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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
TEXTRON FINANCIAL CORPORATION,
LIGHTHOUSE ACQUISITION CORP.
and
LITCHFIELD FINANCIAL CORPORATION
Dated as of September 22, 1999
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER.................................................................................1
SECTION 1.1 The Offer....................................................................1
SECTION 1.2 Company Action...............................................................2
ARTICLE II
THE MERGER................................................................................3
SECTION 2.1 The Merger...................................................................3
SECTION 2.2 Closing; Effective Time......................................................4
SECTION 2.3 Effects of the Merger........................................................4
SECTION 2.4 Articles of Organization; By-Laws............................................4
SECTION 2.5 Directors and Officers.......................................................4
SECTION 2.6 Conversion of Securities.....................................................4
SECTION 2.7 Treatment of Options.........................................................5
SECTION 2.8 Dissenting Shares............................................................5
SECTION 2.9 Surrender of Shares; Stock Transfer Books....................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................7
SECTION 3.1 Organization and Qualification; Subsidiaries.................................7
SECTION 3.2 Articles of Organization and By-Laws.........................................7
SECTION 3.3 Capitalization...............................................................8
SECTION 3.4 Authority Relative to This Agreement.........................................9
SECTION 3.5 No Conflict; Required Filings and Consents...................................9
SECTION 3.6 Compliance..................................................................10
SECTION 3.7 SEC Filings; Financial Statements...........................................10
SECTION 3.8 Absence of Certain Changes or Events........................................11
SECTION 3.9 Absence of Litigation.......................................................12
SECTION 3.10 Employee Benefit Plans.....................................................12
SECTION 3.11 Tax Matters................................................................13
SECTION 3.12 Offer Documents; Proxy Statement...........................................14
SECTION 3.13 Environmental Matters......................................................15
SECTION 3.14 Real Estate Matters........................................................17
SECTION 3.15 Loans; Investments.........................................................18
SECTION 3.16 Licenses...................................................................21
SECTION 3.17 Allowance for Possible Loan Losses.........................................21
SECTION 3.18 Brokers....................................................................22
SECTION 3.19 Sole Representations and Warranties........................................22
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...................................22
SECTION 4.1 Corporate Organization......................................................22
SECTION 4.2 Authority Relative to This Agreement........................................22
SECTION 4.3 No Conflict; Required Filings and Consents..................................23
SECTION 4.4 Offer Documents; Proxy Statement............................................23
SECTION 4.5 Brokers.....................................................................24
SECTION 4.6 Funds.......................................................................24
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER...................................................24
SECTION 5.1 Conduct of Business of the Company Pending the Merger.......................24
ARTICLE VI
ADDITIONAL AGREEMENTS....................................................................27
SECTION 6.1 Stockholders Meeting........................................................27
SECTION 6.2 Proxy Statement.............................................................27
SECTION 6.3 Company Board Representation; Section 14(f).................................28
SECTION 6.4 Access to Information; Confidentiality......................................29
SECTION 6.5 No Solicitation of Transactions.............................................29
SECTION 6.6 Employee Benefits Matters...................................................30
SECTION 6.7 Directors' and Officers' Indemnification and Insurance......................31
SECTION 6.8 Intentionally Omitted.......................................................32
SECTION 6.9 Notification of Certain Matters.............................................32
SECTION 6.10 Further Action; Commercially Reasonable Efforts............................33
SECTION 6.11 Public Announcements.......................................................34
SECTION 6.12 Disposition of Litigation..................................................34
ARTICLE VII
CONDITIONS OF MERGER.....................................................................34
SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger.................34
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER........................................................35
SECTION 8.1 Termination.................................................................35
SECTION 8.2 Effect of Termination.......................................................36
SECTION 8.3 Fees and Expenses...........................................................36
SECTION 8.4 Amendment...................................................................38
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SECTION 8.5 Waiver......................................................................38
ARTICLE IX
GENERAL PROVISIONS.......................................................................38
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements..................38
SECTION 9.2 Notices.....................................................................38
SECTION 9.3 Certain Definitions.........................................................39
SECTION 9.4 Severability................................................................40
SECTION 9.5 Entire Agreement; Assignment................................................40
SECTION 9.6 Parties in Interest.........................................................41
SECTION 9.7 Governing Law...............................................................41
SECTION 9.8 Headings....................................................................41
SECTION 9.9 Counterparts................................................................41
SECTION 9.10 Specific Performance.......................................................41
Annex A - Offer Conditions
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AGREEMENT AND PLAN OF MERGER, dated as of September 22, 1999 (the
"Agreement"), among TEXTRON FINANCIAL CORPORATION, a Delaware corporation
("Parent"), LIGHTHOUSE ACQUISITION CORP., a Massachusetts corporation and a
wholly owned subsidiary of Parent ("Purchaser"), and LITCHFIELD FINANCIAL
CORPORATION, a Massachusetts corporation (the "Company").
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and the stockholders of the Company to
enter into this Agreement with Parent and Purchaser, providing for the merger
(the "Merger") of Purchaser with the Company in accordance with the
Massachusetts Business Corporation Law ("MBCL"), upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the Board of Directors of Parent and Purchaser have each
approved the Merger of Purchaser with the Company in accordance with the MBCL
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1 and no event shall have occurred
and no circumstance shall exist which would result in a failure to satisfy any
of the conditions or events set forth in Annex A hereto (the "Offer
Conditions"), Purchaser shall, as soon as reasonably practicable after the date
hereof (and in any event within five business days from the date of initial
public announcement of the execution hereof), commence an offer (the "Offer") to
purchase for cash all of the issued and outstanding shares of Common Stock, par
value $0.01 per share (referred to herein as either the "Shares" or "Company
Common Stock"), of the Company at a price of $24.50 per Share, net to the seller
in cash. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver by
Purchaser of the Offer Conditions. Purchaser expressly reserves the right, in
its sole discretion, to waive any such condition (other than the Minimum
Condition as defined in the Offer Conditions) and make any other changes in the
terms and conditions of the Offer, provided that, unless previously approved by
the Company in writing, no change may be made which changes the Minimum
Condition or decreases the price per Share payable in the Offer, changes the
form of consideration payable in the Offer (other than by adding consideration),
reduces the maximum number of Shares to be purchased in the Offer, or amends the
terms or Offer Conditions in a manner which, in the Company's reasonable
judgment, is adverse to the holders of the Shares or the Company, or which
imposes conditions or terms to the Offer in addition to those set forth herein.
Purchaser covenants and agrees that, subject to the terms and conditions of this
Agreement, including but not limited to the Offer Conditions, it will accept for
payment and pay for Shares as soon as it is permitted to do so under applicable
law; provided that
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Purchaser shall have the right, in its sole discretion, to extend the Offer for
up to five business days, notwithstanding the prior satisfaction of the Offer,
solely if necessary in order to attempt to satisfy the requirements of Section
82 of the MBCL. It is agreed that the Offer Conditions are for the benefit of
Purchaser and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition (except for any action or inaction by
Purchaser or Parent constituting a breach of this Agreement) or, except with
respect to the Minimum Condition, may be waived by Purchaser, in whole or in
part at any time and from time to time, in its sole discretion. Subject to the
terms and conditions of the Offer, Parent and Purchaser will each use reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Offer.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer with the Securities and Exchange
Commission (the "SEC"). The Schedule 14D-1 shall contain an Offer to Purchase
and forms of the related letter of transmittal (which Schedule 14D-1, Offer to
Purchase and other documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). Parent
and Purchaser agree that the Company and its counsel shall be given an
opportunity to review the Schedule 14D-1 before it is filed with the SEC.
Parent, Purchaser and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents that shall have become
false or misleading in any material respect, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
SECTION 1.2 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that: (i) its Board of
Directors, at a meeting duly called and held on September 22, 1999, has
unanimously (A) determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are advisable and are fair to and in
the best interests of the holders of Shares and the Company, (B) approved this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger, and (C) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares to Purchaser thereunder and
approve this Agreement and the transactions contemplated hereby (it being
understood that, notwithstanding anything in this Agreement to the contrary, if
the Company's Board of Directors by majority vote shall have determined in good
faith, based upon the advice of outside counsel to the Company, that failure to
modify or withdraw its recommendation would constitute a breach of the Board's
fiduciary duty under applicable law, the Board of Directors may so modify or
withdraw its recommendation); and (ii) CIBC World Markets (the "Financial
Advisor") has delivered to the Board of Directors of the Company its written
opinion that, subject to the limitations and qualifications stated therein, the
consideration to be received by holders of Shares, other than Parent and
Purchaser, pursuant to the Offer and the Merger is fair to such holders from a
financial point of view. The Company has been authorized by the Financial
Advisor to permit, subject to prior review by such Financial Advisor, the
inclusion of such fairness opinion (or a reference thereto with the consent of
the Financial Adviser) in the Schedule 14D-9 referred to below and the Proxy
Statement referred to in Section 3.12. The Company hereby consents to the
inclusion in the Offer
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Documents of the recommendations of the Company's Board of Directors described
in this Section 1.2(a).
(b) The Company shall file with the SEC, contemporaneously with the
commencement of the Offer pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the Company's
Board of Directors described in Section 1.2(a)(i) and shall promptly mail the
Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder. The Company, Parent and Purchaser each
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the record holders of
Shares, each as of a recent date, and shall promptly furnish Purchaser with such
additional information (including but not limited to updated lists of
stockholders, mailing labels, security position listings and non-objecting
beneficial owner lists) and such other assistance as Parent, Purchaser or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent, Purchaser
and each of their affiliates and associates shall hold in confidence the
information contained in any of such lists, labels or additional information
and, if this Agreement is terminated, shall promptly deliver to the Company all
copies and extracts of such information then in their possession or under their
control.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the MBCL, at the Effective Time (as
defined in Section 2.2), Purchaser shall be merged with and into the Company. As
a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation"). At Parent's election, any direct or indirect
subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of the Purchaser. In the event of such an election, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
such election.
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SECTION 2.2 Closing; Effective Time. Subject to the provisions of
Article VII, the closing of the Merger (the "Closing") shall take place in New
York City at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue,
New York, New York, as soon as practicable but in no event later than the first
business day after the satisfaction or waiver of the conditions set forth in
Article VII, or at such other place or at such other date as Parent and the
Company may mutually agree. The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date." At the Closing, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or
articles of merger (the "Certificate of Merger") with the Secretary of State of
the Commonwealth of Massachusetts, in such form as required by and executed in
accordance with the relevant provisions of the MBCL (the date and time of the
filing of the Certificate of Merger with the Secretary of State of the
Commonwealth of Massachusetts (or such later time as is specified in the
Certificate of Merger) being the "Effective Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the MBCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4 Articles of Organization; By-Laws. (a) At the Effective
Time and without any further action on the part of the Company and Purchaser,
the Amended and Restated Articles of Organization of the Company (as amended,
the "Articles of Organization"), as in effect immediately prior to the Effective
Time, shall be the articles of organization of the Surviving Corporation until
thereafter and further amended as provided therein and under the MBCL.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the By-Laws of Purchaser, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
and thereafter may be amended or repealed in accordance with their terms or the
Articles of Organization of the Purchaser and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Organization and By-Laws of the Surviving Corporation (directors of the Company
shall tender their resignations effective upon the Effective Time), and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed (as the case may be) and
qualified. Nothing herein shall be deemed to limit the ability of Parent to
cause the Surviving Corporation to elect or appoint different or additional
officers.
SECTION 2.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
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(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section
2.6(b) and any Dissenting Shares (as defined in Section 2.8(a))) shall be
canceled, extinguished and converted into the right to receive $24.50 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such Share in the
manner provided in Section 2.9, less any required withholding taxes.
(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent or of the Company, in each case immediately
prior to the Effective Time, shall be canceled and retired without any
conversion thereof and no payment or distribution shall be made with
respect thereto.
(c) Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and become
one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
SECTION 2.7 Treatment of Options. Immediately prior to the Effective
Time, each outstanding stock option and any related stock appreciation right
granted to employees and non-employee directors of the Company and its
subsidiaries (together, an "Option"), whether or not then exercisable or vested,
shall be canceled by the Company, and the holder thereof shall be entitled to
receive at the Effective Time or as soon as practicable thereafter from the
Company in consideration for such cancellation an amount in cash equal to the
product of (a) the number of Shares previously subject to such Option and (b)
the excess, if any, of the Merger Consideration over the exercise price per
Share previously subject to such Option (such payment to be net of applicable
withholding taxes).
SECTION 2.8 Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who have not voted in favor of or consented to the Merger and shall
have delivered a written demand for appraisal of such shares of Company Common
Stock in the time and manner provided in Section 89 of the MBCL and shall not
have failed to perfect or shall not have effectively withdrawn or lost their
rights to appraisal and payment under the MBCL (the "Dissenting Shares") shall
not be converted into the right to receive the Merger Consideration, but shall
be entitled to receive the consideration as shall be determined pursuant to
Sections 89 and 90 of the MBCL; provided, however, that if such holder shall
have failed to perfect or shall have effectively withdrawn or lost his, her or
its right to appraisal and payment under the MBCL, such holder's shares of
Company Common Stock shall thereupon be deemed to have been converted, at the
Effective Time, into the right to receive the Merger Consideration set forth in
Section 2.6(a) of this Agreement, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 85 of the MBCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to the
MBCL and received by the Company and (ii) the
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opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the MBCL. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to any such demands for
appraisal or offer to settle or settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent for the holders of Shares in connection with the Merger (the "Paying
Agent") to receive the Merger Consideration to which holders of Shares shall
become entitled pursuant to Section 2.6(a). When and as needed, Parent or
Purchaser will make available to the Paying Agent sufficient funds to make all
payments pursuant to Section 2.9(b). Such funds shall be invested by the Paying
Agent as directed by Purchaser or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Parent, as
Parent directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each Share formerly represented by such Certificate,
and such Certificate shall then be canceled. No interest shall be paid or
accrued for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable.
(c) At any time following one year after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been made available to the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying
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Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the disclosure schedule delivered by the Company to
Purchaser prior to the date of execution of this Agreement (the "Company
Disclosure Schedule"):
SECTION 3.1 Organization and Qualification; Subsidiaries. Except as
set forth in Section 3.1 of the Company Disclosure Schedule, each of the Company
and each of its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority and any necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority and governmental
approvals is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect (as defined below). Each of the Company and each of its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing as are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. When used
in connection with the Company or any of its subsidiaries, the term "Material
Adverse Effect" means any change or effect that would (i) be materially adverse
to the business, financial condition or results of operations of the Company and
its subsidiaries taken as a whole or (ii) prevent or materially delay the
consummation of the Offer or the Merger; provided, however, that a decline in
the price of the Company's Common Stock as traded on the Nasdaq National Market
as a result of changes in the accounting practices or business practices set
forth in Section 5.1 of the Company Disclosure Schedule shall not be deemed to
have a Material Adverse Effect unless it is otherwise a result of an event or
occurrence that is materially adverse to the business, financial condition or
results of operations of the Company and its subsidiaries taken as a whole.
SECTION 3.2 Articles of Organization and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Articles of
Organization and the By-Laws of the Company as currently in effect. Such
Articles of Organization and By-Laws are in full force and
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effect and no other organizational documents are applicable to or binding upon
the Company. The Company is not in violation of any of the provisions of its
Articles of Organization or By-Laws.
SECTION 3.3 Capitalization. The authorized capital stock of the
Company consists of 12,000,000 shares of Company Common Stock and 1,000,000
shares of Preferred Stock, par value $0.01 per share ("Company Preferred
Stock"). As of September 22, 1999, (i) 6,984,601 shares of Company Common Stock
were issued and outstanding, all of which were duly authorized, validly issued,
fully paid and nonassessable and were issued free of preemptive (or similar)
rights, (ii) no shares of Company Common Stock were held in the treasury of the
Company and (iii) an aggregate of 913,720 shares of Company Common Stock were
reserved for issuance and issuable upon or otherwise deliverable in connection
with the exercise of outstanding Options issued pursuant to the Company Plans
(as defined in Section 3.10). Since September 22, 1999, no options to purchase
shares of Company Common Stock have been granted and no shares of Company Common
Stock have been issued except for shares issued pursuant to the exercise of
Options outstanding as of September 22, 1999. As of the date hereof, no shares
of Company Preferred Stock are issued and outstanding. Except (i) as set forth
above or (ii) as a result of the exercise of Options outstanding as of September
22, 1999, there are outstanding (a) no shares of capital stock or other voting
securities of the Company, (b) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
(c) no options or other rights to acquire from the Company, and no obligation of
the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company and (d) no equity equivalents, interests in the ownership or earnings of
the Company or other similar rights (collectively, "Company Securities"). Except
as set forth in Section 3.3 of the Company Disclosure Schedule, there are no
outstanding obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. Except as set forth in
Section 3.3 of the Company Disclosure Schedule, there are no other options,
calls, warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its subsidiaries to which the Company or any of its subsidiaries is a party.
All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive (or similar) rights. Except as set
forth in Section 3.3 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity. Except as set forth in Section 3.3 of the
Company Disclosure Schedule, each of the outstanding shares of capital stock of
each of the Company's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and all such shares are owned by the Company or another
wholly owned subsidiary of the Company and are owned free and clear of all
security interests, liens, claims, pledges, agreements, limitations in voting
rights, charges or other encumbrances of any nature whatsoever, except where the
failure to own such shares free and clear is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. The Company has
delivered to Parent prior to the date hereof a list of the subsidiaries and
associated entities of the Company which evidences, among other things, the
percentage of capital stock or other equity interests owned by the Company,
directly or indirectly,
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in such subsidiaries or associated entities. No entity in which the Company
owns, directly or indirectly, less than a 50% equity interest is, individually
or when taken together with all such other entities, material to the business of
the Company and its subsidiaries taken as a whole.
SECTION 3.4 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the approval of this
Agreement by the holders of two-thirds of the outstanding shares of Company
Common Stock if and to the extent required by applicable law, and the filing of
appropriate merger documents as required by the MBCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
(including but not limited to the Offer and the Merger) so as to render
inapplicable hereto and thereto the limitation on business combinations
contained in Chapter 110D and Chapter 110F, Section 1, of the Massachusetts
Corporation-Related Laws. As a result of the foregoing actions, subject to
Section 82 of the MBCL, the only vote required to authorize the Merger is the
affirmative vote of two-thirds of the outstanding Shares.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 3.5(a) of the Company Disclosure Schedule, the execution,
delivery and performance of this Agreement by the Company do not and will not:
(i) conflict with or violate the Articles of Organization or By-Laws of the
Company or the equivalent organizational documents of any of its subsidiaries;
(ii) assuming that all consents, approvals and authorizations contemplated by
clauses (i), (ii) and (iii) of subsection (b) below have been obtained and all
filings described in such clauses have been made, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which its or any of their respective properties
are bound or affected; or (iii) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
could become a default) or result in the loss of a material benefit under, or
give rise to any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or encumbrance on any of the properties
or assets of the Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected, except, in the case of
clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect.
(b) Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, the execution, delivery and performance of this Agreement by the
Company and the consummation of
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the Merger by the Company do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental or regulatory authority, domestic or foreign, or any other person,
except for (i) applicable requirements, if any, of the Exchange Act and the
rules and regulations promulgated thereunder, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), or other foreign filings
or approvals, state securities, takeover and "blue sky" laws, (ii) the filing
and recordation of appropriate merger or other documents as required by the MBCL
and (iii) such consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain are not, individually or in
the aggregate, reasonably likely to (x) prevent or materially delay the Company
from performing its obligations under this Agreement or (y) have a Material
Adverse Effect.
(c) if the adoption of this Agreement and the approval of the Merger
by the stockholders of the Company is required by the MBCL, such adoption and
approval may be accomplished in accordance with the Company's Articles of
Organization and the MBCL solely by the affirmative vote of two-thirds of the
outstanding Shares.
SECTION 3.6 Compliance. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are bound
or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except, in the case of each of clauses (i) and (ii), for any such
conflicts, defaults or violations which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company and, to
the extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1996 (collectively, the "SEC Reports"), each of which has complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or the Exchange Act, and the rules and regulations
promulgated thereunder, each as in effect on the date so filed. None of the SEC
Reports (including but not limited to any financial statements or schedules
included or incorporated by reference therein) contained when filed, or (except
to the extent revised or superseded by a subsequent filing with the SEC)
contains, any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in its
Annual Reports on Form 10-K for each of the two fiscal years ended December 31,
1997 and 1998 filed with the Commission has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly presents
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the consolidated financial position of the Company and its subsidiaries at the
respective date thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at December 31, 1998, including the
notes thereto, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet or in
the notes thereto prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred since December 31,
1998 (i) in the ordinary course of business consistent with past practice and
(ii) which are not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since December 31,
1998, except as contemplated by this Agreement or disclosed in the SEC Reports
filed and publicly available prior to the date of this Agreement, the Company
and its subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been: (i) any changes in the business, financial condition or results of
operations of the Company or any of its subsidiaries having or reasonably likely
to have a Material Adverse Effect; (ii) any damage, destruction or loss (whether
or not covered by insurance) with respect to any assets of the Company or any of
its subsidiaries which is reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect; (iii) any material change by the Company in
its accounting methods, principles or practices; (iv) any revaluation by the
Company of any of its material assets, including but not limited to writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business; (v) any entry by the Company or any of its
subsidiaries into any commitment or transactions material to the Company and its
subsidiaries taken as a whole (other than commitments or transactions entered
into in the ordinary course of business); (vi) any declaration, setting aside or
payment of any dividends or distributions in respect of the Shares; (vii) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including
without limitation the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement, or any other increase in the
compensation payable or to become payable to any present or former directors,
officers or key employees of the Company or any of its subsidiaries, except for
increases in base compensation in the ordinary course of business consistent
with past practice, or pursuant to any employment, consulting or severance
agreement or arrangement previously entered into with any such present or former
directors, officers or key employees; or (viii) any other action which, if it
had been taken after the date hereof, would have required the consent of Parent
under Section 5.1 (except for the actions described in Sections 5.1(e)(iii),
5.1(e)(iv), 5.1(h), 5.1(l) and 5.1(p) hereof).
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SECTION 3.9 Absence of Litigation. Except as disclosed in the SEC
Reports filed and publicly available prior to the date of this Agreement, there
are no suits, claims, actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect. As of the
date hereof, neither the Company nor any of its subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree, determination or award having, or which, insofar as can be
reasonably foreseen, is reasonably likely to have a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. Except (i) as set forth in the
SEC Reports filed and publicly available prior to the date of this Agreement,
(ii) as set forth in Section 3.10 of the Company Disclosure Schedule, or (iii)
with respect to subsections (b) through (g) of this Section 3.10, as is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect:
(a) Section 3.10 of the Company Disclosure Schedule contains a true
and complete list of each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), including, without limitation, multiemployer plans
within the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA (including any funding mechanism therefor
now in effect), whether formal or informal, oral or written, legally
binding or not, under which any employee or former employee of the Company
or any of its subsidiaries, has any present or future right to benefits or
under which the Company or any of its subsidiaries has any present or
future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans".
(b) With respect to each Company Plan, the Company has delivered or
made available to Parent a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding
instrument; (ii) the most recent determination letter, if applicable; (iii)
any summary plan description and other written communications by the
Company or any of its subsidiaries to their employees concerning the extent
of the benefits provided under a Company Plan; and (iv) for the three most
recent years (A) the Form 5500 and attached schedules, (B) audited
financial statements and (C) actuarial valuation reports.
(c) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions
of ERISA, the Internal Revenue Code of 1986, as amended (the "Code"), and
other applicable laws, rules and regulations; (ii) each Company Plan which
is intended to be qualified within the meaning of Code section 401(a) has
received a favorable determination letter as to its qualification, and
nothing has occurred, whether by action or failure to act, that would cause
the revocation of such
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determination letter; (iii) no event has occurred and no condition exists
that would subject the Company or any of its subsidiaries, either directly
or by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled group
of organizations within the meaning of Code sections 414(b), (c), (m) or
(o)), to any tax, fine, lien or penalty imposed by ERISA, the Code or other
applicable laws, rules and regulations; (iv) for each Company Plan with
respect to which a Form 5500 has been filed, no material change has
occurred with respect to the matters covered by the most recent Form since
the date thereof; and (v) no "reportable event" (as such term is defined in
ERISA section 4043), "prohibited transaction" (as such term is defined in
ERISA section 406 and Code section 4975) or "accumulated funding
deficiency" (as such term is defined in ERISA section 302 and Code section
412 (whether or not waived)) has occurred with respect to any Company Plan.
(d) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA, as of the Effective Time, the assets of each
such Company Plan are at least equal in value to the present value of the
accrued benefits (vested and unvested) of the participants in such Company
Plan on a termination basis, based on the actuarial methods and assumptions
indicated in the most recent actuarial valuation reports.
(e) With respect to any multiemployer plan (within the meaning of
ERISA section 4001(a)(3)): (i) none of the Company, any of its subsidiaries
or any member of their Controlled Group has incurred any withdrawal
liability under Title IV of ERISA or would be subject to such liability if,
as of the Effective Time, the Company, any of its subsidiaries or any
member of their Controlled Group were to engage in a complete withdrawal
(as defined in ERISA section 4203) or partial withdrawal (as defined in
ERISA section 4205) from any such multiemployer plan; and (ii) no
multiemployer plan to which the Company, any of its subsidiaries or any
member of their Controlled Group has any liabilities or contributes, is in
reorganization or insolvent (as those terms are defined in ERISA sections
4241 and 4245, respectively).
(f) With respect to any Company Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending
or, to the knowledge of the Company, threatened, and (ii) no facts or
circumstances exist, to the knowledge of the Company, that are likely to
give rise to any such actions, suits or claims.
(g) No Company Plan exists that could result in the payment to any
present or former employee of the Company or any of its subsidiaries of any
money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
subsidiaries as a result of the transaction contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of Code section 280G.
SECTION 3.11 Tax Matters. The Company and each of its subsidiaries,
and any consolidated, combined, unitary or aggregate group for tax purposes of
which the Company or any
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of its subsidiaries is or has been a member has timely filed all Tax Returns
required to be filed by it in the manner provided by law, has paid all Taxes
(including interest and penalties) owed (whether or not shown on any Tax
Returns) other than Taxes that (i) are being contested in good faith, (ii) have
not been finally determined and (iii) for which an adequate reserve has been
provided in its financial statements according to generally accepted accounting
principles. All such Tax Returns were true, correct and complete in all material
respects. No claim has been made in writing by any Taxing authority in a
jurisdiction where any of the Company or its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. Except as
has been disclosed to Parent in Section 3.11 of the Company Disclosure Schedule:
(i) no material claim for unpaid Taxes has become a lien or encumbrance of any
kind against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries; (ii) as of the date
hereof there are no audits or disputes for Taxes upon the Company or any of its
subsidiaries; and (iii) none of the payments required by this Agreement would be
non-deductible under Code Section 162(m). Proper and accurate amounts have been
withheld by the Company and its subsidiaries from their employees in compliance
with the tax withholding provisions of applicable federal, state and local laws
and have been paid over to the appropriate taxing authorities. None of the
Company and its subsidiaries has filed a consent under Code Section 341(f)
concerning collapsible corporations. None of the Company and its subsidiaries
has been required to include in income any adjustment pursuant to Code Section
481 (or any similar provision of state, local or foreign tax law) by reason of a
voluntary change in accounting method initiated by the Company or any of its
subsidiaries, and, to the Company's best knowledge, the IRS has not initiated or
proposed any such adjustment or change in accounting method. Except as set forth
in Section 3.11 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries (i) has been a member of an affiliated group filing
consolidated federal income tax return (other than a group the common parent of
which was the Company), (ii) is a party to a Tax allocation or Tax sharing
agreement (other than an agreement solely among members of a group the common
parent of which is the Company), or (iii) has any liability for the Taxes of any
person (other than any of the Company or its subsidiaries) under Treasury
Regulation section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract or otherwise. As used herein,
"Taxes" shall mean any taxes of any kind, including but not limited to those on
or measured by or referred to as income, gross receipts, capital, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes, including any
schedule or attachment thereto or amendment thereof.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the Schedule
14D-9, nor any of the information supplied by the Company for inclusion in the
Offer Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders, as the case may be, 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
the light of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the
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stockholders of the Company in connection with the Stockholders Meeting (as
defined in Section 6.1) or the information statement to be sent to such
stockholders, as appropriate (such proxy statement or information statement, as
amended or supplemented, is herein referred to as the "Proxy Statement"), shall,
at the date the Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to stockholders and at the time of the Stockholders Meeting and
at the Effective Time, be false or misleading with respect to any material fact,
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent or Purchaser or any of their respective
representatives which is contained in the Schedule 14D-9 or the Proxy Statement.
The Schedule 14D-9 and the Proxy Statement will comply in all material respects
as to form with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
SECTION 3.13 Environmental Matters. (a) Except as disclosed in SEC
Reports filed and publicly available prior to the date of this Agreement and to
the extent that the inaccuracy of any of the following (or the circumstances
giving rise to such inaccuracy), individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect:
(i) (A) the Company and its subsidiaries are, and within the period of
all applicable statutes of limitation have been, in compliance with all
applicable Environmental Laws; and (B) the Company and each of its
subsidiaries believes that each of them will, and will not incur material
expense in excess of the amounts reflected in the Company's financial
statements and capital budgets to, timely attain or maintain compliance
with any Environmental Laws applicable to any of their current operations
or properties or to any of their planned operations over the next three
years;
(ii) (A) the Company and its subsidiaries hold all Environmental
Permits (each of which is in full force and effect) required for any of
their current operations and for any property owned, leased, or otherwise
operated by any of them, and are, and within the period of all applicable
statutes of limitation have been, in compliance with all such Environmental
Permits; and (B) neither the Company nor any of its subsidiaries has
knowledge that over the next three years: any of their Environmental
Permits will not be, or will entail material expense to be, timely renewed
or complied with; any additional Environmental Permits required of any of
them for current operations or for any property owned, leased, or otherwise
operated by any of them, or for any of their planned operations, will not
be timely granted or complied with; or any transfer or renewal of, or
reapplication for, any Environmental Permit required as a result of the
Merger will not be, timely effected;
(iii) no review by, or approval of, any Governmental Authority or
other person is required under any Environmental Law in connection with the
execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby;
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(iv) neither the Company nor any of its subsidiaries has received any
Environmental Claim (as hereinafter defined) against any of them, and
neither the Company nor any of its subsidiaries has knowledge of any such
Environmental Claim being threatened;
(v) Hazardous Materials are not present on any property owned, leased,
or operated by the Company or any of its subsidiaries, that is reasonably
likely to form the basis of any Environmental Claim against any of them;
and neither the Company nor any of its subsidiaries has reason to believe
that Hazardous Materials are present on any other property that is
reasonably likely to form the basis of any Environmental Claim against any
of them;
(vi) neither the Company nor any of its subsidiaries has knowledge of
any material Environment Claim pending or threatened, or of the presence or
suspected presence of any Hazardous Materials that is reasonably likely to
form the basis of any Environmental Claim, in any case against any person
or entity (including without limitation any predecessor of the Company or
any of its subsidiaries) whose liability the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law or against any real or personal property which the Company
or any of its subsidiaries formerly owned, leased, or operated, in whole or
in part; and
(vii) the Company has informed the Parent and the Purchaser of: all
material facts which the Company or any of its subsidiaries reasonably
believes could form the basis of a material Environmental Claim against the
Company or any of its subsidiaries arising out of the non-compliance or
alleged non-compliance with any Environmental Law, or the presence or
suspected presence of Hazardous Materials at any location; all material
costs the Company reasonably expects it and any of its subsidiaries to
incur to comply with Environmental Laws during the next three years; and
all material costs the Company and any of its subsidiaries expect to incur
for ongoing, and reasonably anticipated, investigation and remediation of
Hazardous Materials (including, without limitation, any payments to resolve
any threatened or asserted Environmental Claim for investigation and
remediation costs).
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice (written or oral) of noncompliance, violation, or liability, by any
person or entity asserting liability or potential liability (including
without limitation liability or potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties)
arising out of, based on or resulting from (i) the presence, discharge,
emission, release or threatened release of any Hazardous Materials at any
location, (ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Laws or Environmental Permits, or (iii)
otherwise relating to obligations or liabilities under any Environmental
Law.
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"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other
legally enforceable requirement (including, without limitation, common law)
of any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of human
health as affected by the environment or Hazardous Materials (including
without limitation employee health and safety) or the environment
(including without limitation indoor air, ambient air, surface water,
groundwater, land surface, subsurface strata, or plant or animal species).
"Environmental Permits" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity (including, without
limitation, a court) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Hazardous Materials" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants, contaminants, radioactivity, electromagnetic fields and all
other materials, whether or not defined as such, that are regulated
pursuant to any Environmental Laws or that could result in liability under
any applicable Environmental Laws.
SECTION 3.14 Real Estate Matters. (a) Except as set forth in Section
3.14 of the Company Disclosure Schedule, the Company or its subsidiaries has
good, valid, and, in the case of Owned Properties (as defined below), marketable
fee title to: (i) all of the material real property and interests in real
property owned by the Company or its subsidiaries and used by the Company or its
subsidiaries in the conduct of their business, except for properties hereafter
sold or otherwise disposed of in the ordinary course of business (the "Owned
Properties"), and (ii) all of the material leasehold estates in all real
properties leased by the Company or its subsidiaries, except leasehold interests
hereafter terminated in the ordinary course of business (the "Leased
Properties"; the Owned Properties and Leased Properties being sometimes referred
to herein as the "Real Properties"), in each case free and clear of all
mortgages, liens, security interests, easements, covenants, rights-of-way,
subleases and other similar restrictions and encumbrances ("Encumbrances"),
except for Encumbrances which, (i) individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect or (ii) are disclosed in
Section 3.14(a) of the Company Disclosure Schedule.
(b) Except as disclosed in Section 3.14 of the Company Disclosure
Schedule, and except to the extent that the inaccuracy of any of the following
(or the circumstances giving rise to such inaccuracy), individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect: (i) each
of the agreements by which the Company has obtained a leasehold interest in each
Leased Property (individually, a "Lease" and collectively, the "Leases") is in
full force and effect in accordance with its respective terms and the Company or
its subsidiary is the holder of the
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lessee's or tenant's interest thereunder; to the knowledge of the Company, there
exists no default under any Lease and no circumstance exists which, with the
giving of notice, the passage of time or both, is reasonably likely to result in
such a default; the Company and its subsidiaries have complied with and timely
performed all conditions, covenants, undertakings and obligations on their parts
to be complied with or performed under each of the Leases; the Company and its
subsidiaries have paid all rents and other charges to the extent due and payable
under the Leases; (ii) there are no leases, subleases, licenses, concessions or
any other contracts or agreements granting to any person or entity other than
the Company or any of its subsidiaries any right to the possession, use,
occupancy or enjoyment of any Real Property or any portion thereof; (iii) the
current operation and use of the Real Properties does not violate any statute,
law, regulation, rule, ordinance, permit, requirement, order or decree now in
effect; (iv) the use being made of each Real Property at present is in
conformity with the certificate of occupancy issued for such Real Property; (v)
there are no existing, or to the knowledge of the Company, threatened,
condemnation or eminent domain proceedings (or proceedings in lieu thereof)
affecting the Real Properties or any portion thereof and (vi) no default or
breach exists under any of the covenants, conditions, restrictions,
rights-of-way, or easements, if any, affecting all or any portion of a Real
Property, which are to be performed or complied with by the Company or any of
its subsidiaries.
(c) Neither the Company nor any of its subsidiaries is obligated under
or bound by any option, right of first refusal, purchase contract, or other
contractual right to sell or dispose of any Owned Property or any portions
thereof or interests therein which property, portions and interests,
individually or in the aggregate, are material to the Company and its
subsidiaries.
SECTION 3.15 Loans; Investments. (a) The following terms shall have
the meaning ascribed to them below:
(i) "Investor" means any person or entity who has acquired a Loan from
the Company or any of its subsidiaries, other than the Parent or any of its
subsidiaries.
(ii) "Investor Requirements" means any outstanding contractual, legal
and regulatory obligation of the Company or any of its subsidiaries to any
Investor, including but not limited to, the representations, warranties and
covenants made by the Company or any of its subsidiaries to any Investor.
(iii) "Loan" means any loan or lease at any time held, serviced or
sold by the Company or any of its subsidiaries to the extent that the
Company or any of its subsidiaries could have any liability, obligation or
duties with respect thereto.
(iv) "Loan Documents" means the note, mortgage, deed of trust,
security agreement, or other instrument securing the note and the related
documents for each Loan.
(v) "Mortgage Loan" shall mean a Loan secured by a mortgage.
(vi) "Serviced Loans" means all Loans serviced by the Company or its
subsidiaries for its own account or for others.
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(vii) "Servicing Requirements" means prudent practice and industry
standards together with any contractual, legal or regulatory obligation of
the Company or any of its subsidiaries relating to the Serviced Loans.
(b) Except as would not have a material adverse effect on the
Company's portfolio of Loans, the Loan Documents evidencing each Loan (other
than Serviced Loans serviced for the account of others that have never been
owned by the Company or its subsidiaries) that is currently outstanding
constitute the legal, valid and binding obligations of the parties thereto and
are enforceable against such parties in accordance with their terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of lending institutions or creditors
generally and by general equitable principles. Expect as would not have a
material adverse effect on the Company's portfolio of Loans, no Loan is subject
to any legally enforceable right of rescission, set-off, counterclaim or
defense, including the defense of usury or, to the knowledge of the Company,
lack of legal capacity of any borrower or guarantor, nor will the operation of
any of the terms of any Loan, or the exercise of any legally enforceable right
thereunder, render any Loan or any of the Loan Documents unenforceable, in whole
or in part, or subject to any right of rescission, setoff, counterclaim or
defense, including the defense of usury or, to the knowledge of the Company,
lack of legal capacity of any borrower or guarantor, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect to
any Loan for which there is any recourse against, or responsibility or exposure
of, the Company or any of its subsidiaries.
(c) Except as would not have a material adverse effect on the
Company's portfolio of Loans, the Loan Documents for each Loan (other than
Serviced Loans serviced for the account of others that have never been owned by
the Company or its subsidiaries) have been duly executed and recorded, or are in
the process of being recorded, and are in due and proper form. Except as would
not have a material adverse effect on the Company's portfolio of Loans, the
Company has at all times maintained the Loan Documents in all material respects
in accordance with Investor Requirements, Servicing Requirements and otherwise
in accordance with all legal and regulatory requirements and contractual
obligations applicable to the Company and its subsidiaries.
(d) Except as would not have a material adverse effect on the
Company's portfolio of Loans, all outstanding Loans sold by the Company or any
of its subsidiaries complied in all material respects with Investor Requirements
on the date of sale.
(e) Except as would not have a material adverse effect on the
Company's portfolio of Loans, the Company and its subsidiaries have at all times
been and are in compliance in all material respects with the Servicing
Requirements relating to the Serviced Loans and Loans previously serviced by any
of them.
(f) Except as would not have a material adverse effect on the
Company's portfolio of Loans, each advance outstanding with respect to any Loan
has been made in accordance with all material requirements of the Loan
Documents.
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(g) Except as would not have a material adverse effect on the
Company's portfolio of Loans, neither the Company nor any of its subsidiaries is
in material default with respect to any of its obligations under any Loan.
(h) Neither the Company nor any of its subsidiaries is in violation in
any material respect of any federal, state, or local law, statute, ordinance,
rule, regulation, order or guideline applicable to the Company or its
subsidiaries pertaining to the Loans or otherwise relating to its purchase or
sale of Loans or its lending business.
(i) Except as would not have a material adverse effect on the
Company's portfolio of Loans, all Loans securitized in a pool, at the time of
inclusion in the pool, and at the time of any pool certification or any
recertification, met all applicable guidelines for such pool. The principal
balance outstanding and owing on the Serviced Loans in each pool equals or
exceeds the principal amount owing to the corresponding security holder of such
pool.
(j) Set forth in Section 3.15(j) of the Company Disclosure Schedule is
a list, as of the date hereof, of all interest rate swaps, caps, floors, and
option agreements and other interest rate risk management arrangements to which
the Company or any of its subsidiaries is a party or by which any of their
properties or assets may be bound. Except as would not have a material adverse
effect on the Company's portfolio of Loans, all interest rate swaps, caps,
floors and option agreements and other interest rate risk management
arrangements to which the Company or any of its subsidiaries is a party or by
which any of their properties or assets may be bound were entered into in the
ordinary course of business and, to the best knowledge of the Company, in
accordance with then-customary practice and all applicable rules and regulations
and with counterparties believed to be financially responsible at the time and
are legal, valid and binding obligations and are in full force and effect,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization, receivership, conservatorship or similar laws
relating to or affecting the enforcement of creditors' rights generally, and by
general principles of equity, whether applied by a court of law or equity. The
Company and its subsidiaries have duly performed in all material respects all of
their respective obligations thereunder to the extent that such obligations to
perform have accrued, and to the best knowledge of the Company, there are no
material breaches, violations or defaults or allegations or assertions of such
by any party thereunder. Except as set forth in Section 3.15(l), of the Company
Disclosure Schedule, none of the transactions contemplated by this Agreement
would permit: (i) a counterparty under any interest rate swap, cap, floor and
option agreement or any other interest rate risk management agreement or (ii)
any party to any financing arrangement, including, but not limited to
mortgage-backed financing, to accelerate, discontinue, terminate or otherwise
modify any such agreement or arrangement or would require the Company or any of
its subsidiaries to recognize any gain or loss with respect to such arrangement.
(k) Except as set forth in Section 3.15(k) of the Company Disclosure
Schedule, the Company has not received notice from any governmental,
quasi-governmental or private agency of pending or threatened actions or
investigations relating to the Company's activities in respect of the Loans.
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(l) Except as would not have a material adverse effect on the
Company's portfolio of Loans, the terms of each Loan have not been impaired,
waived, altered or modified in any material respect from the date of its
origination except by a written instrument, which written instrument has been
recorded if recordation is necessary to protect the interests of the owner
thereof. The substance of any such waiver, alteration or modification has been
communicated to and approved in writing by: (i) the relevant Investor, to the
extent required by the relevant Investor Requirements; and (ii) the title
insurer, to the extent required by the relevant policies, and its terms are
reflected in the Loan Documents. Where the Investor's authorization is required,
neither the Company nor any of its subsidiaries has, without the Investor's
knowledge: (i) subordinated the lien of any Mortgage Loan to any other mortgage
or lien or given any other mortgage or lien equal priority with the lien of a
mortgage loan; or (ii) executed any instrument of release, cancellation or
satisfaction with, in whole or in part, respect to any Mortgage Loan.
(m) Except as would not have a material adverse effect on the
Company's portfolio of Loans and except as set forth in Section 3.15(o) of the
Company Disclosure Schedule, as of the date hereof, neither the Company nor any
of its subsidiaries is subject to any repurchase obligation under any Loan.
(n) Except as would not have a material adverse effect on the
Company's portfolio of Loans, neither the Company nor any of its subsidiaries
has received notice of a servicing default for any Loan, and each Loan serviced
by the Company or its subsidiaries has been properly serviced and accounted for
in all material respects in accordance with the applicable Servicing
Requirements. All pools for which the Company or any of its subsidiaries is
responsible are in compliance in all material respects with all applicable
Investor Requirements, procedures, rules, regulations and guidelines.
(o) To the knowledge of the Company, no facts currently exist with
respect to existing securitizations heretofore undertaken by the Company that
would be reasonably likely to materially and adversely affect the ability of the
Company or any of its subsidiaries to continue to do securitizations in the
future in accordance with existing practices.
SECTION 3.16 Licenses. Section 3.16 of the Company Disclosure Schedule
sets forth all licenses, permits, franchises and other authorizations of any
governmental authority (collectively, "Licenses") that are material to the
operation of its business as currently conducted. Except as set forth in Section
3.16 of the Company Disclosure Schedule, the Company has been granted and
possesses all such Licenses, all such Licenses are in full force and effect and
no proceeding is pending or threatened seeking the revocation or limitation of
any such License. Except as set forth in Section 3.16 of the Company Disclosure
Schedule, none of such Licenses will be subject to revocation or other
limitation as a result of this Agreement or the transactions contemplated
hereby.
SECTION 3.17 Allowance for Possible Loan Losses. The reserve for
losses shown on the audited consolidated financial statements as of December 31,
1998 was adequate in all material respects to provide for possible or specific
losses, and contained an additional amount of unallocated reserves for
unanticipated future losses, at a level considered adequate under generally
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accepted accounting principles and standards applied to the specialty finance
business conducted by the Company and its subsidiaries. To the knowledge of the
Company, the aggregate principal amount of all receivables including, but not
limited to, Loans and leases contained in the Loan and lease portfolio of the
Company and its subsidiaries as of December 31, 1998, arose in the ordinary
course of business and are not the subject of any asserted claim or set off,
except to the extent reserves have been taken against such receivables.
SECTION 3.18 Brokers. No broker, finder or investment banker (other
than the Financial Adviser) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and the Financial Adviser pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereby.
SECTION 3.19 Sole Representations and Warranties. The representations
and warranties set forth in this Article III and elsewhere in this Agreement, as
modified by the Company Disclosure Schedule, are the only representations and
warranties of the Company in connection with this Agreement and the transactions
contemplated hereby, and supersede any and all previous written and oral
statements made to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization and has the requisite corporate
power and authority and any necessary governmental approval to own, operate or
lease its properties and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals is not, individually or in
the aggregate, reasonably likely to prevent or materially delay the consummation
of the Offer or the Merger.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
other than filing and recordation of appropriate merger documents as required by
the MBCL. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by
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the Company, constitutes a legal, valid and binding obligation of each such
corporation enforceable against such corporation in accordance with its terms.
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Parent and Purchaser do
not and will not: (i) conflict with or violate the respective certificates of
incorporation or by-laws of Parent or Purchaser; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
such clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Purchaser or by which either
of them or their respective properties are bound or affected; or (iii) result in
any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both could become a default) or result in the loss of
a material benefit under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Parent or Purchaser pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any of their respective properties
are bound or affected, except, in the case of clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which are
not, individually or in the aggregate, reasonably likely to prevent or
materially delay the consummation of the Offer or the Merger.
(b) Except for the Licenses identified in Section 3.16 of the Company
Disclosure Schedule and any other consents, approvals, authorizations, permits
or filings as may be required by any governmental authority in order for the
Surviving Corporation to operate after the Effective Time the business of the
Company as currently conducted, including, without limitation, the filing of
applications and notices with federal and state regulatory authorities governing
consumer finance, commercial finance, mortgage lending and insurance in the
states in which the Company and its subsidiaries operate their respective
businesses, the execution, delivery and performance of this Agreement by Parent
and Purchaser do not and will not require any consent, approval, authorization
or permit of, action by, filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act and the rules and regulations
promulgated thereunder, the HSR Act or other foreign filings or approvals, state
securities, takeover and "blue sky" laws, (ii) the filing and recordation of
appropriate merger or other documents as required by the MBCL, and (iii) such
consents, approvals, authorizations, permits, actions, filings or notifications
the failure of which to make or obtain are not, individually or in the
aggregate, reasonably likely to prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer Documents, as
filed pursuant to Section 1.1, will not, at the time such Offer Documents are
filed with the SEC or are first published, sent or given to stockholders, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement shall not, on the date the Proxy Statement
is first mailed to stockholders, at the time
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of the Stockholders Meeting (as defined in Section 6.1), if any, or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or shall omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in or
incorporated by reference in any of the foregoing documents or the Offer
Documents. The Offer Documents, as amended and supplemented, will comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 4.5 Brokers. No broker, finder or investment banker (other
than Donaldson, Lufkin & Jenrette, Inc.) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of Parent or
Purchaser.
SECTION 4.6 Funds. Parent or Purchaser, at the expiration date of the
Offer and at the Effective Time, will have the funds necessary to consummate the
Offer and the Merger, respectively.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date hereof to the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and its subsidiaries shall be conducted only in, and the Company
and its subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company and its
subsidiaries shall each use its commercially reasonable efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, except as set
forth in Section 5.1 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries shall, between the date of this Agreement and the
Effective Time, directly or indirectly do, or commit to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change its Articles of Organization or by-laws
or equivalent organizational documents;
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(b) issue, deliver, sell, pledge, dispose of or encumber, or authorize
or commit to the issuance, sale, pledge, disposition or encumbrance of, (i)
any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including but not limited
to stock appreciation rights or phantom stock), of the Company or any of
its subsidiaries (except for the issuance of up to 913,720 shares of
Company Common Stock required to be issued pursuant to the terms of Options
outstanding as of September 22, 1999 or (ii) any assets of the Company or
any of its subsidiaries, except in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans, advances or capital contributions to, or investments in,
any other person (other than in the ordinary course of business consistent
with past practice and other than existing committed facilities); (iii)
enter into any contract or agreement other than in the ordinary course of
business consistent with past practice; or (iv) authorize capital
expenditures (during any three month period) which are, in the aggregate,
in excess of $25,000 for the Company and its subsidiaries taken as a whole;
(f) except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of this
Agreement or as provided under Section 2.7, increase the compensation or
fringe benefits of any of its directors, officers or employees, except for
increases in salary or wages of employees of the Company or its
subsidiaries who are not officers of the Company in the ordinary course of
business in accordance with past practice, or grant any severance or
termination pay not currently required to be paid under existing severance
plans to or enter into any employment, consulting or severance agreement or
arrangement with any present or former director, officer or other employee
of the Company or any of its subsidiaries, or establish, adopt, enter into
or amend or terminate any collective bargaining agreement or Company Plan,
including, but not limited to, 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 directors, officers or
employees;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it, other than discontinuance of the gain
on sale method;
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(h) make any material Tax election, change any annual Tax accounting
period, change any method of Tax accounting, file any amended Tax Return or
settle or compromise any material federal, state, local or foreign Tax
liability;
(i) settle or compromise any pending or threatened suit, action or
claim which is material or which relates to the transactions contemplated
hereby;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries not constituting
an inactive subsidiary (other than the Merger);
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (i) in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in
the ordinary course of business and consistent with past practice and (ii)
of liabilities required to be paid, discharged or satisfied pursuant to the
terms of any contract in existence on the date hereof;
(l)(i) make or commit to make any financial services Loan;
(ii) make or commit to make any other Loan except as specifically
provided in clauses (iii) through (ix) of this paragraph (l);
(iii) purchase or commit to purchase consumer land Loans from a single
dealer exceeding an aggregate amount of (y) $1,000,000 in the case of a dealer
that is an approved dealer as of the date of this Agreement or (z) $2,500,000 in
the case of a dealer that becomes an approved dealer on or after the date of
this agreement;
(iv) purchase or commit to purchase consumer timeshare Loans from a
single seller exceeding an aggregate amount of (y) $500,000 in the case of a
seller that is an approved seller as of the date of this Agreement or (z)
$1,000,000 in the case of a seller that becomes an approved seller on or after
the date of this Agreement;
(v) make or commit to make Loans for the acquisition and/or
construction of timeshare units that exceed (y) $2,500,000 in the case of a new
Loan to an approved borrower (or group of affiliated borrowers) as of the date
of this Agreement; provided however, that any increase in an existing commitment
shall not exceed $1,000,000, and provided, further, that any additional Loans or
increases as described in this clause (y) shall not cause the aggregate
commitments to such borrower to exceed $2,500,000 or (z) $2,000,000 in the case
of a borrower (or group of affiliated borrowers) which becomes an approved
borrower on or after the date of this Agreement;
(vi) make or commit to make Loans for the acquisition and/or
development of landlots that exceed (y) $500,000 in the case of a new Loan to an
approved borrower (or group of
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affiliated borrowers) as of the date of this Agreement; provided however, that
any increase in an existing commitment shall not exceed $100,000, and provided,
further, that any additional Loans or increases as described in this clause (y)
shall not cause the aggregate commitments to such borrower to exceed $1,500,000
or (z) $1,000,000 in the case of a borrower (or group of affiliated borrowers)
which becomes an approved borrower on or after the date of this Agreement;
(vii) make or commit to make Loans for the finance or purchase of land
(not including consumer Loans as provided in clause (iii) of Section 5.1(l)
above) that exceed (y) $1,000,000 in the case of a new Loan to an approved
borrower (or group of affiliated borrowers) as of the date of this Agreement;
provided however, that any increase in an existing commitment shall not exceed
$250,000, and provided, further, that any additional Loans or increases as
described in this clause (y) shall not cause the aggregate commitments to such
borrower to exceed $2,500,000 or (z) $500,000 in the case of a borrower (or
group of affiliated borrowers) which becomes an approved borrower on or after
the date of this Agreement;
(viii) make or commit to make Loans for the finance or purchase of
timeshare units (not including consumer Loans as provided in clause (iv) of
Section 5.1(l) above) that exceed (y) $5,000,000 in the case of a new Loan to an
approved borrower (or group of affiliated borrowers) as of the date of this
Agreement; provided however, that any increase in an existing commitment shall
not exceed $2,500,000, and provided, further, that any additional Loans or
increases as described in this clause (y) shall not cause the aggregate
commitments to such borrower to exceed $5,000,000 or (z) $5,000,000 in the case
of a borrower (or group of affiliated borrowers) which becomes an approved
borrower on or after the date of this Agreement; or
(ix) purchase or commit to purchase any tax lien certificate greater
than $500,000;
provided, that nothing in this Section 5.1(l) shall prohibit the Company from
honoring any contractual obligation in existence on the date of this Agreement.
(m) refinance or restructure any existing Loan, except in the ordinary
course of business consistent with past practice and prudent lending
practices;
(n) make any material changes in its polices or practices concerning
Loan underwriting and credit scoring, or which persons may approve Loans or
credit scoring;
(o) except in the ordinary course of business consistent with past
practice and prudent business practices, enter into any securities
transaction for its own account or purchase or otherwise acquire any
investment security for its own account other than (A) securities backed by
the full faith and credit of the United States or an agency thereof and (B)
other readily marketable securities not in excess of $100,000.
(p) foreclose upon or otherwise take title to or possession or control
of any real property (other than residential property) without first
obtaining a phase one environmental report thereon;
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(q) enter into any new, or modify, amend or extend the terms of any
existing, contracts relating to the purchase or sale of financial or other
futures, or any put or call option relating to cash, securities or
commodities or any interest rate swap agreements or other agreements
relating to the hedging of interest rate risk, except in the ordinary
course of business consistent with past practices and prudent business
practices; or
(r) take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 5.1(a) through 5.1(q) or any
action which would make any of the representations or warranties of the Company
contained in this Agreement untrue and incorrect as of the date when made if
such action had then been taken, or would result in any of the conditions set
forth in Annex A not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) If adoption of this Agreement is
required by applicable law, the Company, acting through its Board of Directors,
shall in accordance with and subject to applicable law and the Company's
Articles of Organization and By-Laws, (i) duly call, give notice of, convene and
hold a meeting of its stockholders as soon as practicable following consummation
of the Offer for the purpose of adopting this Agreement and the transactions
contemplated hereby (the "Stockholders Meeting") and except if the Board of
Directors by majority vote determines in good faith, based on the advice of
outside legal counsel to the Company that to do so would constitute a breach of
fiduciary duty under applicable law, (A) include in the Proxy Statement the
unanimous recommendation of the Board of Directors that the stockholders of the
Company vote in favor of the adoption of this Agreement and the approval of the
transactions contemplated hereby and the written opinion of the Financial
Adviser that the consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to such stockholders and (B) use
its reasonable best efforts to obtain the necessary adoption of this Agreement
and the approval of the transactions contemplated hereby by its stockholders. At
the Stockholders Meeting, Parent and Purchaser shall cause all Shares then owned
by them and their subsidiaries to be voted in favor of adoption of this
Agreement and the approval of the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Purchaser, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 82 of the MBCL.
SECTION 6.2 Proxy Statement. If required by applicable law, as soon as
practicable following Parent's request, the Company shall file with the SEC
under the Exchange Act and the rules and regulations promulgated thereunder, and
shall use its reasonable best
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efforts to have cleared by the SEC, the Proxy Statement with respect to the
Stockholders Meeting. Parent, Purchaser and the Company will cooperate with each
other in the preparation of the Proxy Statement; without limiting the generality
of the foregoing, each of Parent and Purchaser will furnish to the Company the
information relating to it required by the Exchange Act and the rules and
regulations promulgated thereunder to be set forth in the Proxy Statement. The
Company agrees to use its reasonable best efforts, after consultation with the
other parties hereto, to respond promptly to any comments made by the SEC with
respect to the Proxy Statement and any preliminary version thereof filed by it
and cause such Proxy Statement to be mailed to the Company's stockholders at the
earliest practicable time.
SECTION 6.3 Company Board Representation; Section 14(f). (a) Promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as shall give Purchaser representation on the Board of Directors equal
to the product of the total number of directors on such Board (giving effect to
the directors elected pursuant to this sentence and including any vacancies or
unfilled newly-created directorships) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Purchaser or any affiliate of
Purchaser bears to the total number of Shares then outstanding, and the Company
shall amend, or cause to be amended, its by-laws to provide for each of the
matters set forth in this Section 6.3 and shall, at such time, promptly take all
action necessary to cause Purchaser's designees to be so elected, including
either increasing the size of the Board of Directors or securing the
resignations of incumbent directors or both. At such times, the Company will use
its reasonable best efforts to cause persons designated by Purchaser to
constitute the same percentage as is on the board of (i) each committee of the
Board of Directors, (ii) each board of directors of each subsidiary of the
Company and (iii) each committee of each such board, in each case only to the
extent permitted by law. Until Purchaser acquires 662/3% of the outstanding
Shares on a fully diluted basis, the Company shall use its commercially
reasonable efforts to ensure that all the members of the Board of Directors and
such boards and committees as of the date hereof who are not employees of the
Company shall remain members of the Board of Directors and such boards and
committees.
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.3 and shall include in the Schedule 14D-9 or a separate
Rule 14f-1 information statement provided to stockholders such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 6.3.
Parent or Purchaser will supply to the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Purchaser's designees
pursuant to this Section 6.3 and prior to the Effective Time, any amendment, or
waiver of any term or condition of this Agreement or the Articles of
Organization or By-Laws of the Company, any termination of this Agreement by the
Company, any extension by the Company of the time for
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the performance of any of the obligations or other acts of Purchaser or waiver
or assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors with respect to this Agreement, will require
only the concurrence of a majority of the directors of the Company then in
office who are neither designated by Purchaser nor are employees of the Company
(the "Disinterested Directors") and such concurrence shall constitute the
authorization of the Board of Directors of the Company and no other action by
the Company, including any action by any other director of the Company, shall be
required for purposes of this Agreement. Notwithstanding the foregoing, the
number of Disinterested Directors shall be not less than two.
SECTION 6.4 Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Parent, and
financing sources who shall agree to be bound by the provisions of this Section
6.4 as though a party hereto, complete access, consistent with applicable law,
at all reasonable times to its officers, employees, agents, properties, offices,
plants and other facilities and to all books and records, and shall furnish
Parent and such financing sources with all financial, operating and other data
and information as Parent, through its officers, employees or agents, or such
financing sources may from time to time reasonably request. Parent, Purchaser
and their respective officers, employees, agents and financing sources shall
exercise such right of access in a manner which does not unduly interfere with
the conduct by the Company of its business.
(b) Each of Parent and Purchaser will hold and will cause its
officers, employees, auditors and other agents to hold in confidence all
documents and information concerning the Company and its subsidiaries furnished
to Parent or Purchaser in connection with the transactions contemplated in this
Agreement pursuant to the terms and provisions of that Confidentiality Agreement
dated July 20, 1999 between Parent and the Company (the "Confidentiality
Agreement").
(c) No investigation or information provided pursuant to this Section
6.4 shall affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any acquisition or
exchange of all or any material portion of the assets of, or any equity interest
in, the Company or any of its subsidiaries or any business combination with or
involving the Company or any of its subsidiaries. At any time prior to
consummation of the Offer, the Company may, directly or indirectly, furnish
information and access, in each case only in response to a request for such
information or access to any person made after the date hereof which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees, representatives
or agents after the date hereof, pursuant to appropriate confidentiality
agreements, and may participate in discussions and negotiate with such person
concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction (including an exchange of stock or assets) involving the
Company or any
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subsidiary or division of the Company, in each case (whether furnishing
information and access or participating in discussions and negotiations) only if
such person has submitted a written proposal to the Board of Directors of the
Company relating to any such transaction and the Board by majority vote
determines in good faith, based upon the advice of outside counsel to the
Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty under applicable law. The Board shall provide a copy of
any such written proposal to Parent immediately after receipt thereof, shall
notify Parent immediately if any proposal (oral or written) is made and shall in
such notice, indicate in reasonable detail the identity of the offeror and the
terms and conditions of any proposal and shall keep Parent promptly advised of
all developments which could reasonably be expected to culminate in the Board of
Directors withdrawing, modifying or amending its recommendation of the Offer,
the Merger and the other transactions contemplated by this Agreement. Except as
set forth in this Section 6.5, neither the Company or any of its affiliates, nor
any of its or their respective officers, directors, employees, representatives
or agents, shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Purchaser, any affiliate or associate of Parent and Purchaser or any designees
of Parent or Purchaser) concerning any merger, sale of any material portion or
assets, sale of any of the shares of capital stock or similar transactions
(including an exchange of stock or assets) involving the Company or any
subsidiary or division of the Company; provided, however, that nothing herein
shall prevent the Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; provided, further, that the
Board shall not recommend that the stockholders of the Company tender their
Shares in connection with any such tender offer unless the Board by majority
vote shall have determined in good faith, based upon the advice of outside
counsel to the Company, that failing to take such action would constitute a
breach of the Board's fiduciary duty under applicable law. The Company agrees
not to release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a party, unless
the Board by majority vote shall have determined in good faith, based upon the
advice of outside counsel to the Company, that failing to release such third
party or waive such provisions would constitute a breach of the fiduciary duties
of the Board of Directors under applicable law.
SECTION 6.6 Employee Benefits Matters. (a) Subject to paragraphs (b)
and (d) below, on and after the Effective Time, Parent shall cause the Surviving
Corporation and its subsidiaries to promptly pay or provide when due all
compensation and benefits earned through or prior to the Effective Time as
provided pursuant to the terms of any compensation arrangements, employment
agreements and employee or director benefit plans, programs and policies in
existence as of the date hereof for all employees (and former employees) and
directors (and former directors) of the Company and its subsidiaries (unless
superseded by an employment agreement between such employee and the Parent or
Purchaser). Parent and the Company agree that the Surviving Corporation and its
subsidiaries shall pay promptly or provide when due all compensation and
benefits required to be paid pursuant to the terms of any individual agreement
with any employee, former employee, director or former director in effect as of
the date hereof and disclosed in Section 3.10(a) of the Company Disclosure
Schedule.
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(b) Parent shall cause the Surviving Corporation, for the period
commencing at the Effective Time and ending on the first anniversary thereof, to
provide employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
and its subsidiaries (other than employees covered by a collective bargaining
agreement) which are no less favorable in the aggregate than those provided to
Parent's similarly situated employees pursuant to the plans, programs and
arrangements (other than those related to the equity securities of the Company)
of the Parent and its subsidiaries in effect on the date hereof and employees
covered by collective bargaining agreements shall be provided with such benefits
as shall be required under the terms of any applicable collective bargaining
agreement; provided, however, that nothing herein shall prevent the amendment or
termination of any specific plan, program or arrangement, require that the
Surviving Corporation provide or permit investment in the securities of Parent,
the Company or the Surviving Corporation or interfere with the Surviving
Corporation's right or obligation to make such changes as are necessary to
conform with applicable law. Employees of the Surviving Corporation shall be
given credit for all service with the Company and its subsidiaries, to the same
extent as such service was credited for such purpose by the Company, under each
employee benefit plan, program, or arrangement of the Parent in which such
employees are eligible to participate for purposes of eligibility and vesting;
provided, however, that in no event shall the employees be entitled to any
credit to the extent that it would result in a duplication of benefits with
respect to the same period of service.
(c) If employees of the Surviving Corporation and its subsidiaries
become eligible to participate in a medical, dental or health plan of Parent or
its subsidiaries, Parent shall cause such plan to (i) waive any preexisting
condition limitations for conditions covered under the applicable medical,
health or dental plans of the Company and its subsidiaries and (ii) honor any
deductible and out of pocket expenses incurred by the employees and their
beneficiaries under such plans during the portion of the calendar year prior to
such participation.
(d) Nothing in this Section 6.6 shall require the continued employment
of any person or, with respect to clauses (a), (b) and (c) hereof, prevent the
Company and/or the Surviving Corporation and their subsidiaries from taking any
action or refraining from taking any action which the Company and its
subsidiaries prior to the Effective Time, could have taken or refrained from
taking.
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
(a) The Articles of Organization and By-Laws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in the Articles of Organization and By-laws of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers or employees of the Company.
(b) Parent shall use its reasonable best efforts to cause to be
maintained in effect for six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company
(provided that Parent may substitute therefor policies of at
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least the same coverage containing terms and conditions which are not materially
less advantageous) with respect to matters occurring prior to the Effective Time
to the extent available; provided, however, that in no event shall Parent or the
Company be required to expend more than an amount per year equal to 150% of
current annual premiums paid by the Company (which the Company represents and
warrants to be not more than $46,000) to maintain or procure insurance coverage
pursuant hereto.
(c) For six years after the Effective Time, Parent agrees that it will
or will cause the Surviving Corporation to indemnify and hold harmless each
present and former director and officer of the Company, determined as of the
Effective Time and their heirs and representatives (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") (but only
to the extent such Costs are not otherwise covered by insurance and paid)
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative
(collectively, "Claims"), arising out of or pertaining to matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent permitted under
applicable law (and Parent shall ,or shall cause the Surviving Corporation to,
also advance expenses as incurred to the fullest extent permitted under
applicable law provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification).
(d) Any Indemnified Party wishing to claim indemnification under
paragraph (c) of this Section 6.7, upon learning of any such Claim, shall
promptly notify Parent thereof, but the failure to so notify shall not relieve
Parent of any liability it may have to such Indemnified Party if such failure
does not materially prejudice Parent. In the event of any such Claim (whether
arising before or after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right to assume the defense thereof and Parent shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense, or counsel for the Indemnified
Parties advises that there are issues that raise conflicts of interest between
Parent or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Parent or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that Parent shall be obligated pursuant to this paragraph (d) to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent, which consent shall not
be unreasonably withheld; and provided, further, that Parent shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
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SECTION 6.8 Intentionally Omitted.
SECTION 6.9 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would, if such representation or warranty were required
to be made at such time, be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure of the Company, Parent or Purchaser, as the case may be, to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.8 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.10 Further Action; Commercially Reasonable Efforts. (a) Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
use commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as soon as
practicable, including but not limited to (i) cooperation in the preparation and
filing of the Offer Documents, the Schedule 14D-9, the Proxy Statement, any
required filings under the HSR Act and any amendments to any thereof and (ii)
using commercially reasonable efforts to promptly make all required regulatory
filings and applications including, without limitation, responding promptly to
requests for further information and to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company and its subsidiaries and Parent and
its subsidiaries as are necessary for the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Offer and
the Merger, including, without limitation, those listed in Section 3.16 of the
Company Disclosure Schedule. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use commercially reasonable efforts to take all such necessary action.
(b) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
their subsidiaries, from any Governmental Authority with respect to the Offer or
the Merger or any of the other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other antitrust law.
(c) Each party shall timely and promptly make all filings which are
required under the HSR Act. Each party will furnish to the other such necessary
information and
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reasonable assistance as it may request in connection with its preparation of
such filings. Each party will supply the other with copies of all
correspondence, filings or communications between such party or its
representatives and the Federal Trade Commission, the Antitrust Division of the
United States Department of Justice or any other governmental agency or
authority or members of their respective staffs with respect to this Agreement
or the transactions contemplated hereby.
SECTION 6.11 Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger and shall not issue
any such press release or make any such public statement prior to such
consultation and without the consent of the other party, except as may be
required by law or any listing agreement with its securities exchange.
SECTION 6.12 Disposition of Litigation. (a) The Company agrees that it
will not settle any litigation currently pending, or commenced after the date
hereof, against the Company or any of its directors by any stockholder of the
Company relating to the Offer or this Agreement, without the prior written
consent of Parent (which shall not be unreasonably withheld).
(b) The Company will not voluntarily cooperate with any third party
which has sought or may hereafter seek to restrain or prohibit or otherwise
oppose the Offer or the Merger and will cooperate with Parent and Purchaser to
resist any such effort to restrain or prohibit or otherwise oppose the Offer or
the Merger.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) If required by the MBCL, this Agreement shall have been adopted by
the affirmative vote of the stockholders of the Company by the requisite
vote in accordance with the Company's Articles of Organization and the
MBCL.
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United
States, foreign, federal or state court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
provided, however, that prior to invoking this condition the invoking party
shall have complied with Section 6.10.
(c) Purchaser shall have purchased Shares pursuant to the Offer.
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(d) Any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) By mutual written consent of Parent, Purchaser and the Company;
(b) By Parent or the Company if any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United
States shall have issued a final order, injunction, decree, judgment or
ruling or taken any other final action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, injunction, decree,
judgment, ruling or other action is or shall have become final and
nonappealable; provided, however, that prior to invoking this right of
termination the invoking party shall have complied with Section 6.10;
(c) By Parent if due to an occurrence or circumstance which resulted
in a failure to satisfy any of the Offer Conditions, Purchaser shall have
(i) terminated the Offer or (ii) failed to pay for Shares pursuant to the
Offer on or prior to the Outside Date (as defined below);
(d) By the Company (only following the Outside Date, in the case of
clause (ii)(B) below) if (i) there shall have been a material breach of any
covenant or agreement on the part of Parent or the Purchaser contained in
this Agreement which materially adversely affects Parent's or Purchaser's
ability to consummate (or materially delays commencement or consummation
of) the Offer, and which shall not have been cured prior to the earlier of
(A) 10 business days following notice of such breach and (B) two business
days prior to the date on which the Offer expires, (ii) Purchaser shall
have (A) terminated the Offer or (B) failed to pay for Shares pursuant to
the Offer on or prior to the Outside Date (unless such termination or
failure is caused by or results from the failure of any representation or
warranty of the Company to be true and correct in any material respect or
the failure of the Company to perform in any material respect any of its
covenants or agreements contained in this Agreement) or (iii) prior to the
purchase of Shares pursuant to the Offer, any person shall have made a bona
fide offer to acquire the Company (A) that the Board of Directors of the
Company by majority vote determines in its good faith judgment is more
favorable to the Company and the Company's stockholders than the Offer and
the Merger and (B) as a result of which the Board of Directors by majority
vote determines in good faith, based upon the advice of outside counsel to
the Company, that it is obligated by its fiduciary obligations under
applicable
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law to terminate this Agreement, provided that such termination under this
clause (iii) shall not be effective until the Company has made payment of
the full fee and expense reimbursement required by Section 8.3; or
(e) By Parent prior to the purchase of Shares pursuant to the Offer,
if (i) there shall have been a breach of any representation, warranty,
covenant or agreement on the part of the Company contained in this
Agreement which is reasonably likely to have a Material Adverse Effect on
the Company or which materially adversely affects (or materially delays)
the consummation of the Offer, which shall not have been cured prior to the
earlier of (A) 10 business days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, (ii) the Board
shall have withdrawn or modified (including by amendment of the Schedule
14D-9) in a manner adverse to Purchaser its approval or recommendation of
the Offer, this Agreement or the Merger or shall have recommended another
offer or transaction, or shall have resolved to effect any of the
foregoing, or (iii) the Minimum Condition shall not have been satisfied by
the expiration date of the Offer as it may have been extended pursuant
hereto and on or prior to such date (A) any person (including the Company
but not including Parent or Purchaser) shall have made a public
announcement, disclosure or communication to the Company with respect to a
Third Party Acquisition or (B) any person (including the Company or any of
its affiliates or subsidiaries), other than Parent or any of its affiliates
shall have become (and remain at the time of termination) the beneficial
owner of 20% or more of the Shares (unless such person shall have tendered
and not withdrawn such person's Shares pursuant to the Offer). As used
herein, the "Outside Date" shall mean the latest to occur (but in no event
later than 90 days following the date hereof) of (i) the date that is 60
days following the date hereof and (ii) provided that the Minimum Condition
has been satisfied within 60 days following the date hereof, the date on
which either (x) the applicable waiting period under the HSR Act shall have
expired or been terminated or (y) the final terms of a consent decree
between Parent and the appropriate governmental authority with respect to
the Offer and the Merger shall have been agreed to.
SECTION 8.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
set forth in Section 8.3 and Section 9.1; provided, however, that nothing herein
shall relieve any party from liability for any wilful breach hereof.
SECTION 8.3 Fees and Expenses.
(a) If:
(i) (x) Parent terminates this Agreement pursuant to Section
8.1(e)(i) hereof and (y) prior to such termination a proposal or offer with
respect to a Third Party Acquisition shall have been made to the Company
and (z) within 12 months after such termination, the Company enters into an
agreement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs; or
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(ii) (x) the Company terminates this Agreement pursuant to
8.1(d)(iii) or (y) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii)(B) hereof and at such time Parent would have been
permitted to terminate this Agreement under Section 8.1(e)(ii) or (iii)
hereof or (z) Parent terminates this Agreement pursuant to Section
8.1(e)(ii) or (iii) hereof;
then the Company shall pay to Parent and Purchaser, within three business days
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with any termination contemplated by Section
8.3(a)(ii) above, a fee, in cash, of $5.5 million (less any amounts previously
paid pursuant to Section 8.3(b)), provided, however, that the Company in no
event shall be obligated to pay more than one such fee with respect to all such
agreements and occurrences and such termination.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or similar business
combination by any person other than Parent, Purchaser or any affiliate thereof
(a "Third Party"); (ii) the acquisition by a Third Party of 20% or more of the
book or fair market value of the consolidated assets of the Company and its
subsidiaries, taken as a whole; or (iii) the acquisition by a Third Party of 20%
or more of the outstanding Shares.
(b) Upon the termination of this Agreement (i) under circumstances in
which Parent shall have been entitled to terminate this Agreement pursuant to
Section 8.1(e)(i) hereof (whether or not expressly terminated on such basis) or
(ii) if any of the representations and warranties of the Company contained in
this Agreement were untrue or incorrect in any material respect when made and at
the time of termination remained untrue or incorrect in any material respect and
such misrepresentation materially adversely affected the consummation (or
materially delayed commencement or consummation) of the Offer, then the Company
shall reimburse Parent, Purchaser and their affiliates (not later than three
business days after submission of statements therefor) for all actual documented
out-of-pocket fees and expenses actually incurred by any of them or on their
behalf in connection with the Offer and the Merger and the consummation of all
transactions contemplated by this Agreement (including, without limitation, fees
and disbursements payable to financing sources, investment bankers, counsel to
Purchaser or Parent or any of the foregoing, and accountants) up to a maximum
amount of $1,000,000. Unless required to be paid earlier pursuant to Section
8.1(d), the Company shall in any event pay the amount requested within three
business days of such request, subject to the Company's right to demand a return
of any portion as to which invoices are not received in due course after request
by the Company.
(c) Except as otherwise specifically provided herein, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement may be
amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of the
Company, no amendment may be made which would reduce
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the amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7 and Article IX shall survive the
Effective Time and those set forth in Section 6.4, Section 8.3 and Article IX
shall survive termination of this Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
if to Parent or Purchaser:
Textron Financial Corporation
40 Westminster Street
P.O. Box 6687
Providence, RI 02940-6687
Attention: David Wisen
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Mario A. Ponce, Esq.
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if to the Company:
Litchfield Financial Corporation
430 Main Street
Williamstown, MA 02167
Attention: Richard A. Stratton
with a copy to:
Hutchins, Wheeler & Dittmar,
A Professional Corporation
101 Federal Street
Boston, MA, 02110
Attention: James Westra, Esq.
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act) has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares; provided,
however, that no person nor any affiliate or associate of such person shall
be deemed to be the beneficial owner of any securities by reason of a
revocable proxy granted for a particular meeting of stockholders, pursuant
to a public solicitation of proxies for such meeting, and with respect to
which shares neither such person nor any such affiliate or associate is
otherwise deemed the beneficial owner;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
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(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession in the United States, in each case applied on a basis consistent
with the manner in which the audited financial statements for the fiscal
year of the Company ended December 31, 1998 were prepared;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, 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 holder
of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
SECTION 9.4 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 conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement, together
with the Confidentiality Agreement, constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any of their respective rights and obligations hereunder to any
direct or indirect wholly owned subsidiary or subsidiaries of Parent, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, except for the provisions of Section 6.7, is
intended to or shall confer upon any other
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person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.10 Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the Commonwealth of Massachusetts or in any court of
the Commonwealth of Massachusetts, this being in addition to any other remedy to
which such party is entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit itself to the personal jurisdiction of any
Federal court located in the Commonwealth of Massachusetts or any court of the
Commonwealth of Massachusetts in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the Commonwealth of Massachusetts, and (iv) consents to service being
made through the notice procedures set forth in Section 9.2.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TEXTRON FINANCIAL CORPORATION
By:
-----------------------------------------
Name:
Title:
LIGHTHOUSE ACQUISITION CORP.
By:
-----------------------------------------
Name:
Title: President
By:
-----------------------------------------
Name:
Title: Treasurer
LITCHFIELD FINANCIAL CORPORATION
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title: Treasurer
48
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings set forth
in the attached Agreement.
Notwithstanding any other provision of the Offer, but subject to the
terms and conditions of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment or, subject to the restriction referred
to above, payment for any Shares tendered pursuant to the Offer, and may amend
or terminate the Offer (whether or not any Shares have theretofore been
purchased or paid for) to the extent permitted by the Merger Agreement if, (i)
at the expiration of the Offer, a number of shares of Company Common Stock
which, together with any Shares owned by Parent or Purchaser, constitutes more
than 66-% of the voting power (determined on a fully-diluted basis), on the date
of purchase, of all the securities of the Company entitled to vote generally in
the election of directors or in a merger shall not have been validly tendered
and not properly withdrawn prior to the expiration of the Offer, the ("Minimum
Condition") or (ii) at any time on or after the date of this Agreement and prior
to the acceptance for payment of Shares, any of the following conditions occurs
or has occurred:
(a) there shall have been entered any order, preliminary or permanent
injunction, decree, judgment or ruling in any action or proceeding before
any court or governmental, administrative or regulatory authority or
agency, or any statute, rule or regulation enacted, entered, enforced,
promulgated, amended or issued that is applicable to Parent, Purchaser, the
Company or any subsidiary or affiliate of Purchaser or the Company or the
Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency that is
reasonably likely to have the effect of: (i) making illegal or otherwise
directly or indirectly restraining or prohibiting the making of the Offer
in accordance with the terms of the Merger Agreement, the acceptance for
payment of, or payment for, some of or all the Shares by Purchaser or any
of its affiliates or the consummation of the Merger; (ii) prohibits the
ownership or operation by the Company or any of its subsidiaries, or Parent
or any of its subsidiaries, of all or any material portion of the business
or assets of the Company or any of its subsidiaries, taken as a whole, or
Parent or its subsidiaries, taken as a whole, or (iii) materially limits
the ownership or operation by the Company or any of its subsidiaries, or
Parent or any of its subsidiaries, of all or any material portion of the
business or assets of the Company or any of its subsidiaries, taken as a
whole, or Parent or its subsidiaries, taken as a whole (other than, in
either case, assets or businesses of the Company or its subsidiaries that
are not material (measured in relation to the combined assets or revenues
of the Company and its subsidiaries, taken as a whole)) or compels Parent
or any of its subsidiaries to dispose of or hold separate all or any
portion of the businesses or assets of the Company or any of its
subsidiaries or Parent or any of its subsidiaries (other than, in either
case, assets or
A-1
49
businesses of the Company or its subsidiaries that are not material
(measured in relation to the combined assets or revenues of the Company
and its subsidiaries, taken as a whole)), as a result of the transactions
contemplated by the Offer or the Merger Agreement; (iv) imposes
limitations on the ability of Parent, Purchaser or any of Parent's
affiliates effectively to acquire or hold or to exercise full rights of
ownership of the Shares, including without limitation the right to vote
any Shares acquired or owned by Parent or Purchaser or any of its
affiliates on all matters properly presented to the stockholders of the
Company, including without limitation the adoption and approval of the
Merger Agreement and the Merger or the right to vote any shares of capital
stock of any subsidiary directly or indirectly owned by the Company; or
(v) requires divestiture by Parent or Purchaser or any of their affiliates
of any Shares;
(b) since the date hereof, there shall have occurred any event, other
than events arising out of the announcement of the Offer and the
transactions contemplated hereby, that is reasonably likely to have a
Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices (other than suspensions or limitations
triggered on the New York Stock Exchange by price fluctuations on a trading
day) for, securities on any national securities exchange or in the
over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory authority or
agency in the United States on the extension of credit by banks or other
lending institutions, (iv) a commencement of a war directly involving the
United States and materially adversely affecting (or materially delaying)
the consummation of the Offer or (v) in the case of any of the foregoing
existing at the time of commencement of the Offer, a material acceleration
or worsening thereof;
(d) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or any of its
affiliates or (ii) (A) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent or Purchaser the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any takeover proposal
or any other acquisition of Shares other than the Offer and the Merger, (B)
any such corporation, partnership, person or other entity or group shall
have entered into a definitive agreement or an agreement in principle with
the Company with respect to a tender offer or exchange offer for any Shares
or a merger, consolidation or other business combination with or involving
the Company or any of its subsidiaries, or (C) the Board of Directors of
the Company or any committee thereof shall have resolved to do any of the
foregoing;
A-2
50
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to materiality or a
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true
and correct in all material respects, in each case as if such
representations and warranties were made at the time of such determination;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been terminated with the consent of the
Company; or
(h) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer or the Merger, and any applicable waiting
periods under any foreign statutes or regulations, shall not have expired
or been terminated;
(i) the Company shall have terminated the employment agreement of
Richard A. Stratton without the prior written consent of the Purchaser; and
(k) the Company shall not have obtained the consent of each member of
the Board of Directors of the Company to the cancellation of all Options
held by such Directors as contemplated by Section 2.7 of the Merger
Agreement.
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (except for any
action or inaction by Purchaser or any of its affiliates constituting a breach
of the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Purchaser or any of its
affiliates constituting a breach of the Merger Agreement) or (other than the
Minimum Condition) may be waived by Purchaser in whole or in part at any time
and from time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-3