or interference with their business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had a Material Adverse Effect on Parent, and (C) there has
been no event causing a Material Adverse Effect on Parent, nor any development
that would, individually or in the aggregate, result in a Material Adverse
Effect on Parent.
Section 2.8 Permits and Compliance. Each of Parent and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any
Governmental Entity necessary for Parent or any of its Subsidiaries to own,
lease and operate its properties or to carry on its business as it is now being
conducted (the "Parent Permits"), except where the failure to have any of the
Parent Permits would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, and, as of the date of this Agreement, no suspension
or cancellation of any of the Parent Permits is pending or, to the Knowledge of
Parent (as hereinafter defined), threatened, except where the suspension or
cancellation of any of the Parent Permits would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. Neither Parent nor any of
its Subsidiaries is in violation of (A) its charter, by-laws or other
organizational documents, (B) any applicable law, ordinance, administrative or
governmental rule or regulation or (C) any order, decree or judgment of any
Governmental Entity having jurisdiction over Parent or any of its Subsidiaries,
except, in the case of clauses (A), (B) and (C), for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. Except as disclosed in the Parent SEC Documents filed prior to the date
of this Agreement or in Section 2.8 of the Parent Letter, as of the date hereof
there is no contract or agreement that is material to the business, assets,
liabilities, financial condition or results of operations of Parent and its
Subsidiaries, taken as a whole. Except as set forth in the Parent SEC Documents
filed prior to the date of this Agreement or Section 2.8 of the Parent Letter,
no event of default or event that, but for the giving of notice or the lapse of
time or both, would constitute an event of default exists or, upon the
consummation by Parent or Sub of the transactions contemplated by this Agreement
or the Stock Option Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
contractual license or other agreement or instrument to which Parent or any of
its Subsidiaries is a party or by which Parent or any such Subsidiary is bound
or to which any of the properties, assets or operations of Parent or any such
Subsidiary is subject, other than any defaults that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent. For purposes of
this Agreement, "Knowledge of Parent" means the actual knowledge of the
individuals identified in Section 2.8 of the Parent Letter.
Section 2.9 Tax Matters. Except as otherwise set forth in
Section 2.9 of the Parent Letter, (i) Parent and each of its Subsidiaries have
filed all federal, and all material state, local, foreign and provincial, Tax
Returns (as hereinafter defined) required to have been filed or appropriate
extensions therefor have been properly obtained, and such Tax Returns are
correct and complete, except to the extent that any failure to so file or any
failure to be correct and complete would not, individually or in the aggregate,
have a Material Adverse Effect
on Parent; (ii) all Taxes (as hereinafter defined) shown to be due on such Tax
Returns have been timely paid or extensions for payment have been properly
obtained, or such Taxes are being timely and properly contested, (iii) Parent
and each of its Subsidiaries have complied in all material respects with all
rules and regulations relating to the withholding of Taxes except to the extent
that any failure to comply with such rules and regulations would not,
individually or in the aggregate, have a Material Adverse Effect on Parent; (iv)
neither Parent nor any of its Subsidiaries has waived any statute of limitations
in respect of its Taxes; (v) any Tax Returns referred to in clause (i) relating
to federal and state income Taxes have been examined by the Internal Revenue
Service (the "IRS") or the appropriate state taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired; (vi) no issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; and (vii) all deficiencies
asserted or assessments made as a result of any examination of such Tax Returns
by any taxing authority have been paid in full or are being timely and properly
contested. The representations set forth in the Parent Tax Certificate attached
to the Parent Letter, if made on the date hereof (assuming the Merger were
consummated on the date hereof), would be true and correct. For purposes of this
Agreement: (i) "Taxes" means any federal, state, local, foreign or provincial
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or added minimum, ad valorem,
value-added, transfer or excise tax, or other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty imposed by any Governmental Entity, and (ii) "Tax Return"
means any return, report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 2.10 Actions and Proceedings. Except as set forth in
the Parent SEC Documents filed prior to the date of this Agreement, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving Parent or any of its Subsidiaries, or
against or involving any of the present or former directors, officers,
employees, consultants, agents or stockholders of Parent or any of its
Subsidiaries, as such, any of its or their properties, assets or business that,
individually or in the aggregate, would have a Material Adverse Effect on Parent
or materially impair the ability of Parent to perform its obligations hereunder.
As of the date of this Agreement, there are no actions, suits or claims or
legal, administrative or arbitrative proceedings or investigations pending or,
to the Knowledge of Parent, threatened against or involving Parent or any of its
Subsidiaries or any of its or their present or former directors, officers,
employees, consultants, agents or stockholders, as such, or any of its or their
properties, assets or business that, individually or in the aggregate, would
have a Material Adverse Effect on Parent or materially impair the ability of
Parent to perform its obligations hereunder. As of the date hereof, there are no
actions, suits, labor disputes or other litigation, legal or administrative
proceedings or governmental investigations pending or, to the Knowledge of
Parent, threatened against or affecting Parent or any of its Subsidiaries or any
of its or their present or former officers, directors, employees, consultants,
agents or stockholders, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Stock Option Agreement.
Section 2.11 Certain Agreements. Neither Parent nor any of its
Subsidiaries
is a party to any material oral or written agreement or plan, including any
employment agreement, severance agreement, stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the Stock Option Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or the Stock Option Agreement.
Section 2.12 ERISA. (a) Except as would not have a Material
Adverse Effect on Parent, each Parent Plan complies in all respects with Title
IV of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
, the Code and all other applicable statutes and governmental rules and
regulations, and (i) no "reportable event" (within the meaning of Section 4043
of ERISA) has occurred with respect to any Parent Plan that is likely to have
individually or in the aggregate, a Material Adverse Effect on Parent and (ii)
neither Parent nor any of its ERISA Affiliates (as hereinafter defined) has
withdrawn from any Parent Plan or Parent Multiemployer Plan (as hereinafter
defined) or instituted, or is currently considering taking, any action to do so.
Except as would not have a Material Adverse Effect on Parent, no Parent Plan,
nor any trust created thereunder, has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived.
(b) With respect to the Parent Plans, no event has occurred
and, to the Knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any ERISA Affiliate or Parent
Plan fiduciary could be subject to any liability under the terms of such Parent
Plans, ERISA, the Code or any other applicable law, other than liabilities for
benefits payable in the normal course, which would have a Material Adverse
Effect on Parent.
(c) As used herein, (i) "Parent Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Parent Multiemployer Plan)),
a "welfare plan" (as defined in Section 3(1) of ERISA), or any bonus, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, holiday pay, vacation, severance, death
benefit, sick leave, fringe benefit, personnel policy, insurance or other plan,
arrangement or understanding, in each case established or maintained by Parent
or any of its ERISA Affiliates or as to which Parent or any of its ERISA
Affiliates has contributed or otherwise may have any liability, (ii) "Parent
Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which Parent or any of its ERISA Affiliates is or has
been obligated to contribute or otherwise may have any liability, and (iii) with
respect to any person, "ERISA Affiliate" means any trade or business (whether or
not incorporated) which is under common control or would be considered a single
employer with such person pursuant to Section 414(b), (c), (m) or (o) of the
Code and the regulations promulgated under those sections or pursuant to Section
4001(b) of ERISA and the regulations promulgated thereunder.
Section 2.13 Compliance with Worker Safety and Environmental
Laws. The properties, assets and operations of Parent and its Subsidiaries are
in compliance with all applicable federal, state, local and foreign laws, rules
and regulations, orders, decrees, judgments, permits and licenses relating to
public and worker health and safety (collectively, "Worker Safety Laws") and the
protection and clean-up of the environment and activities or conditions related
thereto, including, without limitation, those relating to the generation,
handling, disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. With respect to such properties, assets and operations, including any
previously owned, leased or operated properties, assets or operations, there are
no events, conditions, circumstances, activities, practices, incidents, actions
or plans of Parent or any of its Subsidiaries that may interfere with or prevent
compliance or continued compliance with applicable Worker Safety Laws and
Environmental Laws, other than any such interference or prevention as would not,
individually or in the aggregate with any such other interference or prevention,
have a Material Adverse Effect on Parent.
Section 2.14 Labor Matters. Neither Parent nor any of its
Subsidiaries has engaged in any unfair labor practice with respect to any
persons employed by or otherwise performing services primarily for Parent or any
of its Subsidiaries (the "Parent Business Personnel"), and there is no unfair
labor practice complaint or grievance against Parent or any of its Subsidiaries
by the National Labor Relations Board or any comparable state agency pending or
threatened in writing with respect to Parent Business Personnel, except where
such unfair labor practice, complaint or grievance would not have a Material
Adverse Effect on Parent. There is no labor strike, dispute, slowdown or
stoppage pending or, to the Knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries which may interfere with the respective
business activities of Parent or any of its Subsidiaries, except where such
dispute, strike or work stoppage would not have a Material Adverse Effect on
Parent.
Section 2.15 Intellectual Property. Parent and its
Subsidiaries have through ownership or licensing all patents, trademarks, trade
names, service marks, trade secrets, copyrights and other proprietary
intellectual property rights (collectively, "Intellectual Property Rights") as
are necessary in connection with the business of Parent and its Subsidiaries,
taken as a whole, except where the failure to have such Intellectual Property
Rights would not have a Material Adverse Effect on Parent. Neither Parent nor
any of its Subsidiaries has infringed any Intellectual Property Rights of any
third party other than any infringements that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent.
Section 2.16 Pooling of Interests; Reorganization. To the
Knowledge of Parent, neither Parent nor any of its Subsidiaries has (i) taken
any action or failed to take any action which action or failure would jeopardize
the treatment of the Merger as a
pooling of interests for accounting purposes or (ii) taken any action or failed
to take any action which action or failure would jeopardize the qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the Code.
Section 2.17 Required Vote of Parent Stockholders. The
affirmative vote of a majority of the votes cast on the Share Issuance is
required to approve the Share Issuance, provided that the total votes cast on
the proposal represent a majority of the outstanding shares of Parent Common
Stock. No other vote of the securityholders of Parent is required by law, the
Amended and Restated Articles of Incorporation or the Amended and Restated
By-Laws of Parent or otherwise in order for Parent to consummate the Merger and
the transactions contemplated hereby.
Section 2.18 Operations of Sub. Sub is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
Section 2.19 Opinion of Financial Advisor. Parent has received
the written opinion of Merrill Lynch & Co., dated the date hereof, to the effect
that, as of the date hereof, the Exchange Ratio is fair to Parent from a
financial point of view, a copy of which opinion has been delivered to the
Company.
Section 2.20 Brokers. No broker, investment banker or other
person, other than Merrill Lynch & Co., the fees and expenses of which will be
paid by Parent (as reflected in an agreement between Merrill Lynch & Co. and
Parent, a copy of which has been furnished to the Company), is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
Section 2.21 State Takeover Statutes; Certain Charter
Provisions. The Board of Directors of Parent has, to the extent such statutes
are applicable, taken all action (including appropriate approvals of the Board
of Directors of Parent) necessary to exempt Parent, its Subsidiaries and
affiliates, the Merger, this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from Section 23-1-43-5 of the
Indiana Business Corporation Law and Article 8 of Parent's Amended and Restated
Article of Incorporation. To the Knowledge of Parent, no other state takeover
statutes or similar charter or bylaw provisions are applicable to the Merger,
this Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 3.2 Capital Structure. As of the date hereof, the
authorized capital stock of the Company will consist of 400,000,000 shares of
Company Common Stock and 15,000,000 shares of preferred stock, par value $.01
per share ("Company Preferred Stock"). At the close of business on April 3,
1998, (i) 134,012,054 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) 7,887,263 shares of Company Common Stock were
held in the treasury of the Company or by Subsidiaries of the Company and (iii)
10,732,932 shares of Company Common Stock were reserved for future issuance
pursuant to the Company's Key Executive Bonus Program, 1987 Stock Option Plan,
Key Executive Stock Bonus Plan, Restated 1992 Supplemental Stock Option Plan,
Chief Executive Cash Bonus and Stock Option Plan, 1995 Employee Stock Incentive
Plan and 1998 Company Stock Option Plan (collectively, the "Company Stock Option
Plans"). The Company Stock Option Plans are the only benefit plans of the
Company or its Subsidiaries under which any securities of the Company or any of
its Subsidiaries are issuable. No shares of Company Preferred Stock are
outstanding. As of the date of this Agreement, except (i) as set forth above,
and (ii) as set forth in the Company SEC Documents (as hereinafter defined), no
shares of capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. As of the date of this Agreement, except
for stock options covering not in excess of 10,297,132 shares of Company Common
Stock issued under the Company Stock Option Plans (collectively, the "Company
Stock Options"), and the warrant held by Lehman Brothers Inc. there are no
options, warrants, calls,
rights or agreements to which the Company or any of its Subsidiaries is a party
or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or agreement. Each
outstanding share of capital stock of each Subsidiary of the Company that is a
corporation is duly authorized, validly issued, fully paid and nonassessable
and, except as disclosed in the Company SEC Documents filed prior to the date of
this Agreement, each such share is owned by the Company or another Subsidiary of
the Company, free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on voting rights,
charges and other encumbrances of any nature whatsoever. The Company does not
have any outstanding bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter. Exhibit 21 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, as filed with the SEC (the "Company Annual Report"), is
a true, accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC.
Section 3.3 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company has declared the Merger
advisable and fair to and in the best interest of the Company and its
stockholders, approved this Agreement in accordance with the DGCL, resolved to
recommend the adoption of this Agreement by the Company's stockholders and
directed that this Agreement be submitted to the Company's stockholders for
adoption. The Company has all requisite corporate power and authority to enter
into this Agreement and the Stock Option Agreement, to consummate the
transactions contemplated by the Stock Option Agreement and, subject to approval
by the stockholders of the Company of this Agreement, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the Stock Option Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of this Agreement, to (x) approval of this Agreement by the
stockholders of the Company and (y) the filing of appropriate Merger documents
as required by the DGCL. This Agreement and the Stock Option Agreement have been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the Stock Option Agreement by Parent and the validity and binding effect of the
Agreement on Parent and Sub and the Stock Option Agreement on Parent) constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms. The filing of the Joint Proxy Statement with the
SEC and the issuance of the shares of Company Common Stock pursuant to the Stock
Option Agreement have been duly authorized by the Company's Board of Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 3.4 have been obtained and all filings and obligations described in this
Section 3.4 have been made, except as set forth in Section 3.4 of the Company
Letter, the execution and delivery of this Agreement and the Stock Option
Agreement do not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the Certificate
of Incorporation or Restated Bylaws of the Company, (ii) any provision of the
comparable charter or organization documents of any of the Company's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, rights, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement or prevent the
consummation of any of the transactions contemplated hereby or thereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
the Stock Option Agreement by the Company or is necessary for the consummation
of the Merger and the other transactions contemplated by this Agreement or the
Stock Option Agreement, except for (i) in connection, or in compliance, with the
provisions of the HSR Act, the Securities Act and the Exchange Act, (ii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is qualified to do business,
(iii) such filings, authorizations, orders and approvals as may be required to
obtain the State Takeover Approvals, (iv) such filings as may be required in
connection with the taxes described in Section 5.11, (v) applicable
requirements, if any, of Blue Sky Laws, the NYSE and the Pacific Stock Exchange,
(vi) as may be required under foreign laws, (vii) such filings and consents as
may be required under federal and state commercial finance, lending and banking
laws, and (viii) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations
hereunder or under the Stock Option Agreement or prevent the consummation of any
of the transactions contemplated hereby or thereby.
Section 3.5 SEC Documents and Other Reports. The Company has
filed all required documents with the SEC since January 1, 1995 (the "Company
SEC Documents"). Except as set forth in Section 3.5 of the letter dated the date
hereof and delivered on the date hereof by the Company to Parent, which letter
relates to this Agreement and is designated therein as the Company Letter (the
"Company Letter"), as of their respective dates, the Company SEC Documents
complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and, at the
respective times they were filed, none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth in Section 3.5 of the Company Letter, the consolidated financial
statements (including, in each case, any notes thereto) of the Company included
in the Company SEC Documents (the "Financial Statements") complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents or as required by generally accepted accounting
principles, the Company has not, since December 31, 1997, made any change in the
accounting practices or policies applied in the preparation of financial
statements. Except as and to the extent set forth in Section 3.5 of the Company
Letter or in the Company Annual Report, neither the Company nor any of its
Subsidiaries had as of December 31, 1997 any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on the consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto)
included in the Financial Statements that are not so reflected.
Section 3.6 Registration Statement and Joint Proxy Statement.
None of the information to be supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement will (i) in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading or (ii) in the case of the Joint
Proxy Statement, at the time of the mailing of the Joint Proxy Statement, at the
time of each of the Stockholder Meetings and at the Effective Time, contain any
untrue statement of a material fact or omit to state any 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. If at any
time prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries shall occur which is required
at that time to be described in the Joint Proxy Statement or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Parent and the Company. The Registration
Statement will comply (with
respect to the Company) as to form in all material respects with the provisions
of the Securities Act, and the Joint Proxy Statement will comply (with respect
to the Company) as to form in all material respects with the provisions of the
Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date of
this Agreement or as disclosed in Section 3.12(d) of the Company Letter, since
December 31, 1997, (A) the Company and its Subsidiaries have not incurred any
material liability or obligation (indirect, direct or contingent), or entered
into any material oral or written agreement or other transaction, that is not in
the ordinary course of business or that would result in a Material Adverse
Effect on the Company, (B) the Company and its Subsidiaries have not sustained
any loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) that
has had a Material Adverse Effect on the Company, (C) there has been no change
in the capital stock of the Company except for the issuance of shares of the
Company Common Stock pursuant to Company Stock Options and no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its stock, except for the regular quarterly dividend of not more than $.0875 per
share of Company Common Stock, (D) there has not been (x) any granting by the
Company or any of its Subsidiaries to any executive officer of the Company or
any of its Subsidiaries of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Company SEC Documents, (y) any granting by
the Company or any of its Subsidiaries to any such executive officer of any
increase in severance or termination agreements in effect as of the date of the
most recent audited financial statements included in the Company SEC Documents
or (z) any entry by the Company or any of its Subsidiaries into any employment,
severance or termination agreement with any such executive officer and (E) there
has been no event causing a Material Adverse Effect on the Company, nor any
development that would, individually or in the aggregate, result in a Material
Adverse Effect on the Company.
Section 3.8 Permits and Compliance. Each of the Company and
its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and, as of the date of
this Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the Company
Permits would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries is in
violation of (A) its charter, by-laws or
other organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order, decree or
judgment of any Governmental Entity having jurisdiction over the Company or any
of its Subsidiaries, except, in the case of clauses (A), (B) and (C), for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or as disclosed in Section 3.8 of the
Company Letter, as of the date hereof there is no contract or agreement that is
material to the business, properties, assets, liabilities, condition (financial
or otherwise), results of operations or prospects of the Company and its
Subsidiaries, taken as a whole. Except as set forth in the Company SEC Documents
filed prior to the date of this Agreement or as disclosed in Section 3.8 of the
Company Letter, no event of default or event that, but for the giving of notice
or the lapse of time or both, would constitute an event of default exists or,
upon the consummation by the Company of the transactions contemplated by this
Agreement or the Stock Option Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, contractual license or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or operations of
the Company or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. As of the date of this Agreement, set forth in Section 3.8 of the
Company Letter is a description of any material changes to the amount and terms
of the indebtedness of the Company and its Subsidiaries as described in the
Company Annual Report. For purposes of this Agreement, "Knowledge of the
Company" means the actual knowledge of the individuals identified on Section 3.8
of the Company Letter.
Section 3.9 Tax Matters. Except as otherwise set forth in
Section 3.9 of the Company Letter, (i) the Company and each of its Subsidiaries
have filed all federal, and all material state, local, foreign and provincial,
Tax Returns required to have been filed or appropriate extensions therefor have
been properly obtained, and such Tax Returns are correct and complete, except to
the extent that any failure to so file or any failure to be correct and complete
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; (ii) all Taxes shown to be due on such Tax Returns have been timely
paid or extensions for payment have been properly obtained, or such Taxes are
being timely and properly contested; (iii) the Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations would not, individually or in
the aggregate, have a Material Adverse Effect on the Company; (iv) neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes; (v) any Tax Returns referred to in clause (i) relating to
federal and state income Taxes have been examined by the IRS or the appropriate
state taxing authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to
be filed has expired; (vi) no issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; (vii) all deficiencies asserted
or assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full or are being timely and properly
contested; and (viii) no withholding is required under Section 1445 of the Code
in connection with the Merger. The representations set forth in the Company Tax
Certificate attached to the Company Letter, if made on the date hereof (assuming
the Merger were consummated on the date hereof), would be true and correct.
Section 3.10 Actions and Proceedings. Except as set forth in
the Company SEC Documents filed prior to the date of this Agreement or in
Section 3.10 of the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving
the Company or any of its Subsidiaries, or against or involving any of the
present or former directors, officers, employees, consultants, agents or
stockholders of the Company or any of its Subsidiaries, as such, any of its or
their properties, assets or business or any Company Plan (as hereinafter
defined) that, individually or in the aggregate, would have a Material Adverse
Effect on the Company or materially impair the ability of the Company to perform
its obligations hereunder or under the Stock Option Agreement. As of the date of
this Agreement, there are no actions, suits or claims or legal, administrative
or arbitrative proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its Subsidiaries
or any of its or their present or former directors, officers, employees,
consultants, agents or stockholders, as such, or any of its or their properties,
assets or business or any Company Plan that, individually or in the aggregate,
would have a Material Adverse Effect on the Company or materially impair the
ability of the Company to perform its obligations hereunder or under the Stock
Option Agreement. As of the date hereof, there are no actions, suits, labor
disputes or other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
its or their present or former officers, directors, employees, consultants,
agents or stockholders, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Stock Option Agreement.
Section 3.11 Certain Agreements. Except as set forth in
Section 3.11 of the Company Letter, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
employment agreement, severance agreement, stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the Stock Option Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or the Stock Option Agreement (collectively, "Transaction
Agreements"). No holder of any option to purchase shares of Company Common
Stock, or shares of Company Common Stock
granted in connection with the performance of services for the Company or its
Subsidiaries, is or will be entitled to receive cash from the Company or any
Subsidiary in lieu of or in exchange for such option or shares as a result of
the transactions contemplated by this Agreement or the Stock Option Agreement.
Section 3.11 of the Company Letter sets forth (i) for each officer, director or
employee who is a party to, or will receive benefits under, any Transaction
Agreement, the total amount that each such person may receive, or is eligible to
receive, assuming that the transactions contemplated by this Agreement is
consummated on the date hereof, and (ii) the total amount of indebtedness owed
to the Company or its Subsidiaries from each officer or director of the Company
and its Subsidiaries.
Section 3.12 ERISA. (a) Each Company Plan is listed in Section
3.12(a) of the Company Letter. Except as would not have a Material Adverse
Effect on the Company, each Company Plan complies in all respects with ERISA,
the Code and all other applicable statutes and governmental rules and
regulations, and (i) no "reportable event" (within the meaning of Section 4043
of ERISA) has occurred with respect to any Company Plan that is likely to have
individually or in the aggregate, a Material Adverse Effect on the Company, (ii)
neither the Company nor any of its ERISA Affiliates (as hereinafter defined) has
withdrawn from Company Multiemployer Plan (as hereinafter defined) or
instituted, or is currently considering taking, any action to do so, and (iii)
no action has been taken, or is currently being considered, to terminate any
Company Plan subject to Title IV of ERISA. No Company Plan, nor any trust
created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived.
(b) Except as listed in Section 3.12(b) of the Company Letter,
with respect to the Company Plans, no event has occurred and, to the Knowledge
of the Company, there exists no condition or set of circumstances in connection
with which the Company or any ERISA Affiliate or Company Plan fiduciary could be
subject to any liability under the terms of such Company Plans, ERISA, the Code
or any other applicable law, other than liabilities for benefits payable in the
normal course, which would have a Material Adverse Effect on the Company. All
Company Plans that are intended to be qualified under Section 401(a) of the Code
have been determined by the IRS to be so qualified, or a timely application for
such determination is now pending or a request for such a determination filed
within the remedial amendment period of Section 401(b) of the Code is pending,
and the Company is not aware of any reason why any such Company Plan is not so
qualified in operation. Neither the Company nor any of its ERISA Affiliates has
been notified by any Company Multiemployer Plan that such Company Multiemployer
Plan is currently in reorganization or insolvency under and within the meaning
of Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends
to terminate or has been terminated under Section 4041A of ERISA. Except as
disclosed in Section 3.12(b) of the Company Letter, neither the Company nor any
of its ERISA Affiliates has any liability or obligation under any welfare plan
to provide benefits after termination of employment to any employee or dependent
other than as required by Section 4980B of the Code.
(c) As used herein, (i) "Company Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Company Multiemployer Plan)),
a "welfare plan" (as defined in Section 3(1) of ERISA), or any bonus, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, holiday pay, vacation, severance, death
benefit, sick leave, fringe benefit, personnel policy, insurance or other plan,
arrangement or understanding, in each case established or maintained by the
Company or any of its ERISA Affiliates or as to which the Company or any of its
ERISA Affiliates has contributed or otherwise may have any liability, and (ii)
"Company Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which the Company or any of its ERISA Affiliates is or
has been obligated to contribute or otherwise may have any liability.
(d) Item 3.12(d) of the Company Letter contains a list of all
(i) severance and employment agreements with employees of the Company and each
ERISA Affiliate, (ii) severance programs and policies of the Company and each
ERISA Affiliate with or relating to its employees and (iii) plans, programs,
agreements and other arrangements of the Company and each ERISA Affiliate with
or relating to its employees containing change of control or similar provisions.
Section 3.13 Compliance with Worker Safety and Environmental
Laws. The properties, assets and operations of the Company and its Subsidiaries
are in compliance with all applicable Worker Safety Laws and Environmental Laws,
except for any violations that, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. With respect to such properties,
assets and operations, including any previously owned, leased or operated
properties, assets or operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of the Company
or any of its Subsidiaries that may interfere with or prevent compliance or
continued compliance with applicable Worker Safety Laws and Environmental Laws,
other than any such interference or prevention as would not, individually or in
the aggregate with any such other interference or prevention, have a Material
Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries (the
"Company Business Personnel"), and there is no unfair labor practice complaint
or grievance against the Company or any of its Subsidiaries by the National
Labor Relations Board or any comparable state agency pending or threatened in
writing with respect to the Company Business Personnel, except where such unfair
labor practice, complaint or grievance would not have a Material Adverse Effect
on the Company. There is no labor strike, dispute, slowdown or stoppage pending
or, to the Knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries,
except where such dispute, strike or work stoppage would not have a Material
Adverse Effect on the Company.
Section 3.15 Intellectual Property. The Company and its
Subsidiaries have through ownership or licensing all Intellectual Property
Rights as are necessary in connection with the business of the Company and its
Subsidiaries, taken as a whole, except where the failure to have such
Intellectual Property Rights would not have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has infringed any
Intellectual Property Rights of any third party other than any infringements
that, individually and in the aggregate, would not have a Material Adverse
Effect on the Company.
Section 3.16 Opinion of Financial Advisor. The Company has
received the written opinion of Lehman Brothers Inc., dated the date hereof, to
the effect that, as of the date hereof, the Exchange Ratio is fair to the
Company's stockholders from a financial point of view, a copy
of which opinion has been delivered to Parent.
Section 3.17 State Takeover Statutes; Certain Charter
Provisions. The Board of Directors of the Company has, to the extent such
statutes are applicable, taken all action (including appropriate approvals of
the Board of Directors of the Company) necessary to exempt Parent, its
Subsidiaries and affiliates, the Merger, this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby from Section 203
of the DGCL and Articles 8 and 9 of the Company's Certificate of Incorporation.
To the Knowledge of the Company, no other state takeover statutes or similar
charter or bylaw provisions are applicable to the Merger, this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby.
Section 3.18 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to adopt this Agreement. No other vote of the
securityholders of the Company is required by law, the Certificate of
Incorporation or Restated Bylaws of the Company or otherwise in order for the
Company to consummate the Merger and the transactions contemplated hereby and in
the Stock Option Agreement.
Section 3.19 Pooling of Interests; Reorganization. To the
Knowledge of the Company, neither it nor any of its Subsidiaries has (i) taken
any action or failed to take any action which action or failure would jeopardize
the treatment of the Merger as a pooling of interests for accounting purposes or
(ii) taken any action or failed to take any action which action or failure would
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
Section 3.20 Brokers. No broker, investment banker or other
person, other than Lehman Brothers Inc., the fees and expenses of which will be
paid by the Company (as
reflected in an agreement between Lehman Brothers Inc. and the Company, a copy
of which has been furnished to Parent), is entitled to any broker's, finder's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement and by the Stock Option Agreement based upon arrangements made
by or on behalf of the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a)
Conduct of Business by the Company. Except as expressly permitted by clauses (i)
through (xvi) of this Section 4.1(a), during the period from the date of this
Agreement through the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, in all material respects carry on its business in the
ordinary course of its business as currently conducted and, to the extent
consistent therewith, use reasonable best efforts to preserve intact its current
business organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement or as set forth in the Company Letter (with specific reference to
the applicable subsection below), the Company shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such (other than (1) regular
quarterly dividends of not more than $.0875 per share of Company Common
Stock declared and paid on dates consistent with past practice and (2)
dividends and other distributions by Subsidiaries), (B) other than in
the case of any Subsidiary, split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock or (C) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire any such shares, voting securities,
equity equivalent or convertible securities, other than (A) the
issuance of shares of Company Common Stock upon the exercise of Company
Stock Options outstanding on the date of this Agreement in accordance
with their
current terms and (B) the issuance of shares of Company Common Stock
pursuant to the Stock Option Agreement;
(iii) amend its charter or by-laws;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation, limited
liability company, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets, other than transactions that are in the ordinary
course of business consistent with past practice and not material to
the Company and its Subsidiaries taken as a whole;
(v) sell, lease or otherwise dispose of, or agree to sell,
sell, lease or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business consistent
with past practice;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A) in the
ordinary course of business consistent with past practices, provided,
that the Company may not, without the written consent of Parent, incur
more than $25,000,000 of indebtedness for borrowed money, other than
borrowings under credit facilities existing on the date hereof (it
being understood that if any new credit facility is established by
Parent for the benefit of the Company or its Subsidiaries or
indebtedness is purchased or guaranteed by Parent or any of its
Subsidiaries, the terms of such extension of credit or guarantee of
Parent or its Subsidiaries shall contain provisions mutually agreed by
Parent and the Company providing for an extension or transition period
for a mutually agreed period following a termination of this Agreement)
and (B) indebtedness, loans, advances, capital contributions and
investments between the Company and any of its wholly owned
Subsidiaries or between any of such wholly owned Subsidiaries;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or any Subsidiary;
(viii) enter into or adopt any, or amend any existing,
severance plan, agreement or arrangement or enter into or amend any
Company Plan or employment or consulting agreement, except as required
by applicable law;
(ix) increase the compensation payable or to become payable to
its directors, officers or employees (except for increases in the
ordinary course of
business consistent with past practice in salaries or wages of
employees of the Company or any of its Subsidiaries who are not
officers of the Company or any of its Subsidiaries) or grant any
severance or termination pay to, or enter into or amend any employment
or severance agreement with, any director or officer of the Company or
any of its Subsidiaries, or establish, adopt, enter into, or, except as
may be required to comply with applicable law, amend in any material
respect or take action to enhance in any material respect or accelerate
any rights or benefits under, any labor, collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement
for the benefit of any director, officer or employee;
(x) knowingly violate or knowingly fail to perform any
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(xi) make any change to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(xii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods;
(xiii) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(xiv) enter into or amend any agreement or contract material
to the Company and its Subsidiaries, taken as a whole, except in the
ordinary course of business consistent with past practices (provided,
however, that the Company may not amend the Common Stock Warrant
Agreement by and between the Company and Lehman Commercial Paper Inc.
dated as of February 13, 1998, as amended as of the date hereof, and
the related Warrant Certificates); or make or agree to make any new
capital expenditure or expenditures which, individually, is in excess
of $5,000,000 or, in the aggregate, are in excess of $60,000,000;
(xv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent financial statements
(or the notes thereto) of the Company included in the Company SEC
Documents or incurred in the ordinary course of business consistent
with past practice; or
(xvi) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(b) Conduct of Business by Parent. During the period from the
date of this Agreement to the Effective Time of the Merger, Parent shall not,
and shall not permit any of its Subsidiaries to (i) declare, set aside or pay
any dividends on, or make any other distributions in respect of, any capital
stock of Parent, except that Parent may continue the declaration and payment of
regular quarterly cash dividends not in excess of $0.20 per share of Parent
Common Stock with usual record and payment dates and in accordance with Parent's
past dividend policy or (ii) issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of Parent's
capital stock.
Section 4.2 No Solicitation. (a) The Company shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any financial advisor, attorney or other
advisor or representative of, the Company or any of its Subsidiaries to, (i)
solicit, initiate or encourage the submission of, any Takeover Proposal (as
hereafter defined), (ii) enter into any agreement with respect to any Takeover
Proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal; provided, however,
that prior to the Company Stockholders Meeting, if the Board of Directors of the
Company reasonably determines the Takeover Proposal constitutes a Superior
Proposal (as defined below), then, to the extent required by the fiduciary
obligations of the Board of Directors of the Company, as determined in good
faith by a majority of the disinterested members thereof after receiving the
advice of independent counsel, the Company may, in response to an unsolicited
request therefor, furnish information with respect to the Company to, and enter
into discussions with, any person pursuant to a customary confidentiality
agreement. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any executive officer
of the Company or any of its Subsidiaries or any financial advisor, attorney or
other advisor or representative of the Company or any of its Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or any
of its Subsidiaries or otherwise, shall be deemed to be a breach of this Section
4.2(a) by the Company. For purposes of this Agreement, "Takeover Proposal" means
any proposal for a merger or other business combination involving the Company or
any of its Subsidiaries or any proposal or offer to acquire in any manner,
directly or indirectly, a substantial equity interest in, a substantial portion
of the voting securities of, or a substantial portion of the assets of the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement and the Stock Option Agreement, and "Superior Proposal" means a
bona fide Takeover Proposal made by a third party which a majority of the
disinterested members of the Board of Directors of the Company determines in its
reasonable good faith judgment to be more favorable to the Company's
stockholders than the Merger (after
receiving the written opinion, with only customary qualifications, of the
Company's independent financial advisor that the value of the consideration
provided for in such proposal exceeds the value of the consideration provided
for in the Merger) and for which financing, to the extent required, is then
committed or which, in the reasonable good faith judgment of a majority of such
disinterested members (after receiving the written advice of the Company's
independent financial advisor), is highly likely to be financed by such third
party.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Sub, the approval or recommendation by
such Board of Directors or any such committee of this Agreement or the Merger or
(ii) approve or recommend, or propose to approve or recommend, any Takeover
Proposal.
(c) The Company shall advise Parent orally (within one
business day) and in writing (as promptly as practicable) of (i) any Takeover
Proposal or any inquiry with respect to or which could lead to any Takeover
Proposal, (ii) the material terms of such Takeover Proposal and (iii) the
identity of the person making any such Takeover Proposal or inquiry. The Company
will keep Parent fully informed of the status and details of any such Takeover
Proposal or inquiry.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
agreement relating to a Takeover Proposal or standstill agreement to which the
Company or any of its Subsidiaries is a party (other than any involving Parent).
During such period, the Company agrees to enforce, to the fullest extent
permitted under applicable law, the provisions of any such agreements,
including, but not limited to, obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
Section 4.4 Pooling of Interests; Reorganization. During the
period from the date of this Agreement through the Effective Time, unless the
other party shall otherwise agree in writing, none of Parent, the Company or any
of their respective Subsidiaries shall (a) knowingly take or fail to take any
action which action or failure would jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes or (b) knowingly take or fail to
take any action which action or failure would jeopardize the qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the Code
or would cause any of the representations and warranties set forth in the
Company Tax Certificate attached to the Company Letter or the Parent Tax
Certificate attached to the Parent Letter to be untrue or incorrect in any
material respect. Between the date of this Agreement and the Effective Time,
Parent and the Company each shall take all reasonable actions necessary to cause
the characterization of the Merger as a pooling of
interests for accounting purposes if such a characterization were jeopardized by
action taken by Parent or the Company, respectively, prior to the Effective
Time.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings. The Company and Parent will each, as
soon as practicable following the date of this Agreement, duly call, give notice
of, convene and hold a meeting of stockholders (respectively, the "Company
Stockholder Meeting" and the "Parent Stockholder Meeting" and, collectively, the
"Stockholder Meetings") for the purpose of considering the approval of this
Agreement (in the case of the Company) and the Share Issuance (in the case of
Parent). The Company and Parent will, through their respective Boards of
Directors, recommend to their respective stockholders adoption or approval of
such matters, as the case may be, shall use all reasonable efforts to solicit
such approvals by their respective stockholders and shall not withdraw such
recommendation, except, in the case of Parent, subject to the fiduciary duties
of the Board of Directors of Parent under applicable law. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant to
the first sentence of this Section 5.1 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of a Takeover Proposal. The Company and Parent shall coordinate and cooperate
with respect to the timing of such meetings and shall use their reasonable best
efforts to hold such meetings on the same day.
Section 5.2 Preparation of the Registration Statement and the Joint
Proxy Statement. The Company and Parent shall promptly prepare and file with the
SEC the Joint Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included as a
prospectus. Each of Parent and the Company shall use its reasonable best efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing. As promptly as practicable after
the Registration Statement shall have become effective, each of Parent and the
Company shall mail the Joint Proxy Statement to its respective stockholders.
Parent shall also take any action reasonably required to be taken under any
applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger and upon the exercise of the Substitute Options (as
defined in Section 5.8), and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action.
Section 5.3 Comfort Letters. (a) The Company shall use its
reasonable best efforts to cause to be delivered to Parent "comfort" letters of
KPMG Peat Marwick LLP, the Company's independent public accountants, dated the
date on which the Registration
Statement shall become effective and as of the Effective Time, and addressed to
Parent and the Company, in form and substance reasonably satisfactory to Parent
and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions such as those
contemplated by this Agreement.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company "comfort" letters of Coopers & Lybrand L.L.P. (or any
successor thereto), Parent's independent public accountants, dated the date on
which the Registration Statement shall become effective and as of the Effective
Time, and addressed to the Company and Parent, in form and substance reasonably
satisfactory to the Company and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
Section 5.4 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to Parent or to the Company or any
of their Subsidiaries, each of Parent and the Company shall, and shall cause
each of its Subsidiaries to, afford to the accountants, counsel, financial
advisors and other representatives of the other party hereto reasonable access
to, and permit them to make such inspections as they may reasonably require of,
during normal business hours during the period from the date of this Agreement
through the Effective Time, all their respective properties, books, contracts,
commitments and records (including, without limitation, the work papers of
independent accountants, if available and subject to the consent of such
independent accountants) and, during such period, Parent and the Company shall,
and shall cause each of its Subsidiaries to, furnish promptly to the other (i) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of federal or state
securities laws and (ii) all other information concerning its business,
properties and personnel as the other may reasonably request. No investigation
pursuant to this Section 5.4 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto. All information obtained by Parent or the Company pursuant to this
Section 5.4 shall be kept confidential in accordance with each of the
Confidentiality Agreements, dated April 1, 1998 between Parent and the Company
(collectively, the "Confidentiality Agreement").
Section 5.5 Compliance with the Securities Act. (a) Section 5.5(a) of
the Company Letter contains a list (reasonably satisfactory to counsel for
Parent) identifying all persons who, at the time of the Company Stockholder
Meeting, may be deemed to be "affiliates" of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Rule 145
Affiliates"). The Company shall use its reasonable best efforts to cause each
person who is identified as a Rule 145 Affiliate in such list to deliver to
Parent within 30 days of the date hereof a written agreement in substantially
the form of Exhibit 5.5(a) hereto, executed by each of such persons identified
in the foregoing list.
(b) Section 5.5(b) of the Parent Letter contains a list
(reasonably
satisfactory to counsel for the Company) identifying those persons who may be,
at the time of the Parent Stockholder Meeting, affiliates of Parent under
applicable SEC accounting releases with respect to pooling of interests
accounting treatment. Parent shall use its reasonable best efforts to enter into
a written agreement in substantially the form of Exhibit 5.5(b) hereto within 30
days of the date hereof with each of such persons identified in the foregoing
list.
Section 5.6 Stock Exchange Listings. Parent shall use its reasonable
best efforts to list on the NYSE, upon official notice of issuance, the shares
of Parent Common Stock to be issued in connection with the Merger.
Section 5.7 Fees and Expenses. (a) Except as provided in this Section
5.7 and Section 5.11, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby including, without limitation, the fees and disbursements of
counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses, provided that all printing expenses and all
filing fees (including, without limitation, filing fees under the Securities
Act, the Exchange Act and the HSR Act) shall be divided equally between Parent
and the Company.
(b) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement is terminated (A) by the Company or Parent pursuant to Section
7.1(e) or 7.1(g), (B) by Parent pursuant to Section 7.1(h) or (C) by the Company
or Parent at a time when Parent is entitled to terminate this Agreement pursuant
to Section 7.1(e), 7.1(g) or 7.1(h), then, in each case, the Company shall
(without prejudice to any other rights Parent may have against the Company for
breach of this Agreement) reimburse Parent upon demand for all out-of-pocket
fees and expenses incurred or paid by or on behalf of Parent or any Affiliate
(as hereinafter defined) of Parent in connection with this Agreement, the Stock
Option Agreement and the transactions contemplated herein or therein, including
all fees and expenses of counsel, investment banking firms, accountants and
consultants. As used herein, "Affiliate" shall have the meaning set forth in
Rule 405 under the Securities Act.
(c) Notwithstanding any provision in this Agreement to the contrary,
if (i) this Agreement is terminated by the Company or Parent at a time when
Parent is entitled to terminate this Agreement pursuant to Section 7.1(b), (c)
or (e), and, concurrently with or within twelve months after such a termination
a Third Party Acquisition Event (as defined below) occurs, or (ii) this
Agreement is terminated pursuant to Section 7.1(g) or 7.1(h) or by the Company
or Parent at a time when Parent is entitled to terminate this Agreement pursuant
to Section 7.1(g) or 7.1(h), then, in each case, the Company shall (in addition
to any obligation under Section 5.7(b) and without prejudice to any other rights
that Parent may have against the Company for a breach of this Agreement) pay to
Parent the Termination Fee in cash, such payment to be made promptly, but in no
event later
than the second business day following, in the case of clause (i), the later to
occur of such termination and such Third Party Acquisition Event or, in the case
of clause (ii), such termination.
"Termination Fee" means $200,000,000 minus the product obtained by
multiplying (i) the value (if any) of the Spread (as defined in Section 9 of the
Stock Option Agreement) as of the date when the Termination Fee is payable by
(ii) the number of Optioned Shares held by Parent as to which the Option has not
yet been exercised (as such terms are defined in Section 1 of the Stock Option
Agreement); provided, however, that in no event shall the Termination Fee be
less than $100,000,000.
A "Third Party Acquisition Event" means any of the following events:
(A) any Person (other than Parent or its Affiliates) acquires or becomes the
beneficial owner of 20% or more of the outstanding shares of Company Common
Stock; (B) any group (other than a group which includes or may reasonably be
deemed to include Parent or any of its Affiliates) is formed which, at the time
of formation, beneficially owns 20% or more of the outstanding shares of Company
Common Stock; (C) any Person (other than Parent or its Affiliates) shall have
commenced a tender or exchange offer for 20% or more of the then outstanding
shares of Company Common Stock or publicly proposed any bonafide merger,
consolidation or acquisition of all or substantially all the assets of the
Company, or other similar business combination involving the Company; (D) the
Company enters into, or announces that it proposes to enter into, an agreement,
including, without limitation, an agreement in principle, providing for a merger
or other business combination involving the Company or a "significant
subsidiary" (as defined in Rule 1.02(v) of Regulation S-X as promulgated by the
SEC) of the Company or the acquisition of a substantial interest in, or a
substantial portion of the assets, business or operations of, the Company or a
significant subsidiary (other than the transactions contemplated by this
Agreement); (E) any Person (other than Parent or its Affiliates) is granted any
option or right, conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Company Common Stock which, together with all
shares of Company Common Stock beneficially owned by such Person, results or
would result in such Person being the beneficial owner of 20% or more of the
outstanding shares of Company Common Stock; or (F) there is a public
announcement with respect to a plan or intention by the Company or any Person,
other than Parent and its Affiliates, to effect any of the foregoing
transactions. For purposes of this Section 5.7(c), the terms "group" and "
beneficial owner" shall be defined by reference to Section 13(d) of the Exchange
Act.
Section 5.8 Company Stock Options. Not later than the Effective Time,
each Company Stock Option which is outstanding immediately prior to the
Effective Time pursuant to the Company's stock option plans (other than any
"stock purchase plan" within the meaning of Section 423 of the Code) in effect
on the date hereof (the "Stock Plans") shall become and represent an option to
purchase the number of shares of Parent Common Stock (a "Substitute Option")
(decreased to the nearest full share) determined by
multiplying (i) the number of shares of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time by (ii) the
Exchange Ratio, at an exercise price per share of Parent Common Stock (rounded
up to the nearest tenth of a cent) equal to the exercise price per share of
Company Common Stock immediately prior to or at the Effective Time divided by
the Exchange Ratio. Parent shall pay cash to holders of Company Stock Options in
lieu of issuing fractional shares of Parent Common Stock upon the exercise of
Substitute Options for shares of Parent Common Stock, unless in the judgment of
Parent such payment would adversely affect the ability to account for the Merger
under the pooling of interests method. After the Effective Time, except as
provided above in this Section 5.8, each Substitute Option shall be exercisable
upon the same terms and conditions as were applicable under the related Company
Stock Option immediately prior to or at the Effective Time. The Company shall
take all necessary action to implement the provisions of this Section 5.8. The
Company agrees that it will not grant any stock appreciation rights or limited
stock appreciation rights and will not permit cash payments to holders of
Company Stock Options in lieu of the substitution therefor of Substitute
Options, as described in this Section 5.8.
Section 5.9 Reasonable Best Efforts; Pooling of Interests. (a) Upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including, but not
limited to: (i) the obtaining of all necessary actions or non-actions, waivers,
consents and approvals from all Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity (including those in connection with the HSR Act and State
Takeover Approvals), (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement, the
Stock Option Agreement or the consummation of the transactions contemplated
hereby and thereby, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed,
(iv) each of Parent and the Company agreeing to take, together with their
respective accountants, all actions reasonably necessary in order to obtain a
favorable determination (if required) from the SEC that the Merger may be
accounted for as a pooling of interests in accordance with generally accepted
accounting principles and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement. No party to this Agreement shall consent to any voluntary delay of
the consummation of the Merger at the behest of any Governmental Entity without
the consent of the other parties to this Agreement, which consent shall not be
unreasonably withheld. The Company and Parent shall coordinate with each other
as to the declaration of dividends
or other distributions on Company Common Stock and Parent Common Stock,
including the record dates thereof, it being the intention of the parties that
the holders of Company Common Stock shall not receive more than one dividend for
any single calendar quarter (it being understood that the Company customarily
pays its dividend for a quarter on the last day thereof while the Parent
customarily pays its dividend for a quarter on the first business day of the
succeeding quarter) on their shares of stock (including any shares of Parent
Common Stock received in the Merger).
(b) Each party shall use all reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in connection with any filing or submission required or action to be
taken by either Parent or the Company to effect the Merger and to consummate the
other transactions contemplated hereby, the Company shall not, without Parent's
prior written consent, commit to any divestiture transaction, and neither Parent
nor any of its Affiliates shall be required to divest or hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, the Company or any of the material
businesses, product lines or assets of Parent or any of its Subsidiaries or that
otherwise would have a Material Adverse Effect on Parent.
Section 5.10 Public Announcements. Parent and the Company will not
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the other party, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange.
Section 5.11 Real Estate Transfer and Gains Tax. Parent and the
Company agree that either the Company or the Surviving Corporation will pay any
state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.12 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become
applicable to the transactions contemplated hereby or in the Stock Option
Agreement, Parent and the Company and their respective Boards of Directors shall
use their best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to minimize the effects of any such statute or
regulation on the transactions contemplated hereby and thereby.
Section 5.13 Indemnification; Directors and Officers Insurance. For
six years from and after the Effective Time, Parent agrees to cause the
Surviving Corporation to, and shall guarantee the obligation of the Surviving
Corporation to, indemnify and hold harmless all past and present officers and
directors of the Company and of its Subsidiaries to the same extent such persons
are indemnified as of the date of this Agreement by the Company pursuant to the
Company's Certificate of Incorporation, Restated Bylaws or agreements in
existence on the date hereof for acts or omissions occurring at or prior to the
Effective Time. Parent shall provide, or shall cause the Surviving Corporation
to provide, for an aggregate period of not less than six years from the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") that is substantially similar (with respect
to limits and deductibles) to the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation shall not be required to pay
premiums aggregating more than $3,000,000 for D&O Insurance for the six year
period commencing on the Effective Time.
Section 5.14 Notification of Certain Matters. Parent shall use its
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which it is aware and which would be reasonably likely to
cause (x) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied in
all material respects, (ii) any failure of Parent or the Company, as the case
may be, to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any change
or event which would be reasonably likely to have a Material Adverse Effect on
Parent or the Company, as the case may be; provided, however, that the delivery
of any notice pursuant to this Section 5.14 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.15 Employee Benefit Plans and Agreements. (a) Parent agrees
that it will cause the Surviving Corporation from and after the Effective Time
to honor all Company Plans and all employment agreements entered into by the
Company prior to the
date hereof; provided, however, that nothing in this Agreement shall be
interpreted as limiting the power of Parent or the Surviving Corporation to
amend or terminate any Company Plan or any other individual employee benefit
plan, program, agreement or policy or as requiring Parent or the Surviving
Corporation to offer to continue (other than as required by its terms) any
written employment contract.
(b) The Company shall use its reasonable best efforts to enter into
excise tax agreements, a form of which is set forth on Section 5.15 of the
Company Letter, prior to the Effective Time. Section 5.15 of the Company Letter
also sets forth the estimated amount that each such identified officer would be
entitled to receive under such agreement if such officers' retention payouts
were being made as of the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been duly approved
by the requisite vote of stockholders of the Company in accordance with
applicable law and the Certificate of Incorporation and Restated Bylaws of the
Company, and the Share Issuance shall have been approved by the requisite vote
of the stockholders of Parent in accordance with applicable rules of the NYSE,
applicable law and the Amended and Restated Articles of Incorporation and
Amended and Restated By-Laws of Parent.
(b) Stock Exchange Listings. The Parent Common Stock issuable in the
Merger shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
(c) HSR and Other Approvals. (i) The waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or approvals
of, or filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Entity, which the failure to obtain, make or occur would
have the effect of making the Merger or any of the transactions contemplated
hereby illegal or would have, individually or in the aggregate, a Material
Adverse Effect on Parent (assuming the Merger had taken place), shall have been
obtained, shall have been made or shall have occurred.
(d) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the Knowledge of Parent or the Company, threatened by the SEC.
All necessary state securities or blue sky authorizations (including State
Takeover Approvals) shall have been received.
(e) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger or any of the transactions contemplated hereby
illegal.
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and Warranties. Each
of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Effective Time, each of the representations and warranties of Parent and Sub
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and the Company shall have received certificates
signed on behalf of each of Parent and Sub by its Chief Executive Officer and
its Chief Financial Officer to such effect.
(b) Tax Opinion. The Company shall have received an opinion of Dorsey
& Whitney LLP, in form and substance reasonably satisfactory to the Company,
dated the Effective Time, substantially to the effect that on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time, for
federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Company, Sub and Parent will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code;
(ii) no gain or loss will be recognized by Parent or the Company as a
result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of the
Company upon the conversion of their shares of Company Common Stock into
shares of Parent Common Stock pursuant to the Merger, except with respect
to cash, if any, received in lieu of fractional shares of Parent Common
Stock;
(iv) the aggregate tax basis of the shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger (including a fractional share of Parent Common Stock for which cash
is paid) will be the same as the aggregate tax basis of such shares of
Company Common Stock;
(v) the holding period for shares of Parent Common Stock received in
exchange for shares of Company Common Stock pursuant to the Merger will
include the holder's holding period for such shares of Company Common
Stock, provided such shares of Company Common Stock were held as capital
assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal
to the difference, if any, between such stockholder's basis in the
fractional share (determined under clause (iv) above) and the amount of
cash received.
In rendering such opinion, Dorsey & Whitney LLP may rely as to matters of fact
upon the representations contained herein and may receive and rely upon
representations from Parent, the Company, and others, including representations
from Parent substantially similar to the representations in the Parent Tax
Certificate attached to the Parent Letter and representations from the Company
substantially similar to the representations in the Company Tax Certificate
attached to the Company Letter.
(c) Certain Consents. In obtaining any approval or consent required to
consummate any of the transactions contemplated herein or in the Stock Option
Agreement, no Governmental Entity shall have imposed or shall have sought to
impose any condition, penalty or requirement which, in the reasonable opinion of
the Company, individually or in the aggregate, would have a Material Adverse
Effect on Parent (assuming the consummation of the Merger).
(d) Board Representation. Parent shall have taken all action necessary
to cause Mr. Lawrence Coss and one additional person, selected by Parent among
the individuals who are directors of the Company as of the date hereof, to
become members of the Board of Directors of Parent upon consummation of the
Merger (it being understood that Parent, at its sole discretion, may choose to
appoint one additional individual from
such existing Board of Directors of the Company to become a member of the Board
of Directors of Parent), subject in each case to the willingness of each such
individual to serve as a director of Parent.
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Tax Opinion. Parent shall have received an opinion of Sidley &
Austin, in form and substance reasonably satisfactory to Parent, dated the
Effective Time, substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing as of the Effective Time, for federal income
tax purposes:
(i) the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Company, Sub and Parent will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code;
(ii) no gain or loss will be recognized by Parent or the Company as a
result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of the
Company upon the conversion of their shares of Company Common Stock into
shares of Parent Common Stock pursuant to the Merger, except with respect
to cash, if any, received in lieu of fractional shares of Parent Common
Stock;
(iv) the aggregate tax basis of the shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger
(including a fractional share of Parent Common Stock for which cash is
paid) will be the same as the aggregate tax basis of such shares of Company
Common Stock;
(v) the holding period for shares of Parent Common Stock received in
exchange for shares of Company Common Stock pursuant to the Merger will
include the holder's holding period for such shares of Company Common
Stock, provided such shares of Company Common Stock were held as capital
assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal
to the difference, if any, between such stockholder's basis in the
fractional share (determined under clause (iv) above) and the amount of
cash received.
In rendering such opinion, Sidley & Austin may rely as to matters of fact upon
representations contained herein and may receive and rely upon representations
from Parent, the Company, and others, including representations from Parent
substantially similar to the representations in the Parent Tax Certificate
attached to the Parent Letter and representations from the Company substantially
similar to the representations in the Company Tax Certificate attached to the
Company Letter.
(c) Accounting. (i) Parent shall have received an opinion of Coopers &
Lybrand L.L.P. (or any successor thereto), in form and substance reasonably
satisfactory to Parent, that the Merger will qualify for pooling of interests
accounting treatment under Accounting Principles Board Opinion No. 16 if closed
and consummated in accordance with this Agreement (which opinion shall be based,
as to the financial statements of the Company, on a customary "pooling" letter
of KPMG Peat Marwick LLP); and
(ii) Parent shall have received the "comfort letters" described in
Section 5.3(a), in form and substance reasonably satisfactory to Parent.
(d) Consents. (i) The Company shall have obtained the consent or
approval of each person or Governmental Entity whose consent or approval shall
be required in connection with the transactions contemplated hereby under any
loan or credit agreement, note, mortgage, indenture, lease or other agreement or
instrument or any applicable law, rule or regulation, except as to which the
failure to obtain such consents and approvals would not, in the reasonable
opinion of Parent, individually or in the aggregate, have a Material Adverse
Effect on the Company or Parent or upon the consummation of the transactions
contemplated in this Agreement or the Stock Option Agreement.
(ii) In obtaining any approval or consent required to consummate any
of the transactions contemplated herein or in the Stock Option Agreement, no
Governmental
Entity shall have imposed or shall have sought to impose any condition, penalty
or requirement which, in the reasonable opinion of Parent, individually or in
aggregate would have a Material Adverse Effect on the Company or Parent.
(e) Litigation. There shall not be instituted or pending any suit,
action or proceeding before any Governmental Entity as a result of this
Agreement, the Stock Option Agreement or any of the transactions contemplated
herein or therein which would have a Material Adverse Effect on the Company or
Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the stockholders of the Company or
Parent:
(a) by mutual written consent of Parent and the Company;
(b) except for a breach by the Company of Section 5.1, by either
Parent or the Company if the other party shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement required to be complied with prior to the date of such
termination, which failure to comply has not been cured within thirty
business days following receipt by such other party of written notice from
the non-breaching party of such failure to comply;
(c) by either Parent or the Company if there has been (i) a breach by
the other party (in the case of Parent, including any material breach by
Sub) of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or warranty
not true and correct in all material respects or (ii) a breach by the other
party (in the case of Parent, including any material breach by Sub) of any
representation or warranty that is qualified as to materiality, in each
case which breach has not been cured within thirty business days following
receipt by the breaching party from the non-breaching party of written
notice of the breach;
(d) by Parent or the Company if: (i) the Merger has not been effected
on or prior to the close of business on December 31, 1998; provided,
however, that the right to terminate this Agreement pursuant to this
Section 7.1(d)(i) shall not be available to any party whose failure to
fulfill any of its obligations contained in this Agreement has been the
cause of, or resulted in, the failure of the Merger to have
occurred on or prior to the aforesaid date; or (ii) any court or other
Governmental Entity having jurisdiction over a party hereto shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable;
(e) by Parent or the Company if the stockholders of the Company do not
approve this Agreement at the Company Stockholder Meeting or at any
adjournment or postponement thereof;
(f) by Parent or the Company if the stockholders of Parent do not
approve the Share Issuance at the Parent Stockholder Meeting or at any
adjournment or postponement thereof;
(g) by Parent or the Company if the Company enters into a merger,
acquisition or other agreement (including an agreement in principle) to
effect a Superior Proposal or the Board of Directors of the Company
resolves to do so; provided, however, that the Company may not terminate
this Agreement pursuant to this Section 7.1(g) unless (i) the Company has
delivered to Parent a written notice of the Company's intent to enter into
such an agreement to effect the Superior Proposal, (ii) five business days
have elapsed following delivery to Parent of such written notice by the
Company and (iii) during such five business day period the Company has
fully cooperated with Parent, including, without limitation, informing
Parent of the terms and conditions of the Takeover Proposal and the
identity of the Person making the Takeover Proposal, with the intent of
enabling Parent to agree to a modification of the terms and conditions of
this Agreement so that the transactions contemplated hereby may be
effected; provided, further, that the Company may not terminate this
Agreement pursuant to this Section 7.1(g) unless at the end of such five
business day period the Board of Directors of the Company continues
reasonably to believe that the Takeover Proposal constitutes a Superior
Proposal and prior to such termination the Company pays to Parent the
amounts specified under Sections 5.7(a), (b) and (c);
(h) by Parent if (i) the Board of Directors of the Company, in breach
of Section 5.1, shall not have recommended, or shall have resolved not to
recommend, or shall have qualified, modified or withdrawn its
recommendation of the Merger or declaration that the Merger is advisable
and fair to and in the best interest of the Company and its stockholders,
or shall have resolved to do so, (ii) the Board of Directors of the Company
shall have recommended to the stockholders of the Company any Takeover
Proposal or shall have resolved to do so or (iii) a tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock
of the Company is commenced, and the Board of Directors of the Company
fails to recommend against acceptance of such tender offer or exchange
offer by its
stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders); or
(i) by the Company if the Board of Directors of Parent shall not have
recommended, or shall have resolved not to recommend, or shall have
qualified or modified or withdrawn its recommendation of the Merger or
declaration that the Merger is advisable and fair to and in the best
interest of Parent and its stockholders, or shall have resolved to do so.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 5.4 and the entirety of
Section 5.7, which shall survive the termination); provided, however, that
nothing contained in this Section 7.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Parent and the Company, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Stephen C. Hilbert
Facsimile No.: (317) 817-6327
with a copy to:
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attention: John J. Sabl, Esq.
Facsimile No.: (317) 817-6327
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq.
Paul L. Choi, Esq.
Facsimile No.: (312) 853-7036
(b) if to the Company, to
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102
Attention: Lawrence M. Coss
Facsimile No.: (612) 293-3646
with a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: William B. Payne, Esq.
Facsimile No.: (612) 340-8738
Section 8.3 Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, except for the Stock Option Agreement and as provided in the last
sentence of Section 5.4, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement, except for the
provisions of Section 5.13, is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 8.7 Assignment. Subject to Section 1.1, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties.
Section 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full
force and effect so long as the economic and legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific wording or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such remedy being
in addition to any other remedy to which any party is entitled at law or in
equity.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
CONSECO, INC.
By: /s/Stephen C. Hilbert
-----------------------
Name: Stephen C. Hilbert
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/John J. Sabl
- ---------------
Name: John J. Sabl
Title: Executive Vice President,
Secretary and General Counsel
MARBLE ACQUISITION CORP.
By: /s/Stephen C. Hilbert
-----------------------
Name: Stephen C. Hilbert
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/John J. Sabl
- ---------------
Name: John J. Sabl
Title: Executive Vice President and Secretary
GREEN TREE FINANCIAL
CORPORATION
By: /s/Lawrence M. Coss
-----------------------
Name: Lawrence M. Coss
Title: Chairman and Chief
Executive Officer
Attest:
/s/Joel H. Gottesman
- --------------------
Name: Joel H. Gottesman
Title: Senior Vice President, Secretary
and General Counsel
Exhibit 5.5(a)
FORM OF AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Green Tree Financial Corporation, a Delaware corporation
(the "Company"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of April 6, 1998 (the "Merger Agreement") among Conseco, Inc., an Indiana
corporation ("Parent"), Marble Acquisition Corp., a Delaware corporation
("Sub"), and the Company, Sub will be merged with and into the Company (the
"Merger"). Capitalized terms used in this letter without definition shall have
the meanings assigned to them in the Merger Agreement.
As a result of the Merger, I will receive shares of Common Stock, no
par value, of Parent (the "Parent Shares") in exchange for shares of common
stock, par value $.01 per share, of the Company (the "Company Shares") owned by
me or purchasable upon exercise of stock options.
1. I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Parent Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Parent Shares, to
the extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Parent Shares to me
pursuant to the Merger has been registered with the Commission under the Act on
a Registration Statement on Form S-4. However, I have also been advised that,
because (a)
at the time the Merger is submitted for a vote of the stockholders of the
Company, (b) I may be deemed to be an affiliate of the Company and (c) the
distribution by me of the Parent Shares will not have been registered under the
Act, I may not sell, transfer or otherwise dispose of the Parent Shares issued
to me in the Merger unless (i) such sale, transfer or other disposition is made
in conformity with the volume and other limitations of Rule 145 promulgated by
the Commission under the Act, (ii) such sale, transfer or other disposition has
been registered under the Act or (iii) in the opinion of counsel reasonably
acceptable to Parent, or pursuant to a no-action letter obtained by the
undersigned from the staff of the Commission reasonably acceptable to Parent
such sale, transfer or other disposition is otherwise exempt from registration
under the Act.
D. I understand that Parent is under no obligation to register the
sale, transfer or other disposition of the Parent Shares by me or on my behalf
under the Act or, except as provided in paragraph 2(A) below, to take any other
action necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that there will be placed on the certificates
for the Parent Shares issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED APRIL
6, 1998 BETWEEN THE REGISTERED HOLDER HEREOF AND CONSECO, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF CONSECO,
INC."
F. I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a registration
statement, Parent reserves the right to put the following legend on the
certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH
A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
G. I further represent to, and covenant with, Parent that I will
not, during the 30 days prior to the Effective Time (as defined in the Merger
Agreement), sell, transfer or otherwise dispose of or reduce my risk (as
contemplated by SEC Accounting Series Release No. 135) with respect to the
Company Shares or shares of the capital stock
of Parent that I may hold and, furthermore, that I will not sell, transfer or
otherwise dispose of or reduce my risk (as contemplated by SEC Accounting Series
Release No. 135) with respect to the Parent Shares received by me in the Merger
or any other shares of the capital stock of Parent until after such time as
results covering at least 30 days of combined operations of the Company and
Parent have been published by Parent, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a report
to the Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the combined results of operations.
H. Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
2. By Parent's acceptance of this letter, Parent hereby agrees with me
as follows:
A. For so long as and to the extent necessary to permit me to sell
the Parent Shares pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Act, Parent shall use its reasonable best efforts to (i) file, on a
timely basis, all reports and data required to be filed with the Commission by
it pursuant to Section 13 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and (ii) furnish to me upon request a written statement as to
whether Parent has complied with such reporting requirements during the 12
months preceding any proposed sale of the Parent Shares by me under Rule 145.
Parent has filed all reports required to be filed with the Commission under
Section 13 of the 1934 Act during the preceding 12 months.
B. It is understood and agreed that certificates with the legends
set forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the Parent Shares received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the Parent
Shares received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) the Parent has received either an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to Parent, or a "no action" letter obtained by the undersigned from the staff of
the Commission, to the effect that the restrictions imposed by Rule 145 under
the Act no longer apply to the undersigned.
Very truly yours,
___________________
Name:
Agreed and accepted this _________ day
of _______________, 1998, by
[Parent]
By __________________________________
Name:
Title:
Exhibit 5.5(b)
FORM OF AFFILIATE LETTER FOR AFFILIATES OF PARENT
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Conseco, Inc., an Indiana corporation ("Parent"), as the
term "affiliate" is defined for purposes of Accounting Series Releases 130 and
135, as amended, of the Securities and Exchange Commission ("Commission").
Pursuant to the terms of the Agreement and Plan of Merger dated as of April 6,
1998 (the "Merger Agreement") among Parent, Marble Acquisition Corp., a Delaware
corporation ("Sub"), and Green Tree Financial Corporation, a Delaware
corporation (the "Company"), Sub will be merged with and into the Company (the
"Merger").
I represent to, and covenant with, Parent that I will not, during the
period beginning 30 days prior to the Effective Time (as defined in the Merger
Agreement) until after such time as results covering at least 30 days of
combined operations of the Company and Parent have been published by Parent, in
the form of a quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form 10-K, 10-Q, or
8-K, or any other public filing or announcement which includes the combined
results of operations, sell, transfer or otherwise dispose of or reduce my risk
with respect to any shares of the capital stock of Parent ("Parent Stock") or
the Company that I may hold.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Parent as described in the first paragraph of
this letter, nor as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Very truly yours,
_______________________
Accepted this __________ day of Name:
_________________, 1998, by
[Parent]
By ___________________________
Name: